ANNUAL REPORT
For the fiscal year 30 June 2021
VivoPower International PLC
Notes to the Financial Statements
VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
VivoPower International PLC is an international electric vehicle, critical power
services, solar energy, battery and microgrid technology company whose core
purpose is to deliver sustainable energy solutions to its customers. VivoPower has
operations in Australia, Canada, the Netherlands, the United Kingdom and the
United States
Nasdaq: VVPR
Contents
The Reports
Highlights
Chairman and 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
Page
3
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42
48
49
50
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53
103
104
105
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110
Page | 2
Highlights
VivoPower International PLC for the year ended 30 June 2021
Highlights
Accomplishments for the Year ended 30 June 2021
Revenues declined 16% to $40.4m primarily due to COVID-19 related lockdowns.
Gross profit declined to $6.3m but gross margin increased due to operational efficiencies.
Adjusted EBITDA down to $(1.4) million due to revenue decline and increased overheads
to support hyperscale growth.
Cash increased from $2.8 million to $8.6 million: $32 million net capital raises proceeds.
Reduction in group net debt from $23.1 million to $14.5 million.
Completed acquisition of 100% of Tembo e-LV for an aggregate of $7.1 million and $0.2
million equity. Secured 4,825 potential commitments and conversion kits orders to date.
Electric vehicle (“EV”) Landcruiser conversion program with Toyota Australia.
Completed Tottenham Hotspur Football Club SES feasibility study.
*All references to $ are references to USD unless otherwise noted.
Year Ended 30 June
(US dollars in thousands, except
per share data)
Revenue
Gross profit
Operating (loss)/profit
Adjusted EBITDA (1)
Basic earnings per share (dollars)
Adjusted earnings per share (dollars)(2)
2021
40,411
6,327
(4,782)
(1,448)
(0.46)
(0.28)
2019
2020
47,986
(unaudited)
43,545
7,101
2,169
3,937
(0.38)
(0.12)
6,093
(5,217)
(3,770)
(0.83)
(0.66)
Three
Months
Ended 30
June
2019
13,617
1,657
(33)
404
(0.11)
(0.07)
Year
Ended
31
March
2019
39,036
6,310
(5,410)
(3,990)
(0.83)
(0.68)
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, one-off non-recurring costs including restructuring expenses and non-cash
equity remuneration. 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.
Page | 3
Chairman and Chief Executive’s Statement
VivoPower International PLC for the year ended 30 June 2021
Chairman and Chief Executive’s Statement and Review
This time last year VivoPower International PLC (“VivoPower” or the “Company”) was half-way through
executing upon a hyper-turnaround and had just announced a new strategy, titled Sustainable Energy
Solutions (“SES”) with a stated plan to add an electric vehicle capability. Fast forward a year and it is pleasing
to report that whilst COVID-19 lockdowns in Australia adversely affected revenue and profitability for the
2021 fiscal year, the VivoPower team has delivered on key results well ahead of schedule and targets. Key
results delivered include:
• Successful completion of an award-winning hyper-turnaround plan, delivering on all 7 points of the plan
ahead of schedule and without compromising creditors or effecting job losses that were not attributable
to performance;
• Completed acquisition, onboarding and integration of electric vehicle business, Tembo e-LV (“Tembo”)
into the group;
• Secured exclusive distribution deals for Tembo conversion kits globally , with potential commitments
and orders of 4,825 electric vehicle conversion kits;
• Executed binding letter of intent with Toyota Motor Corporation Australia (“TMCA”) in relation to
electrification of Toyota Landcruisers with an initial focus on off road applications in Australia (and as a
pre-cursor to a potential Master Services Agreement);
• Secured first holistic end to end SES project with Tottenham Hotspur Football Club in the United
Kingdom (U.K.), with feasibility studies completed before 30 June 2021;
• Completed equity raisings totalling US$32 million in net proceeds;
• Reduced net debt from $23 million to $14 million, remedied net current asset deficiency and
significantly increased cash reserves;
• Secured full management and economic control of US solar joint venture; and
• Debuted in the Real Leaders Impact Awards as one of the Top 50 impact companies globally.
As mentioned before and notwithstanding the above achievements, VivoPower’s revenue and profits
declined versus the prior financial year. This was principally due to the adverse impact of strict COVID-19
lockdowns and border controls in Australia. Key financial results and metrics for the fiscal year ended 30
June 2021 were as follows:
• Annual revenues of $40.4 million, a decline of 15.8% compared to $48 million for the previous fiscal year;
• Gross profit of $6.3 million, a decline of 11.3% compared to $7.1m for the previous fiscal year;
• Underlying EBITDA of $(1.4 million) compared to a $3.9 million EBITDA profit for the previous fiscal year,
reflecting COVID-19 lockdowns in Australia and also increased investment in operational expenditure to
support growth plans for Tembo and SES;
• Statutory earnings per share (EPS) loss of ($0.46) represented a decline versus ($0.38) EPS loss for the
previous fiscal year, whilst underlying EPS loss was ($0.28) versus ($0.12) loss.
At the time of writing, lockdowns and border restrictions remain in place in Australia. However, there is now
clarity on when these will end with the Federal Government of Australia confirming that once vaccination
rates hit 70%, lockdowns will cease and when they hit 80%, borders will be reopened. Based on current
vaccination rates, this is expected to be in November 2021. Despite this near-term outlook, we have
accelerated our diversification to be less reliant on Australia and this is a key driver for seeking distribution
agreements for Tembo EV conversion kits in Canada, the Nordic region (encompassing Norway, Finland,
Sweden and Iceland) as well as Mongolia.
Page | 4
Chairman and Chief Executive’s Statement
VivoPower International PLC for the year ended 30 June 2021
Given the strong pipeline of contracted opportunities we have for both our Electric Vehicle and Critical Power
Services business units, we are confident of the medium to long term outlook.
For the financial year ending 30 June 2022, we have set the following enterprise objectives:
•
•
•
•
•
•
Expand SES pipeline and delivery capabilities;
Grow Aevitas business unit to support SES;
Deliver Tembo orders on schedule and on budget;
Advance Tembo product design, supply, and quality initiatives;
Cement partnerships with TMCA and global distributors;
Execute on corporate initiatives to support growth.
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. I would also like to thank and commend my fellow team members at
VivoPower for their relentless commitment to execution excellence and for exceeding the very ambitious
strategic and operational targets we had set this time last year. It has been an honour for all of the team to
be awarded the prestigious Turnaround Management Association Award for the best turnaround globally in
the small companies category. That however is history and the entire VivoPower team and Board are now
fully focussed on the hyperscaling mission we have before us in relation to Tembo and our broader SES
strategy.
Kevin Chin
Chairman and Chief Executive Officer
14 September 2021
Page | 5
here Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Strategic Report
Principal Activities
VivoPower is a sustainable energy solutions company whose core purpose is to provide its customers with
turnkey decarbonisation solutions that enable them to achieve net zero carbon status. It does this by
delivering an enterprise solution encompassing electric vehicles, critical power services, battery and
microgrid technology as well as solar. The Company is focussed on harder to decarbonise sectors including
mining, infrastructure and utilities, involving customised and ruggedised requirements, including off road
electric vehicles. VivoPower is a certified B Corporation with operations in Australia, Canada, the
Netherlands, the United Kingdom and the United States (U.S.).
Management analyses our business in five reportable segments: Critical Power Services, Electric Vehicles,
Sustainable Energy Solutions, Solar Development and Corporate Office. Critical Power Services is
represented by VivoPower’s wholly owned subsidiary Aevitas. In turn, Aevitas wholly owns J.A. Martin
Electrical Pty Limited (“J.A. Martin”) and Kenshaw Electrical Pty Limited (“Kenshaw”), both of which operate
in Australia with a focus on the design, supply, installation and maintenance of critical power, control and
distribution systems, including for solar farms. Electric Vehicles is represented by Tembo e-LV B.V. (“Tembo”),
a Netherlands-based specialist battery-electric and off-road vehicle company delivering electric vehicles
(“EV”) for mining and other rugged industrial customers globally. Sustainable Energy Solutions ((“SES”) is the
design, evaluation, sale and implementation of renewable energy infrastructure to customers, both on a
standalone basis and in support of Tembo EVs. Solar Development is represented by Caret LLC and
comprises 12 solar projects in the United States. 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 U.K. See Note 4.2 to our consolidated
financial statements included herein for a breakdown of our financial results by reportable segment.
Critical Power Services
Through a holding entity called Aevitas which was formed in 2013 and acquired by VivoPower in December
2016, VivoPower has two wholly-owned Australian subsidiaries, J.A. Martin and Kenshaw, VivoPower
provides critical energy infrastructure generation and distribution solutions including the design, supply,
installation and maintenance of power and control systems. The businesses are trusted power advisers to
over 750 active government, commercial and industrial customers. Headquartered at Newcastle, in the
Hunter Valley region of New South Wales, J.A. Martin and Kenshaw, are well situated to capitalise on a strong
operating environment driven by growth in public and private sector investment in infrastructure, renewable
energy, mining and healthcare.
With a gross regional product of more than A$50 billion, the Hunter Valley region is Australia’s leading
regional economy. It has a multi-faceted economy and a skilled workforce, with traditional strengths in
mining and advanced manufacturing complemented by fast-growing service, knowledge, and renewables
sectors.
The Critical Power Services businesses have several core competencies, encompassing a range of electrical,
mechanical, and non-destructive testing services. In addition, the businesses are preparing to be responsible
for delivering electrical services and infrastructure to support VivoPower’s EV and SES offerings, including
on-site renewable generation, batteries and microgrids, EV charging stations, and emergency backup power
solutions.
Page | 6
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
J.A. Martin Electrical Pty Limited
J.A. Martin is a specialised 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 since its founding in 1968.
Operating from two premises in New South Wales, J.A. Martin’s facility in Newcastle manufactures
industrial switchboards and motor control centres, manages turnkey project installations, service and
maintenance, and provides design and engineering services. It also has an office and workshop facility in
the Hunter Valley for servicing the mining and industrial sectors.
J.A. Martin is ISO9001 (Quality Management) and ISO45001 (Occupational Health and Safety) certified;
tangible evidence of its commitment to quality, and health and safety, and positions it to service some of
the largest and most respected mining and industrial firms in the world.
J.A. Martin’s core competencies include customised 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.
In the fiscal year ended 30 June 2021, J.A. Martin serviced almost 250 customers across a broad range of
industries, including solar farms, grain handling and agriculture, water and gas utilities, cotton gins,
commercial buildings, and mining. With 132 employees and a fleet of 76 vehicles, the business has built a
strong reputation for high quality engineering and design, delivered on time and budget, supported by a
high-level of quality and service.
Notwithstanding a history and core business centred in the industrial, manufacturing and mining sectors,
J.A. Martin has over the past 3 years developed a strong reputation and position in the Australian solar EPC
market, focusing on small and medium sized solar projects. During the financial year, J.A. Martin
completed the provision of electrical installation and services for its seventh solar farm, the 39MWdc
Molong Solar Farm near the town of Orange, New South Wales, and has commenced work on two further
solar projects, bringing its total of contracted or completed solar project work to 470MW.
As a result of strong growth in the Australian solar generation market, J.A. Martin’s revenue base has been
transformed from a traditional reliance on the industrial, manufacturing and mining sectors. This growth
is expected to continue with the New South Wales Government’s Electricity Strategy and Electricity
Infrastructure Roadmap setting out a plan to deliver Renewable Energy Zones (“REZs”) in five regions
across New South Wales (N.S.W.), including the Hunter Valley-Central Coast region where J.A. Martin is
headquartered. By connecting multiple renewable energy generators and ancillary storage in the same
location, REZs capitalise on economies of scale and will play a vital role in delivering affordable, reliable,
and clean energy generation to help replace the state’s existing power stations as they close over the
coming decades.
J.A. Martin’s traditional customer base includes companies that operate in or service the mining sector,
which is Australia’s largest industry as measured by contribution to gross domestic product. Over the past
12 months, the mining sector in Australia has performed strongly and has continued to do so
notwithstanding the effects of the global COVID-19 pandemic. Given its experience in the sector, J.A. Martin
is well positioned to benefit from future growth in the mining industry in Australia.
Page | 7
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Revenue earned within Australia is comprised of the following activities:
Year Ended 30 June
Three Months
Ended 30
June
Year
Ended 31
March
2019
(US dollars in thousands)
2021
2020
(unaudited)
Electrical installation projects
11,200
11,420
11,009
Electrical service contracts
Electrical switchboard
manufacturing
Total revenue
5,131
4,093
3,494
3,582
5,082
4,041
20,424
18,496
20,132
2019
774
2,986
1,813
5,573
2019
8,375
7,361
4,949
20,685
While there is no material seasonality which impacts J.A. Martin, in FY2021, the business continued to be
impacted by operational disruptions caused by lockdowns attributable to the COVID-19 pandemic. This has
resulted in delays to the commencement of several projects and restricted access to clients’ sites, resulting
in slower completion of scheduled works and hence revenue recognition. Through the implementation of
workplace health and safety best practices and adherence to public health directives, J.A. Martin mitigated
the impact of the pandemic to some degree, however the additional costs and operational inefficiencies
caused have adversely affected profitability margins.
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 over its more
than 50-year history. Supplier relationships are core to the realisation of its commercial goals and ability to
meet the demands of customers in a competitive marketplace. With most electrical equipment
manufactured outside of Australia, the business has also had to adapt to longer lead times from suppliers
caused by the COVID-19 induced disruption to supply chains.
With almost 250 active customers for the year-ended 30 June 2021, 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.
VivoPower continues to believe that J.A. Martin, through its experience, capability, and track record, is well
positioned competitively to benefit from the strong growth outlook for Australian solar as well as the cyclical
rebound of the mining sector.
Kenshaw Electrical Pty Limited
Kenshaw is a specialised provider of critical electrical power, critical mechanical power and non-destructive
testing services that has been headquartered in the Newcastle and Hunter Valley region of New South Wales
for almost 40 years since its founding in 1981.
Operating from three premises across New South Wales and the Australian Capital Territory, Kenshaw’s head
office is in Newcastle, with additional branches in Canberra and most recently, Sydney. The business’ 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. In addition, by partnering with several
leading uninterruptible power supply (“UPS”) providers, the business is able to offer fully integrated UPS
design, sales and installation.
Page | 8
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
With ISO9001 (Quality Management) certification evidence of its commitment to quality, Kenshaw is able to
provide regular and responsive service on a contracted and ad-hoc basis to a loyal client base of over 500
local, national and multinational clients ranging from data centres, hospitals, mining and agriculture to aged
care, transport and utility services.
Kenshaw’s core competencies include: generator design, turn-key sales and installation; generator servicing
and emergency breakdown services; customised motor modifications; wheel cartridge motor electric repair
and refurbishment; and 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.
The growing data centre sector also continues to be a key market for Kenshaw. According to TeleGeography,
COVID-19 pandemic-led demand for video conferencing, online schooling, entertainment, social networking
and platforms to support remote working led to a 47% increase in global internet traffic in 2020, above initial
forecasts of 28%. This translated to a spike in requirements for data storage, computing and networking. In
its H2 2020 Asia Pacific Data Centre Trends report, CBRE Group, Inc., reported that total data centre net
absorption in the Asia Pacific Tier 1 markets of Tokyo, Sydney, Singapore and Hong Kong SAR, reached
322MW in 2020, double that of 2019 and setting a record high. The report also forecasts that Sydney’s data
centre supply pipeline is set to reach a new high of over 100MW per annum from 2021-2024, well above the
past three-year average of 60MW.
VivoPower believes Kenshaw is benefiting from the growth in the data centre market through its long-term
relationship with one of Australia’s leading data centre companies and newly established relationships with
other data centre providers. In addition, with a growing base of completed installation projects, the business
is actively targeting the provision of contracted ongoing management of these power generator assets,
through its Generator Service and Non-Destructive Testing divisions. The well-established Canberra branch
and new Sydney branch, form an integral part of this offering by allowing for locally stored equipment and
personnel with an aim for Kenshaw to become entrenched at its clients’ sites for the entire lifecycle of the
assets.
In addition to the data centre sector, the health and aged care sectors continue to be a key market for
Kenshaw. An increase in regulatory requirements and the ageing of the population are driving growth in both
sectors, with Australia currently in the middle of a significant demographic transition, as people in the baby
boomer generation reach 65. The 2020 Intergenerational Report by the Australian Treasury Department
forecasts that the population will continue to age with 23% of the population projected to be over 65 by
2060-61 – a rise of approximately seven percentage points from 2020-21. Australian Government health
spending is projected to continue to increase as a share of Gross Domestic Product (“GDP”) from 4.1% in
2018-19 to 6.2% in 2060-61, with aged care spending expected to increase from 1.2% of GDP in 2020-21 to
2.1% of GDP in 2060-61.
Kenshaw benefits from these demographic tailwinds through serving longstanding customers such as
Health Infrastructure New South Wales, Public Works Advisory, Hunter New England Health, Anglican Care
and Ramsay Health, for which it delivers customised critical back up power solutions and services as well as
generator maintenance and thermal imaging services. These services utilise Kenshaw’s custom developed
Generator Service App which results in more accurate reporting of servicing and detailed condition
reporting.
As for J.A. Martin, Kenshaw’s traditional customer base includes companies that operate in or service the
mining sector, which is Australia’s largest industry as measured by contribution to gross domestic product.
Over the past 12 months, the mining sector in Australia has performed strongly and has continued to do
so notwithstanding the effects of the global COVID-19 pandemic. Given its experience in the sector,
Kenshaw is well positioned to benefit from future growth in the mining industry in Australia.
Page | 9
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Revenue earned in Australia is comprised of the following activities:
Year Ended 30 June
(US dollars in thousands)
2021
2020
2019
(unaudited)
Generator sales and installation
11,479
23,579
16,373
Generator service and non-
destructive testing
Motor sales and overhaul
Total revenue
1,761
4,199
4,384
5,169
18,409
1,565
29,343
1,660
22,417
Three
Months
Ended 30
June
Year
Ended 31
March
2019
6,381
1,178
377
7,936
2019
11,095
1,744
4,276
17,115
While there is no material seasonality which impacts Kenshaw, in FY2021, the business continued to be
adversely impacted by operational disruptions due to strict lockdowns attributable to the COVID-19
pandemic. This has resulted in delays to the commencement of several projects and restricted access to
clients’ sites, particularly in the health and aged care sectors, resulting in slower completion of scheduled
works and hence revenue recognition. Through the implementation of workplace health and safety best
practices and adherence to public health directives, Kenshaw has been able to mitigate the impact of the
pandemic to some degree, however the additional costs and operational inefficiencies caused have
adversely affected profitability margins. In addition, with most electrical equipment manufactured outside
of Australia, the business has also had to adapt to longer lead times from suppliers caused by the COVID-19
induced disruption to supply chains.
Relationships with its primary suppliers enables Kenshaw to sell and service their equipment as a dealer or
agent. The business is a primary supplier and service agent for Cummins, Deutz and CAT generators, and
WEG electric motors, and maintains long term relationships with other equipment manufacturers such as
Siemens, Toshiba and Teco. This allows Kenshaw to offer a complete solution to its clients with flexibility of
product choice.
For the year ended 30 June 2021, 19% (year ended 30 June 2020: 69%; three months ended 30 June 2019:
76%) of Kenshaw’s revenue was earned from one customer. While this customer has been less active in
FY2021, it is still expected to continue to provide significant revenue in future years. However, with almost
500 active customers for the year ended 30 June 2021, 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.
VivoPower continues to believe that Kenshaw, through its experience, capability, and track record, is well
positioned competitively to benefit from the strong growth outlook for Australian data centres, aged and
health care infrastructure as well as the cyclical rebound of the mining sector.
Electric Vehicles
Tembo e-LV B.V. and subsidiaries, Tembo 4x4 B.V. and FD 4x4 B.V. (“Tembo”) is a specialist battery-electric
and off-road vehicle company that designs and builds ruggedised light electric vehicle solutions for
customers across the globe in the mining, infrastructure, utilities, and government services sectors.
Page | 10
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
VivoPower acquired 51% of Tembo on 5 November 2020 for €4.0 million. On 2 February 2021, the Company
completed the acquisition of the remaining 49% of Tembo, for a consideration of $2.2 million and 15,793
shares in the Company.
Despite the global impact of the COVID-19 pandemic and following the completion of 100% of Tembo by
VivoPower, Tembo was able to generate long-term business opportunities from new and existing customers
internationally. A 7 year distribution agreement was executed with GB Auto Group Pty Limited and GB
Electric Vehicles Pty Ltd (together “GB Auto”), who, as a result, will be the exclusive Australia-wide distributor
of Tembo’s products. As part of the agreement, GB Auto committed to the purchase of a minimum of 2,000
Tembo e-LV kits (Landcruiser and Hilux models) in the first 4 years of the agreement. In June 2021, a definitive
agreement was executed with Acces Industriel Mining Inc. (“Acces") whereby Acces has exclusive
distributorship rights in Canada for Tembo’s electric light vehicles in Canada. Under the agreement, Acces
intends to purchase 1,675 Tembo e-LV conversion kits by December 2026. In the same month, a non-binding
heads of terms was signed with Artic Trucks Limited (“Arctic”), with a potential commitment from Arctic to
purchase 800 Tembo e-LV conversion kits over the ensuing 5.5 years for the Nordic market (including Norway,
Finland, Sweden and Iceland), with the definitive agreement expected to be signed shortly. In July 2021, a
definitive agreement was signed with Tembo’s existing Mongolian dealer, Bodiz International Group LLC
(“Bodiz”), who intends to purchase 350 Tembo e-LV conversion kits by December 2026.
During the second half of the financial year, Tembo accelerated the development of its 72kWh battery
platform for the Landcruiser model in accordance with the highest automotive product development
process standards, including but not limited to Advanced Product Quality Planning (APQP) and Product &
Design Validation Plans (PVP & DVP)in cooperation with GB Auto and Toyota Motor Corporation Australia
Limited (“Toyota Australia”). In recent months, Tembo’s team of engineers have collectively developed an
enhanced product, which is undergoing extensive testing and at the same time the first customer prototype
vehicles for this enhance product are being assembled in Australia.
In parallel to the development activities, a network of preferred suppliers has been set up. These have been
selected based on quality, safety and durability, amongst other criteria. Consideration has also been given
to cost, delivery, service as well as other requirements that are dictated to within the automotive industry,
and to align with VivoPower’s sustainability goals and principles.
Furthermore, Tembo has been focusing on enhancing its quality standards and credentials, by obtaining, for
example, the ISO 9001:2015 Quality Management Systems accreditation. An initiative remains underway to
obtain a number of other quality standards, including, but not limited to ISO 14001:2015 Environmental
Management System.
In addition, the VivoPower board and leadership team have worked closely with the Tembo management
team to further reinforce a culture of safety as well as to identify and implement industry best practice health
and safety standards.
In June 2021, a binding Letter of Intent ("LOI") was signed with Toyota Australia to formalize a collaboration
program between VivoPower, Tembo and Toyota Australia for electrification of Toyota Landcruiser vehicles,
with an initial focus on the mining sector in Australia. This LOI is a precursor to a potential MSA (Master
Services Agreement) which all parties are working towards at present.
Tembo is focused on a number of objectives in the coming year, including securing additional distribution
agreements globally, completing the development and commencing full scale production of the 72kWh
Toyota Landcruiser electric conversion kit, expanding its assembly and production capabilities in the
Netherlands (including potentially moving to new purpose built facilities) as well as in other markets and
advancing research and development into the next generation of electric conversion kits and batteries.
Tembo is well placed to capitalise on the very strong increase in demand for fleet electrification solutions
from customers in harder to decarbonise sectors such as mining, infrastructure and utilities.
Page | 11
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Revenue earned in the Netherlands is comprised of the following activities:
Year Ended 30 June
(US dollars in thousands)
2021
2020
2019
(unaudited)
Conversion kits
Vehicle spec conversion
Accessories
Total revenue
137
1,219
37
1,394
-
-
-
-
-
-
-
-
Three
Months
Ended
30 June
2019
Year
Ended
31 March
2019
-
-
-
-
-
-
-
-
Sustainable Energy Solutions (“SES”)
In August 2020, VivoPower announced a strategic pivot to enter the electric vehicle (“EV”) sector, due to
interest from the Company’s existing customer base, with an initial focus on the mining, infrastructure and
utilities sectors. At the same time, VivoPower also announced that it would undertake a strategic pivot to a
SES strategy, where its core mission is to help corporate customers achieve their decarbonisation goals.
The key differentiator of VivoPower’s strategy is that the Company intends to focus on delivering a holistic,
SES to customers that comprise of the following 3 key elements:
• EV and battery leasing;
•
critical power “electric-retrofit” of customer’s sites (e.g., warehouses and depots) to enable
optimised EV battery charging and encompassing renewable power generation (including solar),
battery storage and microgrids; and
• EV battery reuse and recycling (including potential second life applications as an element of critical
power requirements on a customer’s site).
In Australia, the SES business draws on the experience and capabilities of VivoPower’s Critical Power Services
businesses (J.A. Martin and Kenshaw) to deliver solutions to customers, whilst in other markets, it intends to
partner with experienced local critical power services companies.
In June 2021, VivoPower announced that it successfully completed its first full suite SES feasibility study with
English Premier League Football Club Tottenham Hotspur F.C. (“THFC”) evaluating solar, battery and
microgrid solutions for THFC’s stadium and training ground in the United Kingdom. VivoPower and THFC are
now discussing the potential of moving forward with the implementation of one or more SES projects.
Given that the SES business segment was only newly established during the past financial year, it has
generated immaterial revenues and has not incurred any significant costs. VivoPower expects there to be
significant growth going forward, which will also necessitate investment in people and technology.
VivoPower is actively working to originate new SES projects for both new and existing (through J.A. Martin
and Kenshaw) customers of the VivoPower group of companies, with significant projects already proposed
to major Australian mining companies.
Page | 12
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Solar Development
Historic Solar Development Business
As a consequence of the Company’s strategic pivot to a SES strategy, VivoPower no longer intends to engage
in solar project development activities in isolation, only if it’s a component of a SES for a corporate customer
that it is helping to achieve decarbonisation goals. This segment has historically been characterised as the
Solar Development segment and encompassed the Company’s solar development activities in the U.S. and
Australia.
VivoPower’s historic strategy in relation to solar development has been to minimise capital intensity and
maximise 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. The stages of solar
development can be broadly characterised 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.
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 has been 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 partnered with ITP Renewables (“ITP”), a global leader in renewable energy engineering,
strategy and construction, and energy sector analytics. In the U.S., we entered into a development joint
venture with Innovative Solar Systems, LLC (“ISS”). VivoPower assumed management control of this 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. Subsequently, in June 2021 VivoPower
announced that it had secured a settlement resulting in the Company gaining full ownership of the
remaining 50% of the equity interest in the portfolio from ISS for nominal consideration of US$1.
United States Solar Development
VivoPower’s portfolio of U.S. solar projects is held by its now wholly owned subsidiary, Caret, LLC (“Caret”)
(formerly Innovative Solar Ventures I, LLC), previously a joint venture with ISS. VivoPower invested in the joint
venture in April 2017 and secured a 50% economic ownership in a diversified portfolio consisting originally
of 38 solar projects in 9 states across the U.S. with a combined potential electrical generating capacity of 1.8
GW.
In June 2021, VivoPower announced that it had secured a settlement resulting in the Company gaining full
ownership of the remaining 50% of the equity interest in the portfolio from ISS for $1.
Of the original 38 projects, we decided to discontinue or put on hold 26 projects as we considered them less
economically attractive versus other projects at this stage and did not want to invest further capital in them
for the time being. The 12 remaining projects are in various stages of development as summarised below
and all are being further developed for future sale and/or partnerships, with an expectation of full realisation
within the next 12 to 24 months, although nearer term opportunities may be pursued if they arise.
Page | 13
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
While a significant number of projects have been discontinued or put on hold during the year ended 30 June
2021, the overall investment in the portfolio is not considered impaired as the discontinued or on hold
projects may still realise value in the future. After securing full economic control on 30 June 2021, a fair value
assessment based on discounted future cashflows was performed and confirmed by our auditors. This did
not result in any impairment of the capitalised intangible development costs, as compared to the equity
accounted and held for sale project balances previously reported. In fact, VivoPower recorded a net gain of
$0.9 million in respect of Caret, LLC (“Caret”), in the year ended 30 June 2021, comprising a loss of $7.0 million
in respect of its 50% share of discontinued solar development projects in the joint venture, offset by a gain
of $7.8 million on acquisition of the remaining 50% of the joint venture on 30 June 2021. The acquisition
resulted in a bargain purchase, as the consideration of $5.4 million comprises no cash outflow, only the fair
value of pre-acquisition equity interest held by VivoPower (after adjustment for abandoned projects in the
year), which is lower than the fair value of acquired net assets of $13.2 million.
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
Active Solar Projects
TX 75
NM 88
TX 107
TX 137
TX 144
TX 145
TX 165
TX 177
TX 195
TX 276
TX 307
TX 341
Subtotal
Discontinued Solar Projects
SC 76
FL 78
GA 83
SC 84
GA 86
GA 90
SC 97
GA 111
GA 112
SC 129
SC 132
FL 168
TX 207
WA 211
KS 229
CO 239
KS 244
OK 267
CO 269
KS 291
TX 305
CO 320
FL 330
OK 339
WA 370
CO 371
Subtotal
Original Portfolio
TX
NM
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
12 Projects
SC
FL
GA
SC
GA
GA
SC
GA
GA
SC
SC
FL
TX
WA
KS
CO
KS
OK
CO
KS
TX
CO
FL
OK
WA
CO
26 Projects
38 Projects
55
87
93
28
82
62
62
34
41
55
55
28
682
21
75
27
30
27
27
28
27
20
28
28
43
83
56
69
55
34
41
55
34
41
41
41
69
74
86
1,162
1,844
Advanced
Mid
Mid
Advanced
Advanced
Advanced
Advanced
Advanced
Advanced
Mid
Mid
Advanced
Eligible
Eligible
Eligible
Eligible
Eligible
Discontinued - FY21
Discontinued - FY20
Discontinued - FY21
Discontinued - FY19
Discontinued - FY21
Discontinued - FY21
Discontinued - FY19
Discontinued - FY21
Discontinued - FY19
Discontinued - FY21
Discontinued - FY21
Discontinued - FY20
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
Discontinued - FY20
Discontinued - FY21
Discontinued - FY21
Discontinued - FY21
◆ 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.
The Company does not intend to acquire any additional utility-scale solar projects in the United States at
this time and is focused on maximizing value from its current portfolio of projects.
Australia Solar Development
VivoPower has developed, built, acquired and operated a diverse portfolio of operating rooftop solar
projects in Australia, totalling just under 23 MW across over 80 sites in every Australian state and the
Australian Capital Territory. These projects were fully contracted with commercial, municipal and non-profit
Page | 14
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
customers under long-term PPAs. Pursuant to the Company’s strategy to recycle development capital, we
were able to profitably monetize 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.
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. 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 would fund 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 Company 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, with both projects achieving advanced stages of
development since that time. In February 2021, VivoPower announced the successful sale of its 60% equity
stake in the Daisy Hill Solar Farm project to its development partner, ITP, for total consideration representing
a 2.1x multiple of the Company’s invested capital in the project. Subsequently, VivoPower also agreed to sell
its stake in the Yoogali Solar Farm project to ITP for immaterial consideration.
The sale of its interests in these projects are in line with VivoPower’s strategic pivot to refocus efforts only on
customer-centric SES projects in the future and it does not intend to develop any standalone solar projects
in Australia that are not part of its broader SES strategy.
JOBS Act
In April 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things,
reduce certain reporting requirements for an “emerging growth company.” As an “emerging growth
company,” we have irrevocably elected not to take advantage of the extended transition period afforded by
the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply
with new or revised accounting standards on the relevant dates on which adoption of such standards is
required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to not
take advantage of the extended transition period for complying with new or revised accounting standards is
irrevocable. In addition, we are in the process of evaluating the benefits of relying on the other exemptions
and reduced reporting requirements provided by the JOBS Act.
Subject to certain conditions set forth in the JOBS Act, if as an “emerging growth company” we choose to
rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation
report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-
Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with
any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor’s report providing additional information about the audit and the financial
statements (auditor discussion and analysis), or (iv) disclose certain executive compensation-related items
such as the correlation between executive compensation and performance and comparisons of our chief
executive officer’s compensation to median employee compensation.
These exemptions will apply for a period of five years following the completion of the Business Combination
or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier.
Page | 15
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Financial Results
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain on SES development
Other income
Depreciation of property and equipment
Amortisation of intangible assets
Operating (loss)/profit
Restructuring and other non-recurring costs
Finance income
Finance expense
Loss before income tax
Income tax
Loss for the year
Adjusted EBITDA
Year Ended 30 June
2021
40,411
(34,084)
6,327
(11,133)
769
1,511
(1,089)
(1,167)
(4,782)
(2,880)
2,179
(2,590)
(8,073)
115
(7,958)
(1,448)
2020
47,986
(40,885)
7,101
(5,479)
1,589
724
(898)
(868)
2,169
(3,410)
33
(3,182)
(4,390)
(713)
(5,103)
3,937
Management analyses our business in five reportable segments: Critical Power Services, Electric Vehicles,
Sustainable Energy Solutions, Solar Development, and Corporate Office.
During the year ended 30 June 2021, the Group generated statutory revenue of $40.4 million, gross profit of
$6.3 million, operating loss of $4.8 million and a net loss of $8.0 million. For the year ended 30 June 2020, the
Group generated revenue of $48.0 million, gross profit of $7.1 million, operating profit of $2.2 million, and a
net loss of $5.1 million.
Adjusted EBITDA for the year ended 30 June 2021 was a loss of $1.4 million, compared to a profit of $3.9
million for the previous year. 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, other finance income and expenses, one-off non-recurring costs including restructuring expenses
and non-cash equity remuneration.
The results of operations for the year ended 30 June 2021, reflect a period of investment in hyperscaling of
the Electric Vehicles business since acquisition, and growth in the corporate functions and management
team to be able to sustainably support planned international growth.
Revenue in Critical Power Services declined by $9.1 million to $38.8 million in the year, as a result of delays
in delivery on orders, contracts and projects due to COVID-19 related lockdowns. Electric Vehicles
contributed $1.4 million revenue in the 8 months since acquisition. Solar Development contributed $0.2m
of revenues but there was no contribution as yet from Sustainable Energy Solutions.
The reduction in revenue in the year caused a $0.8 million reduction in gross profit to $6.3 million, although
this reduction was mitigated by a $0.8 million increase in other income (primarily Jobseeker government
Page | 16
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
allowance in Australia during COVID-19 lockdowns). Gross margins improved in percentage terms from 15%
to 16% as a result of continued focus on cost control. Electric Vehicles also contributed $0.1 million in gross
profit since acquisition while Solar Development contributed $0.2 million.
The $0.7 million gain on Solar Development projects in the year ended 30 June 2021 comprised a $0.9 million
net gain in respect of Caret LLC, in the year ended 30 June 2021, resulting from a loss of $7.0 million in respect
of the Company’s 50% share of discontinued solar development projects in the joint venture, offset by a
bargain purchase gain of $7.8 million on acquisition of the remaining 50% of the joint venture on 30 June
2021. This gain was offset by a $0.2 million loss on solar development projects in VivoPower Pty Ltd in
Australia. By comparison, the $1.5m gain on Solar Development projects in the year ended 30 June 2020
comprised a $2.3 million gain on sale of VivoRex, LLC in the U.S and a $0.5 million gain on the sale of Sun
Connect portfolio in Australia, partly offset by a $1.2 million loss on discontinued projects in the ISS portfolio.
The results for the year ended 30 June 2021 also reflect a $5.6 million increase in general and administrative
costs to $11.1 million. The increase comprises $1.1 million non-cash equity incentive costs, $1.8 million
increase in salaries and professional fees costs in UK and for the new SES business unit, and $1.4 million in
the Electric Vehicles segment in the 8 months since acquisition.
The results of operations for the year ended 30 June 2021 include $2.9 million restructuring and other non-
recurring costs. A further $2.0 million costs were incurred in the year related to disputes with a former CEO,
Dr. Philip Comberg. Following a court hearing in March 2020 and a final ruling on the Comberg claim in
September 2020, $1.5 million of the incurred costs were spent and a further $0.5 million provided for
disputed legal success fees. A further $0.6 million cost was incurred in relation to the acquisition of Tembo.
Restructuring and other non-recurring costs are further described in Note 8 to the consolidated financial
statements.
In the year ended 30 June 2021, net finance costs of $0.4 million include $1.0 million income for waiver of
historic accrued interest and dividends on Aevitas convertible preference shares and loan notes following
agreement by certain holders to exchange the instruments for non-convertible Aevitas preference shares in
August 2020, interest on the AWN related party loan of $2.0 million and interest on the Aevitas convertible
preference share, loan notes and non-convertible preference shares of $1.2 million, and foreign exchange
gains of $2.1 million.
As at 30 June 2021, the Group’s current assets were $24.0 million (as at 30 June 2020: $20.5 million, 30 June
2019: $36.3 million), which was comprised of $8.6 million (as at 30 June 2020: $2.8 million; 30 June 2019: $7.1
million) of cash and cash equivalents, $1.1 million restricted cash (as at 30 June 2020: $1.0 million; 30 June
2019: $0.6 million;), $12.7 million (as at 30 June 2020: $12.6 million; 30 June 2019: $15.0 million) of trade and
other receivables, and nil (as at 30 June 2020: $4.1 million, 30 June 2019: $13.5 million) of assets held for sale
related to the ISS Joint Venture portfolio, following acquisition of the remaining 50% of the joint venture by
the Company.
Current liabilities were $13.4 million as at 30 June 2021 (as at 30 June 2020, $19.7 million; 30 June 2019: $29.1
million). The decrease (despite the addition of new trade creditor balances for Tembo on acquisition) reflects
payment of outstanding corporate trade creditors and accrued AWN related party loan interest following the
capital raise in October 2020.
Current asset-to-liability ratio as at 30 June 2021 was 1.79:1 (as at 30 June 2020: 1.04:1; 30 June 2019: 1.25:1;
31 March 2019: 1.43:1).
Page | 17
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
As at 30 June 2021, the Company had net assets of $40.4 million (as at 30 June 2020 $17.9 million; 30 June
2019: $22.5 million), including intangible assets of $47.4 million (as at 30 June 2020: $29.8 million; 30 June
2019: $31.8 million) following the Tembo and ISV joint venture acquisitions. Property, plant and equipment
increased to $2.6 million as at 30 June 2021 from $2.5 million as at 30 June 2020, reflecting replacement
capital expenditure and acquired Tembo assets, less depreciation.
Cash inflow for the year ended 30 June 2021, was $5.5 million, arising from cash inflow from financing
activities of $23.5 million less cash outflow from operating activities of $15.4 million and cash used by
investing activities of $2.7 million. At 30 June 2021, the Company had cash reserves of $8.6 million (30 June
2020: $2.8 million) and debt of $23.1 million (30 June 2020: $26.0 million), giving a net debt position of $14.5
million (30 June 2020: $23.1 million).
Net cash outflows from investing activities of $2.7 million in the current year comprised $0.4 million proceeds
from sale of solar development project assets in Australia, offset by $0.9 million purchases of property, plant
and equipment and a net $2.1 million cash outflow on acquisition of Tembo e-LV. The outflow on acquisition
comprised $7.1 million consideration, less $4.9 million cash acquired.
Cash inflows from financing activities of $23.5 million in the year ended 30 June 2021 comprising primarily
$32.0 million net proceeds from capital raise less $2.2 million repayment of AWN related party loan principal
and $5.3 million interest on borrowings, primarily Arowana Holdings Limited (“AWN”) loan and Aevitas hybrid
interest, including catch up on amounts accrued from prior periods.
Year Ended 30 June 2021 Compared to Year Ended 30 June 2020:
Year Ended 30 June 2021
(US dollars in thousands)
Revenue
Costs of sales
Gross profit
General and administrative
expenses
Gain on solar development
Other income
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
Critical
Power
Services
38,832
(32,792)
6,040
Solar
Development
Electric
Vehicles
Corporate
Office
185
-
185
1,394
(1,292)
102
-
-
-
Total
40,411
(34,084)
6,327
(3,004)
(1,309)
(1,923)
(4,897)
(11,133)
36
1,511
(1,902)
2,681
(27)
1,687
4,341
(714)
3,627
733
-
(4)
-
-
-
-
769
1,511
(346)
(4)
(2,256)
(395)
(2,167)
(4,901)
(4,782)
-
(631)
(2,222)
(2,880)
(24)
(419)
96
(323)
(1)
(2,799)
733
(2,066)
(2,073)
(9,196)
-
(9,196)
(411)
(8,073)
115
(7,958)
Page | 18
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
Year Ended 30 June 2020
(US dollars in thousands)
Revenue
Costs of sales
Gross profit
General and administrative
expenses
Gain on solar development
Other income
Depreciation and
amortisation
Operating profit/(loss)
Restructuring and other
non-recurring costs
Finance expense – net
Loss before taxation
Income tax
Loss for the period
Critical
Power
Services
47,914
(40,865)
7,049
(2,745)
41
724
(1,718)
3,351
(124)
(1,436)
1,791
15
1,806
Solar
Development
Electric
Vehicles
Corporate
Office
69
(20)
49
(469)
1,548
-
(45)
1,083
(1,296)
(9)
(222)
(728)
(950)
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
47,986
(40,885)
7,101
3
-
3
(2,265)
(5,479)
-
-
1,589
724
(3)
(1,766)
(2,265)
2,169
(1,990)
(3,410)
(1,704)
(5,959)
-
(5,959)
(3,149)
(4,390)
(713)
(5,103)
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 demand for our products and services
Our business and revenues depend on the demand for our products and services. The market demand for
electric vehicles, critical power services, sustainable energy solutions and solar development projects is
heavily influenced by a range of factors that include the governmental economic, fiscal, and political polices
at both the national and state levels in both the U.S., Australia, Europe, the United Kingdom and the rest of
the world, as well as global economic and political factors affecting the cost, availability, and desirability of
renewable energy, other energy sources. Other external factors such as the COVID-19 pandemic may also
affect demand for our products and services.
Competitiveness of our products and services
Our products and services need to be competitive in terms of price and quality with competition in each of
our markets. Tembo in particular operates in a market that is relatively new, rapidly evolving, characterised
by rapidly changing technologies, new competitors, evolving government regulation and industry standards,
frequent new vehicle announcements and changing consumer demands and behaviours. In order to stay
competitive and relevant, it needs to continuously innovate and invest in product development and new
technologies. Our critical power services businesses face pricing pressure in a competitive market and must
continually improve cost efficiencies.
Operational scale up of electric vehicle assembly and delivery capabilities
Tembo faces operational risks as a maker of battery-electric ruggedised and off-road vehicles embarking on
an exponential scale up of its assembly and delivery capabilities. Growth is dependent on securing
appropriate premises and equipment, achieving design and manufacturing process goals, achieving
Page | 19
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
compliance with safety regulations and standards, recruiting, and retaining suitably qualified personnel,
overcoming any delays and, resolving any supply chain shortages, to be able to deliver the volume and
quality of products required to meet customer commitments.
Delivering electric vehicle products and services to customers requirements and regulatory standards
Following the acquisition of Tembo, we signed distribution agreements with a number of partners globally,
to sell Tembo EV conversion kits. In addition, we signed a binding letter of intent with Toyota Australia to
initially provide electrification solutions for the Toyota Landcruiser model, with a focus initially on off road
applications in Australia, and which is subject to further negotiation of a master service agreement. Meeting
the technical specifications, quality and safety standards of our customers and partners is a key driver of
ensuring Tembo’s brand, reputation, revenue and future prospects. Product failures in service could leave
us exposed to future warranty claims. Failure to meet the required regulations and standards in the markets
we serve could require product recalls and fines and penalties.
Development and scale up of the SES solutions business
Whilst we have experience in developing, financing, building and operating solar power systems and
distributed generation solar systems, we have limited experience and track record in combining this
experience to then develop and offer a complete SES solution with microgrids, battery recycling and reuse
and are still in the process of building the capabilities in the team. Developing and/or acquiring these
capabilities is a key factor in expanding our SES solutions business.
Supply chain execution
Materials deliveries from suppliers are at risk of disruption due to external events and factors such as COVID-
19 and semiconductor shortages. Overcoming challenging supply chain issues is a key factor in our
businesses being able to deliver goods and services to our customers in line with their requirements and
meet our revenue growth targets.
Ability to secure capital at attractive rates and terms.
Our businesses are capital intensive requiring significant investment in operational expenditure and capital
expenditure to realise the growth potential of our electric vehicle, critical power services, sustainable energy
solutions and solar development businesses. In addition, we are subject to significant and ongoing
administrative and related expenses required to operate and grow a public company. Together these items
impose substantial requirements on our cash flow. As a result, we expect to require some combination of
additional financing options in order to execute our strategy and meet the operating cash flow requirements
necessary to operate and grow our business.
Currency fluctuations.
We conduct business in the U.S., Australia, the Netherlands and the U.K. As a result, we are exposed to risks
associated with fluctuations in currency exchange rates, particularly between the U.S. dollar, the British
Pound, the Euro and the Australian dollar.
Ability to attract and retain talent
We are looking to rapidly hyperscale our business, in the face of fierce competition for talent and short
timeframes. To achieve our operational goals, we need to attract high calibre talent quickly.
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,
Page | 20
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
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.
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
1
8
35
44
5
18
206
229
6
26
241
273
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 recognises 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:
Page | 21
Strategic Report
VivoPower International PLC for the year ended 30 June 2021
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.
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 24 was approved by the Board and signed on its behalf by:
Kevin Chin
Executive Chairman
14 September 2021
Page | 22
Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
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 2021. Subsidiary and associated undertakings are listed in Note 15 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
Age Position
Appointed
Resigned
Directors:
Kevin Chin (1)(4)
Matthew Cahir (3)
Peter Jeavons (1)(2)(3)(4)
William Langdon (1)(2)(3)
Michael Hui
Gemma Godfrey (1)(2)(4)
Executive Officers:
Kevin Chin (1)(4)
48 Chairman
56 Non-Executive Director
56 Non-Executive Director
60 Non-Executive Director
41 Non-Executive Director
37 Non-Executive Director
27 April 2016
16 June 2020
16 June 2020
16 June 2020
22 January 2020
15 December 2020
48 Chief Executive Officer
25 March 2020
(1)
(2)
(3)
(4)
Member (or in the case of Mr. Chin, non-voting observer) of the Audit and Risk Committee.
Member of the Remuneration Committee.
Member of the Nomination Committee.
Member of the Sustainability Committee, established December 18, 2020
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, which is a beneficial owner of 44.2% (as at 30
June 2021) of VivoPower and is himself the beneficial owner of 10.4% of VivoPower, primarily through The
Panaga Group Trust (5.6%) and Arowana Partners Group Pty Ltd (4.3%).
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, as well as owning other unlisted companies and investments.
Over his 25-plus year career, Mr. Chin has accumulated extensive experience in “hands on” strategic and
operational management having served as CEO, CFO and COO 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 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 topics such as
turnarounds and growing pains challenges. He also has significant international experience in private equity,
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Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
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, United Kingdom.
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 CEO, President and COO. 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 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 CFO of venture-backed OmniTicket
Network and after served in 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 specialises 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 of RuleBurst Haley, which was acquired by 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, who are another large enterprise
software company and was responsible for the European business at Nuxeo, a Goldman Sachs backed, open
source, enterprise content management software provider
He 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, United Kingdom.
Mr. Jeavons is Chairman of the Remuneration and Sustainability Committees of the Company.
Page | 24
Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
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 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, Michael was Co-founder and CEO of an online-payments business, and spent
more than 10 years as a lawyer practicing corporate and commercial law. He resides in Brisbane, Australia.
Gemma Godfrey
Gemma Godfrey is a non-executive director and advisor with global board experience across financial
services, technology, media, public policy and sustainable energy. With an 18-year career, her track record
of strategic planning, innovation and consumer insight helps ambitious businesses achieve their goals.
Mrs. Godfrey is Chair of the Investment Management Group of national IFA network, IWP. She is also a Non-
Executive Director of advanced technologies company, Creativemass, and a business expert on ITV’s Good
Morning Britain. She was the Founder and CEO of an FCA-authorised digital investing service, which was
acquired by FTSE 250 insurer JLT. She pioneered new technology and went on to launch a digital media
business for News U.K., part of News Corp.
A former boardroom adviser to Arnold Schwarzenegger on ‘The Apprentice,’ Mrs. Godfrey was an advisor to
the U.K. Government on its 10-year strategy to improve the nation’s financial wellbeing. She was previously
Head of Investment Strategy at FTSE-AIM wealth manager, Brooks Macdonald, and Chair of the Investment
Committee of Credo Group. Mrs. Godfrey started her career at Goldman Sachs and GAM, with a background
in quantum physics. She resides in London, United Kingdom.
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.
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Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
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.
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 21 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 2021, 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 29 of the financial statements.
Going Concern
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 2021, the Company had unrestricted cash totalling $8.6 million, compared to $2.8 million as at
30 June 2020, $7.1 million as at 30 June 2019 and $4.5 million as at 31 March 2019. The improved cash
position in the year follows the successful capital raise and at the market (“ATM”) share issuances performed
in the year ended 30 June 2021.
Over the next twelve months, the Company expects a rebound in revenues and EBITDA generation in critical
power systems, growing overheads in electric vehicles as the operation prepares for series production, and
Page | 26
Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
revenue and costs in SES related to Tottenham Hotspur projects and scaling up the business more generally.
Furthermore, the Company will be investing in capitalised development costs in electric vehicles in
preparation for Tembo series production, and capitalised development costs in SES, to fund development
of the U.S. solar portfolio towards future sales, and development of microgrid, EV charging and battery
energy storage capabilities. The Company will also be investing in property, plant and equipment,
particularly in Tembo.
The Company estimates that the net additional funding requirement in the year ended 30 June 2022 is a
minimum of $15 million. The Company is planning to finance this funding requirement through, asset
backed financing for investment in property, plant and equipment and software, debtor and inventory
financing solutions, and if required hybrid equity or ordinary equity, depending on what is best suited to the
Company’s growth needs. The Directors believe these actions will provide sufficient cash to support business
operations and meet obligations as they become due through September 2022.
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. These include:
•
•
•
•
•
•
•
•
•
Regular re-forecasting process and flexing of opex and capex cost growth according to liquidity
needs;
Phased approach to hiring of personnel to sustain growth of the Tembo business;
Obtaining COVID-19 relief where available, e.g. Jobsaver COVID-19 payroll subsidy in Australia;
Staging the timing of property plant and equipment and software capex to match asset backed
financing inflows;
Obtain R&D grants in the U.K. and Europe to help fund investment in electric, solar and battery
technologies;
Careful project planning and commercial structuring of SES projects;
Possible sale, spin off or distribution in specie of Caret, LLC;
Staging the timing of equity raises to minimise dilution; and
Renegotiation of terms on loans and supply chain.
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.
Legal Proceedings
On February 26, 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 October 4, 2017. Mr. Comberg claimed damages of £0.62 million related
to the notice period in his service agreement, £0.54 million related to shares in the Company he alleges were
due to him, and other unquantified amounts related to bonuses and past service fees alleged to be due. On
April 9, 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 November 26, 2018, the Company agreed to a settlement of the
counterclaims against Mr. Comberg for an undisclosed amount.
After aborted attempts at settlement, the matter was heard in the U.K. High Court in the first two weeks of
March 2020, with judgement ruled in September 2020. The Company was successful in defending the
majority of the claims, with a total of £0.62m ($0.90 million) of the claims being settled in favour of Mr.
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Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
Comberg. However, final costs and interest of $1.76 million awarded to him were higher than budgeted. The
$2.66 million payments resulted in an additional restructuring and non-recurring expense of $1.5 million
during the year ended 30 June 2021, over and above utilisation of the $1.1 million brought forward provision
as at 30 June 2020.
A further provision of $0.48 million for disputed legal success fees related to the Mr. Comberg litigation has
also been recorded at 30 June 2021.
Donations
During the year ended 30 June 2021, the Group made no political donations nor other political expenditures.
Greenhouse Gas Emissions
Due to the difficulty of calculation, it is not currently 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 2021, there were 18,506,064 ordinary shares in issue. No shares were 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. At the Company’s Annual General Meeting on 6 October 2020, the
Directors were given authority to allot shares up to an aggregate nominal amount of $180,000.00. Following
the issuance of ordinary share capital in the equity capital raise in October 2020, utilising over $40,000
nominal amount of authorised shares allotment, at the Company’s Exceptional General Meeting on 18
December 2020, Directors were given a new authority to allot shares up to an aggregate nominal amount of
$180,000.00.
During the year, the Company completed a series of capital raises on Nasdaq. A total of 4,091,019 ordinary
shares were issued, comprising 3,382,350 ordinary shares issued on October 19, 2020 as an underwritten
public offering pursuant to an F-1 registration statement filed with the SEC on October 14, 2020, and 708,669
ordinary shares issued during June 2021, as at the market price, pursuant to an F-3 registration statement
filed with the SEC on December 21, 2020.
In February 2021, the Company issued 49,750 ordinary shares to Tottenham Hotspur Football Club (“THFC”)
as part of the exclusive global battery partnership agreement.
During the year, the Company issued 792,126 ordinary shares to employees, directors and consultants of the
Company under the Omnibus Incentive Plan.
In February 2021, the Company issued 15,793 ordinary shares as part consideration for the purchase of the
non-controlling interest in Tembo e-LV B.V.
On 30 June 2021, holders of convertible preference shares and convertible loan notes in Aevitas Group
Limited, exercised their right to convert the debt instruments into ordinary shares in VivoPower International
PLC. As disclosed in Note 31, a total of 2,005,190 restricted ordinary shares were issued at a contracted price
of $10.20 on July 21, 2021. Of the 2,005,190 ordinary shares issued, 1,959,339 were issued to funds owned by
AWN, the Company’s largest individual shareholder.
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
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Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
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 24 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 20,641,995 ordinary shares
issued and outstanding on 18 August 2021. 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.
AWN Holdings Limited (2)
The Panaga Group Trust (1)
Number of Shares
Percentage of Issued Capital
10,136,125
1,039,201
49.1%
5.0%
(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. On 21 July 2021, VivoPower International PLC issued a further 1,959,339 ordinary shares to funds owned by AWN, being
conversion of the convertible preference shares and convertible loan notes in Aevitas Group Limited into ordinary shares in VivoPower
International PLC, in accordance with terms of conversion of the instruments. 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
Page | 29
Directors’ Report
VivoPower International PLC for the year ended 30 June 2021
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 23 to 30 was approved by the Board and signed on its behalf by:
Kevin Chin
Chairman
14 September 2021
Page | 30
Corporate Governance
VivoPower International PLC for the year ended 30 June 2021
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 five non-executive directors. The
Board has determined that Peter Jeavons, Gemma Godfrey 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 23 to 25 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 2021 and the attendance of the members at those meetings
(attended/eligible to attend):
Board
12/ 12
12 / 12
12 / 12
12 / 12
12 / 12
5 / 5
Audit and Risk
Committee
Remuneration
Committee
Nominations
Committee
2 / 2*
2 / 2
3 / 3
3 / 3
2 / 3
1 / 1
5 / 5*
1 / 1
5 /5
5 /5
5 / 5
1 / 1
-/-
-/-
1 / 1
1 / 1
1 / 1
-/-
Kevin Chin
Michael Hui
Peter Jeavons
William Langdon
Matthew Cahir
Gemma Godfrey
* attended as an observer
Audit and Risk Committee
The Audit and Risk Committee is comprised of William Langdon (who is Chair of the Audit and Risk
Committee), Gemma Godfrey and Peter Jeavons. All members have been determined by the Board to be
Page | 31
Corporate Governance
VivoPower International PLC for the year ended 30 June 2021
independent under the applicable Nasdaq listing standards. Peter Jeavons, William Langdon and Matt Cahir
joined the committee on 16 June 2020. Matt Cahir resigned from the committee on 30 June 2021. Gemma
Godfrey joined the committee on 01 July 2021, Ashwin Roy served on the committee from his appointment
on September 20, 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.
Upon the resignation of Edward Hyams, an independent director, on 16 November 2018, the Company no
longer complied with Nasdaq’s audit committee requirements as set forth in Listing Rule 5605, which
requires a minimum of three independent directors on the committee. On 20 September 2019, Ashwin Roy
joined the committee as an independent director, enabling the Company to regain compliance with Listing
Rule 5605 on that date.
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 Committee
The Remuneration Committee is comprised of Peter Jeavons (Chair of the Remuneration Committee),
William Langdon and Gemma Godfrey, each of whom the Board has determined is independent under the
applicable Nasdaq listing standards. Peter Jeavons and William Langdon joined the committee on June 16,
2020, and Matthew Cahir served on the committee from his appointment on 16 June 2020, until his
resignation on 30 June 2021. Gemma Godfrey joined the committee on 01 July 2021. Shimi Shah, Ashwin Roy
and Peter Sermol served on the committee until their resignations on June 16, 2020.
Nominations Committee
The Nomination Committee of the board of directors is comprised of Matthew Cahir (who is Chair of the
Nomination 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. Ashwin Roy served on the committee from his appointment on 20 September 2019, until his
resignation on June 16, 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.
Shimi Shah joined the Nomination Committee on 28 December 2017.
Sustainability Committee
The Sustainability Committee was formed on 18 December 2020 and is comprised of Peter Jeavons (Chair of
the Sustainability Committee), Kevin Chin and Gemma Godfrey. The Sustainability Committee’s duties
include, but are not limited, to overseeing and monitoring of the Company’s Safety and Health policies, B
Corp certification, environmental policies, community and staff engagement, and corporate social
responsibility policies.
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.
Page | 32
Corporate Governance
VivoPower International PLC for the year ended 30 June 2021
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.
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 26 October 2021. 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 | 33
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 2021.
The Remuneration Committee is comprised of Peter Jeavons (Chair of the Remuneration and Nomination
Committee), William Langdon and Gemma Godfrey, each of whom the Board has determined is independent
under the applicable Nasdaq listing standards. Peter Jeavons and William Langdon joined the committee
on 16 June 2020, and Matthew Cahir served on the committee from his appointment on 16 June 2020, until
his resignation on 30 June 2021. Gemma Godfrey joined the committee on 01 July 2021. Shimi Shah, Ashwin
Roy 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 2021 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 | 34
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
Directors
The amount earned by each Director for the years ended 30 June 2021 and 2020, three months ended 30
June 2019 and the year ended 31 March 2019 is set out in the table below:
Year ended 30 June
Salary
and fees
Bonus
and LTIP
Pension
and other
Benefits
Long
Term
Incentive
2021
Total
Directors
Edward Hyams
Gary Hui
Shimi Shah
Peter Sermol
Ashwin Roy
-
-
-
-
-
Kevin Chin (Chairman)
£104,885
Matthew Cahir
Peter Jeavons
William Langdon
Michael Hui
Gemma Godfrey
£82,289
£82,289
£82,289
£73,063
£57,003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£82,289
£82,289
£82,289
£16,934
£89,997
-
£57,003
Three
months
ended 30
June
Year
Ended 31
March
2019
2020
Total
-
-
2019
Total
2019
Total
-
-
£33,326
£110,837
£57,748
£15,000
£81,063
£57,748
£15,000
£61,750
£30,438
-
-
£1,590
£1,590
£1,590
£9,000
-
-
-
-
-
-
-
-
-
-
-
£104,885
£156,559
£48,750
£195,000
Mr. Chin was paid a salary of £68,000 ($92,119) per annum as Chairman during the year, payable to Arowana
Partners Group Pty Ltd. In addition to his monthly salary, along with other directors of the Company, on
December 14, 2020, Mr. Chin was granted 7,788 ($50,000) RSUs (“Restricted Stock Units”) vesting in the year,
to bring compensation in line with market levels as benchmarked by Pearl Meyer.
Mr. Cahir was paid a salary of $48,000 per annum from 1 July 2020, to 31 December 2020, which was increased
to $50,000 per annum from 1 January 2021. The total $49,000 fees for the year were elected to be received as
41,533 RSUs. On 14 December 2020, Mr. Cahir was also granted 7,788 ($50,000) RSUs vesting in the year, to
bring compensation in line with market levels as benchmarked by Pearl Meyer. Mr. Cahir also received an
additional cash sum of $5,000 for electing to receive his salary as RSUs, and $7,500 as chair of the
remuneration committee.
Mr. Cahir is also paid a consulting fee as President of VivoPower USA and sales director for electric vehicles,
via Middleburg Juice Company, LLC. The Remuneration Committee (with Mr. Cahir recused) approved an
extension to Mr. Cahir’s consulting agreement effective 1 July 2021, with cash remuneration of $32,000 per
month and healthcare allowance of $5,000 per month. In addition, Mr. Cahir is entitled to a $27,000 per
month sales incentive payable in shares in the Company after two years, based on the Company share price
at 2 June 2021, subject to Company performance and existing and future sales agreements being realised
in-line with the Company’s revenue goals and expectations.
Mr. Jeavons was paid a salary of $48,000 per annum from 1 July 2020, to 31 December 2020, which was
increased to $50,000 per annum from 1 January 2021. The total $49,000 fees for the year were elected to be
received as 41,533 RSUs. on December 14, 2020, Mr. Jeavons was also granted 7,788 ($50,000) RSUs vesting
in the year, to bring compensation in line with market levels as benchmarked by Pearl Meyer. Mr. Jeavons
also received an additional cash sum of $5,000 for electing to receive his salary as RSUs, and $7,500 as chair
of the nomination committee. The remuneration committee also approved non-chair members of the audit
and risk committee and remuneration committees to receive an annual fee of $4,000 per annum from 1 July
Page | 35
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
2021. Accordingly, Mr. Jeavons is entitled to receive $4,000 per annum as member of the audit and risk
committee.
Mr. Langdon was paid a salary of $48,000 per annum from 1 July 2020, to 31 December 2020, which was
increased to $50,000 per annum from 1 January 2021. The total $49,000 fees for the year were elected to be
received as 41,533 RSUs. On December 14, 2020, Mr. Langdon was also granted 7,788 ($50,000) RSUs vesting
in the year, to bring compensation in line with market levels as benchmarked by Pearl Meyer. Mr. Langdon
also received an additional cash sum of $5,000 for electing to receive his salary as RSUs, and $7,500 as chair
of the audit and risk committee. From 01 July 2021, Mr. Langdon is entitled to receive $4,000 per annum as
member of the remuneration committee.
Mr. Hui was paid a salary of $48,000 per annum from 1 July 2020, to 31 December 2020, which was increased
to $50,000 per annum from 1 January 2021. Mr. Hui also receives equity-based remuneration in relation to
his involvement in management of Critical Power Services segment, and the hyper-turnaround and
hyperscaling program. Of the 17,500 ($13,125) annual retention RSUs granted on April 1, 2020, vesting
annually from June 2021 to June 2026, 3,500 RSUs ($2,625) vested in the current year. Of the 52,500 ($39,375)
performance RSUs vesting quarterly from September 2020 to June 2023, dependent on meeting quarterly
performance goals, 27,095 RSUs ($20,321) vested in the current year. On December 14, 2020, Mr. Hui was also
granted 7,788 ($50,000) RSUs vesting in the year, to bring compensation in line with market levels as
benchmarked by Pearl Meyer.
Mrs. Godfrey was employed from December 15, 2020 to 30 June 2021. Mrs. Godfrey is paid a salary of $50,000
per annum and received all of her salary for the current year as cash. On December 15, 2020, Mrs. Godfrey
was also granted 7,788 ($50,000) RSUs vesting in the year, to bring compensation in line with market levels
as benchmarked by Pearl Meyer. Mrs. Godfrey is entitled to receive $8,000 per annum as member of the audit
and risk and remuneration committees.
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 | 36
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
Directors’ Interests
The Directors’ beneficial interest in the 18,506,064 issued ordinary shares of the Company as at 30 June 2021
are detailed below.
Number of Shares Beneficially
Owned
Outstanding
scheme interests
at
30 June 2021
Total of all share interests and
outstanding scheme interests, at
30 June 2021
Name and
address of
beneficial
owner (1)
Unvested scheme
interests (not
subject to
performance
measures)
Kevin Chin (2)
1,814,298(3) (4)
295,000
32,007
36,135
19,483
-
2,196,923
Matthew Cahir
Peter Jeavons
William
Langdon
Michael Hui
Gemma
Godfrey
All directors
and executive
officers as a
group (6
persons)
-
-
-
-
-
-
-
Vested but
unexercised
scheme interests
101,612(6)
-
-
-
6,445
7,954
116,011
Total shares
subject to
outstanding
scheme interests
-
-
-
-
-
-
-
Percentage of
Outstanding
Shares
10.4%
1.6%
0.2%
0.2%
0.1%
0.0%
1,915,910
295,000
32,007
36,135
25,928
7,954
2,312,934
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, U.K.
(2) The business address is c/o AWN Holdings Limited, at Level 11, 110 Mary Street, Brisbane, QLD 4000, Australia.
(3) Represents shares held by Arowana Partners Group Pty Ltd, Borneo Capital Pty Limited, The Panaga Group Trust and KTFC Superannuation
Fund, 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.
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 (“TSR”) for the Company for the period from its listing on
29 December 2016 to 30 June 2021, relative to the Nasdaq Composite Index. The Nasdaq Composite Index
is considered an appropriate comparator for VivoPower:
Page | 37
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
VivoPower and Nasdaq TSR
300
250
200
150
100
50
0
29-Dec-16
31-Mar-17
31-Mar-18
31-Mar-19
30-Jun-19
30-Jun-20
30-Jun-21
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
Three
Months
Ended
Year
Ended
Year
Ended
Three
Months
Ended
30 June
31 Mar
30 June
Year
Ended
31
Mar
Year Ended
30 June
Three
Months
Ended
Year
Ended
31
Mar
2021
2020
2019
2019
2021
2020
2019
2019
2021
2020
2019
2019
Kevin Chin
£365,898
£71,081
N/A
N/A
0%
N/A
£193,875
£66,094
£25,336
0%
0%
0%
N/A
0%
N/A
0%
£84,383
0%
0%
0%
N/A
0%
N/A
0%
N/A
N/A
N/A
£321,019 N/A
N/A
N/A
0%
N/A
N/A
N/A
15%
Art Russell
Carl
Weatherley-
White
Kevin Chin was appointed Chief Executive Officer on 25 March 2020. In his capacity as Chief Executive, Mr.
Chin was paid £325,000 base salary and £38,000 annual professional development allowance in the year. Mr.
Chin also receives equity-based remuneration in relation to his involvement in leading the hyper-turnaround
and hyperscaling program. Of the 87,200 ($65,400) annual retention RSUs granted on 1 April 2020, vesting
annually from June 2021 to June 2026, 17,440 RSUs ($13,080) vested in the current year. Of the 261,600
($196,200) performance RSUs vesting quarterly from September 2020 to June 2023, dependent on meeting
quarterly performance goals, 135,012 RSUs ($101,259) vested in the current year.
In addition to these amounts paid to Mr Chin as Chief Executive Officer, Mr Chin is also 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
Page | 38
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
year ended 30 June 2020 reflects his compensation for the period from 1 July 2019 to his resignation on 17
February 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.
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 2021
Year Ended
30 June 2020
Three Months Ended
30 June 2019
Year Ended
31 March 2019
Employee remuneration
17,395,000
16,457,000
4,114,000
17,413,000
Distributions to shareholders
NIL
NIL
NIL
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 and Equity Compensation
Mr. Chin is employed by a related 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 29 June
2020, Mr. Chin’s original non-executive directorship appointment, dated 1 August 2016, was varied to reflect
Mr. Chin assuming the positions of Executive Chairman and Chief Executive Officer of VivoPower
International PLC, effective from 25 March 2020. The cost of Mr. Chin’s executive service agreement is paid
by VivoPower International Services Limited and incorporates the cost of any support resources required by
Mr. Chin to fulfil the role.
Following a review by Pearl Meyer of Mr. Chin’s compensation plan as Chief Executive Officer, to align to the
new strategy and additional responsibilities, the remuneration committee approved an increase to Mr.
Chin’s remuneration to £325,000 base salary and £38,000 annual professional development allowance,
effective 1 July 2020.
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. Amounts vesting in the year ended 30 June 2021 are
detailed above.
Non-Executive Directors
Cash and Equity Compensation
The Company will pay annual retainers to non-executive directors in line with the remuneration policy
approved by shareholders on 5 September 2017. The Company 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
Page | 39
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
to retainers will be compliant with the remuneration policy and will be disclosed in the Remuneration Report
for the relevant financial year.
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.
Following an independent review and market benchmarking exercise by Pearl Meyer in the current year, the
Remuneration Committee approved the increases to Board remuneration detailed below.
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
$50,000
(increased from $48,000 effective 1 January 2021);
Annual retainer for the Chairman of the Board
£68,000
(effective 1 July 2020).
Directors are also entitled to an additional fee for each committee they are a member or chairman of, except
for unpaid committee membership for the Nomination and Sustainability Committees, as follows:
Annual retainer for Committee Chairmanship
Annual retainer for the Committee membership
$7,500
$4,000
(Membership fee only applicable from 1 July 2021 onwards);
Directors can individually elect to receive their retainer remuneration as an RSU, or in cash, or a combination
of RSUs and cash.
In addition to the retainer paid monthly noted above, on 14 December 2020, each director was granted 7,788
($50,000) RSUs (“Restricted Stock Units”) vesting in the year, to bring compensation in line with market levels
as benchmarked by Pearl Meyer.
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. Amounts vesting in
the year ended 30 June 2021 are detailed above.
Benefits
The Company will provide benefits to Non-Executive directors in line with the remuneration policy approved
by shareholders on 5 September 2017. The Company 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 | 40
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2021
Consideration of Matters Relating to Directors’ Remuneration
Remuneration Committee
The members of the Committee during the year ended 30 June 2021 and their attendance at meetings of
the Committee, are set out below:
William Langdon
Peter Jeavons
Matthew Cahir
Attendance
5/5
5/5
5/5
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 and changes to remuneration levels for the Board of Directors and Chief Executive. 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.
DLA Piper, Shoosmiths LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provide the Company with
legal advice. Advice from , DLA Piper, 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 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 Annual Report on Remuneration for the year ended 30 June 2020 was approved by shareholders at the
Annual General Meeting held on 6 October 2020. The resolution to approve the report was approved by
99.0% of voting shareholders.
The Remuneration Report was approved by the Board and signed on its behalf by:
Peter Jeavons
Chair of the Remuneration Committee
14 September 2021
.
Page | 41
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
Independent Auditor’s Report to the Members of VivoPower
International PLC
Opinion on the Consolidated Financial Statements
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 2021 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the
Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company
Statements of Cash Flows and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and
international accounting standards in conformity with the requirements of the Companies Act 2006 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 2021 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006;
the parent company’s financial statements have been properly prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act
2006 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
In auditing the financial statements, we have concluded that the director's use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included obtaining an understanding of the basis of preparation of Board approved budgets and
cash flow forecasts, assessing the accuracy of historic forecasts, testing the key underlying assumptions and
performing sensitivity analysis on possible changes which could impact the available headroom. We also
reviewed and evaluated the Board approved memorandum on going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the group's or parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Page | 42
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
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 $850,000 (2020 - $995,000). This was calculated by applying a percentage to revenue (1.5%) and
net assets (3%). 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 and the Netherlands, 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 $90,000 (2020 - $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 $365,000 to
$30,000 (2020 - $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 $42,250 for the group and $4,500 for the parent company.
Our approach to the 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 subsidiary undertakings were audited by
component auditors in Australia and the Netherlands, 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 | 43
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
Key Audit Matter
Revenue recognition
Revenue
for the year ended 30 June 2021
amounted to $40.4 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.
How the scope of our audit addressed this matter
Our testing in this area included the following:
• Reviewing
the work undertaken by
component auditors in accordance with the
issued component instructions, including
regular communication throughout the
audit;
• Updating and checking by walkthrough
tests our understanding of the internal
control environment for the significant
income streams;
• 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
As at 30 June 2021 the carrying value of goodwill
and intangible assets was $47.4 million. Details of
these assets and the related critical judgements
and estimates are disclosed in notes 3.2 and 14.
is
carrying
Each year management is required to assess
impaired and consider
whether goodwill
whether
the
recoverable amount using discounted cash flows.
Intangible assets subject to amortisation are
assessed for indicators of impairment.
value exceeds
the
Our testing in this area included the following:
• Reviewing and challenging management’s
value in use calculations including the
rationale behind the key assumptions and
cash flow forecasts;
• Checking the mathematical accuracy of the
value in use calculations;
• Performing
sensitivity
reasonably possible changes
assumptions and
headroom;
the
impact on
analysis
on
in key
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.
• Assessing the accuracy of budgets and
forecasts used in prior periods to actual
results;
• Performing an independent assessment to
identify any indicators of impairment; and
Page | 44
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
• Reviewing independently prepared reports,
including an assessment of the competence
and objectivity of the preparer; and
• Assessing
the
appropriateness
of
disclosures in respect of the judgements
and estimates on whether an impairment
exists including 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
contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
Opinions on other matters prescribed by 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 year 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 the 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 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.
Page | 45
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, 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 and the parent company’s ability to continue as a going concern, disclosing, as applicable, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they
operate to identify laws and regulations that could reasonably be expected to have a direct effect
on the financial statements. We obtained our understanding in this regard through discussions with
management, industry research, application of cumulative audit knowledge and experience of the
sector.
• We determined the principal laws and regulations relevant to the group and parent company in this
regard to be those arising from federal, state and local government regulations relating to the
electricity and utility market and health and safety regulations.
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations.
These procedures included, but were not limited to enquiries of management, review of minutes,
review of legal / regulatory correspondence, obtaining direct confirmations from legal advisers and
discussions with internal legal counsel.
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the estimates, judgement and assumptions applied by
management in their assessment of impairment of goodwill and intangible assets gave the greatest
potential for management bias. Details of how we addressed that risk are included in the key audit
matters section of this report.
• We addressed the risk of fraud arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of journals; reviewing accounting
estimates for evidence of bias; and evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Page | 46
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2021
• We communicated the risk of non-compliance with laws and regulations, including fraud, to the
component auditors who incorporated this into their testing, which was reviewed by the group audit
team.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the events
and transactions reflected in the financial statements, as we will be less likely to become aware of instances
of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: 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
14 September 2021
15 Westferry Circus
Canary Wharf
London E14 4HD
Page | 47
Consolidated Statement of Comprehensive Income
VivoPower International PLC for the year ended 30 June 2021
Consolidated Statement of Comprehensive Income
(US dollars in thousands, except per share
amounts)
Note
Year Ended 30 June
2021
2020
Revenue from contracts with customers
4
40,411
47,986
Three
Months
Ended
30 June
2019
13,617
Year
Ended
31 March
2019
39,036
Cost of sales
Gross profit
General and administrative expenses
Gain on solar development – net
Other income
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating (loss)/profit
Restructuring and other non-recurring costs
Finance income
Finance expense
Loss before income tax
Income tax
Loss for the period
Losses attributed to:
(34,084)
(40,885)
(11,960)
(32,726)
6,327
(11,133)
769
1,511
(1,089)
(1,167)
(4,782)
(2,880)
2,179
7,101
(5,479)
1,589
724
(898)
(868)
2,169
(3,410)
33
1,657
(1,291)
38
-
(214)
(223)
(33)
(525)
-
6,310
(7,685)
(2,615)
-
(430)
(990)
(5,410)
(2,017)
4
(2,590)
(3,182)
(796)
(3,243)
(8,073)
(4,390)
(1,354)
(10,666)
115
(713)
(92)
(557)
(7,958)
(5,103)
(1,446)
(11,223)
5
6
13
14
7
8
10
10
11
Equity owners of VivoPower International Plc
(7,571)
(5,103)
(1,446)
(11,223)
Non-controlling interests
12
(387)
-
-
-
(7,958)
(5,103)
(1,446)
(11,223)
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or
loss:
Currency translation differences recognised directly in equity
1,601
(1,028)
(102)
(2,998)
Total comprehensive loss for the period
attributable to owners of the company
(6,357)
(6,131)
(1,548)
(14,221)
Earnings per share attributable to the owners of
the company (dollars)
Basic
Diluted
26
26
(0.46)
(0.46)
(0.38)
(0.38)
(0.11)
(0.11)
(0.83)
(0.83)
All results are generated from continuing operations.
Page | 48
Consolidated Statement of Financial Position
VivoPower International PLC for the year ended 30 June 2021
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
Inventory
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)/retained earnings
Equity and reserves attributable to owners
Non-Controlling interest
TOTAL EQUITY
TOTAL EQUITY AND LIABILITIES
Year Ended 30 June
Note
2021
2020
2019
Year
Ended 31
March
2019
13
14
11
16
17
18
19
20
21
22
23
24
24
23
11
25
25
26
2,575
47,449
2,495
-
52,519
8,604
1,140
12,712
1,537
-
23,993
76,512
8,917
708
2,802
1,004
13,431
22,087
165
411
22,663
36,094
222
76,229
(1,465)
15,314
(49,882)
40,418
-
40,418
76,512
2,486
29,849
1,347
8,225
41,907
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
2,951
31,762
2,113
-
36,826
7,129
632
14,992
-
13,530
36,283
73,109
24,639
449
1,718
2,327
29,133
19,359
2,100
1
21,460
50,593
163
40,215
(2,279)
20,076
(35,659)
22,516
-
22,516
73,109
1,205
32,366
2,054
-
35,625
4,522
1,319
10,399
-
13,530
29,770
65,395
17,923
287
1,710
887
20,807
18,380
2,222
1
20,603
41,410
163
40,215
(2,177)
19,846
(34,062)
23,985
-
23,985
65,395
These financial statements were approved by the Board of Directors on 14 September 2021 and were signed
on its behalf by:
Kevin Chin, Chairman
Page | 49
Consolidated Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2021
Consolidated Statement of Cash Flow
(US dollars in thousands)
Cash flows from operating activities
Loss for the period
Income tax
Finance income
Finance expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Gain (/loss) on solar development
Disposal of treasury shares
Increase in equity instruments
Shared based payments
(Increase)/decrease in trade and other receivables
(Increase) in inventory
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Corporation tax payments
Year Ended 30 June
Three
Months
Ended 30
June
Year
Ended 31
March
Note
2021
2020
2019
2019
(7,958)
(5,103)
(1,446)
(11,223)
(115)
(2,179)
2,590
1,089
1,167
(769)
-
-
1,078
(6)
(807)
26
26
713
(33)
3,182
898
868
(1,589)
-
113
-
-
-
796
214
223
(38)
62
368
-
913
(4)
3,243
430
990
2,615
86
815
-
2,411
(4,593)
(2,543)
-
(9,372)
(6,851)
(95)
-
1,295
(477)
-
6,716
(114)
-
-
3,841
(728)
-
Net cash from/(used in) operating activities
(15,377)
(4,573)
2,188
(1,565)
Cash flows from investing activities
Interest received
Proceeds on sale of property plant and equipment
Purchase of property, plant and equipment
Investment in capital projects
Proceeds on sale of capital projects
Acquisitions - consideration
Acquisitions – cash acquired
Net cash from/(used in) investing activities
10
7
13
13
7
12
12
-
36
(937)
-
366
(7,089)
4,942
(2,682)
-
432
(884)
(277)
1,023
-
-
-
-
(400)
-
84
-
-
4
464
(348)
(245)
11,981
-
-
294
(316)
11,856
Page | 50
Consolidated Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2021
(US dollars in thousands)
Cash flows from financing activities
Other borrowings
Lease repayments
Financing agreements proceeds
Financing agreements repayments
Proceeds from issuance of ordinary shares
Costs associated with issuance of shares
Debtor finance borrowings/(repayments)
Loans from related parties
Repayment of loans from related parties
Bank loan borrowings
Chattel mortgage borrowings
Finance expense
Transfer from/(to) restricted cash
Net cash from/(used in) financing activities
Net (decrease)/increase 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
24
24
24
24
26
26
24
24
24
24
24
10
18
17
17
Year Ended June 30
Three
Months
Ended
June 30
Year
Ended 31
March
Note
2021
2020
2019
2019
-
(422)
-
(63)
18
(360)
-
-
34,866
(2,819)
(518)
-
(2,226)
(33)
32
(5,296)
(127)
23,537
-
-
-
-
(347)
1,300
(257)
344
300
(515)
(381)
22
-
(304)
4,000
(6,000)
-
-
751
-
(1,520)
(3,243)
(1,319)
(7,635)
2,656
1,939
(73)
-
-
-
-
150
766
-
-
-
(796)
687
744
2,616
4,522
(9)
5,478
2,824
302
(4,257)
7,129
(48)
8,604
2,824
7,129
4,522
Non-cash investing and financing transactions during the year-ended June 30, 2021 comprise:
•
•
•
792,126 shares issued to Incentive Award participants at nominal value: $1.1 million;
15,793 shares issued as non-cash consideration for the acquisition of the non-controlling interest in
Tembo: $0.2 million.
Exchange of Aevitas convertible preference shares and convertible loan notes to Aevitas preference
shares: $3.0 million.
• Conversion of Aevitas convertible preference shares and convertible loans notes to ordinary share
capital in the Company: $20.5 million.
Page | 51
Total
23,985
20
24,005
(1,548)
(3)
62
(1,489)
22,516
(6,131)
971
6
344
184
(4,626)
-
-
-
-
-
-
-
-
-
-
-
-
184
184
Consolidated Statement of Changes in Equity
VivoPower International PLC for the year ended 30 June 2021
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
At 31 March 2019
163
40,215
(2,177)
19,846
(34,062)
Change in accounting
policy (see Note 2.18)
Restated at 1 April 2019
Total comprehensive loss
for the year
Equity instruments
Disposal of treasury shares
-
-
-
-
20
163
40,215
(2,177)
19,846
(34,042)
-
-
-
-
-
-
-
-
(102)
-
-
(102)
-
(3)
233
230
(1,446)
-
(171)
(1,617)
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
Non-controlling interest
At 30 June 2020
Loss for the year
Other comprehensive
income/(expense)
Transactions with owners
in their capacity as owners
Equity instruments
Capital raises
Other share issuances
Employee share awards
Non-controlling interest
-
-
-
-
-
-
-
-
-
-
-
-
(1,028)
-
-
-
-
971
17
344
-
(5,103)
-
(11)
-
-
(1,028)
1,332
(5,114)
163
40,215
(3,307)
21,408
(40,773)
184
17,890
-
-
-
-
-
-
(7,571)
(387)
(7,958)
1,842
(241)
-
-
1,601
163
40,215
(1,465)
21,167
(48,344)
(203)
11,533
-
49
1
9
-
-
34,317
736
961
-
59
36,014
-
-
-
-
-
-
(3,141)
(2,804)
(15)
107
-
(5,853)
-
-
-
-
-
-
-
-
(3,141)
31,562
722
1,077
(1,538)
(1,538)
203
(1,335)
203
28,885
At 30 June 2021
222
76,229
(1,465)
15,314
(49,882)
-
40,418
For further information on Other Reserves please see Note 26.
Page | 52
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 United Kingdom. The address of the
Company’s registered office is The Scalpel, 18th Floor, 52 Lime Street, London EC3M 7AF, United Kingdom.
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. 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 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’). As at 30 June 2021, the
Company no longer has an ultimate controlling party, as AWN Holdings Limited holds a 44% equity interest
in the Company as at 30 June 2021, and 49% following the issuance of restricted shares on 21 July 2021
following conversion of Aevitas convertible preferred shares and convertible notes that redeemed on 30
June 2021.
In prior periods, the ultimate controlling party and the results into which these financials were consolidated
was AWN Holdings Limited, a company registered in Australia.
2. Significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all periods presented, unless otherwise stated.
2.1. Basis of preparation
VivoPower International PLC consolidated financial statements were prepared in accordance with
International Financial Reporting Standards (IFRS), 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, except when
accounting for acquisitions, whereby fair values have been applied.
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 2021, the Company had unrestricted cash totalling $8.6 million, compared to $2.8 million as at
30 June 2020, $7.1 million as at 30 June 2019 and $4.5 million as at 31 March 2019. The improved cash
position in the year follows the successful capital raise and ATM share issuances performed in the year ended
30 June 2021.
Over the next twelve months, the Company expects a rebound in revenues and EBITDA generation in critical
power systems, growing overheads in electric vehicles as the operation prepares for series production, and
revenue and costs in SES related to Tottenham Hotspur projects and scaling up the business more generally.
Furthermore, the Company will be investing in capitalised development costs in electric vehicles in
preparation for Tembo series production, and capitalised development costs in SES, to fund development
of the U.S. solar portfolio towards future sales, and development of microgrid, EV charging and battery
energy storage capabilities. The Company will also be investing in property, plant and equipment,
particularly in Tembo.
Page | 53
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
The Company estimates that the net additional funding requirement in the year ended 30 June 2022 is a
minimum of $15 million. The Company is planning to finance this funding requirement through , asset
backed financing for investment in property, plant and equipment and software, debtor and inventory
financing solutions, and if required hybrid equity or ordinary equity, depending on what is best suited to the
Company’s growth needs. The Directors believe these actions will provide sufficient cash to support business
operations and meet obligations as they become due through September 2022.
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. These include:
•
•
•
•
•
•
•
•
•
•
Regular re-forecasting process and flexing of opex and capex cost growth according to liquidity
needs;
Phased approach to hiring of personnel to sustain growth of the Tembo business;
Obtaining COVID-19 relief where available, e.g. Jobsaver COVID-19 payroll subsidy in Australia;
Staging the timing of property plant and equipment and software capex to match asset backed
financing inflows;
Obtain R&D grants in the U.K. and Europe to help fund investment in electric, solar and battery
technologies;
Careful project planning and commercial structuring of SES projects;
Possible sale, spin off or distribution in specie of Caret, LLC; ;
Staging the timing of equity raises to minimise dilution; and
Renegotiation of terms on loans and supply chain.
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
recognised 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.
Page | 54
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 unrealised income and expense arising from intra-
group transactions, are eliminated in full in preparing the consolidated financial statements. Unrealised
gains arising from transactions with equity accounted investees are eliminated against the investment to the
extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
2.3. Business combination
The acquisition method of accounting is used to account for all business combinations, regardless of
whether equity instruments or other assets are acquired. The consideration transferred for the acquisition
of a subsidiary comprises the:
•
•
•
•
•
fair values of the assets transferred
liabilities incurred to the former owners of the acquired businesses
equity interests issued by the Company
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value
or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expenses as incurred.
The excess of the:
•
•
•
consideration transferred
amount of any non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less
than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly
in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value, with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains
or losses arising from such remeasurement are recognised in profit or loss.
2.4. 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. Any gain on a bargain purchase is recognised in profit or loss immediately.
Page | 55
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Goodwill
Goodwill arose on the effective acquisition of VivoPower Pty Ltd, Aevitas O Holdings Limited (“Aevitas”) and
Tembo e-LV B.V. Goodwill is reviewed annually to test for impairment.
Negative goodwill arose on the acquisition of the remaining 50% share in the ISS Joint Venture, constituting
a bargain purchase. The gain was immediately recognised in the profit and loss.
Other intangible assets
Intangible assets acquired through a business combination are initially measured at fair value and then
amortised over their useful economic lives. Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it relates.
Development expenditure includes the product development project for ruggedised electric vehicles in
Tembo, pre-series-production expenditure on developing vehicle specifications and production processes.
Capitalised costs include primarily internal payroll costs and external consultants.
Development expenditure on U.S. solar projects includes securing land rights, completing feasibility studies,
negotiating power purchase agreements, and other costs incurred to prepare project sales for Notice to
Proceed with construction and hence sale to a partner as a shovel ready project.
For both electric vehicles product development project, and U.S. solar development projects, it is the
Company’s intention to complete the projects, it expects to obtain adequate technical, financial and other
resources to complete the projects, and management consider that it is probable for the future economic
benefits attributable to the development expenditure to flow to the entity; and that the cost of the assets can
be measured reliably. Accordingly, the development expenditure is recognised under IAS 38 – Intangible
Assets as an intangible asset.
All other expenditure, including expenditure on internally generated goodwill and brands, and research costs
are recognised in the profit and loss as incurred.
Amortisation is calculated on a straight-line basis to write down the assets over their useful economic lives
at the following rates:
• Development expenditure - 5 to 10 years
• Customer relationships – 5 -10 years
•
•
Trade names – 15 to 25 years
Favourable supply contracts – 15 years
• Other – 5 years
2.5. 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 to 20 years
• Motor vehicles - 5 years
Page | 56
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
• Plant and equipment – 3.5 to 10 years
• Right-of-use assets – remaining term of lease
2.6. 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.
2.7. Inventory
Inventories are stated at the lower of cost and net realizable value, in accordance with IAS 2 – Inventories.
The cost includes all direct and indirect variable production expenses, plus fixed expenses based on the
normal capacity of each production facility. The net realizable value of inventories intended to be sold
corresponds to their selling price, as estimated based on market conditions and any relevant external
information sources, less the estimated costs necessary to complete the sale.
2.8. 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 recognised 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.
Until 31 March 2019, leases of property, plant and equipment were classified as either finance leases or
operating leases, as further described below. From April 1, 2019, leases are recognised 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 April 1, 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 recognised 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
Page | 57
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 recognised as a
reduction in the rental expense over the lease term.
2.9. 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 recognised 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
recognised in the Statement of Comprehensive Income.
An impairment loss in respect of goodwill is not reversed. In the case of other assets, impairment losses
recognised 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 amortisation, if no impairment loss had been recognised.
2.10. Financial Instruments
Financial assets and liabilities are recognised 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 April 1, 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 amortised 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 amortised 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,
Page | 58
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
•
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
categorised 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 recognised over the term of the loan on a straight-line basis. The initial
payment is taken to the Statement of Financial Position and then amortised over the full-length of the facility.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised
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 – Financial Instruments 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 amortised 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 recognised as a deduction from equity, net of any tax effects.
Repurchase of share capital (treasury shares)
When share capital recognised 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 recognised as a
deduction from equity, and excluded from the number of shares in issue when calculating earnings per
share.
Page | 59
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
2.11. 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.
2.12. 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.
Where the time value of money is material, provisions are measured at the present value of expenditures
expected to be paid in settlement.
2.13. 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.
2.14. 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
Page | 60
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
translation of the Group’s net investment foreign entities are recognised 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.
2.15. 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,
generator sales, vehicle spec conversion and conversion kits. 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 and accepted by the
customer.
Revenue for sale of electric vehicles, kits for electric vehicles and related products is recognised upon delivery
to the customer. Where distribution agreements are agreed with external parties to participate in the
assembly of vehicles, revenue recognition will be assessed under IFRS 15 - Revenue from Contracts with
Customers, to establish the principal and agent in the relationship between the parties and with the end
customer.
Warranties are of short duration and only cover defective workmanship and defective materials. No
additional services are committed to which generate a performance obligation.
No adjustment is made for the effects of financing, as the Company 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.
2.16. Other income
Other income in relation to government grants, is recognized in the period that the related costs, for which
the grants are intended to compensate, are expensed.
Page | 61
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
2.17. 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 holidays, 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.
Share based payments
Shares issued to employees and other participants under the Omnibus Incentive Plan 2017 are recognised
over the expected vesting period, using the grant date share price, in accordance with IFRS 2.
2.18. 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 fee dispute resolutions 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
detailed review and sales campaign for solar projects managed by the ISS Joint Venture partner.
Other non-recurring costs also include one-off costs resulting from acquisition of Tembo e-LV and
subsidiaries.
Page | 62
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
2.19. New standards, amendments and interpretations
The following accounting standards and their amendments were adopted during the financial year.
International Accounting Standards
IAS 1 and 8 - Definition of Material (amendments)
Various amendments to references to conceptual framework
International Financial Reporting Standards
IFRS 3 - Business Combinations (amendment)
Effective date
1 January 2020
1 January 2020
Effective date
1 January 2020
The adoption of these policies has had no material impact on the Group or the Company.
The following accounting standards and their amendments were in issue at the year-end but will not be in
effect until after this financial year.
International Accounting Standards (amendments)
IAS 1 (amendments) - Presentation of Financial Statements regarding classification
of liabilities
IAS 1 (amendments) - Presentation of Financial Statements regarding the
amendments of disclosure of accounting policies
Effective date*
1 January 2023
1 January 2023
IAS 8 (amendments) - Accounting Policies, Changes in accounting estimates and
error to distinguish between accounting policies and accounting estimates
1 January 2023
IAS 37 (amendments) - Provisions, Contingent Liabilities and Contingent Assets
outlines the accounting for provisions, with contingent assets and contingent
liabilities 1 January 2022
1 January 2022
IAS 16 (amendments) – Property, Plant and Equipment
1 January 2022
IFRS 3 (amendments) – Business Combinations reference to Conceptual Framework
1 January 2022
IFRS 2018-20 Annual Improvements to IFRS Standards 2018 -2020
1 January 2022
*Years beginning on or after
The Directors do not expect that the adoption of the standards listed above will have a material impact on
the financial statements of the Group or Company in future periods.
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.
Page | 63
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
3.1. Revenue from contracts with customers – determining the timing of satisfaction of
services
As disclosed in Note 2.15 the Group concluded that solar development revenue and revenue from other long-
term projects is recognised 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.
Impairment assessments require the use of estimates and assumptions. 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 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 14. These estimates and
assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in
circumstances will impact these projections, which may impact the recoverable amount of assets and/or
CGUs.
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
A provision of $0.48 million for disputed legal success fees related to the Mr. Comberg litigation recorded at
30 June 2021 is estimated by management, making a judgement in conjunction with advice from legal
counsel, on the likely outcome of the claim.
3.5. Income taxes
In recognizing 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.
Page | 64
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
3.6. Deferred tax assets
Deferred tax assets for unused tax losses amounting to $1.9 million at 30 June 2021 (30 June 2020: $0.8
million; 30 June 2019: $1.005 million; 31 March 2019: $1.005 million) are recognised to the extent that it is
probable that sufficient taxable profit will be available against which the losses can be utilised. Management
judgement is required to determine the amount of deferred tax assets that can be recognised, based upon
the likely timing and level of future taxable profits. To the extent that future cash flows and taxable income
differ significantly from estimates, the ability of the Company to realise the deferred tax assets recorded at
the reporting date could be impacted.
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 recognised 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 recognised immediately. As the options have no vesting conditions the related expense
was recognised 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
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.
3.9. Fair value measurement
The fair values of financial assets and liabilities recorded in the statement of financial position are measured
using valuation techniques including discounted cash flow (DCF) models. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, a degree of judgement is
required in establishing fair values. Changes in assumptions about these factors could affect the reported
fair value. When the fair values of non-financial assets/CGUs need to be determined, for example in business
combinations and for impairment testing purposes, they are measured using valuation techniques including
the DCF model. Further information about the significant judgements, estimates and assumptions impacting
the fair value measurements in business combinations is contained in Note 12.
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.
Management analyses our business in five reportable segments: Critical Power Services, Electric Vehicles,
Sustainable Energy Solutions, Solar Development and Corporate Office. Critical Power Services is
represented by VivoPower’s wholly owned subsidiary Aevitas. In turn, Aevitas wholly owns J.A. Martin
Electrical Pty Limited (“J.A. Martin”) and Kenshaw Electrical Pty Limited (“Kenshaw”), both of which operate
in Australia with a focus on the design, supply, installation and maintenance of critical power, control and
distribution systems, including for solar farms. Electric Vehicles is represented by Tembo e-LV B.V. (“Tembo”),
Page | 65
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
a Netherlands-based specialist battery-electric and off-road vehicle company delivering electric vehicles
(“EV”) for mining and other rugged industrial customers globally. Sustainable Energy Solutions ((“SES”) is the
design, evaluation, sale and implementation of renewable energy infrastructure to customers, both on a
standalone basis and in support of Tembo EVs. Solar Development is represented by Caret and comprises
12 solar projects in the United States. 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 U.K. No segmental information is presented for SES as
amounts related to SES in the current period are immaterial. 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 its performance and make
decisions about resources to be allocated to the segment, 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)
Year ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
Australia
United States
Netherlands
United Kingdom
Total revenue
2021
39,018
-
1,393
-
2020
47,983
-
-
3
2019
13,507
110
-
-
2019
37,889
1,147
-
-
40,411
47,986
13,617
39,036
Revenue by product and service is as follows:
(US dollars in thousands)
Year ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
Electrical products and related services
Development fees
Conversion kits
Vehicle spec conversion
Accessories
Other revenue
Total revenue
2021
38,832
185
137
1,219
38
-
2020
47,917
69
-
-
-
-
40,411
47,986
2019
13,484
-
-
-
-
2019
37,799
90
-
-
-
133
13,617
1,147
39,036
The Group did not have any customers representing more than 10% of revenue for the year ended 30 June
2021 (year ended 30 June 2020: one; three months ended 30 June 2019: one; year ended 31 March 2019: one).
Page | 66
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
4.2 Operating segments
a)
Segment results of operations
Results of operations by reportable segment are as follows:
Year Ended 30 June 2021
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain on solar development - net
Other income
Depreciation and amortisation
Operating profit/(loss)
Restructuring costs and other non-recurring
costs
Finance income
Finance expense
Profit/(loss) before income tax
Income tax
Profit/(loss) for the period
Year Ended 30 June 2020
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain on solar development - net
Other income
Depreciation and amortisation
Operating profit/(loss)
Critical
Power
Services
38,832
(32,792)
6,040
(3,004)
36
1,511
(1,902)
2,681
(27)
2,163
(476)
4,341
(714)
3,627
Critical
Power
Services
47,914
(40,865)
7,049
(2,745)
41
724
(1,718)
3,351
Restructuring costs and other non-recurring
costs
(124)
(1,296)
Finance expense – net
Profit/(loss) before income tax
Income tax
Profit/(loss) for the period
(1,436)
1,791
15
1,806
(9)
(222)
(728)
(950)
Solar
Development
Electric
Vehicles
Corporate
Office
Total
185
1,394
-
(1,292)
185
102
-
-
-
40,411
(34,084)
6,327
(1,309)
(1,923)
(4,897)
(11,133)
733
-
(4)
-
-
-
-
769
1,511
(346)
(4)
(2,256)
(395)
(2,167)
(4,901)
(4,782)
-
-
(24)
(631)
(2,222)
(2,880)
10
(11)
6
2,179
(2,079)
(2,590)
(419)
(2,799)
(9,196)
(8,073)
96
733
-
115
(323)
(2,066)
(9,196)
(7,958)
Solar
Development
Electric
Vehicles
Corporate
Office
Total
69
(20)
49
(469)
1,548
-
(45)
1,083
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
3
47,986
(40,885)
7,101
(2,265)
(5,479)
-
-
1,589
724
(3)
(1,766)
(2,265)
2,169
(1,990)
(3,410)
(1,704)
(3,149)
(5,959)
(4,390)
-
(713)
(5,959)
(5,103)
Page | 67
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Three Months Ended 30 June 2019
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Gain/(loss) on solar development - net
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
Year Ended 31 March 2019
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales
Gross profit
General and administrative expenses
Loss on solar development - net
Depreciation and amortisation
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense – net
Loss before income tax
Income tax
Loss for the period
Critical
Power
Services
13,484
(11,864)
1,620
(567)
5
(422)
636
(15)
(358)
263
(92)
171
Critical
Power
Services
37,800
(32,317)
5,483
(2,823)
(30)
(1,272)
1,358
(8)
1,354
(4)
(572)
(576)
Solar
Development
Electric
Vehicles
Corporate
Office
Total
133
(96)
37
(206)
41
(14)
(142)
(39)
(49)
(230)
-
(230)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,617
(11,960)
1,657
(518)
(1,291)
(8)
(1)
(527)
(471)
(389)
38
(437)
(33)
(525)
(796)
(1,387)
(1,354)
-
(92)
(1,387)
(1,446)
Solar
Development
Electric
Vehicles
Corporate
Office
1,236
(409)
827
(2,148)
(2,585)
(140)
(4,043)
7
(221)
(4,260)
15
(4,245)
-
-
-
-
-
-
-
-
-
-
-
-
Total
39,036
(32,726)
6,310
(7,685)
(2,615)
(1,420)
(5,410)
-
-
-
(2,714)
-
(8)
(2,722)
(2,016)
(2,017)
(1,664)
(3,239)
(6,402)
(10,666)
-
(557)
(6,402)
(11,223)
b)
Segment net assets
Net assets by reportable segment are as follows:
As at 30 June 2021
(US dollars in thousands)
Assets
Liabilities
Net assets/(liabilities)
Critical
Power
Services
35,604
(9,442)
26,162
Solar
Development
Electric
Vehicles
Corporate
Office
Total
24,693
9,027
7,188
76,512
(767)
(2,093)
(23,792)
(36,094)
23,926
6,934
(16,604)
40,418
Page | 68
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
As at 30 June 2020
(US dollars in thousands)
Assets
Liabilities
Net assets/(liabilities)
As at 30 June 2019
(US dollars in thousands)
Assets
Liabilities
Net assets/(liabilities)
As at 31 March 2019
(US dollars in thousands)
Assets
Liabilities
Net assets/(liabilities)
Critical
Power
Services
38,519
(14,481)
24,038
Critical
Power
Services
45,881
(21,171)
24,710
Critical
Power
Services
35,472
(13,603)
21,869
Solar
Development
Electric
Vehicles
Corporate
Office
Total
22,965
(1,697)
21,268
-
-
-
896
62,380
(28,312)
(44,490)
(27,416)
17,890
Solar
Development
Electric
Vehicles
Corporate
Office
Total
26,534
(5,766)
20,768
-
-
-
694
73,109
(23,656)
(50,593)
(22,962)
22,516
Solar
Development
Electric
Vehicles
Corporate
Office
Total
29,538
(6,085)
23,453
-
-
-
385
65,395
(21,722)
(41,410)
(21,337)
23,985
5. Gain/(loss) on Solar Development
(US dollars in thousands)
Year Ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
VivoRex contract obligations
Australia solar projects
ISS Joint Venture - 50% share of discontinued
projects
2021
-
(165)
2020
2,768
496
(6,950)
(1,675)
NC Projects sale
-
Gain on acquisition of remaining 50% ISV from ISS
7,848
Other gains
Total gain/(loss) on Solar Development
36
769
-
-
-
1,589
2019
-
-
-
-
-
38
38
2019
(1,902)
(247)
(868)
402
-
-
(2,615)
The Company recorded a net loss for solar projects in Australia, related primarily to the sale of its 50%
interest in the Yoogali Solar Farm on 1 June 2021. The loss on sale of $0.2 million comprised disposal of $0.2
million net book value of intangible assets. Additionally, the Company recognised $0.1 million gain on the
disposal of Daisy Hill.
The Company recorded a loss of $7.0 million in respect of its share of discontinued Solar Development
projects in the joint venture, Innovative Solar Ventures I, LLC (“ISS Joint Venture”), prior to acquisition of the
remaining 50% interest by the Company on 30 June 2021.
Page | 69
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
On 30 June 2021, the Company completed its acquisition of the remaining 50% share in the ISS Joint Venture.
As detailed in Note 12.b, the difference between consideration of $5.4 million, being the fair value of pre-
acquisition equity interest held by VivoPower, and fair value of acquired net assets of $13.2 million, resulted
in a gain of $7.8 million. Results of operations for the portfolio are reported within the Sustainable Energy
Solutions (formerly Solar Development) segment.
On 2 July 2019, the Company sold its 100% interest in VivoRex, LLC, for $1 and recorded a gain for accounting
purposes of $2.8 million as a result of the disposal of onerous contract obligations of $2.5 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 SES (formerly 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 $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 $1.7 million loss on discontinued Solar Development projects in the ISS Joint
Venture.
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 ($0.9 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 realised after the impairment
recognised in the prior year.
6. Other income
The Australian government’s Jobkeeper allowance helped keep Australian citizens in jobs and supported
businesses affected by the significant economic impact of the COVID-19 pandemic. The allowance is
included in other income and recognised in the period that the related costs, for which it is intended to
compensate, are expensed. There are no unfulfilled conditions or other contingencies attaching to these
grants. The Group did not benefit directly from any other forms of government assistance. The Company has
reclassified the 2020 comparative in the Consolidated Statement of Comprehensive Income for amounts
receivable under the Jobkeeper allowance. This is now included in other income, whereas previously in the
year ended 30 June 2020 this was included in revenue. All comparative figures in the associated notes to the
financial statements have been amended accordingly. The amount re-classified is $0.7 million.
Page | 70
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
7. Operating profit/(loss)
Operating profit/(loss) is stated after charging/(crediting):
(US dollars in thousands)
Year Ended June 30
Three Months
Ended 30 June
Year Ended
31 March
Amortisation 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 on foreign exchange
Auditors’ remuneration – audit fees
Auditors’ remuneration – audit related services
Auditors’ remuneration – tax services
Directors’ emoluments
2021
1,167
1,089
-
-
-
2,179
163
-
12
676
2020
868
898
-
-
-
33
161
-
11
398
Loss/(gain) on disposal of solar development
(769)
(1,589)
8. Restructuring and other non-recurring costs
2019
223
214
-
-
-
-
97
-
-
104
(38)
2019
990
430
548
65
33
-
253
26
28
611
2,615
(US dollars in thousands)
Corporate restructuring – workforce reduction
Corporate restructuring – litigation provision
Corporate restructuring – professional fees
Project review and investigation costs
Relocation costs
Acquisition related costs
Total
Year Ended June 30
2021
2020
-
2,042
179
-
27
632
163
1,104
1,031
1,112
-
-
Three Months
Ended 30 June
Year Ended
31 March
2019
-
-
518
7
-
-
2019
102
-
1,776
139
-
-
2,880
3,410
525
2,017
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
Page | 71
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
separations in both the current and prior year. Terminated and restructured projects are the costs incurred
related to solar business development activities in Asia for which the decision was made not to proceed for
economic reasons, and costs of detailed review and investigation for the ISS Joint Venture portfolio in the
U.S.
In the year ended 30 June 2021, the Company also incurred non-recurring costs for legal, accounting, tax
advisory and due diligence costs of $0.6 million related to the acquisition of Tembo e-LV in November 2020.
9. Staff numbers and costs
The average number of employees (including directors) during the period was:
Sales and Business Development
Central Services and Management
Production
Total
Year Ended June 30
Three Months
Ended 30 June
Year Ended
31 March
2021
2020
2019
2019
13
35
164
212
11
27
171
209
9
31
139
179
9
32
138
179
Their aggregate remuneration costs comprised:
(US dollars in thousands)
Year Ended 30 June
Three Months
Ended 30 June
Year Ended
31 March 2019
Salaries, wages and incentives
Social security costs
Pension contributions
2021
2020
14,550
13,565
795
850
803
792
Short-term compensated absences
1,200
1,296
2019
3,310
213
185
406
2019
14,327
1,044
788
1,254
Total
17,395
16,456
4,114
17,413
Directors’ emoluments for the year ended 30 June 2021 were $675,806 (year ended 30 June 2020: $536,979;
three months ended 30 June 2019: $103,925; (year ended 31 March 2019: $611,450) of which the highest paid
director received $92,119 (year ended 30 June 2020: $205,673; three months ended 30 June 2019: $62,136;
year ended 31 March 2019: $254,084). Director emoluments include employer social security costs.
Key Management Personnel:
(US dollars in thousands)
Year Ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
Salaries, wages and incentives
Social security costs
Pension contributions
Equity incentives
Short-term compensated absences
2021
1,949
102
64
244
2
2020
1,009
79
36
111
-
2019
388
28
13
27
-
2019
2,354
176
45
130
-
Page | 72
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Total
2,361
1,235
456
2,705
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
2021 was 10 (year ended 30 June 2020: 7; three months ended 30 June 2019: 10; year ended 31 March 2019:
10).
10. Finance income and expense
(US dollars in thousands)
Year Ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
2021
2020
2019
2019
Finance income
Foreign exchange gains
Interest received
Total finance income
2,179
-
2,179
33
-
33
-
-
-
-
4
4
(US dollars in thousands)
Year Ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
2021
2020
2019
2019
Finance expense
Related party loan interest payable
Convertible loan notes and preference shares
interest payable
Waived dividends and interest on convertible
preference shares and loan notes
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
1,986
1,228
(995)
-
97
92
-
-
92
90
2,590
1,653
1,185
-
-
174
95
-
-
-
75
3,182
387
307
-
-
51
22
6
42
(19)
-
796
1,588
1,284
-
206
164
1
-
-
-
-
3,243
Interest paid in the year of $5.3 million includes $2.2 million of accrued interest on Aevitas convertible preference
shares and convertible loan notes from prior periods.
Page | 73
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
11. Taxation
a) Tax charge/(credit)
(US dollars in thousands)
Year Ended 30 June
Three Months
Ended 30 June
Year Ended
31 March
2021
2020
2019
2019
Current tax
UK tax
Foreign tax
Total current tax
Deferred tax
Current year
UK tax
Foreign tax
Total deferred tax
-
(848)
(848)
-
(51)
1,014
963
-
53
53
-
(202)
(564)
(766)
-
(162)
(162)
-
-
70
70
29
(217)
(188)
-
267
(636)
(369)
Total income tax
115
(713)
(92)
(557)
The difference between the total tax charge and the amount calculated by applying the weighted average
corporation tax rates 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
Three Months
Ended 30 June
Year Ended
31 March
Loss before income tax
Group weighted average corporation tax rate
Tax at standard rate
Effects of:
2021
(8,073)
22.2%
1,789
2020
(4,390)
24.6%
1,080
Expenses that are not deductible for tax
purposes
(833)
(106)
Adjustment to prior year tax provisions
137
Deferred tax assets not recognised on tax losses
(978)
Total income tax for the period Recognised in
the Consolidated Statement of Comprehensive
Income
115
-
(1,687)
(713)
2019
(1,354)
22.0%
297
(49)
-
(340)
(92)
2019
(10,666)
21.8%
2,325
41
(64)
(2,859)
(557)
Page | 74
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
b) Deferred tax
(US dollars in thousands)
Deferred tax assets
Deferred tax liabilities
Net deferred tax asset/(liability)
As at 30 June
2021
2,495
(411)
2,084
2020
1,347
-
1,347
2019
2,113
(1)
2,112
These assets and liabilities are analysed as follows:
Deferred tax assets
31 March 2019
Credit to comprehensive income
30 June 2019
Charged to comprehensive income
30 June 2020
Credit to comprehensive income
Acquisitions
30 June 2021
Deferred tax liabilities
30 June 2019
Credit to comprehensive income
30 June 2020
Credit to comprehensive income
Acquisition of subsidiary (Note 12)
30 June 2021
Tax losses
Other timing
differences
1,005
-
1,005
(191)
814
776
263
1,853
1,049
59
1,108
(575)
533
109
-
642
Accelerated
allowances
Other timing
differences
(1)
1
-
-
-
-
-
-
-
78
(489)
(411)
As at
31 March 2019
2,054
(1)
2,053
Total
2,054
59
2,113
(766)
1,347
885
263
2,495
Total
(1)
1
-
78
(489)
(411)
Deferred tax has been recognised 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.
12. Business Combination
(a) Tembo e-LV
On 5 November 2020, VivoPower International PLC acquired 51% of the ordinary issued share capital of
Tembo e-LV B.V. a specialist battery-electric and off-road vehicle company located in The Netherlands. The
non-controlling interest representing 49% of the ordinary issued share capital was acquired on 2 February
2021.
Page | 75
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Purchase consideration
(Amounts in thousands)
Cash consideration for 51% acquisition
The assets and liabilities recognised as a result of the acquisition are as follows:
(Amounts in thousands)
Cash and cash equivalents
Trade and other receivables
Inventory
Property, plant and equipment (Note 13)
Deferred tax asset (Note 11)
Trade and other payables
Related party payable
Other non-current liabilities
Deferred income
Deferred tax liability (Note 11)
Remediation provision
Fair value of identifiable net assets acquired
Non-controlling interests (49%)
Net assets acquired
Cash consideration for 51% acquisition
Surplus on acquisition
Allocation of surplus:
Goodwill (Note 14a)
Other intangible assets (Note 14b)
EUR
4,000
USD
4,916
EUR
4,021
100
594
167
214
USD
4,942
123
730
206
263
(541)
(665)
(1,024)
(1,259)
(181)
(578)
(398)
(282)
2,092
(222)
(711)
(489)
(336)
2,582
(1,025)
(1,260)
1,067
4,000
2,933
1,340
1,593
2,933
1,322
4,916
3,594
1,698
1,896
3,594
Page | 76
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Acquisition of Non-controlling interest:
Cash paid
Ordinary shares issued
Total consideration for non-controlling interest
Non-controlling interest acquired:
At acquisition
Loss attributable to non-controlling interest
At date of acquisition of non-controlling interest
Surplus on acquisition of non-controlling interest
Purchase consideration - cash outflow
(Amounts in thousands)
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration - 51%
Cash consideration - 49%
Less: Balances acquired
Cash
EUR
USD
1,800
197
1,997
2,173
237
2,410
(1,025)
(1,259)
319
(706)
1,291
387
(873)
1,538
EUR
USD
4,000
1,800
4,916
2,173
4,021
4,942
Net outflow of cash - investing activities
1,779
2,147
Acquisition-related costs of $0.6 million that were not directly attributable to the issue of shares are included
within restructuring and other non-recurring costs in the income statement.
Goodwill represents the value of gaining immediate access to an established business in the electric vehicles
market, including the skilled workforce, which are not separately recognised and do not meet the criteria for
recognition as an intangible asset under IAS 38. None of the goodwill recognised is expected to be deductible
for income tax purposes. Separately recognised intangible assets acquired comprise $1.5 million of
customers contracts and $0.4 million of trade names, based on a purchase price allocation performed by
management.
Intangible assets acquired comprise $1.5 million customer contracts and $0.4 million of trade names, based
on a purchase price allocation performed by management. Customer contracts are valued in years 1-5
include revenue from acquired customer relationships representing 25% of total revenue, average attrition
rate 25% per annum, average EBIT 3.7%, weighted average cost of capital 13.0%. Trade names are valued
using a relief from royalty method of the income valuation approach over a 6-year life based on a 5% industry
average royalty rate.
The Company recognises non-controlling interests in an acquired entity at the non-controlling interests'
proportionate share of the acquired entity's identifiable net assets.
The non-controlling interest representing 49% of the ordinary issued share capital, comprising $1.3 million
at acquisition, less $0.4 million loss recorded in the profit and loss account between 5 November 2020 and 2
February 2021, total $0.9 million, was acquired by the Company on 2 February 2021, for $2.2 million cash and
Page | 77
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
15,793 shares in the Company ($0.2 million). The $1.5 million difference between consideration and acquired
non-controlling interest was credited directly to equity.
The remediation provision recognised was a present obligation of Tembo e-LV immediately prior to the
business combination. The execution of the remediation was not conditional upon it being acquired by the
Company. From the date of acquisition, Tembo contributed $1.4 million of revenue and $2.8 million of loss
before tax from continuing operations. If the acquisition had taken place at the beginning of the year, Group
revenue from continuing operations would have been $41.1 million and loss before tax from continuing
operations for the Group would have been $8.3 million.
(b) ISS Joint Venture
On 30 June 2021, the Company purchased the remaining 50% share in the ISS Joint Venture for a
consideration of $1, plus the $5.4 million fair value of pre-acquisition equity interest held by the Company.
Fair value of net assets acquired included capitalised project expenses and were recorded at fair value.
The acquisition resulted in a bargain purchase worth $7.8 million as a result of the litigation settlement and
is recognized in the Statement of Comprehensive Income within gain/loss on Solar Development as set out
Note 5.
Purchase consideration
(US dollars in thousands)
Cash
Fair value of pre-acquisition equity interest
Total consideration
Less: Fair value of acquired net assets:
Cash
Deposits
Capitalised project development expenses (Note 14b)
Gain on bargain purchase
No revenue or profit or loss has been recognized since the acquisition date.
The net cash flow resulting from the acquisition was $ nil.
5,393
5,393
13,241
7,848
2
990
12,249
Page | 78
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
13. Property, plant and equipment
(US dollars in thousands)
Cost
At 31 March 2019
Change in accounting policy
(Note 2.18)
Restated at 1 April 2019
Foreign exchange
Additions
Disposals
At 30 June 2019
Foreign exchange
Additions
Disposals
At 30 June 2020
Foreign exchange
Additions
Acquisitions from business
combinations
Disposals
At 30 June 2021
US dollars in thousands)
Depreciation
At 31 March 2019
Change in accounting policy
(Note 2.18)
Restated at 1 April 2019
Foreign exchange
Charge for the period
Disposals
At 30 June 2019
Foreign exchange
Charge for the period
Disposals
At 30 June 2020
Foreign exchange
Charge for the period
Disposals
At 30 June 2021
Computer
Equipment
Motor
Vehicles
Plant and
Equipment
Fittings
and
Equipment
Right-
of-Use
Assets
Total
543
1,629
1,029
176
-
3,377
-
(371)
-
-
2,152
1,781
543
(5)
7
-
545
(11)
36
(94)
476
41
125
-
(80)
562
1,258
(13)
45
(8)
1,282
(26)
359
(252)
1,363
145
230
4
(174)
1,568
1,029
(11)
222
-
1,240
(26)
189
(171)
1,232
26
395
114
(156)
1,611
Computer
Equipment
Motor
Vehicles
Plant and
Equipment
380
1,079
-
(123)
380
(3)
27
-
404
(7)
55
(79)
373
31
66
(71)
399
956
(12)
1
(8)
937
(15)
171
(257)
836
85
206
(157)
970
645
-
645
(7)
17
-
655
(11)
107
(4)
747
70
167
(112)
872
176
(2)
16
-
190
(4)
9
-
195
18
6
-
2,152
(20)
110
-
2,242
(46)
570
5,158
(51)
400
(8)
5,499
(113)
1,163
(483)
(1,000)
2,283
5,549
196
182
88
426
938
206
(565)
6,554
Total
(97)
(58)
122
Fittings
and
Equipment
2,691
Right-
of-Use
Assets
68
-
68
-
6
-
74
(1)
13
-
86
8
8
(46)
-
2,172
318
318
(3)
163
-
478
(3)
552
(16)
195
2,367
(25)
214
(8)
2,548
(37)
898
(346)
1,021
3,063
77
642
(58)
271
1,089
(444)
56
1,682
3,979
Page | 79
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
(US dollars in
thousands)
Net book value
At 31 March 2019
At 30 June 2019
At 30 June 2020
At 30 June 2021
Computer
Equipment
Motor
Vehicles
Plant &
Equipment
Fittings &
Equipment
Right-of-
Use Assets
163
141
103
163
550
344
527
598
385
585
485
739
108
116
109
66
-
1,764
1,262
1,009
Total
1,205
2,951
2,486
2,575
14. Intangible assets
(US dollars in thousands)
Goodwill
Other intangible assets
Total
a) Goodwill
As at 30 June
2021
25,794
21,655
47,449
2020
21,919
7,930
29,849
2019
22,387
9,375
31,762
As at
31 March 2019
22,622
9,744
32,366
(US dollars in thousands)
As at 1 July / 1 April
Goodwill on acquisition of Tembo
Foreign exchange
Carrying value
As at 30 June
2021
21,919
1,698
2,177
25,794
2020
22,387
-
(468)
21,919
2019
22,622
-
(235)
22,387
As at
31 March 2019
24,482
-
(1,860)
22,622
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)
Tembo (allocated to the Electric Vehicle
segment)
Total
As at 30 June
2021
2020
2019
As at
31 March
2019
13,658
12,483
12,751
12,884
10,319
9,436
9,636
9,738
1,817
25,794
-
-
-
21,919
22,387
22,622
The Group conducts impairment tests on the carrying value of goodwill and intangibles 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
Page | 80
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 Limited 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%
(30 June 2020: 10.6%; 30 June 2019: 8.8%; 31 March 2019: 8.8%) and annual growth rate of 3% per annum.
No sensitivity analysis is provided as the Company expects no foreseeable changes in the assumptions that
would result in impairment of the goodwill.
Following the strategic pivot of the solar development business into sustainable energy solutions,
management have re-assessed the applicability of the CGU which the VivoPower Pty Ltd goodwill and
intangibles should be included within, for impairment assessment purposes. Whilst the strategic pivot
requires development of new capabilities in the Company related to battery technology and grid
connectivity, a significant portion of the existing technology, project execution methodology and
management team of VivoPower Pty Ltd continue to provide solar development activity in the sustainable
energy solutions segment. Furthermore, revenue streams of sustainable energy solutions include a
significant solar component. Therefore, management have concluded that the VivoPower Pty Ltd goodwill
and intangible assets can be included within the SES segment. Management have only included the solar
element of future revenue streams when assessing impairment of VivoPower Pty Ltd goodwill and intangible
assets.
The solar element of 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 10.7% (30
June 2020: 10.9%; 30 June 2019: 11.0%; 31 March 2019: 11.0%), an average annual growth rate in years 1-5 of
120% during the hyperscaling phase of the business, an average of 53% of revenue derived from supporting
infrastructure for electric vehicle sales will relate to solar infrastructure in years 1-5, with an average of 20%
of electric light vehicles sold by the Company in years 1-5 will be sold with an additional sustainable energy
solution; an average of 69% of standalone renewable power generation, storage and distribution projects
revenue will relate to solar development in years 1-5.
If the conversion rate of sustainable energy solutions from supporting infrastructure for electric vehicles is
only 5% instead of management’s estimate of 20%, the Company would have had to recognise an
impairment of $0.3 million. If the implementation rate is nil instead of management’s estimate of 20%, the
Company would have had to recognise an impairment of $4.8 million. If the forecast revenue for standalone
renewable power generation, storage and distribution projects reduces by 90% compared to management’s
estimate, the Company would have had to recognise an impairment of $3.4 million.
The CGU represented by Tembo e-LV B.V. and subsidiaries 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% and average annual growth rate of 748% per annum in years 1-5. No sensitivity analysis is
provided as the Company expects no foreseeable changes in the assumptions that would result in
impairment of the goodwill.
Page | 81
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
b) Other intangible assets
(US dollars in
thousands)
Cost
At 31 March
2019
Foreign
exchange
Additions
Disposals
At 30 June
2019
Foreign
exchange
Additions
Disposals
At 30 June
2020
Foreign
exchange
Additions
Acquisitions
from
business
combination
s
Disposals
At 30 June
2021
Customer
Relationsh
ips
Trade
Names
Favourabl
e Supply
Contracts
Solar
Projects
Product
developme
nt
Other
Intangible
Assets
Total
Intangible
Assets
5,097
2,476
4,229
(55)
-
(50)
(26)
(44)
-
-
-
-
4,992
2,450
4,185
(51)
(86)
-
-
-
-
2,399
4,099
225
-
-
385
-
-
-
(103)
461
(968)
4,382
411
46
(550)
5,781
1,492
404
-
-
-
-
-
-
-
-
-
-
-
12,248
-
-
-
-
-
-
-
-
-
-
-
513
-
-
158
11,960
(1)
12
-
169
(4)
-
(9)
156
13
-
-
-
(126)
12
(50)
11,796
(244)
461
(977)
11,036
1,034
559
14,144
(550)
3,028
4,484
12,248
513
169
26,223
(US dollars in
thousands)
Amortisation
At 31 March 2019
Foreign exchange
Amortisation
At 30 June 2019
Foreign exchange
Amortisation
Disposals
At 30 June 2020
Foreign exchange
Amortisation
At 30 June 2021
Customer
Relations
hips
Trade
Names
Favourabl
e Supply
Contracts
Solar
Projects
Product
developm
ent
Other
Intangible
Assets
Total
Intangible
Assets
1,064
(6)
100
1,158
(24)
404
(133)
1,405
131
622
2,158
384
(4)
41
421
(9)
160
-
572
54
229
855
657
(7)
70
720
(15)
273
-
978
92
298
1,368
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
18
111
(1)
12
122
(2)
31
-
151
18
-
169
2,216
(18)
223
2,421
(50)
868
(133)
3,106
295
1,167
4,568
Page | 82
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
(US dollars in
thousands)
Net book value
At 31 March
2019
At 30 June 2019
At 30 June 2020
At 30 June 2021
Customer
Relationsh
ips
Trade
Names
Favourabl
e Supply
Contracts
Solar
Projects
Product
developm
ent
Other
Intangible
Assets
Total
Intangible
Assets
4,033
3,834
2,977
3,623
2,092
2,029
1,827
2,173
3,572
3,465
3,121
3,116
-
-
-
12,248
-
-
-
495
47
47
5
-
9,744
9,375
7,930
21,655
Customer relationships, trade names and favourable supply contracts have an average remaining period of
amortisation of 9 years, 12 years and 12 years respectively.
Additions in the year comprise $0.5 million of post-acquisition electric vehicle product development costs in
Tembo and $0.1 million of project development costs relating to the Yoogali Solar project in VivoPower Pty
Ltd.
Intangible assets were acquired as part of business combinations during the year. They are recognised at
their fair value at the date of acquisition and, where applicable, are subsequently amortised on a straight-
line basis over their estimated useful economics lives:
(i) Development expenditure
$12.2 million of development expenditure as part of the acquisition of the remaining 50% interest in
Innovative Solar Ventures I, LLC as described in Note 12b. No amortisation has been charged as the
acquisition took place on 30 June 2021.
(ii) Customer relationships and trade names
$1.5 million and $0.4 million of customer relationships and trade names, respectively, as part of the
acquisition of Tembo as described in Note 12a. Tembo has customer relationships with a number of mining
and industrial companies. The contracts can be expected to last at least 5 years. The trade name of Tembo
4x4 is capitalized and amortized over 6 years.
Intangible assets disposed of in the year relate to the Yoogali and Daisy Hill Solar projects in Australia as
described in Note 5. Both intangible assets were categorised in customer relationships.
15. Investment in subsidiaries
The principal operating undertakings in which the Group’s interest at 30 June 2021 is 20% or more are as
follows:
Subsidiary undertakings
VivoPower International Services Limited
VivoPower USA LLC
VivoPower US-NC-31, LLC
VivoPower US-NC-47, LLC
VivoPower (USA) Development, LLC
Percentage of
ordinary shares held
Registered address
28 Esplanade, St Helier, Jersey, JE2
3QA
251 Little Falls Drive, Wilmington, DE,
USA 19808
100%
100%
100%
100%
100%
Page | 83
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Caret, LLC (formerly Innovative Solar
Ventures I, LLC)
VivoPower Pty Ltd
VivoPower WA Pty Ltd
VVP Project 1 Pty Limited
Amaroo Solar 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. *
Tembo e-LV B.V.
Tembo 4x4 e-LV B.V.
FD 4x4 Centre B.V.
100%
100%
100%
100%
100%
100%
99.90%
100%
100%
100%
100%
64%
64%
40%
100%
100%
100%
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
Hoek 54A, 5571GK, Bergeijk,
Netherlands
Associate and Joint Venture
Undertakings
Percentage of shares held
Registered address
VVPR-ITP TopCo Pty Limited
50%
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.
16. Investments accounted for using the equity method
(US dollars in thousands)
Caret, LLC (formerly Innovative Solar
Ventures I, LLC)
Total
%
Owned
100%
As at 30 June
2021
2020
2019
-
-
8,225
8,225
-
-
As at
31 March
2019
-
-
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 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 was allocated to each of the projects based on monthly capital
contributions determined with reference to completion of specific project development milestones under
Page | 84
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
an approved development budget for the ISS Joint Venture. To June 29, 2021, 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 2021, of $1.1 million, which was recorded in trade and other payables. 20 projects
within the portfolio were discontinued in the year ended 30 June 2021, resulting in a write off of capitalised
costs of $7.0 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 and the Company commenced a process to take
control of the portfolio from the Joint Venture partner, which was expected to result in a slower project
realisation timeframe. Accordingly, the portion of the investment that was expected to be realised in near
term sales within 12 months remained in assets held for sale, whereas the remainder of the portfolio was
reclassified back to investments accounted for under the equity method.
On 30 June 2021, the Company acquired the remaining 50% of Caret, LLC from Innovative Solar Systems,
LLC, for a consideration of $1. Accordingly, the book value of $8.1 million of the investments accounted for
using the equity method have been derecognised upon acquisition, and the fair value of 100% of the
consolidated capitalised project development costs recorded as an intangible asset upon acquisition, as
detailed in Note 12b
17. Cash and cash equivalents
(US dollars in thousands)
Cash at bank and in hand
As at 30 June
As at
2021
8,604
2020
2,824
2019
7,129
31 March 2019
4,522
The credit ratings of the counterparties with which cash was held are detailed in the table below.
(US dollars in thousands)
A+
A
A-
AA-
Total
18. Restricted cash
(US dollars in thousands)
Bank guarantee security deposit
Preferred supplier agreement escrow
Total
As at 30 June
As at
2020
2019
31 March 2019
-
-
554
2,270
2,824
As at 30 June
2020
1,013
-
1,013
252
233
-
6,644
7,129
2019
632
-
632
17
14
-
4,491
4,522
As at
31 March 2019
816
503
1,319
2021
5,423
-
2
3,179
8,604
2021
1,140
-
1,140
At 30 June 2021, there is a total of $1.1 million (30 June 2020, $1.0 million; 30 June 2019, $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 | 85
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
19. Trade and other receivables
(US dollars in thousands)
Current receivables
Trade receivables
Contract assets
Prepayments
Other receivables
Current tax receivable
Total
As at June 30
As at
2021
2020
2019
March 31 2019
4,959
2,723
2,837
2,011
182
3,112
3,382
432
5,475
155
6,193
3,929
2,919
1,951
-
12,712
12,556
14,992
5,899
1,800
628
2,072
-
10,399
In accordance with IFRS 15, contract assets are presented as a separate line item. The Company has not
recognised 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 June 30
2021
4,959
-
4,959
2020
3,119
(7)
3,112
2019
6,195
(2)
6,193
As at
31 March 2019
5,929
(30)
5,899
The maximum exposure to credit risk for trade receivables by geographic region was:
(US dollars in thousands)
USA
Australia
Netherlands
Total
As at June 30
2021
-
4,349
610
4,959
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 June 30
2021
4,918
41
4,959
2020
3,055
57
3,112
2019
108
6,085
-
6,193
2019
6,093
100
6,193
As at
31 March 2019
78
5,821
-
5,899
As at
31 March 2019
5,765
134
5,899
Page | 86
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
20. Inventory
(US dollars in thousands)
Raw materials
Total
As at June 30
As at
2020
2019
31 March 2019
-
-
-
-
-
-
2021
1,537
1,537
21. Assets classified as held for sale
(US dollars in thousands)
Caret, LLC (formerly Innovative
Solar Ventures I, LLC)
Total
% Owned
50%
As at 30 June
2021
-
-
2020
4,080
2019
13,530
4,080
13,530
As at
31 March 2019
13,530
13,530
The Company’s portfolio of U.S. solar projects was held through 50% ownership in the ISS Joint Venture until
June 29, 2021. On 30 June 2021, the Company acquired the remaining 50% of the ISS Joint Venture from
Innovative Solar Systems, LLC, and accordingly existing book value of joint venture assets held for sale have
been derecognised and included in the acquisition accounting, leaving nil balance in assets held for sale on
30 June 2021.
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 had 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
2021
2020
2019
-
-
-
-
-
15,044
15,044
(770)
(2,079)
110
(770)
(847)
103
12,305
13,530
As at
31 March
2019
15,044
(770)
(847)
103
13,530
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 16), until acquisition and
consolidation on 30 June 2021, was as follows:
(US dollars in thousands)
Assets classified as held for sale
Investments accounted for using the equity method
Net assets
As at 30 June
2021
-
-
-
2020
4,080
8,225
2019
13,530
-
12,305
13,530
As at
31 March
2019
13,530
-
13,530
Page | 87
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
The table below provides summarised 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 summarised 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
2021
2020
2019
-
-
-
2
23,277
23,279
1,187
27,107
28,294
As at
31 March
2019
1,187
27,107
28,294
Reconciliation to carrying amounts of the ISS Joint Venture (including amounts disclosed within
Investments, see Note 16):
(US dollars in thousands)
Opening net assets
Commission credit
Commission credit on abandonments
Sundry income
Project swaps
Abandoned projects
Acquisition of controlling interest
Net assets
VivoPower share in %
VivoPower share in $ (excluding funding
obligation)
Commission credit
Acquisition costs
Net Assets
22. 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
31 March 2019
28,294
2019
28,294
As at 30 June
2021
24,390
-
-
-
-
(13,900)
(10,490)
-
N/A
2020
28,294
(1,546)
144
90
-
(2,592)
-
24,390
50%
-
-
-
-
-
-
28,294
50%
-
-
-
-
12,195
14,148
-
110
(721)
103
12,305
13,530
As at 30 June
2021
4,325
648
-
1,413
624
1,129
778
8,917
2020
4,807
370
504
1,383
496
6,013
1,822
15,395
2019
5,554
2,247
1,527
1,209
1,054
10,095
2,953
24,639
1,514
-
-
281
(1,795)
-
28,294
50%
14,148
(721)
103
13,530
As at
31 March 2019
5,675
1,952
1,378
1,165
764
4,978
2,011
17,923
Page | 88
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 and $5.0 million contract liabilities balance at 30 June 2019 and 31 March 2019,
respectively, $2.4 million was not recognised as revenue in the year ended 30 June 2020 due to contract
postponement. The revenue was recognised in the first half of the year ended 30 June 2021. The $6.0 million
of the contract liabilities balances at 30 June 2020, was fully recognised as revenue in the year ended 30 June
2021.
23. Provisions
(US dollars in thousands)
Current provisions
Employee entitlements
Litigation
Warranty
Remediation
Employee terminations
Onerous contracts
Total current provisions
Non-current provisions
Employee entitlements
Onerous contracts
Total non-current provision
Total provisions
As at 30 June
2021
2020
2019
As at
31 March
2019
1,510
1,459
1,802
485
209
306
-
-
1,561
1,104
232
-
-
-
-
-
-
112
96
2,802
2,897
1,718
165
-
165
2,967
169
-
169
3,066
148
1,952
2,100
3,818
-
-
-
157
94
1,710
227
1,995
2,222
3,932
Employee entitlements include long term leave and vacation provisions.
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 claimed damages of £0.62 million related
to the notice period in his service agreement, £0.54 million related to shares in the Company he alleges were
due to him, and other unquantified amounts related to bonuses and past service fees alleged to be due. On
April 9, 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.
After aborted attempts at settlement, the matter was heard in the U.K. High Court in the first two weeks of
March 2020, with judgement ruled in September 2020. The Company was successful in defending the
majority of the claims, with a total of £0.62 million ($0.90 million) of the claims being settled in favour of Mr.
Comberg. However final costs and interest of $1.76 million awarded to him were higher than budgeted. The
$2.66 million payments resulted in an additional restructuring and non-recurring expense of $1.5 million
Page | 89
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
during the year ended 30 June 2021, over and above utilisation of the $1.1 million brought forward provision
as at 30 June 2020.
A further provision of $0.48 million for disputed legal success fees related to the Mr. Comberg litigation has
also been recorded at 30 June 2021.
Warranty provisions in Australia relate to the servicing of generators and is based on a percentage of revenue
generated.
The remediation provision comprises additional work required on electric vehicles, comprising a
combination of remediation, testing or conversion of drivetrains to 72kwH.
(US dollars
in
thousands)
At 31 March
2019
Foreign
exchange
Additional
provisions
Reverse
unused
provisions
Unwinding of
discount
Provisions
utilised
At 30 June
2019
Foreign
exchange
Additional
provisions
Reverse
unused
provisions
Disposals
Provisions
utilised
At 30 June
2020
Foreign
exchange
Additional
provisions
Reverse
unused
provisions
Provisions
utilised
At 30 June
2021
Employee
Entitlements
Employee
Terminations
Remediation
1,686
158
(18)
146
(41)
-
(116)
1,657
(41)
1,659
(72)
-
-
-
-
-
(45)
113
-
176
(28)
-
(1,473)
(261)
1,730
170
1,306
(67)
(1,172)
1,967
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
306
-
-
306
Onerous
Contracts
2,088
-
-
-
42
(82)
2,048
-
-
-
(2,048)
-
-
-
-
-
-
-
Litigation Warranty
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
14
184
2,042
122
3,776
(112)
(179)
(2,661)
(47)
(3,880)
485
209
2,967
Page | 90
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
24. Loans and borrowings
(US dollars in thousands)
Current liabilities
Debtor invoice financing
Lease liabilities
Shareholder loans
Chattel mortgage
Project financing agreement
Bank loan
Other borrowings
Total current liabilities
Non-current liabilities
Lease liabilities
Shareholder loan
Chattel mortgage
Project financing agreement
Bank loan
As at 30 June
2021
2020
2019
As at
31 March
2019
-
669
-
88
59
152
36
508
641
-
51
-
66
46
901
660
766
-
-
-
-
751
136
-
-
-
-
-
1,004
1,312
2,327
887
326
714
21,175
23,401
1,117
18,242
244
183
159
249
-
278
-
-
-
138
18,242
-
-
-
Total non-current liabilities
22,087
24,642
19,359
18,380
Total liabilities
23,091
25,954
21,686
19,267
In the prior fiscal year, on 30 June 2020 the Company refinanced its $23.4 million shareholder loan due to
AWN Holdings Limited (“AWN”), its largest shareholder. The shareholder loan bore interest at 10.0% per
annum plus a line fee of 2.0% per annum, payable monthly in advance. No interest or line fee settlements
were required until after a corporate liquidity event had occurred. Principal was repayable in 9 equal monthly
instalments from July 2021 until March 2022. Security granted to AWN comprised a Specific Security Deed
over the assets of Aevitas O Holdings Pty Ltd and general security over the assets of VivoPower International
PLC.
In December 2020, following the successful capital raise in October 2020, the Company and AWN agreed
some further amendments to the terms of the loan, reducing the interest rate from 10.0% to 8.0% per annum,
and reduction in line fee from 2.0% to 0.8% per annum, payable monthly in advance. Principal is repayable
in 60 equal monthly instalments of $0.35 million from July 2021 to June 2026, as well as an immediate stand-
alone repayment of $2.2 million principal, paid in April 2021.
On 30 June 2021, the Company agreed a further refinancing of its shareholder loan with AWN, to align the
repayment schedule with the timing of the investment and revenue growth plan in Electric Vehicles. Under
the amended terms, the repayment of principal has been deferred to 1 January 2023, with monthly
instalments of $0.35 million over the following sixty months, resulting in loan maturity extending from 30
June 2026, to 31 December 2027. In addition, the Company will cash settle a refinancing fee of approximately
$0.34 million in two tranches on 30 June 2022 and 31 December 2022. The interest rate and line fee remain
unchanged at 8% and 0.8% respectively and other terms remain unchanged.
Page | 91
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 2021, 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.
During the year ended 30 June 2021, two project financing agreements and a property lease were acquired
as part of the acquisition of Tembo. The project financing arrangements have a balance of $0.2 million as at
30 June 2021 and are repayable quarterly over 6 and 8 months, respectively.
The obligations under lease liabilities are as follows:
Minimum lease Payments
As at 30 June
2021
2020
2019
As at 31
March
2019
Present value of minimum lease
payments
As at 30 June
2021
2020
2019
As at 31
March
2019
683
379
1,062
(67)
995
695
759
1,454
(99)
1,355
692
1,299
1,991
(214)
1,777
147
143
290
(16)
274
669
326
995
-
995
641
714
1,355
-
1,355
660
1,117
1,777
-
1,777
136
138
274
-
274
(US dollars in thousands)
Amounts payable under lease
liabilities:
Less than one year
Later than one year but not
more than five
Future finance charges
Total lease obligations
25. Called up share capital
(US dollars in thousands)
2021
2020
2019
Allotted, called up and fully paid
As at 30 June
As at
31 March 2019
Ordinary shares of $0.012 each
$222,074
$162,689
$162,689
$162,689
Number allotted
18,506,064
13,557,376
13,557,376
13,557,376
Ordinary shares of $0.012 each
$222,074
$162,689
$162,689
$162,689
Page | 92
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Movements in ordinary shares:
At 31 March 2019
At 30 June 2019
At 30 June 2020
Capital raises1
THFC investment2
Employee share scheme issues3
Acquisition of non-controlling interest in
subsidiary4
Shares
Par value Share premium
Total
No.
USD 000
USD 000
USD 000
13,557,376
13,557,376
13,557,376
4,091,019
49,750
792,126
15,793
163
163
163
49
1
9
-
40,215
40,215
40,215
34,317
499
961
237
40,378
40,378
40,378
34,366
500
970
237
At 30 June 2021
18,506,064
222
76,229
76,451
1 During the year, the Company completed a series of capital raises on Nasdaq. A total of 4,091,019 ordinary
shares were issued, comprising 3,382,350 ordinary shares issued on October 19, 2020 as an underwritten
public offering pursuant to an F-1 registration statement filed with the SEC on October 14, 2020, and 708,669
ordinary shares issued during June 2021, as at the market (ATM) price, pursuant to an F-3 registration
statement filed with the SEC on December 21, 2020.
2 In February 2021, 49,750 ordinary shares were issued to Tottenham Hotspurs Football Club (“THFC”) as part
of the exclusive global battery partnership
3 792,126 shares were issued to employees and directors of the Company and consultants to the Company
under the Omnibus Incentive Plan during the year.
4 In February 2021, 15,793 restricted ordinary shares were issued as part consideration for the purchase of
the non-controlling interest in Tembo e-LV B.V.
On 30 June 2021, holders of convertible preference shares and convertible loan notes in Aevitas Group
Limited, exercised their right to convert the debt instruments into ordinary shares in VivoPower International
PLC. A total of 2,005,190 restricted ordinary shares were issued at a contracted price of $10.20 on July 21,
2021. Of the 2,005,190 ordinary shares issued, 1,959,339 were issued to funds owned by AWN, the Company’s
largest individual shareholder.
Each share has the same right to receive dividends and repayment of capital and represents one vote at
shareholders’ meetings. Proceeds received in addition to the nominal value of the shares issued during the
year have been included in share premium. The costs associated with the issuance of new shares are
included within other reserves (see note 26). Share premium has also been recorded in respect of the share
capital related to employee share awards.
Page | 93
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
26. Other reserves
Equity
instrum
ents1
Prefere
nce
shares1
Shares
pendin
g issue2
Capital
raising
costs3
Equity
incentive
costs4
Share
awards
issuanc
e4
Treasur
y
shares5
Share
option
reserve
6
Foreign
exchan
ge
Total
-
(246)
3,713
11
19,846
(US dollars in
thousands)
At 31 March
2019
Equity
instruments
Disposal of
treasury
shares
At 30 June
2019
Equity
instruments
Other reserves
Employee
share scheme
At 30 June
2020
Conversion to
Aevitas
preference
shares
Interest on
equity
instruments
Equity
instruments
payments
Conversion to
ordinary
shares
pending issue
in VivoPower
International
PLC
Capital raising
costs
Share
issuance costs
Equity
incentives
cost less
shares issued
Other
movements
At 30 June
2021
26,090
(3)
-
26,087
970
-
-
27,057
-
-
-
-
-
-
-
-
(2,998)
2,998
114
185
(3,317)
(123)
-
-
-
-
-
-
-
-
-
-
-
(20,466)
-
20,466
(9,722)
-
-
(9,722)
-
3,713
-
(6,009)
-
-
-
-
-
-
-
-
-
-
(390)
210
-
-
-
-
(2,804)
(15)
-
-
-
-
-
-
1
17
326
344
-
-
-
-
-
-
1,078
(971)
-
-
-
3,270
20,466
(8,828)
1,422
(971)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3)
233
233
(13)
3,713
11
20,076
-
-
13
-
-
-
-
-
-
-
-
-
-
-
(3,713)
-
-
-
-
-
-
-
-
-
-
-
-
-
5
971
17
344
16
21,408
-
-
-
-
-
-
-
-
299
(3,440)
-
(2,804)
(15)
107
(61)
(241)
(45)
15,314
1 Equity instruments held at 30 June 2020 were 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
Page | 94
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
later than 30 June 2021. The Company 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 were 2,473,367 convertible preference shares outstanding with a face value of AU$3.00 per share and
a value held in reserves of AU$11,059,348 at 30 June 2020, representing their face value plus dividends
accrued. Convertible preference shares were subordinated to all creditors of Aevitas Group, ranked equally
amongst themselves, and ranked in priority to ordinary shares of Aevitas Group.
There were 2,473,367 convertible loan notes outstanding with a face value of AU$7.00 per share and a value
held in reserves of AU$25,075,203, representing their face value plus the dividends accrued. The convertible
loan notes ranked equally with the unsecured creditors of Aevitas Group.
Dividends or interest were payable quarterly in arrears at a rate of 7% on the capitalised value to December
29, 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 had 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
On August 7, 2020, the Company offered one new Aevitas Preference Share, with an issue price of $10, in
exchange for each combined convertible note and convertible preference share, with an issue price of $7
and $3 respectively. Dividends are payable quarterly, in arrears, at a rate of 7%. Of the 2,473,367 holders of
combined convertible note and convertible preference shares, 426,528 holders accepted the terms of the
new Aevitas Preference Shares and received 426,528 Aevitas Preference Shares (A$4,265,280) on August 31,
2020, in exchange for the combined convertible notes and convertible preference shares previously held.
The new Aevitas Preference Shares are subordinated to all creditors of Aevitas Group, rank equally amongst
themselves, and rank in priority to Aevitas Group Limited ordinary shares for the payment of dividends.
The 426,528 holders which exchanged on August 31, 2020, had earned $26,708 interest on the convertible
loan note in the year ended June 20, 2021, up until exchange, and this was paid in full along with $11,447
dividends that accrued over the same pre-exchange period on the convertible preference shares. Post-
exchange, $185,480 dividends of the Aevitas Preference Shares have been earned, with $121,905 of those
paid by 30 June 2021. And the 426,528 Aevitas Preference Shares have a face value of $3,208,922 (A$10 per
share), recognised together with the dividends payable.
On 30 June 2021, the remaining 2,005,190 holders of convertible preference shares and convertible loan
notes in Aevitas Group Limited (“Aevitas Group”), exercised their right to convert the instruments into
ordinary shares in VivoPower International PLC. The cumulative balance of face value and accrued unpaid
interest and dividends outstanding of the convertible preference shares and convertible loan notes at 30
June 2021 of $20.5 million, was redeemed on that date, and VivoPower International PLC recognised the
requirement to issue 2,005,190 restricted ordinary shares, based on a contracted conversion price of $10.20
per share.
2 $20.5 million recognition in equity of the 2,005,190 restricted ordinary shares pending issuance at a
contracted conversion price of $10.20 per share. The 2,005,190 restricted ordinary shares were issued on July
21, 2021.
3 During the year the Company incurred $2.8m of transaction costs associated with a series of capital raises
on Nasdaq and an issue of shares to Tottenham Hotspurs Football Club.
4 During the year $1,422,000 was expensed towards share incentive awards to employees, directors, and
consultants of the Company under the Omnibus Incentive Plan. Amounts are expensed at the award grant
price over the vesting period, adjusted for actual quantities upon vesting. Of the expenses recorded, $971,000
of shares were delivered to participants in the year. 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.
Page | 95
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
5 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
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.
6 The share option reserve represents 828,000 share options granted to Early Bird Capital as part of the initial
public share offering. The 0ptions entitled the holder to buy VivoPower ordinary shares at US$8.70 at any
time before April 30, 2020. The options were originally accounted for as a share-based award and
accordingly, the cost of the award was recognised 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.
27. 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 attributable to
equity owners
Weighted average number of shares in
issue (‘000s)
Basic loss per share (dollars)
Diluted loss per share (dollars)
28. Pensions
Year Ended
30 June 2021
Year Ended
30 June 2020
Three Months
Ended
30 June 2019
Year Ended
31 March
2019
(7,571)
(5,103)
(1,446)
(11,223)
16,307
13,557
13,557
13,557
(0.46)
(0.46)
(0.38)
(0.38)
(0.11)
(0.11)
(0.83)
(0.83)
The Company’s principal pension plan comprises the compulsory superannuation scheme in Australia,
where the Company contributes 9.5%. A pension scheme is also in place for U.K. employees, where the
Company contributes 7% (year ended 30 June 2020: 4%). A pension scheme is also in place for Netherlands
employees where the Company contributes 10.3%. The pension charge for the year represents contributions
payable by the Group which amounted to $0.8 million (year ended 30 June 2020: $0.79 million; 3 months
ended June 20, 2019: $0.27 million; year ended 31 March 2019: $0.76 million).
Page | 96
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
29. Financial instruments
(US dollars in thousands)
Financial assets at amortised cost
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total
Financial liabilities at amortised cost
Loans and borrowings
Trade and other payables
Total
As at 30 June
2021
2020
2019
As at 31 March
2019
6,970
8,604
1,140
8,587
2,824
1,013
8,144
7,129
632
16,714
12,424
15,905
23,091
5,751
28,842
25,954
7,504
33,458
21,686
12,281
33,967
7,971
4,522
1,319
13,812
19,267
11,016
30,283
The amounts disclosed in the above table for trade and other receivables and payables do not agree to the
amount reported in the 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 $8.6
million at 30 June 2021 (30 June 2020: $2.8m; 30 June 2019: $7.1 million; 31 March 2019: $4.5 million). The
ratio of current assets to current liabilities at 30 June 2021 is 1.79 (30 June 2020: 1.04; 30 June 2019: 1.25; 31
March 2019: 1.43). 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 nil was drawn at 30 June 2021 (30 June 2020:
$0.5 million; 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.
Contractual maturities of financial liabilities, including interest payments, are as follows:
Page | 97
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Year ended 30 June 2021
(US dollars in thousands)
Total
Less than
1 year
1-3
years
3-5
years
More than
5 years
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)
5,751
Borrowings
Lease liabilities
Total
22,096
995
28,842
5,751
411
669
-
-
11,424
10,261
326
-
6,831
11,750
10,261
-
-
-
-
Year ended 30 June 2020
(US dollars in thousands)
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)
Borrowings
Lease liabilities
Total
Total
Less than
1 year
1-3
years
3-5
years
More than
5 years
7,504
24,598
1,356
33,458
7,504
688
649
-
23,873
654
8,841
24,527
-
37
53
90
Year ended 30 June 2019
(US dollars in thousands)
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)
Borrowings
Lease liabilities
Total
Total
12,281
23,397
1,991
37,669
Less
than 1
year
12,281
3,859
692
16,832
1-3 years 3-5 years
-
19,538
1,077
20,615
-
-
222
222
-
-
-
-
More
than 5
years
-
-
-
-
Year ended 31 March 2019
(US dollars in thousands)
Total
Less than
1 year
1-3
years
3-5
years
More than
5 years
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)
11,016
11,016
-
Borrowings
Lease liabilities
Total
(c) Credit risk
22,480
2,556
19,924
290
147
143
33,786
13,719
20,067
-
-
-
-
-
-
-
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
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.
Page | 98
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 19 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 between USD, AUD, EUR and GBP.
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 2021:
• Cash and cash equivalents $2.3 million denominated in AUD, $0.9 million denominated in EUR and
$0.1 million denominated in GBP.
• Restricted cash $1.1 million denominated in AUD.
• Trade and other receivables $8.4 million denominated in AUD, $1.0 million denominated in EUR and
$0.2 million denominated in GBP.
• Trade and other payables $10.6 million denominated in AUD, $1.0 million in EUR and $0.9 million in
GBP.
• Borrowings $3.8 million denominated in AUD and $0.3 in EUR.
• Provisions $2.2 million denominated in AUD, $0.3 million in EUR and $0.5 million in GBP.
The non-current shareholder loan of $21.2 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.
30. Related party transactions
Following dilution due to issuance of ordinary share capital to third parties in the year, AWN is no longer the
ultimate controlling party of VivoPower, but retains a significant influence.
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 Company from AWN and its subsidiaries; the extent of the
transactions between the two groups is listed below.
In the prior fiscal year, on 30 June 2020, the Company refinanced its $23.4 million shareholder loan due to
AWN Holdings Limited (“AWN”), its largest shareholder. The shareholder loan bore interest at 10.0% per
annum plus a line fee of 2.0% per annum, payable monthly in advance. No interest or line fee settlements
were required until after a corporate liquidity event had occurred. Principal was repayable in 9 equal
monthly instalments from July 2021 until March 2022. Security granted to AWN comprised a Specific Security
Deed over the assets of Aevitas O Holdings Pty Ltd and general security over the assets of VivoPower
International PLC.
Page | 99
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
In December 2020, following the successful capital raise in October 2020, the Company and AWN agreed
some further amendments to the terms of the loan, reducing the interest rate from 10.0% to 8.0% per annum,
and reduction in line fee from 2.0% to 0.8% per annum, payable monthly in advance. Principal is repayable
in 60 equal monthly instalments of $0.35 million from July 2021 to June 2026, as well as an immediate stand-
alone repayment of $2.2 million principal, paid in April 2021.
On 30 June 2021, the Company agreed a further refinancing of its shareholder loan with AWN, to align the
repayment schedule with the timing of the investment and revenue growth plan in Electric Vehicles. Under
the amended terms, the repayment of principal has been deferred to 1 January 2023, with monthly
instalments of $0.35 million over the following sixty months, resulting in loan maturity extending from 30
June 2026, to 31 December 2027. In addition, the Company will cash settle a refinancing fee of approximately
$0.34 million in two tranches on 30 June 2022, and 31 December 2022. The interest rate and line fee remain
unchanged at 8% and 0.8% respectively and other terms remain unchanged.
Michael Hui, non-executive director of VivoPower International PLC, is also an employee and director of AWN.
During the year ended 30 June 2021, Mr. Hui invoiced the Company $48,000 for director fees. At 30 June 2021,
the Company had an account payable of $nil in respect of these services and an amount accrued of $1,000.
Furthermore annual 3,500 RSUs ($2,625) 27,095 quarterly PSUs ($20,321) and 7,788 ($50,000) one-off RSUs
vested to Michael Hui in the current year.
From time to time, costs incurred by AWN on behalf of VivoPower are recharged to the Company. During the
year ended 30 June 2021, $1,028,096 was recharged to the Company. At 30 June 2021, the Company has a
payable to AWN in respect of recharges of $4,345 (30 June 2020: $202,024; 30 June 2019: $1,268,670; 31 March
2019: $1,268,670).
Aevitas was indebted to the following subsidiaries of AWN via their holdings in Aevitas convertible loan notes
and convertible preference shares, which converted into rights to VivoPower shares on 30 June 2021,
subsequently issued on 21 July 2021. These convertible instruments were accounted for as equity
instruments within other reserves, as more fully described in Note 26 to the consolidated financial
statements.
Subsidiaries of AWN earned $737,220 of interest on convertible loan notes and $315,951 of dividends on
convertible preferred shares during the year ended 30 June 2021. This interest and the dividends, plus
amounts outstanding from prior periods, a total of $2,397,488, were paid to AWN subsidiaries during the year
ended 30 June 2021. Upon redemption at 30 June 2021, the face value plus interest and dividends
outstanding to 30 June 2021, were reinvested into rights to shares in VivoPower International PLC, at a
subscription price of $10.20 per share, as follows:
• Arowana Australasian Special Situations 1A Pty Ltd: 666,666 Aevitas convertible loan notes with a
Redemption Sum of $4,617,719, and 388,889 Aevitas convertible preferred shares with a
Redemption Sum of $1,192,352;
• Arowana Australasian Special Situations 1B Pty Ltd: 666,667 Aevitas convertible loan notes with a
Redemption Sum of $4,617,727, and 388,889 Aevitas convertible preferred shares with a
Redemption Sum of $1,192,352;
• Arowana Australasian Special Situations 1C Pty Ltd: 666,667 Aevitas convertible loan notes with a
Redemption Sum of $4,617,727; and 388,889 Aevitas convertible preferred shares with a
Redemption Sum of $1,192,352; and
• Arowana Australasian Special Situations Fund 1 Pty Limited: 833,333 Aevitas convertible preferred
shares with a Redemption Sum of $2,555,038
Page | 100
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 exchanged 4,697 convertible loan notes and 4,697
convertible preference shares for 4,697 Aevitas Preference Shares, of face value A$46,970. The Panaga Group
Trust earned $294 interest on the convertible loan notes and $126 on the convertible preference shares prior
to exchange, which was paid during the year ended 30 June 2021.
Chief Executive fees for Kevin Chin in the amounts of $443,816 and training annual allowance of $51,976 were
charged to the Company by AWN during the year ended 30 June 2021. Furthermore annual 17,740 RSUs
($13,080) and 135,012 quarterly PSUs ($101,259) vested to APG for Mr. Chin as Chief Executive in the current
year.
Chairman’s fees for Kevin Chin in the amounts of $92,119 were charged to the Company by Arowana Partners
Group Pty Ltd (“APG”), and 7,788 ($50,000) one-off RSUs vested to APG as Chairman in the current year. Mr.
Chin is a shareholder and director of Arowana Partners Group Pty Ltd during the year ended 30 June 2021.
On 01 July 2020, Arowana International UK Limited (“AWE”), previously a subsidiary of AWN, ceased to be a
subsidiary of AWN, and ownership of this entity is not under common control. Accordingly, AWE is no longer
a related party to the Company in the year ended 30 June 2021.
31. Subsequent events
On 21 July 2021, the Company issued 2,005,190 restricted ordinary shares in VivoPower International PLC,
pursuant to the contracted terms of conversion of Aevitas convertible preference shares and convertible
notes that redeemed on 30 June 2021. Of the new ordinary shares issued, 1,959,339 were issued to AWN
Holdings Limited. Following this issuance, the beneficial ownership in VivoPower International PLC held by
AWN Holdings Limited increased to 49.1%.
32. Key management personnel compensation
Key management personnel, which are those roles that have a Group management aspect to them are
included in Note 9 to the consolidated financial statements.
33. Ultimate controlling party
As at 30 June 2021, the Company no longer has an ultimate controlling party, as AWN Holdings Limited only
holds a 44% equity interest in the Company as at 30 June 2021, and 49% following the issuance of restricted
shares on 21 July 2021 following conversion of Aevitas convertible preferred shares and convertible notes
that redeemed on 30 June 2021
In prior periods, the ultimate controlling party and the results into which these financials were consolidated
was AWN Holdings Limited, a company registered in Australia.
Page | 101
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Subsidiaries of the Registrant
Name
VivoPower International Services Limited
VivoPower USA, LLC
VivoPower US-NC-31, LLC
VivoPower US-NC-47, LLC
VivoPower (USA) Development, LLC
Innovative Solar Ventures I, LLC
VivoPower Pty Ltd
VivoPower WA Pty Ltd
VVP Project 1 Pty Limited
Amaroo Solar Pty. Ltd
Aevitas O Holdings Pty Ltd
Aevitas Group Limited
Aevitas Holdings Pty Ltd
Electrical Engineering Group Pty Limited
J.A. Martin Electrical Pty Limited
Kenshaw Electrical Pty Limited
VivoPower Philippines Inc.
VivoPower RE Solutions Inc.
V.V.P. Holdings Inc
Tembo e-LV B.V.
Tembo 4x4 e-LV B.V.
FD 4x4 Centre B.V.
Jurisdiction
Jersey
United States
United States
United States
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Philippines
Philippines
Philippines
The Netherlands
The Netherlands
The Netherlands
Page | 102
Company Statement of Financial Position
VivoPower International PLC for the year ended 30 June 2021
Company Statement of Financial Position
(US dollars in thousands)
Note
2021
2020
2019
30 June
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
36
37
38
39
40
41
-
14,513
-
14,513
5,256
51,357
56,613
71,126
1,786
485
2,271
222
76,229
12,087
-
7,388
24,850
32,238
306
16,534
16,840
49,078
3,750
1,104
4,854
163
40,215
19,185
349
7,388
24,353
32,090
1
18,577
18,578
50,668
5,347
-
5,347
163
40,215
18,330
(19,683)
(15,339)
(13,387)
68,855
71,126
44,224
49,078
45,321
50,668
31 March
2019
349
7,388
24,356
32,093
4
18,238
18,242
50,335
4,670
-
4,670
163
40,215
18,101
(12,814)
45,665
50,335
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 2021 was $4,343,000 (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).
These financials were approved by the Board of Directors on 14 September 2021 and signed on its behalf by:
Kevin Chin
Chairman
Page | 103
Year ended 30 June
Three
Months
Ended 30
June
Year
Ended
31
March
Note
2021
2020
2019
2019
Company Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2021
Company Statement of Cash Flow
(US dollars in thousands, except per share
amounts)
Cash flows from operating activities
Loss for the period
Income tax
Foreign exchange loss
Finance income
Finance expense
Decrease in provisions
Increase in trade and other receivables
Increase in trade and other payables
(4,343)
-
87
-
2
(620)
1,291
(1,203)
(1,952)
-
-
-
46
-
-
-
Net cash from/(used in) operating activities
(4,787)
(1,906)
Cash flows from investing activities
Acquisition of subsidiary
(7,125)
Intercompany loan funding / (repayments)
37
(14,708)
Net cash (used in)/from investing activities
(21,833)
Cash flows from financing activities
Capital raise - net
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
31,570
-
31,570
4,950
306
-
2,223
2,223
-
(12)
(12)
305
1
Cash and cash equivalents at the end of the period
5,256
306
(402)
-
-
(2)
-
-
(11)
709
294
-
(299)
(299)
-
2
2
(3)
4
1
(2,212)
(378)
-
-
36
-
(27)
805
(1,776)
-
1,796
1,796
-
(36)
(36)
(16)
20
4
Page | 104
Company Statement of Changes in Equity
VivoPower International PLC for the year ended 30 June 2021
Company Statement of Changes in Equity
(US dollars in thousands)
Share
Capital
Share
Premium
Other
Reserves
Retained
Deficit
Total
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
At 30 June 2020
Total comprehensive income for the
period
Capital raises
Equity instruments
Other share issuances
Employee share awards
At 30 June 2021
163
40,215
18,101
(12,814)
45,665
-
-
-
-
163
-
-
-
-
(402)
(402)
-
-
-
-
-
(3)
233
230
-
(171)
(573)
40,215
18,330
(13,387)
(460)
(1,952)
(2,412)
-
-
-
-
971
344
855
-
-
(1,952)
(3)
62
(343)
45,321
971
344
(1,097)
44,224
163
40,215
19,185
(15,339)
-
49
-
1
9
59
222
-
34,317
-
736
961
36,014
76,229
-
(4,344)
(4,344)
(2,821)
(4,383)
-
107
(7,098)
12,087
-
-
-
-
(4,344)
(19,683)
31,545
(4,383)
737
1,077
24,631
68,855
For further information on “Other Reserves” please see Note 26 within the consolidated financial
statements.
Page | 105
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2021
Notes to the Company Financial Statements
34. Reporting entity
in accordance with
VivoPower International PLC company financial statements were prepared
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.
35. 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 30 within the consolidated financial
statements.
36. Investment
(US dollars in thousands)
Shares in group undertakings
Investment in Tembo e-LV
Investment in VivoPower International Services Limited
Total
As at 30 June
As at 31
March
2021
2020
2019
2019
7,125
7,388
14,513
-
7,388
7,388
-
7,388
7,388
-
7,388
7,388
On 5 November 2020, the Company acquired 51% of the ordinary issued share capital of Tembo e-LV B.V.
for $4.9 million. Tembo e-LV B.V. is a specialist battery-electric and off-road vehicle company located in The
Netherlands. The non-controlling interest representing 49% of the ordinary issued share capital was
acquired on 2 February 2021 for $2.2 million and 15,793 shares in the Company ($0.2 million).
Page | 106
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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 15 in the consolidated financial statements.
37. Other receivables
(US dollars in thousands)
Amounts owed by group undertakings
Prepaid expenses
Total
38. Trade and other payables
(US dollars in thousands)
Trade payables
Accrued expenses
Payroll tax liabilities
Other borrowings
Amounts owed to group undertakings
Total
39. Provisions
(US dollars in thousands)
At 30 June 2019
Charged/(credited) to profit or loss:
Additional provisions
Provisions utilised
At 30 June 2020
Charged/(credited) to profit or loss:
Additional provisions
Provisions utilised
At 30 June 2021
As at 30 June
2021
49,484
1,873
51,357
2020
16,338
196
16,534
As at 31
March
2019
18,099
139
18,238
2019
18,427
150
18,577
As at 30 June
As at 31
March
2021
1,334
401
15
36
-
1,786
2020
2,792
157
4
46
751
3,750
2019
-
1,158
25
-
1,816
2,999
2019
-
1,161
9
-
1,848
3,018
Litigation
Total
1,104
-
1,104
2,042
(2,661)
485
1,104
-
1,104
2,042
(2,661)
485
Page | 107
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2021
40. Share capital
(US dollars in thousands)
Allotted, called up and fully paid:
As at 30 June
2021
2020
2019
As at 31
March
2019
Ordinary shares of $0.012 each
$ 222,074
$ 162,689
$ 162,689
$ 162,689
Number allotted:
Ordinary shares of $0.012 each
18,506,064
13,557,376
13,557,376
13,557,376
At 31 March 2019
At 30 June 2019
At 30 June 2020
Capital raises1
THFC investment2
Employee share scheme issues3
Acquisition of non-controlling interest in subsidiary4
Shares
Par
value
No. USD 000
Share
premium
USD 000
Total
USD 000
13,557,376
13,557,376
13,557,376
4,091,019
49,750
792,126
15,793
163
163
163
49
1
9
-
40,215
40,215
40,215
34,317
499
961
237
40,378
40,378
40,378
34,366
500
970
237
At 30 June 2020
18,506,064
222
76,229
76,451
1 During the year, the Company completed a series of capital raises on Nasdaq. A total of 4,091,019 ordinary
shares were issued, comprising 3,382,350 ordinary shares issued on 19 October 2020 as an underwritten
public offering pursuant to an F-1 registration statement filed with the SEC on 14 October 2020, and 708,669
ordinary shares issued during June 2021, as at the market price, pursuant to an F-3 registration statement
filed with the SEC on December 21, 2020.
2 In February 2021, 49,750 ordinary shares were issued to Tottenham Hotspurs Football Club (“THFC”) as
part of the exclusive global battery partnership agreement.
3 792,126 shares were issued to employees and directors of the Company and consultants to the Company
under the Omnibus Incentive Plan during the year.
4 In February 2021, 15,793 restricted ordinary shares were issued as part consideration for the purchase of
the non-controlling interest in Tembo e-LV B.V.
On 30 June 2021, holders of convertible preference shares and convertible loan notes in Aevitas Group
Limited, exercised their right to convert the debt instruments into ordinary shares in VivoPower
International PLC. A total of 2,005,190 restricted ordinary shares were issued at a contracted price of $10.20
on 21 July 2021. Of the 2,005,190 ordinary shares issued, 1,959,339 were issued to funds owned by AWN,
the Company’s largest individual shareholder.
Each share has the same right to receive dividends and repayment of capital and represents one vote at
shareholders’ meetings. Proceeds received in addition to the nominal value of the shares issued during the
year have been included in share premium. The costs associated with the issuance of new shares are
included within other reserves (see note 41). Share premium has also been recorded in respect of the share
capital related to employee share awards.
Page | 108
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2021
41. Other reserves
(US dollars in
thousands)
Equity
instrumen
ts
Shares
pendin
g issue
Capital
raising
costs
Equit
y
incen
tive
costs
Share
awards
issuanc
e
Treasur
y
shares
Share
option
reserve
Foreig
n
exchan
ge
Total
At 31 March 2019
26,090
Equity instruments
Other reserves
Treasury shares
18
-
-
18
At 30 June 2019
26,108
Equity instruments
Share options lapsed
Equity incentives
At 30 June 2020
Capital raises
Equity instruments -
conversion
Equity instruments - other
Equity incentives
Other movements
971
-
-
971
27,079
-
(20,466)
20,466
(4,384)
-
(2,229)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(9,722)
-
-
-
-
(9,722)
-
3,713
-
3,713
-
-
-
-
-
-
-
-
350
350
(6,009)
350
-
-
-
(2,821)
-
-
-
-
At 30 June 2021
-
20,466
(8,830)
1,428
(971)
(27,079)
20,466
(2,821)
1,078
(971)
1,078
(971)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(246)
3,713
(1,734)
18,101
-
-
232
232
-
-
-
-
-
(21)
-
(21)
18
(21)
232
229
(14)
3,713
(1,755)
18,330
-
-
14
-
(3,713)
-
-
971
-
-
(480)
(116)
14
(3,713)
(480)
855
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,235)
-
-
-
-
2,229
19,185
(2,821)
-
(4,384)
107
-
2,229
(7,098)
(6)
12,087
42. Employee and directors
The company employed one member of staff during the course of the year. Contractual agreements are in
place for six 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 | 109
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2021
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
DLA Piper
160 Aldersgate Street, Barbican,
London, UK, EC1A 4HT
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
44 Montgomery Street, San Francisco, CA 94104
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 30 August 2021, the Company’s issued share capital consists of 20,641,995 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, Australia, Canada, and Netherlands.
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 26 October 2021. The notice of the meeting will be sent to shareholders at
least 21 days before the meeting.
Page | 110