ANNUAL REPORT
For the fiscal year 30 June 2022
VivoPower International PLC
VivoPower International PLC
Notes to the Financial Statements
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, United Arab Emirates, 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
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Page | 2
Highlights
VivoPower International PLC for the year ended 30 June 2022
Highlights
Accomplishments for the Year ended 30 June 2022
Revenues ^ declined 7% to $37.6m primarily due to COVID-19 related lockdowns. Down 3% year-
on-year on a constant AUD/USD FX basis
Gross profit ^ declined to $1.6 million due to impact of COVID-19 related compliance costs and
supply chain/logistics related cost increases, including $1.9 million of one-off Bluegrass overruns
Adjusted EBITDA ^ down to $(10.4) million due to revenue decline, increased costs and increase
in headcount and marketing costs to support growth
Statutory net after-tax loss of ($21.6) million for FY22 and earnings per share (“EPS”) of ($1.04) per
share, as compared to a ($8.0) million loss and ($0.49) per share in FY21
Cash decreased from $8.6 million to $1.3 million, but increased to $8.9 million post balance date
following completion of divestitures and $5.0 million NASDAQ shelf issuance in July 2022
Toyota partnership cemented with a Design Services Agreement. Distribution partner network
and geographic reach expanded; additional 3,350 e-LV conversion kits committed
Divestiture of non-core businesses in Aevitas - refocus on Solar growth including Edenvale Solar
Farm contract
*All references to $ are references to USD unless otherwise noted.
^ Amounts include discontinued operations
(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)
Year Ended 30 June
2022
37,618
1,585
(14,640)
(10,353)
(1.04)
(1.02)
2021
40,411
6,327
(4,782)
(1,448)
(0.49)
(0.28)
2020
47,986
7,101
2,169
3,937
(0.38)
(0.12)
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 2022
Chairman and Chief Executive’s Statement and Review
VivoPower International PLC (“VivoPower” or the “Company”) had a strong year in terms of executing on its
sustainable energy solutions (SES) strategy. However, it was a difficult year from a financial results
perspective, adversely affected by strict COVID lockdowns and policies in our key markets, especially
Australia as well as adverse foreign exchange movements.
Key achievements during the financial year included:
•
•
•
•
Tembo distribution partner network and geographic reach considerably expanded; additional
commitments for 3,350 e-LV conversion kits, thus increasing total EV kit commitments and orders to
8,000+;
Delivered on some EV kit orders globally despite strong headwinds from supply chain and logistics
delays and made significant progress on development of next generation long-range 72kWh conversion
kits;
Executed Design Services Agreement with Toyota Australia, cementing our partnership to be
commercially engaged in next stage of electrification design for LandCruiser 70;
Completed and contracted solar farms to over 650MWdc across seven projects in Australia including
204MWdc Edenvale Solar Farm and 119MWdc Hillston Solar Farm;
• Moved to new expanded facilities for Kenshaw and Tembo increasing capacity to grow significantly;
•
Established Tembo presence directly in Australia, the Philippines and the United Arab Emirates as part
of globalisation program to be near our customers
Post balance date, we were able to execute on the following:
•
•
Divestiture of non-core businesses in Aevitas to refocus on growth in Aevitas Solar;
Competed shelf issuance with a placement to an institutional investor with $5.0 million in net equity
proceeds;
• Memorandum of Understanding (MOU) signed with state owned enterprise (SOE) in Jordan for 1,000
Tembo e-LV kits;
•
Achieved B Corporation recertification and recognized in the B Corp Best For The World program as
being in the top 10% globally amongst B Corporations for Governance.
As mentioned before and notwithstanding the above achievements, VivoPower’s revenue and profits
declined versus the prior financial year. Key financial results and metrics for the fiscal year ended 30 June
2022 were as follows:
•
•
•
•
Annual revenues including discontinued operations of $37.6 million, a decline of 6.9% compared to
$40.4 million for the previous fiscal year (declined 3% on a constant AUD / USD exchange rate basis);
Gross profit including discontinued operations of $1.6 million, a decline of 74.9% compared to $6.3m
for the previous fiscal year;
Underlying EBITDA of $(10.4) million compared to a $(1.4) million EBITDA profit for the previous fiscal
year, reflecting COVID-19 lockdowns in Australia, FX fluctuations and increased investment in
operational expenditure to support growth plans for Tembo;
Statutory earnings per share (EPS) loss of $(1.04) represented a decline versus $(0.49) EPS loss for the
previous fiscal year, whilst underlying EPS loss was $(1.02) versus $(0.31) loss for the previous fiscal year.
Page | 4
Chairman and Chief Executive’s Statement
VivoPower International PLC for the year ended 30 June 2022
Notwithstanding the above, the tailwinds for our various business units have strengthened in the past few
months, with developments such as the ratification of the Inflation Reduction Act in the United States and
the added government impetus in Australia that is fuelling a record level of solar power development.
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 2023, we have set the following enterprise objectives:
•
•
•
•
•
•
Deliver Tembo e-LV commitments on schedule and budget
Execute on Tembo microfactory and continue R&D
Expand Tembo addressable market & partnership base
Scale-up Aevitas solar, expand capabilities & diversify customer base
Grow SES business with new capabilities and partnerships
Execute on corporate initiatives to enable sustainable growth
On behalf of the rest of the Board, I would like to take this opportunity to thank all of our stakeholders for
their continued support and engagement. I would also like to than colleagues at VivoPower for their
relentless commitment to execution excellence. As a company, we remain committed to delivering impact
on a triple bottom line basis across people, profit and planet.
Kevin Chin
Chairman and Chief Executive Officer
September 2022
Page | 5
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
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, the United States (U.S.) and the United Arab Emirates.
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 Kenshaw
Electrical Pty Limited (“Kenshaw”) and Kenshaw Solar Pty Ltd. (“Kenshaw Solar”), previously J.A. Martin
Electrical Pty Limited, 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 Netherlands”) and Tembo EV Australia Pty Ltd (“Tembo
Australia”), (in combination “Tembo”), a 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, Kenshaw and Kenshaw Solar. Aevitas
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, the businesses have operations across the Eastern-seaboard of
Australia, and 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.
The Hunter Valley region is the leading regional economy in Australia, contributing over A$34.7 billion to the
New South Wales economy and generating over 44% of the state’s electricity needs. It has a multi-faceted
economy and a skilled workforce, with traditional strengths in mining and advanced manufacturing
complemented by fast-growing defence, 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.
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Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Kenshaw Solar (previously J.A. Martin Electrical Pty Limited)
Kenshaw Solar (previously J.A. Martin) is a specialized industrial electrical engineering and power services
company that has been servicing the largest commercial and industrial belt in Australia, the Newcastle and
Hunter Valley region in New South Wales, for more than 50 years since its founding in 1968.
In line with VivoPower’s strategy to focus on its core electrical vehicle, renewable critical power and
sustainable energy solutions businesses, the non-solar business of J.A. Martin was deemed non-core and
sold to ARA on 01 July 2022. The remaining solar division of J.A. Martin now operates as Kenshaw Solar,
under the management of the Kenshaw leadership team from the new, expanded Kenshaw location in
Newcastle. Kenshaw Solar continues to deliver existing contracts in place at the time of the divesture in
respect of the Blue Grass and Edenvale Solar Farms and is actively seeking new projects in the solar market
as part of the Kenshaw Solar growth strategy.
Results of the non-solar operations of J.A. Martin are included in discontinued operations. Included within
the net assets of the discontinued operation sold to ARA are a facility in Newcastle which 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.
Kenshaw Solar 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.
Notwithstanding a history and core business centred in the industrial, manufacturing and mining sectors,
Kenshaw Solar has over the past four years developed a strong reputation and position providing electrical
services to the Australian solar market. During the fiscal year, Kenshaw Solar completed the provision of
electrical installation and services for its eighth solar farm, the 119MWdc Hillston Solar Farm, and has
commenced work on two further solar projects, bringing its total of contracted or completed solar project
work to 664.8MW.
As a result of strong growth in the Australian solar generation market, Kenshaw Solar’s revenue base has
been transformed from a traditional reliance on the industrial, manufacturing and mining sectors to an
increasing exposure to the renewables sector. Through its work on the Blue Grass and Edenvale Solar
Farms, the business has made inroads into the Western Downs region of Queensland, dubbed “The Energy
Capital of Queensland”, and expects to see further growth from this region. The Western Downs’ energy
sector is growing significantly due to geography and environmental conditions, along with existing
transmission infrastructure that gives energy providers access to interstate connectors and transmission
lines. As a result, the region is a prime destination for renewable energy. There are over A$4.0 billion worth
of approved projects in the renewable energy sector in the region, including 24 solar farms and A$2.4 billion
worth of projects under construction, constituting nearly a quarter of Australia’s total investment in
renewables.
Kenshaw Solar’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 continued to perform strongly notwithstanding the
effects of the global COVID-19 pandemic and rising geopolitical tensions, in particular the breakdown in
the relationship between China and Australia.
Revenue earned within Australia is comprised of the following activities:
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Strategic Report
VivoPower International PLC for the year ended 30 June 2022
(US dollars in thousands)
Electrical installation
projects
Electrical service
contracts
Electrical switchboard
manufacturing
Total revenue
2022
Year ended June 30
2021
2020
Kenshaw
Solar
8,671
JA
Martin
6,090
Kenshaw
Solar
4,172
JA Martin
7,028
Kenshaw
Solar
3,786
JA
Martin
7,634
-
-
5,328
3,750
-
-
5,131
4,093
-
-
3,494
3,582
8,671
15,168
4,172
16,252
3,786
14,710
In fiscal year ended 30 June 2022, (“FY2022”), the business continued to be impacted by operational
disruptions caused by absenteeism and supply chain disruption attributable to the COVID-19 pandemic. This
has resulted in delays to the execution and completion of several projects and restricted access to clients’
sites, resulting in slower completion of scheduled works and hence revenue recognition, and higher costs in
delivering contracted goods and services. Through the implementation of workplace health and safety best
practices and adherence to public health directives, Kenshaw Solar has mitigated the impact of the
pandemic to some degree, however the additional costs and operational inefficiencies caused have
adversely affected profitability margins.
Kenshaw Solar’s solar division has also been materially affected by high levels of rainfall along the east coast
of Australia in the first half of 2022, with Australia experiencing more rain in the first five months of the year
than the average rainfall. This La Nina weather pattern continues to linger along the east coast and is
expected to persist into at least September. As a consequence, the occurrence of delays attributable to
adverse weather have risen, resulting in delayed project completions and higher costs.
Kenshaw Solar 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 realization 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 adapted to longer lead times from suppliers caused by
the COVID-19 induced disruption to supply chains, however this effect has not been entirely mitigated and
supply chain challenges persist.
With the sale of the non-solar J.A. Martin operations, Kenshaw Solar will need to diversify its customer-base
in order to reduce its reliance on its key solar partner, Grupo Gransolar, S.L. The business is not 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.
Kenshaw Electrical Pty Limited
Founded in 1981, Kenshaw is a specialized provider of critical electrical power and critical mechanical power
services that is headquartered in Newcastle, in the Hunter Valley region of New South Wales, Australia.
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 Sydney. The business’s success is 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 and
mechanical equipment. 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 2022
With ISO9001 (Quality Management) and ISO45001 (Occupational Health and Safety) certification as
evidence of its commitment to quality and safety, 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, health infrastructure, mine operators and agriculture to aged care facilities,
transport providers and utility services.
Kenshaw’s core competencies include: generator design, turn-key sales and installation; generator servicing
and emergency breakdown services; customized motor modifications; wheel cartridge motor electric repair
and refurbishment; and industrial electrical services.
The data centre sector continues to be a key market for Kenshaw. Fuelled by the trend of digital
transformation and the emergence of remote working, online schooling and virtual entertainment during
the COVID-19 pandemic, and compounded by the growing impact of big data and the internet of things,
Australian data centre providers are experiencing significant increases in demand for their storage and
processing capabilities. Recent changes by the New South Wales government to relax planning approvals for
data centre development should stimulate further growth in new supply within Kenshaw’s home state. In
the Sydney market alone, 2021-2024 pipeline of 456MW is almost equivalent to the existing total capacity of
488MW.
VivoPower believes Kenshaw continues to benefit 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 and facility management service providers. In addition, with a growing
base of completed installation projects, the business actively targets the provision of contracted ongoing
monitoring and maintenance of these critical UPS assets, through its Generator Service division. The well-
established Canberra branch and newer 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. In Australia, health spending has generally grown faster than the rest of the economy over the past
40 years. The 2021 Intergenerational Report (“IGR”) by the Australian Treasury Department forecasts that
Australian Government health spending will continue to increase as a share of Gross Domestic Product
(“GDP”) from 4.1% in 2018-19 to 6.2% in 2060-61. Funding for public hospitals is projected to be the fastest
growing component of that health spending, nearly doubling in nominal terms between 2020-21 to 2031-32.
In the aged care sector, Australian Government spending has increased by over 40% in real terms since 2012-
13. The reforms announced as part of the 2021-22 Budget will deliver a substantial structural increase in the
level of funding for aged care. By 2023-24, the IGR forecasts that Australian Government spending on aged
care is expected to be around A$4.5 billion higher per year as a result of the reforms (an increase of around
17%). This represents an increase in annual spending equivalent to around 0.2 percentage points of GDP.
The number of older Australians requiring aged care services is expected to increase as the population ages.
In the near term, the impacts of the baby boomer generation moving into their 70s and 80s will be particularly
marked. A key driver of aged care spending is the number of people over the age of 70. The IGR predicts that
number of people aged 70 and over will more than double over the next 40 years, reaching around 6.9 million
people by 2060-61.
Kenshaw benefits from these demographic and government spending 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 customized critical back up power
solutions and generator maintenance services. These services utilize Kenshaw’s custom developed
Generator Service App which results in more timely, detailed and accurate reporting of servicing and
condition.
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Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Kenshaw’s traditional customer base also includes companies that operate in or service the mining sector,
which is Australia’s largest industry as measured by contribution to GDP. Over the last year, the mining sector
in Australia has continued to perform strongly. Given its experience in the sector, Kenshaw is well positioned
to benefit from future growth in the mining industry in Australia.
(US dollars in thousands)
Generator sales and installation
Generator service and non-
destructive testing
Motor sales and overhaul
Total revenue
Year Ended 30 June
2022
5,206
1,767
5,315
12,288
2021
11,479
1,761
5,169
18,409
2020
23,579
4,199
1,565
29,343
While there is no material seasonality which impacts Kenshaw, in FY2022, the business continued to be
adversely impacted by operational disruptions caused by absenteeism and supply chain disruption
attributable to the COVID-19 pandemic. This has resulted in delays to the execution and completion of
several projects and restricted access to clients’ sites, resulting in slower completion of scheduled works and
hence revenue recognition, and higher costs in delivering contracted goods and services. 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.
With almost 500 active customers for the year ended 30 June 2022, 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 continued strength of the Australian mining sector.
Page | 10
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Electric Vehicles
Tembo e-LV B.V. and subsidiaries, Tembo 4x4 e-LV B.V. and FD 4x4 Centre B.V. (“Tembo Netherlands”) and
Tembo EV Australia Pty Ltd (“Tembo Australia”) are specialist battery-electric and off-road vehicle companies
that design and build electric battery conversion kits to replace ICE in ruggedized light electric vehicle
solutions for customers across the globe in the mining, infrastructure, utilities, and government services
sectors.
During the year, Tembo has opened offices in both Australia as well as United Arab Emirates (UAE) and will
shortly open an office in the UK. These offices are designed to provide closer alliances with our Distribution
Partners.
Despite the global impact of the COVID-19 pandemic along with its many lock-downs and following the
completion of 100% acquisition of Tembo by VivoPower, Tembo was able to generate long-term business
opportunities from new and existing customers internationally. 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 were
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. In September 2021, GHH
Germany signed a Distribution Agreement to purchase 3,000 conversion kits, covering 50 countries, over the
next 5 years.
During the second half of the fiscal 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 close cooperation with 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 as the first customer prototype vehicles for this
enhanced product are being assembled in Australia. The enhanced product has significantly more power
along with a much extended range and payload capability.
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 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. In June 2022 Tembo achieved ISO
14001:2015 certification for its Environmental Management Systems
In addition, the VivoPower board and leadership team have worked closely with the Tembo management
team to further reinforce a culture of safety and quality as well as to identify and implement industry best
practice occupational health and safety standards.
In May 2022, a Design Services Agreement ("DSA") was signed with Toyota Australia to formalize the
development program between VivoPower, Tembo and Toyota Australia for electrification of Toyota
Landcruiser vehicles, with an initial focus on the mining sector in Australia. This DSA is a precursor to a
potential Distribution Agreement.
Tembo is focused on a number of objectives in the coming year, including securing additional distribution
agreements globally, completing the development and commencement of full scale production of the
Page | 11
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
72kWh Toyota Landcruiser electric conversion kit, expanding its assembly and production capabilities in the
Netherlands as well as in other markets, and advancing research and development into the next generation
of electric conversion kits and batteries.
Under the proposed agreement, the Jordanian Organization intends to sell 1,000 Tembo e-LV conversion
kits from execution of this agreement until 30th September 2027.
Tembo is well placed to capitalize on the very strong increase in demand for fleet electrification solutions
from customers in harder to decarbonize sectors such as mining, infrastructure and utilities.
Revenue earned within the Netherlands post acquisition is comprised of the following activities:
(US dollars in thousands)
Conversion kits
Vehicle spec conversion
Accessories
Total revenue
Year Ended 30 June
2022
789
301
400
1,490
2021
137
1,219
38
1,394
2020
-
-
-
-
As the table above illustrates, Tembo was able to increase revenues from delivery of EV conversion kits by
375% versus the previous year. However, this was constrained by global supply chain and logistics delays
that affected the whole industry. In addition, the increased revenues from sales of conversion kits was offset
by a reduction in vehicle conversion revenues (as resources were re-directed to focusing on the new 72 kwH
battery kit development).
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 an
SES strategy, where its core mission is to help corporate customers achieve their decarbonization goals.
The key differentiator of VivoPower’s strategy is that the Company intends to focus on delivering a holistic
SES to customers that comprise the following 3 key elements:
•
•
•
EV and battery leasing;
Critical power “electric-retrofit” of customer’s sites (e.g., warehouses and depots) to enable optimized
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 December 2021, VivoPower executed a Memorandum of Understanding signed with Relectrify, a leading
supplier of battery energy storage systems utilizing second-life EV batteries, with the collaboration extended
to explore future redeployment of Tembo batteries.
In August 2022 the Company has invested in a Green Gravity Energy Pty Ltd, an Australian company
specializing in energy storage solutions in former mining locations.
Page | 12
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Given that the SES business segment was established in early FY2021, it has generated minimal revenues to
date. The Company 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 bog
(through J.A. Martin and Kenshaw) customers of the VivoPower group of companies, with significant projects
already proposed to major Australian mining companies.
Solar Development
Historic Solar Development Business
As a consequence of the Company’s strategic pivot to an SES strategy, VivoPower no longer intends to
engage in solar project development activities in isolation, unless if it’s a component of a sustainable energy
solution for a corporate customer that it is helping to achieve decarbonization goals. This segment has
historically been characterized 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 minimize capital intensity and
maximize return on invested capital by pursuing a business model predicated on developing and selling
projects prior to construction and continually recycling capital rather than owning assets. The stages of solar
development can be broadly characterized as: (i) early stage; (ii) mid-stage; (iii) advanced stage; (iv)
construction; and (v) operation. Our business model has been 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”) in April 2017 and in June 2021, VivoPower announced that
it had secured full ownership of the remaining 50% of the equity interest in the portfolio from ISS for a
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”),
owning a diversified solar project 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.
Of the 12 projects in the portfolio that were active at the start of the fiscal year, 4 additional projects were
discontinued or put on hold during the year ended 30 June 2022, in order to focus development efforts on
the most advanced and economically attractive projects in the portfolio. As these projects were previously
identified as being at high risk of being unviable, no value was attributed to them in the fair value assessment
preformed upon acquisition of a controlling interest in the portfolio in June 2021. Accordingly, no write off
of capitalized project costs is required for the 4 projects that have been discontinued in FY2022.
The 8 remaining projects are all in Advanced stages of development as summarized below and all are being
further developed for future sale and/or partnerships including in the context of the ‘power-to-x' strategy
announced by the Company in August 2021 which is currently being pursued with a focus on joint venture
opportunities
in the sustainable cryptocurrency mining and high-performance computing data
infrastructure sectors. The Company is currently actively evaluating partnership or joint development
Page | 13
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
opportunities with cryptocurrency mining and data centre developers in relation to a number of project sites
in its US solar portfolio. However, no exclusive or definitive agreements have been executed during the year
ended 30 June 2022. VivoPower expects a full realization within the next 12 to 24 months, although nearer
term opportunities may be pursued if they arise.
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 23MW across over 80 sites in every Australian state and the
Australian Capital Territory. These projects were fully contracted with commercial, municipal and non-
profit 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.
Page | 14
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
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 2022
Financial Results
Year Ended 30 June
2022
2021
(US dollars in thousands) Continuing Discontinued
Revenue from contracts
with customers
15,168
22,448
Total Continuing Discontinued
Total
37,616
23,975
16,436
40,411
Costs of sales
(20,308)
(13,842)
(34,150)
(19,614)
(14,470)
(34,084)
Cost of sales - COVID-19
disruption
Gross profit
General and administrative
expenses
(1,881)
-
(1,881)
-
-
-
259
1,326
1,585
4,361
1,966
6,327
(13,326)
(1,485)
(14,811)
(9,651)
(1,482)
(11,133)
Gain on SES development
(13)
-
Other income
662
324
(13)
986
769
960
-
769
552
1,512
Depreciation of property
and equipment
Amortisation of intangible
assets
(770)
(445)
(1,215)
(638)
(451)
(1,089)
(850)
(322)
(1,172)
(815)
(352)
(1,167)
Operating (loss)/profit
(14,038)
(602)
(14,640)
(5,014)
233
(4,781)
Restructuring and other
non-recurring costs
Finance income
Finance expense
(443)
-
(443)
(2,877)
(3)
(2,880)
173
2
175
2,176
3
2,179
(8,604)
(174)
(8,778)
(2,450)
(140)
(2,590)
Loss before income tax
(22,912)
(774)
(23,686)
(8,165)
93
(8,072)
Income tax
1,968
149
2,117
138
(24)
114
Loss for the year
(20,944)
(625)
(21,569)
(8,027)
69
(7,958)
Adjusted EBITDA
(10,518)
166
(10,352)
(2,483)
1,035
(1,448)
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 2022, the Group (including discontinued operations) generated total revenue
of $37.6 million, gross profit of $1.6 million, operating loss of $14.6 million and a net loss of $21.6 million. Of
these amounts, continuing operations of the Group generated revenue of $22.4 million, gross profit of $0.3
million, operating loss of $14.0 million and a net loss of $20.9 million. For the year ended 30 June 2021, the
Group (including discontinued operations) generated total 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 2021, the
Group generated continuing revenue of $24.0 million, gross profit of $4.4 million, operating loss of $5.0
million, and a net loss of $8.0 million.
Adjusted EBITDA (including discontinued operations) for the year ended 30 June 2022 was a loss of $10.4
million, compared to a loss of $1.4 million for the previous year. Adjusted EBITDA for continuing operations
was a loss of $10.5 million, compared to a loss of $2.5 million for the previous year. Adjusted EBITDA is a non-
IFRS financial measure. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and
amortization, impairment of assets, impairment of goodwill, other finance income and expenses, one-off
non-recurring costs including restructuring expenses and non-cash equity remuneration.
Page | 16
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
The results for the year ended 30 June 2022 reflect a challenging year, with numerous headwinds including
strict COVID lockdowns in our key markets during the first half of the year, followed by supply chain
shortages, extended logistics delays and COVID-19 related costs in the second half of the year which affected
our ability to operate and deliver efficiently. Our financial results were adversely affected, with revenues
constrained and group operating losses exacerbated by a US$1.9 million one off COVID driven loss in relation
to the Bluegrass Solar project in Australia and foreign exchange impact.
Revenue in Critical Power Services (excluding discontinued operations) declined by $1.4 million to $21.0
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 $1.5 million revenue in the year, with sales activity remaining
limited in the current product development phase. There was no revenue contribution from Solar
Development or Sustainable Energy Solutions in the year (year ended 30 June 2021: $0.2 million).
Gross profit (including discontinued operations) has reduced $4.7 million to $1.6 million, although this
decrease was partly mitigated by $1.0 million other income (year ended 30 June 2021: $1.5 million) for
government relief for COVID-19 allowance in Australia. Gross margins decreased in percentage terms from
16% to 4% as a result of COVID-19 lockdowns and impact on supply chain. This includes $1.9 million of non-
recurring costs on the Blue Grass project in Kenshaw Solar (formerly J.A. Martin), specifically impacted by
state border closures during the project execution phase. Excluding these non-recurring costs, gross margin
was 9% including discontinued operations, and 10% for continuing operations. Electric Vehicles also
contributed $0.01 million in gross profit (prior year: $0.1 million) while Solar Development contributed nil
(prior year: $0.2 million).
The gain on Solar Development projects was net nil for the year ended 30 June 2022 comprised $0.1 million
write off of costs incurred on uneconomic projects in Caret, offset by $0.1 million gain on sale of tangible
assets in Critical Power Systems.
The results for the year ended 30 June 2022 also reflect a $3.7 million increase in general and administrative
costs related to continuing operations to $13.3 million. The increase includes a $0.7 million increase in
marketing expenses, a $0. 8 million increase in non-cash equity remuneration, and a $1.9 million increase in
Corporate salaries, professional fees, IT expenses and investor relations costs to support worldwide growth.
The results of operations for the year ended 30 June 2022 include $0.4 million restructuring and other non-
recurring costs. These costs include $0.4 million remediation provisions in Electric Vehicles, $0.2 million
other restructuring costs in Corporate, offset by $0.1 million release of unutilized provision for disputed legal
success fees following settlement in the year.
Net finance costs from continuing operations of $8.4 million for the year ended 30 June 2022 include $3.4
million interest on related party loans, $4.5 million net foreign exchange losses and $0.2 million dividends
from Aevitas Preference Shares.
As at 30 June 2022, the Group’s current assets were $21.2 million (as at 30 June 2021: $24.0 million; 30 June
2020: $20.5 million), which was comprised of $1.3 million (as at 30 June 2021: $8.6 million; 30 June 2020: $2.8
million) of cash and cash equivalents, $1.2 million restricted cash (as at 30 June 2021: $1.1 million; 30 June
2020: $1.0 million;), $9.0 million (as at 30 June 2021: $12.7 million; 30 June 2020: $12.6 million) of trade and
other receivables, and $8.2 million (as at 30 June 2021: nil, 30 June 2020: $4.1 million) of assets held for sale
related to the JAM ex-solar segment sale and Caret LLC (formerly ISS Joint Venture) portfolio, following
acquisition of the remaining 50% of the joint venture by the Company.
Current liabilities were $22.9 million as at 30 June 2022 (as at 30 June 2021, $13.4 million; 30 June 2020: $19.7
million). The increase reflects additional shareholder loans and accrued interest.
Current asset-to-liability ratio as at 30 June 2022 was 0.92:1 (as at 30 June 2021: 1.79:1; 30 June 2020: 1.04:1).
As at 30 June 2022, the Company had net assets of $22.0 million (as at 30 June 2021 $40.4 million; 30 June
2020: $17.9 million), including intangible assets of $40.1 million (as at 30 June 2021: $47.4 million; 30 June
Page | 17
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
2020: $29.8 million). Property, plant and equipment increased to $3.7 million as at 30 June 2022 from $2.6
million as at 30 June 2021, reflecting additional leased properties, less depreciation and assets transferred
to assets held for sale.
Cash outflow for the year ended 30 June 2022, was $6.9 million, arising from cash inflow from financing
activities of $3.6 million and cash used in investing activities of $5.3 million less cash inflow from operating
activities of $5.1 million. At 30 June 2022, the Company had cash reserves of $1.3 million (30 June 2021: $8.6
million) and debt of $28.6 million (30 June 2021: $23.1 million), giving a net debt position of $27.3 million (30
June 2021: $14.5 million).
Net cash outflows from investing activities of $5.3 million in the current year comprised $1.2 million net
purchases of property, plant and equipment and a net $4.3 million cash outflow which includes additional
intangibles pertaining to capitalized staff costs.
Cash inflows from financing activities of $3.6 million in the year ended 30 June 2022 comprises primarily $4.2
million interest on borrowings, primarily AWN loan less finance expense paid amounting to $0.6 million.
Page | 18
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Year Ended 30 June 2022 Compared to Year Ended 30 June 2021:
Continuing operations
Discontinued
operations
Year Ended 30 June 2022
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales - other
Cost of sales – COVID-19 disruption
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Other income
Depreciation and amortization
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense - net
Profit/(loss) before income tax
Income tax
Loss for the year
Critical
Power
Services
20,958
(18,804)
(1,881)
273
(1,568)
103
662
(1,165)
(1,695)
45
(7,470)
(9,120)
1,349
(7,771)
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
Continuing
-
-
-
-
(80)
(139)
-
-
1,490
(1,504)
-
(14)
(2,578)
-
-
(443)
-
-
-
-
-
-
-
-
22,448
(20,308)
(1,881)
259
(1,660)
(7,440)
(13,326)
23
-
(3)
-
-
(9)
(13)
662
(1,620)
(219)
(3,035)
(1,640)
(7,449)
(14,038)
-
-
(429)
(974)
-
23
(59)
(10)
(443)
(8,431)
(219)
(4,438)
(1,617)
(7,518)
(22,912)
-
575
192
(148)
1,968
(219)
(3,863)
(1,425)
(7,666)
(20,944)
Critical
Power
Services
Total
15,168
37,616
(13,842)
(34,150)
-
(1,881)
1,326
1,585
(1,485)
(14,811)
-
324
(13)
986
(767)
(2,387)
(602)
(14,640)
-
(443)
(172)
(8,603)
(774)
(23,686)
149
2,117
(625)
(21,569)
Page | 19
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Continuing operations
Discontinued
operations
Year Ended 30 June 2021
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales - other
Cost of sales – COVID-19 disruption
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Other income
Depreciation and amortization
Operating profit/(loss)
Restructuring & other non-recurring costs
Finance expense - net
Profit/(loss) before income tax
Income tax
Loss for the year
Critical
Power
Services
22,396
(18,322)
-
4,074
(1,522)
36
960
(1,099)
2,449
(24)
1,824
4,249
(691)
3,558
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
Continuing
185
-
-
185
(1,309)
733
-
(4)
1,394
(1,292)
-
102
(1,923)
-
-
(346)
(395)
(2,167)
-
(24)
(631)
(1)
(419)
(2,799)
96
733
(323)
(2,066)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,897)
-
-
(4)
(4,901)
(2,222)
(2,073)
23,975
(19,614)
-
4,361
(9,651)
769
960
(1,453)
(5,014)
(2,877)
(274)
(9,196)
(8,165)
-
138
(9,196)
(8,027)
Critical
Power
Services
Total
16,436
40,411
(14,470)
(34,084)
-
-
1,966
6,327
(1,482)
(11,133)
-
552
(803)
769
1,512
(2,256)
233
(4,781)
(3)
(2,880)
(137)
(411)
93
(24)
(8,072)
114
69
(7,958)
Page | 20
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
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
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.
Page | 21
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
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.
Inflation. The economic volatility attributable to COVID-19 and Russia’s invasion of Ukraine is part of and
contributing to a larger trend of rising inflation around the globe, which may have a significant adverse effect
on economic activity and VivoPower’s business.
Ability to secure capital at attractive rates and terms.
Our businesses are capital intensive requiring significant investment in operational expenditure and capital
expenditure to realize 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 legal and financial compliance costs. 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, United Arab Emirates, 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,
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.
Page | 22
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
Directors
Senior Manager
Employees
Total
Health and Safety
Female
Male
Total
1
8
26
35
4
20
200
224
5
28
226
259
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. VivoPower recertified as a B Corporation in 2022
and was recognized in the Best For The World program as being in the top 5% amongst B Corporations for
Governance. Consistent with this certification, the shareholders approved changes to the Articles of
Association of the Company at the annual general meeting on August 20, 2018, to include:
(i)
the purposes of the Company are to promote the success of the Company for the benefit of its members
as a whole and, through its business and operations, to have a material positive impact on society and
the environment, taken as a whole;
(ii)
in exercising the powers of the Company, a Director shall have regard to, among other matters,
stakeholder interests such as:
a.
b.
the likely consequences of any decision in the long term;
the interests of the Company's employees;
c.
the need to foster the Company's business relationships with suppliers, customers and others;
d.
the impact of the Company's operations on the community and the environment;
e.
the desirability of the Company maintaining a reputation for high standards of business conduct;
and
f.
the need to act fairly as between members of the Company.
As a B Corporation, the Company is committed to continuously improve its B Corporation score and deliver
on the B Corporation triple bottom line of Planet, People and Profit.
Page | 23
Strategic Report
VivoPower International PLC for the year ended 30 June 2022
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
27 September 2022
Page | 24
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
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 2022. 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
Directors:
Kevin Chin (1)(4)
Matthew Cahir
Peter Jeavons (1)(2)(3)(4)
William Langdon (1)(2)(3)
Michael Hui
Gemma Godfrey (1)(2)(3)(4)
Age Position
Appointed
Resigned
49 Chairman
57 Non-Executive Director
57 Non-Executive Director
61 Non-Executive Director
42 Non-Executive Director
38 Non-Executive Director
27 April 2016
16 June 2020
16 June 2020
16 June 2020
22 January 2020
15 December 2020
17 March 2022
Executive Officers:
Kevin Chin (1)(4)
(1)
(2)
(3)
(4)
49 Chief Executive Officer
25 March 2020
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
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 47.5% as at 30
June 2022 (42.8% as at 31 August 2022) and is the beneficial owner of 9.6% of VivoPower as at 30 June 2022
(8.6% as at 31 August 2022), primarily through The Panaga Group Trust (4.9%) and Arowana Partners Group
Pty Ltd (4.4%).
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,
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.
Page | 25
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
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.
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.
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.
Page | 26
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
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.
Matthew Cahir
Matthew Cahir served as Director and Chairman of the Nominations Committee until his resignation on 17
March 2022.
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 UK-adopted international accounting standards 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 UK-adopted international accounting standards have been followed, subject
to any material departures disclosed and explained in the financial statements; and,
• prepare the financial on the going concern basis unless it is inappropriate to presume that the Group
and parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s and parent company’s transactions and disclose with reasonable accuracy at any time
the financial position of the Group and parent company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and parent company and to prevent and
detect fraud and other irregularities.
This annual report and financial statements together with the Notice of Annual General Meeting and other
information regarding the Group may be viewed on the Company’s website at www.vivopower.com.
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
Page | 27
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
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 2022, 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 30 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 2022, the Company had unrestricted cash totalling $1.3 million, compared to $8.6 million as at
30 June 2021 and $2.8 million as at 30 June 2020. Nevertheless as disclosed in note 32 - Subsequent Events,
after the year end date the Company received $2.6 million initial net cash proceeds from the sale of the J.A.
Martin Electrical ex-solar business and $5.0 million net proceeds from the registered direct offering shelf
issuance cap raise in July 2022.
Over the next twelve months, the Company expects a recovery in revenues and continued EBITDA generation
in critical power systems, growing revenue and costs in scaling up electric vehicles as the operation prepares
for series production. The Company will also be investing in further capitalized development costs in electric
vehicles in preparation for Tembo series production. In addition, it expects to fund selective development of
the U.S. solar portfolio to maximize future sales proceeds, as well as development of microgrid, EV charging
and battery energy storage capabilities, as part of the scaling up of the SES business unit. 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 2023 is a minimum of $25 million, at least
partially received in Q1 FY2023. The Company is planning to finance this funding requirement through equity
investment, European Innovation Council Accelerator grant, asset-backed financing for investment in
property, plant and equipment and software and debtors, supply chain and inventory financing solutions,
depending on what is best suited to the Company’s growth needs.
Page | 28
Directors’ Report
VivoPower International PLC for the year ended 30 June 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;
Staging the timing of property, plant and equipment and software capex to match asset-backed
financing inflows;
• Obtain Research & Development 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;
Purchase order financing, debtor financing facilities;
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 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 04 October 2017. On 09 April 2018, the Company filed a defence and
counterclaim, denying that a repudiatory breach was committed by the Company and denying the other
claims asserted by Mr. Comberg, claiming that Mr. Comberg was terminated for cause. On 26 November 2018,
the Company agreed to a settlement of the counterclaims against Mr. Comberg for an undisclosed amount.
After aborted attempts at settlement, the matter was heard in the U.K. High Court, 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
awarded to him were $1.76 million. Of the remaining provision as at 30 June 2021 of $0.5 million for unpaid
costs, $0.4 million was spent in the year ended 30 June 2022, resulting in a $0.1 million release of the
remaining unutilized provision.
On 31 May 2022 the William Q. Richards Estate filed a complaint alleging the Company improperly included
495 acres of land owned by the William Q. Richards Estate in the reinvestment zone of the tax abatement
agreements executed on 14 March 2022 between Cottle County, Texas and the Company’s subsidiaries
Innovative Solar 144, LLC and Innovative Solar 145, LLC. The complaint requested the Cause of Action to
nullify and/or declare the tax abatement agreements void. The William Q. Richards Estate filed an amended
complaint on 18 August 2022, further detailing their claims and requesting unspecified damages. The
Company will file a defence in September 2022, denying each of the Causes of Action and claims stated in
the complaint. The Company expects to be successful in its defence, accordingly no provision has been
recorded as at 30 June 2022 in relation to this matter.
Page | 29
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
Donations
During the year ended 30 June 2022, 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 2022, there were 21,318,118 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 82,644 ordinary shares were issued under an F-3 registration statement filed with the SEC on
December 21, 2020.
During the year, the Company issued 682,220 ordinary shares were issued to employees, directors and
consultants of the Company under the Omnibus Incentive Plan.
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 26, 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.
During the year ended 30 June 2022, 42,000 restricted shares were issued to corporate advisors in exchange
for investor relations services.
There are no specific restrictions on the transfer of shares in the Company, which is governed by the Articles
of Association and prevailing legislation, nor is the Company aware of any agreements between holders of
securities that may result in restrictions on the transfer of shares or that may result in restrictions on voting
rights.
There are no persons holding securities carrying special rights regarding control of the Company, no special
rights attaching to shares under employee share schemes, no restrictions on voting rights, nor any significant
agreements that take effect, alter or terminate on change of control of the Company following a takeover,
with the exception of the conversion rights attached to the convertible preference shares and convertible
loan notes in Aevitas Group Limited as described in Note 26 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 23,669,763 ordinary shares
issued and outstanding on 31 August 2022. 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
Page | 30
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
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.
Number of Shares
Percentage of Issued Capital
AWN Holdings Limited (2)
Armistice Capital Master Fund Ltd
10,136,145
1,709,230
42.8%
7.2%
(99) According to a Schedule 13D filed 31 January 2017, on behalf of AWN Holdings Limited (formerly Arowana International Limited)
(“AWN”), Arowana Australasian Special Situations Fund 1 Pty Limited (“Arowana Fund Co”), Arowana Australasian VCMP 2, LP
(“Arowana Fund GP”), Arowana Australasian Special Situations Partnership 1, LP (“Arowana Fund”), Arowana Energy Holdings Pty
Ltd. (“Arowana Energy”), AWN, as the controlling shareholder of each of Arowana Fund Co, Arowana Fund GP, Arowana Fund and
Arowana Energy, may be deemed to beneficially own 8,176,804 ordinary shares. This amount includes 5,718,879 ordinary shares
held directly by AWN, 488,435 ordinary shares directly held by certain entities controlled by AWN, 1,027,203 ordinary shares held by
Arowana Fund and 942,287 ordinary shares held by Arowana Energy. The business address of these entities is c/o AWN Holdings
Limited., at Level 11, 153 Walker Street, North Sydney, NSW 2060, Australia.
On 21 July 2021, AWN Holdings Limited was issued a further 1,959,339 restricted ordinary shares VivoPower International PLC, pursuant to the
contracted terms of conversion of Aevitas convertible preferred shares and convertible loan. As at 30 June 2022, AWN held a 47.5% equity
interest in the Company, reducing to 42.8% following the shelf issuance in July 2022.
Dividends
The Company has never declared or paid any dividends on our ordinary shares, and we currently do not plan
to declare dividends on our ordinary shares in the foreseeable future. Any determination to pay dividends to
holders of our ordinary shares will be at the discretion of our board of directors and will depend upon many
factors, including our financial condition, results of operations, projections, liquidity, earnings, legal
requirements, restrictions in our debt arrangements and other factors that our board of directors deem
relevant.
Articles of Association
The Company’s Articles of Association may only be amended by special resolution at a general meeting of
shareholders.
Auditors
PKF Littlejohn LLP has indicated its willingness to continue as auditor. In accordance with s489 of the
Companies Act 2006, a resolution to re-appoint them as auditors for the ensuing year will be put to the
members at the forthcoming Annual General Meeting.
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are
each aware, there is no relevant audit information of which the Company’s auditors are unaware; and each
director has taken all the steps that he ought to have taken as a director to make himself aware of any
relevant audit information and to establish that the Company’s auditors are aware of that information. This
confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies
Act 2006.
Page | 31
Directors’ Report
VivoPower International PLC for the year ended 30 June 2022
The Directors’ Report comprising pages 23 to 30 was approved by the Board and signed on its behalf by:
Kevin Chin
Chairman
27 September 2022
Page | 32
Corporate Governance
VivoPower International PLC for the year ended 30 June 2022
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 2022 and the attendance of the members at those meetings
(attended/eligible to attend):
Board
Audit and Risk
Committee
Remuneration
Committee
Nominations
Committee
8/ 8
8/ 8
8/ 8
8/ 8
5/ 5
8/ 8
- / -
-/ -
3 / 3
3 / 3
- / -
3 / 3
4 / 4*
- / -
5 /5
5 /5
- / -
5 / 5
-/-
-/-
- / -
-/-
-/-
-/-
Kevin Chin
Michael Hui
Peter Jeavons
William Langdon
Matthew Cahir
Gemma Godfrey
* attended as an observer
Page | 33
Corporate Governance
VivoPower International PLC for the year ended 30 June 2022
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
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 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 June 16, 2020.
Nominations Committee
The Nomination Committee of the board of directors is comprised of Gemma Godfrey (who is Chair of the
Nomination Committee), William Langdon, and Peter Jeavons joined the committee on 16 June 2020, and
each of whom the Board has determined is independent under the applicable Nasdaq listing standards.
Matthew Cahir served on the committee from 16 June 2020 until his resignation on 17 March 2022. Gemma
Godfrey joined the committee on 17 March 2022.
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
Page | 34
Corporate Governance
VivoPower International PLC for the year ended 30 June 2022
Group’s strategic business objectives and can only provide reasonable assurance against material
misstatement or loss.
The key elements of the system of internal control are:
Control environment
There is sufficient segregation of duties and authorisation controls on approval of customer and supplier
contracts, recruitment of staff, approval of purchases and payment of suppliers.
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 | 35
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
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 2022.
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 from the Committee 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 2022 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 | 36
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
Directors
The amount earned by each Director for the years ended 30 June 2022, 2021 and 2020 is set out in the table
below:
Year ended 30 June
Salary
and
fees
-
Bonus
and
LTIP
-
Pension
and other
Benefits
-
Long Term
Incentive
-
Directors
Shimi Shah
Peter Sermol
Ashwin Roy
-
-
Kevin Chin (Chairman)
£68,000
Matthew Cahir
Peter Jeavons
William Langdon
Michael Hui
Gemma Godfrey
£28,962
£52,127
£46,461
£37,774
£43,817
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2022
Total
-
-
-
2021
Total
-
-
-
2020
Total
£57,748
£57,748
£30,438
£68,000 £104,885 £156,559
£28,962
£82,289
£52,127
£82,289
£46,461
£82,289
£6,586
£44,360
£89,997
-
£43,817
£57,003
£1,590
£1,590
£1,590
£9,000
-
-
-
-
-
-
-
Mr. Chin was paid a salary of £68,000 ($92,029) 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 $50,000 per annum from 1 July 2021 to February 2022 as a result of his
resignation as a director on 17 March 2022.
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. Following his resignation on 17 March 2022, the
Committee approved the continued monthly payment of $32,000 per month and healthcare allowance of
$5,000 per month until the end of his notice period on 17 September 2022, in accordance with the terms of
his contract. In December 2021, the Committee approved an equity award of 70,000 ($229,600) RSUs in
relation to short term incentives for the year ended 30 June 2021, vesting in December 2021. In addition, the
Committee approved the following equity awards to Mr. Cahir following his resignation in March 2022, being
fulfilment of business development incentives for the year ended 30 June 2022:
•
•
•
•
a business development payment of 182,432 ($270,000) RSUs, vesting 01 May 2022;
a business development stretch payment of 109,459 ($162,000) RSU’s vesting conditional on certain
commercial settlement goals being achieved. These goals were achieved and RSU’s vested during
the year ended 30 June 2022.
a business development upside payment of 36,486 ($54,000) RSUs vesting conditional on certain
commercial settlement goals being achieved. This condition remains outstanding as at 30 August
2022.
2.5 points in a future Caret Omnibus incentive plan.
Mr. Jeavons was paid a salary of $50,000 per annum during the year. Mr. Jeavons also received an annual fee
of $7,500 as chair of the sustainability committee, $7,500 annual fee as chair of the remuneration committee
Page | 37
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
and $4,000 annual fee as member of the audit and risk committee. Mr. Jeavons elected to receive 75% of all
his fees for the year in equity (7,099 RSUs), 25% in cash.
Mr. Langdon was paid a salary of $50,000 per annum during the year. Mr. Langdon also received an annual
fee of $7,500 as chair of the audit and risk committee and $4,000 annual fee as member of the remuneration
committee. Mr. Langdon elected to receive 100% of his salary as equity (1,989 RSUs) and 100% of his
committee fees in cash.
Mr. Hui was paid a salary of $50,000 per annum during the year. 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, 8,124 RSUs ($6,093) vested in the current year.
Mrs. Godfrey is paid a salary of $50,000 per annum. Mrs. Godfrey also received $4,000 annual fee as member
of the audit and risk committee and $4,000 as member of the remuneration committee. Mrs. Godfrey elected
to receive 25% of her salary and committee fees as equity; 75% in cash.
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 | 38
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
Directors’ Interests
The Directors’ beneficial interest in the 21,318,118 issued ordinary shares of the Company as at 30 June 2022
are detailed below.
Number of Shares Beneficially
Owned
Outstanding
scheme interests
at
30 June 2022
Total of all share interests and
outstanding scheme interests, at
30 June 2022
Unvested
scheme
interests (not
subject to
performance
measures)
Vested but
unexercised
scheme interests
Total shares
subject to
outstanding
scheme
interests
Percentage of
Outstanding
Shares
2,018,080(3) (4)
36,155
37,225
29,711
-
2,126,610
-
-
-
-
-
-
25,7496)
1,771
1,711
5,168
495
34,894
-
-
-
-
-
-
2,043,819
37,926
38,936
34,879
5,934
2,161,504
8.6%
<1%
<1%
<1%
<1%
9.1%
Name and address
of beneficial
owner (1)
Kevin Chin (2)
Peter Jeavons
William Langdon
Michael Hui
Gemma Godfrey
All directors and
executive officers as
a group (6 persons)
(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 2022, relative to the Nasdaq Composite Index. The Nasdaq Composite Index
is considered an appropriate comparator for VivoPower:
Page | 39
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
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
30-Jun-22
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
Year ended 30 June
Year ended 30 June
Year ended 30 June
2022
2021
2020
2022
2021
2020
2022
2021
2020
Kevin Chin
Art Russell
Carl Weatherley-White
£367,428
£365,898
£71,081
N/A
N/A
N/A
£193,875
N/A
N/A
0%
0%
N/A
0%
0%
N/A
0%
0%
N/A
£206,273
£84,383
-
-
-
-
N/A
N/A
N/A
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
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.
Page | 40
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
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 2022
Year Ended
30 June 2021
Year Ended
30 June 2020
Employee remuneration
18,088,000
17,395,000
16,457,000
Distributions to shareholders
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 2022 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
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.
Page | 41
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
An independent review and market benchmarking exercise by Pearl Meyer was conducted in the year ended
30 June 2021, following which the Remuneration Committee approved the increases to Board remuneration
detailed below. No further changes to Directors remuneration have occurred in the current year.
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 December 2020, 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 2022 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 | 42
Directors’ Remuneration Report
VivoPower International PLC for the year ended 30 June 2022
Consideration of Matters Relating to Directors’ Remuneration
Remuneration Committee
The members of the Committee during the year ended 30 June 2022 and their attendance at meetings of
the Committee, are set out below:
William Langdon
Peter Jeavons
Gemma Godfrey
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.
Shoosmiths LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. provide the Company with legal
advice. Advice from Shoosmiths LLP and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is made available
to the Remuneration Committee, where it relates to matters within its remit.
Statement of voting at general meeting
The Annual Report on Remuneration for the year ended 30 June 2021 was approved by shareholders at the
Annual General Meeting held on 26 October 2021. The resolution to approve the report was approved by
99.37% 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 26 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
27 September 2022
.
Page | 43
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2022
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 2022 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and parent company Statement of Financial Position, the
Consolidated and parent company Statements of Cash Flows, the Consolidated and parent company
Statement of Changes in Equity 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
UK-adopted international accounting standards 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 2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-
adopted international accounting standards 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 directors’ 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 to actual results, 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 | 44
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2022
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 $672,000 (2021 - $850,000). This was calculated by applying a percentage to revenue (1.5%, 2021
-1.5% ) and net assets (3%, 2021 – 3%). We selected revenue and net assets as the materiality benchmarks
as we considered 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 United States of America. There is no change to the materiality
benchmarks and percentages from the prior period.
The parent company materiality was $100,000 (2021 - $90,000) based upon 2% of expenses (2021 - 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 to reflect the risk associated with the
judgemental and key areas of management estimation in the financial statements.
Overall component materiality for significant and/or material subsidiary undertakings ranged from $25,000
to $370,000 (2021 - $30,000 to $365,000). Performance materiality for all components was set at 70% of
overall component materiality.
We agreed with the Audit and Risk Committee that we would report to them all individual audit differences
identified during the course of our audit in excess of $33,600 (2021 – $42,250) for the group and $5,000 (2021
- $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 in determining judgements and
estimates by the directors that represented a risk of material misstatement due to fraud.
The accounting records of all significant and/or material subsidiary undertakings in Australia were audited
by component auditors, under the oversight of us as group auditor in accordance with International
Standard on Auditing 600, based upon component materiality and the risk to the group. The significant
subsidiary undertakings in Netherlands is subject to a full scope audit by the PKF Littlejohn London team
with relevant sector experience.
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
Page | 45
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2022
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.
Key Audit Matter
Revenue recognition
Revenue for the year ended 30 June 2022 amounted
to $22.5 million and details of the related critical
judgements and estimates are disclosed in note 3.
There is a risk of misstatement of revenue from
contracts with customers arising from the following
areas which makes this a key focus of our audit:
•
identification of performance obligations in
customer contracts;
•
the
timing of satisfaction of
judging
performance obligations;
• allocation of transaction price;
• measuring of 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 work in this area included:
• Updating our understanding of the internal
for the significant
control environment
checking by
and
revenue
walkthrough tests our understanding of the
internal control environment
the
significant income streams;
streams,
for
• Reviewing
the work undertaken by
component auditors in accordance with the
issued component instructions, including
regular communication
the
audit;
throughout
• Performing controls testing on the key
controls applicable to the contract and
revenue cycle;
• Substantively testing a sample of contracts
concluded and in progress at the year-end,
including contract assets and liabilities and
deferred and accrued income, and testing
the stage of completion;
• Reviewing post year-end cash receipts and
documents to test the completeness, cut-off
and accuracy of revenue around the year-
end; and
• Ensuring the revenue related disclosures in
the financial statements are complete and
accurate.
Recoverability of intangible assets
As at 30 June 2022 the carrying value of goodwill
and intangible assets was $40.1 million. Details of
these assets and the related critical judgements and
estimates are disclosed in notes 14 and 3.2.
is required to assess
Each year management
whether goodwill is impaired and consider whether
the carrying value exceeds the recoverable amount
using discounted cash flows. Intangible assets
subject to amortisation are assessed for indicators
of impairment. Impairment assessments require the
use of estimates, judgements and assumptions.
is
The calculation of the recoverable amount
dependent on various significant judgements and
estimates, including forecasts and discount rates.
Our work in this area included:
• Reviewing and challenging management’s
value
including the
rationale behind the key assumptions and
cash flow forecasts;
in use calculations
• Checking the mathematical accuracy of the
value in use calculations;
• Performing sensitivity analysis on reasonably
possible changes in key assumptions and the
impact on the headroom;
• Assessing the accuracy of budgets and
forecasts used in prior periods to actual
results;
Page | 46
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2022
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.
• Performing an independent assessment to
identify any indicators of impairment; and
• Assessing the appropriateness of the group’s
disclosure in respect of the judgements and
estimates, on whether an impairment exists
and the sensitivity analysis on the headroom
(refer to Note 14).
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 | 47
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2022
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
sectors.
• 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
electric vehicle market, 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 and regulatory correspondence, obtaining direct confirmations from legal advisers
and review of market announcements.
• 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
Page | 48
Independent Auditor’s Report to the Members of VivoPower International PLC
VivoPower International PLC for the year ended 30 June 2022
estimates for evidence of bias; and evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
• 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
27 September 2022
15 Westferry Circus
Canary Wharf
London E14 4HD
Page | 49
Consolidated Statement of Comprehensive Income
VivoPower International PLC for the year ended 30 June 2022
Consolidated Statement of Comprehensive Income
(US dollars in thousands, except per share
amounts)
Revenue from contracts with customers
Note
4
Cost of sales
Cost of sales – non-recurring
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 continuing operations
(Loss)/profit from discontinued operations
Loss for the period
Losses attributed to:
Equity owners of VivoPower International Plc
Non-controlling interests
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or
loss:
Currency translation differences recognised directly in
equity
Total comprehensive loss for the period
attributable to owners of the company
Earnings per share attributable to the owners
of the company (dollars)
Continuing Operations
Basic
Diluted
Discontinued Operations
Basic
Diluted
5
6
13
14
7
8
10
10
11
28
28
28
28
Year Ended 30 June
2021
23,975
2020
33,129
(19,614)
(27,701)
2022
22,448
(20,308)
(1,881)
259
(13,326)
(13)
662
(770)
(850)
(14,038)
(443)
173
(8,604)
-
4,361
(9,651)
769
960
(638)
(815)
(5,014)
(2,877)
2,176
(2,450)
(22,912)
(8,165)
1,968
(20,944)
(625)
(21,569)
138
(8,027)
69
(7,958)
-
5,428
(4,225)
1,589
432
(401)
(546)
2,277
(3,410)
27
(2,974)
(4,080)
(742)
(4,822)
(281)
(5,103)
(21,569)
-
(7,571)
(387)
(5,103)
-
(21,569)
(7,958)
(5,103)
1,043
1,601
(1,028)
(20,526)
(6,357)
(6,131)
(1.01)
(1.01)
(0.03)
(0.03)
(0.49)
(0.49)
(0.00)
(0.00)
(0.36)
(0.36)
(0.02)
(0.02)
Page | 50
Consolidated Statement of Financial Position
VivoPower International PLC for the year ended 30 June 2022
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
Liabilities classified as held for sale
Total current liabilities
Non-current liabilities
Loans and borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
EQUITY
Share capital
Share premium
Cumulative translation reserve
Other reserves
Accumulated deficit
Equity and reserves attributable to owners
Non-Controlling interest
TOTAL EQUITY
TOTAL EQUITY AND LIABILITIES
Year Ended 30 June
Note
2022
2021
2020
13
14
11
16
17
18
19
20
21
23
24
25
22
25
24
11
26
26
27
3,743
40,081
4,668
-
48,492
1,285
1,195
9,036
1,435
8,214
21,165
69,657
15,106
132
1,104
5,109
1,497
22,948
23,452
57
1,234
24,743
47,691
256
99,418
(139)
(6,118)
(71,451)
21,966
-
21,966
69,657
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
These financial statements were approved by the Board of Directors on 27 September 2022 and were signed
on its behalf by:
Kevin Chin, Chairman
Page | 51
Consolidated Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2022
Consolidated Statement of Cash Flow
(US dollars in thousands)
Cash flows from operating activities
Loss from continuing operations
(Loss)/profit from discontinued operations
Income tax
Finance income
Finance expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Gain/(loss) on solar development
Increase in equity instruments
Shared based payments
Decrease/(increase) in trade and other receivables
Increase in inventory
Increase/(decrease) in trade and other payables
(Decrease)/increase in provisions
Corporation tax payments
Year Ended 30 June
Note
2022
2021
2020
13
14
26
(20,944)
(625)
(1,926)
-
5,334
770
1,172
13
-
1,876
3,438
102
6,232
(572)
-
(8,027)
69
(115)
(2,397)
2,889
1,089
1,167
(769)
-
1,078
(813)
-
(9,453)
(95)
-
(4,822)
(281)
713
(33)
3,182
898
868
(1,589)
113
-
2,411
-
(6,851)
1,295
(477)
Net cash used in operating activities
(5,130)
(15,377)
(4,573)
Cash flows from investing activities
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
7
13
7
57
(1,165)
(4,254)
19
-
-
36
(937)
-
366
(7,089)
4,942
432
(884)
(277)
1,023
-
-
Net cash (used in)/from investing activities
(5,343)
(2,682)
294
Page | 52
Consolidated Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2022
(US dollars in thousands)
Note
2021
2020
2019
Year Ended June 30
Cash flows from financing activities
Other (repayments)/borrowings
Lease repayments
Capital raise proceeds
Capital raise costs
Debtor finance repayments
Loans from related parties
Repayment of loans from related parties
Bank loan (repayments)/borrowings
Chattel mortgage borrowings
Finance expense
Transfer to restricted cash
Net cash from 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
25
25
26
25
25
25
25
25
10
18
17
Cash and cash equivalents at the end of the period
17
(85)
-
243
(47)
(4)
4,231
-
(166)
74
(636)
(55)
3,555
(6,918)
8,604
(401)
1,285
18
(360)
34,866
(2,819)
(518)
-
(2,226)
(33)
32
(5,296)
(127)
23,537
5,478
2,824
302
8,604
-
(422)
-
-
(347)
1,300
(257)
344
300
(515)
(381)
22
(4,257)
7,129
(48)
2,824
Non-cash investing and financing transactions during the year-ended 30 June 2022 comprise:
•
•
682,220 shares issued to Incentive Award participants at nominal value: $1.9 million;
2,005,190 shares issued following the cancellation of Aevitas hybrid instruments: $20.5 million;
• Right-of-use assets additions and the related lease liability during the year: $2.5 million and $1.5 million
Page | 53
Consolidated Statement of Changes in Equity
VivoPower International PLC for the year ended 30 June 2022
Consolidated Statement of Changes in Equity
(US dollars in
thousands)
At 30 June 2019
Share
capital
Share
premium
Cumulative
translation
reserve
Other
reserves
163
40,215
(2,279)
20,076
Loss for the year
-
-
-
-
Other comprehensive
expense
-
-
(1,028)
-
(Accumulated
deficit)
/retained
earnings
(35,659)
(5,103)
Non-
controlling
interest
Total
-
22,516
-
(5,103)
-
(1,028)
163
40,215
(3,307)
20,076
(40,762)
-
16,385
Transactions with owners in their capacity as owners
Equity instruments
-
-
Other reserves
-
-
Employee share scheme
-
-
-
-
-
971
17
344
-
(11)
-
-
-
-
Non-controlling interest
-
-
-
-
-
-
-
1,332
-
(11)
184
184
1,505
At 30 June 2020
163
40,215
(3,307)
21,408
(40,773)
184
17,890
Loss for the year
Other comprehensive
income/(expense)
-
-
-
-
-
-
(7,571)
(387)
(7,958)
1,842
(241)
-
-
1,601
163
40,215
(1,465)
21,167
(48,344)
(203)
11,533
971
6
344
184
Transactions with owners in their capacity as owners
Equity instruments
-
-
Capital raises
49
34,317
Other share issuances
Employee share awards
Non-controlling interest
1
9
-
736
961
-
-
(3,141)
-
(2,804)
-
-
-
(15)
107
-
At 30 June 2021
Loss for the year
Other comprehensive
income/(expense)
59
36,014
-
(5,853)
222
76,229
(1,465)
15,314
-
-
-
-
-
-
-
-
-
-
(1,538)
(1,538)
(49,882)
(21,569)
-
(3,141)
-
31,562
-
-
722
1,077
203
(1,335)
203
28,885
-
40,418
-
(21,569)
1,326
(283)
-
-
1,043
222
76,229
(139)
15,031
(71,451)
-
19,892
Transactions with owners in their capacity as owners
Capital raises
1
243
Other share issuances
Employee share awards
Conversion of Aevitas
equity instruments
1
8
217
2,287
-
-
-
(122)
(144)
(417)
24
20,442
-
(20,466)
34
23,189
- (21,149)
-
-
-
-
-
At 30 June 2022
256
99,418
(139)
(6,118)
(71,451)
For further information on Other Reserves please see Note 27.
-
-
-
-
122
74
1,878
0
-
2,074
-
21,966
Page | 54
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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’). Since 30 June 2021, the
Company no longer has an ultimate controlling party, as AWN Holdings Limited holds less than 50% equity
interest in the Company, being 47.5% as at 30 June 2022 and 42.8% as at 31 August 2022. 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 2022, the Company had unrestricted cash totalling $1.3 million, compared to $8.6 million as at 30
June 2021 and $2.8 million as at 30 June 2020. Nevertheless as disclosed in note 32–- Subsequent Events, after
the year end date the Company received $2.6 million initial net cash proceeds from the sale of the J.A. Martin
Electrical ex-solar business and $5.0 million net proceeds from the registered direct offering shelf issuance cap
raise in July 2022.
Over the next twelve months, the Company expects a recovery in revenues and continued EBITDA generation in
critical power systems, growing revenue and costs in scaling up electric vehicles as the operation prepares for
series production. The Company will also be investing in further capitalized development costs in electric
vehicles in preparation for Tembo series production. In addition, it expects to fund selective development of the
U.S. solar portfolio to maximize future sales proceeds, as well as development of microgrid, EV charging and
battery energy storage capabilities, as part of the scaling up of the SES business unit. 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 2023 is a
minimum of $25 million. The Company is planning to finance this funding requirement through equity
investment, European Innovation Council Accelerator grant, 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.
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:
Page | 55
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
•
•
•
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;
Staging the timing of property plant and equipment and software capex to match asset backed
financing inflows;
• Obtain Research & Development 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;
Purchase order financing, debtor financing facilities;
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.
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:
Page | 56
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
•
•
•
•
•
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
during the year ended 30 June 2021.
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.
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.
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Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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 to 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
• Plant and equipment – 3.5 to 10 years
• Right-of-use assets – remaining term of lease
2.6. Assets classified as held for sale and discontinued operations
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.
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Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
A discontinued operation is a component of the Company that has been disposed of or is classified as held
for sale and represents a separate major line of business or geographical area of operations. The results of
discontinued operations are presented separately in the statement of profit or loss.
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.
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group.
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.
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
Page | 59
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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,
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.
Page | 60
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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.
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.
Page | 61
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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
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 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
Page | 62
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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 Share-based
Payments.
Page | 63
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
2.19.
New standards, amendments and interpretations
The following accounting standards and their amendments were adopted during the financial year.
International Financial Reporting Standards
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark
Reform – Phase 2
Effective date
1 January 2021
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)
IFRS 16 (amendments) – Leases : Covid-19 related Rent Concessions beyond 30 June
2021
Effective date*
1 April 2021
IAS 1 (amendments)–- Presentation of Financial Statements regarding classification
of liabilities as Current or Non-current
1 January 2023
IAS 1 (amendments)–- Presentation of Financial Statements regarding the
amendments of disclosure of accounting policies
1 January 2023
IAS 8 (amendments)–- Accounting Policies, Changes in accounting estimates and
error – Definition of 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
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
Page | 64
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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).
Page | 65
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
3.4. Litigation provision
No litigation provision was recorded at 30 June 2022. The provision of $0.5 million for disputed legal
success fees related to the Mr. Comberg litigation recorded at 30 June 2021 was estimated by management,
making a judgement in conjunction with advice from legal counsel, on the likely outcome of the claim. $0.4
million of this provision was utilized in the year ended 30 June 2022, and the remainder released.
3.5. Capitalization of product development costs
The Group capitalizes costs for product development projects in the EV segment. The capitalization of costs
is based on management’s judgement that technological and economic feasibility is confirmed, and all other
recognition criteria within IAS 38 can be demonstrated. In determining the amounts to be capitalized,
management makes assumptions regarding the expected future cash generation, discount rates to be
applied and the expected period of benefits. As of 30 June 2022, the carrying amount of capitalized
development costs were $3.8million (2021: $0.5million).
3.6. Contingent consideration on disposals
Included within the assessment of recoverable value for impairment purposes of assets held for sale related
to the sale of the JA Martin ex-solar business, are estimates of the contingent consideration included within
the sale agreement. The contingent consideration receivable 12 months following sale, is based on a
multiple of earnings before interest, tax, depreciation and amortization of the business. Fair value of
contingent consideration $4.5 million applied a contracted 4.5x multiple to year 1 forecast EBITDA of $2.7
million, discounted at 10% to net present value, less purchase price paid.
3.7. 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.
3.8. Deferred tax assets
Deferred tax assets for unused tax losses amounting to $4.1 million at 30 June 2022 (30 June 2021: $1.9
million; 30 June 2020: -$0.08 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.
Page | 66
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
3.9. 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. The options lapsed during the year ended 30 June 2020.
3.10.
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.
Whilst the majority of the Aevitas exchangeable preference shares and exchangeable notes were converted
into ordinary shares in VivoPower in July 2021 a minority of investors in the instruments elected to accept
new Aevitas Preference Shares. The Company considered IAS 32 paragraph 16 in determining the
accounting treatment and has determined the new Aevitas Preference Shares instruments should be
treated as equity.
3.11.
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”),
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
Page | 67
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
to maintain the Nasdaq public company listing, comply with applicable SEC reporting requirements, and
related investor relations and is located in the U.K.
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 from continuing operations by geographic location is as follows:
(US dollars in thousands)
Year ended 30 June
Australia
United States
Netherlands
United Kingdom
Total revenue
2022
20,958
-
1,490
-
22,448
2021
22,582
-
1,393
-
23,975
Revenue from continuing operations by product and service is as follows:
(US dollars in thousands)
Year ended 30 June
Electrical products and related services
Development fees
Vehicle spec conversion
Conversion kits
Accessories
Total revenue
2022
20,958
-
789
301
400
2021
22,396
185
137
1,219
38
2020
33,126
-
-
3
33,129
2020
33,060
69
-
-
-
22,448
23,975
33,129
The Group did not have any customers representing more than 10% of revenue for the year ended 30 June
2022 (year ended 30 June 2021: none; year ended 30 June 2020: one).
Page | 68
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
4.2. Operating segments
a) Segment results of operations
Results of operations by reportable segment are as follows:
Year Ended 30 June 2022
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales - other
Cost of sales – COVID-19 disruption
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Other income
Depreciation and amortization
Operating profit/(loss)
Restructuring and other non-recurring
costs
Finance expense - net
Profit/(loss) before income tax
Income tax
Loss for the year
Critical
Power
Services
20,958
(18,804)
(1,881)
273
(1,568)
103
662
(1,165)
(1,695)
45
(7,470)
(9,120)
1,349
(7,771)
-
-
-
-
(80)
(139)
-
-
1,490
(1,504)
-
(14)
(2,578)
-
-
(443)
Continuing operations
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
Continuing
Discontinued
operations
Critical
Power
Services
15,168
Total
37,616
(13,842)
(34,150)
-
1,326
(1,881)
1,585
-
-
-
-
-
-
-
-
22,448
(20,308)
(1,881)
259
(1,660)
(7,440)
(13,326)
(1,485)
(14,811)
23
-
(3)
-
-
(9)
(13)
662
(1,620)
-
324
(767)
(13)
986
(2,387)
(219)
(3,035)
(1,640)
(7,449)
(14,038)
(602)
(14,640)
-
-
(429)
(974)
-
23
(59)
(10)
(443)
(8,431)
(219)
(4,438)
(1,617)
(7,518)
(22,912)
-
575
192
(148)
1,968
-
(443)
(172)
(8,603)
(774)
(23,686)
149
2,117
(219)
(3,863)
(1,425)
(7,666)
(20,944)
(625)
(21,569)
Page | 69
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Year Ended 30 June 2021
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales - other
Cost of sales – COVID-19 disruption
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Other income
Depreciation and amortization
Operating profit/(loss)
Restructuring & other non-recurring costs
Finance expense - net
Profit/(loss) before income tax
Income tax
Loss for the year
Critical
Power
Services
22,396
(18,322)
-
4,074
(1,522)
36
960
(1,099)
2,449
(24)
1,824
4,249
(691)
3,558
Continuing operations
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
Continuing
185
-
-
185
(1,309)
733
-
(4)
1,394
(1,292)
-
102
(1,923)
-
-
(346)
(395)
(2,167)
-
(24)
(631)
(1)
(419)
(2,799)
96
733
(323)
(2,066)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,897)
-
-
(4)
(4,901)
(2,222)
(2,073)
23,975
(19,614)
-
4,361
(9,651)
769
960
(1,453)
(5,014)
(2,877)
(274)
(9,196)
(8,165)
-
138
(9,196)
(8,027)
Discontinued
operations
Critical
Power
Services
16,436
Total
40,411
(14,470)
(34,084)
-
-
1,966
6,327
(1,482)
(11,133)
-
552
(803)
233
(3)
(137)
93
(24)
69
769
1,512
(2,256)
(4,781)
(2,880)
(411)
(8,072)
114
(7,958)
Page | 70
Continuing operations
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
Continuing
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Year Ended 30 June 2020
(US dollars in thousands)
Revenue from contracts with customers
Costs of sales - other
Cost of sales – COVID-19 disruption
Gross profit
General and administrative expenses
Gain/(loss) on solar development
Other income
Depreciation and amortization
Operating profit/(loss)
Restructuring & other non-recurring costs
Finance expense - net
Profit/(loss) before income tax
Income tax
Loss for the year
Critical
Power
Services
33,057
(27,681)
-
5,376
(1,491)
41
432
(899)
3,459
(124)
(1,234)
2,101
(14)
2,087
69
(20)
-
49
(469)
1,548
-
(45)
1,083
(1,296)
(9)
(222)
(728)
(950)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Discontinued
operations
Critical
Power
Services
14,857
Total
47,986
(13,184)
(40,885)
-
1,673
(1,254)
-
292
(819)
(108)
-
(202)
-
7,101
(5,479)
1,589
724
(1,766)
2,169
(3,410)
(3,149)
3
-
-
3
(2,265)
-
-
(3)
(2,265)
(1,990)
(1,704)
33,129
(27,701)
-
5,428
(4,225)
1,589
432
(947)
2,277
(3,410)
(2,947)
(5,959)
(4,080)
(310)
(4,390)
-
(742)
29
(713)
(5,959)
(4,822)
(281)
(5,103)
Page | 71
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
b)
Segment net assets
Net assets by reportable segment are as follows:
As at 30 June 2022
(US dollars in thousands)
Assets
Liabilities
Net assets/(liabilities)
As at 30 June 2021
(US dollars in thousands)
Assets
Liabilities
Net assets/(liabilities)
As at 30 June 2020
(US dollars in thousands)
Assets
Liabilities
Critical
Power
Services
30,878
(13,452)
17,426
Critical
Power
Services
35,604
(9,442)
26,162
Critical
Power
Services
38,519
(14,481)
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
22,505
14,201
1,170
903
69,657
(377)
(4,528)
(485)
(28,849)
(47,691)
22,128
9,673
685
(27,946)
21,966
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
24,693
9,027
(767)
(2,093)
23,926
6,934
-
-
-
7,188
76,512
(23,792)
(36,094)
(16,604) 40,418
Solar
Development
Electric
Vehicles
Sustainable
Energy
Solutions
Corporate
Office
Total
22,965
(1,697)
Net assets/(liabilities)
24,038
21,268
5. Gain/(loss) on Solar Development
(US dollars in thousands)
VivoRex contract obligations
Australia solar projects
ISS Joint Venture - 50% share of discontinued
projects
Gain on acquisition of remaining 50% ISV from ISS
Other gains/(losses)
Total gain/(loss) on Solar Development
-
-
-
2022
-
23
-
-
(36)
(13)
-
-
-
896
62,380
(28,312)
(44,490)
(27,416)
17,890
Year Ended 30 June
2021
-
(165)
2020
2,768
496
(6,950)
(1,675)
7,848
36
769
-
-
1,589
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
Page | 72
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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 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.
The Company also recorded a $1.7 million loss on discontinued Solar Development projects in the ISS Joint
Venture.
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.
7. Operating profit/(loss)
Operating profit/(loss) from continuing operations is stated after charging/(crediting):
(US dollars in thousands)
Year Ended June 30
Amortisation of intangible assets
Depreciation of property, plant and equipment
Auditors’ remuneration – audit fees
Auditors’ remuneration – tax services
Directors’ emoluments
Loss/(gain) on disposal of solar development
2022
850
770
177
12
693
13
2021
815
638
163
12
676
(769)
8. Restructuring and other non-recurring costs
2020
546
401
161
11
398
(1,589)
Page | 73
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
(US dollars in thousands)
Corporate restructuring – professional fees
Corporate restructuring – litigation provision
Project review and investigation costs
Corporate restructuring – workforce reduction
Relocation costs
Remediation - electric vehicle work
Acquisition related costs
Total
Year Ended June 30
2022
189
(128)
-
-
-
382
-
443
2021
179
2,039
-
-
27
-
632
2,877
2020
1,031
1,104
1,112
163
-
-
-
3,410
In the year ended 30 June 2022, the Company incurred non-recurring costs related to restructuring activities
of $0.2 million and one-off remediation expenses of $0.4 million, offset by $0.1 million release of unutilized
provision related to the Comberg Claims.
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.
Restructuring and other non-recurring costs by nature are one-time incurrences, and therefore, do not
represent normal trading activities of the business. These costs are disclosed separately in order to draw
them to the attention of the reader of the financial information and enable comparability in future periods.
During a prior fiscal period, the Board undertook a strategic restructuring of the business to align operations,
personnel, and business development activities to focus on a fewer number of areas of activity. Associated
with this restructuring was the departure of a number of employees and contractors from the business. The
workforce reduction cost represents the total salary, benefit, severance, and contract costs paid in the year
or accruing to these individuals in the future for which no services will be rendered to the Company.
Professional fees represent legal fees incurred to resolve certain disputes related to some of these
separations in both the current and prior year. 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.
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
2022
13
29
212
254
2021
13
35
164
212
2020
11
27
171
209
Page | 74
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Their aggregate remuneration costs comprised:
(US dollars in thousands)
Salaries, wages and incentives
Social security costs
Pension contributions
Short-term compensated absences
Total
Year Ended 30 June
2022
15,237
730
844
1,277
18,088
2021
14,550
795
850
1,200
17,395
2020
13,565
803
792
1,296
16,456
Directors’ emoluments for the year ended 30 June 2021 were $376,584 (year ended 30 June 2021: $675,806;
year ended 30 June 2020: $536,979) of which the highest paid director received $91,029 (year ended 30 June
2020: $92,119; year ended 30 June 2020: $205,673). Director emoluments include employer social security
costs.
Key Management Personnel:
(US dollars in thousands)
Salaries, wages and incentives
Social security costs
Pension contributions
Equity incentives
Short-term compensated absences
Year Ended 30 June
2022
1,578
151
114
392
-
2021
1,949
102
64
244
2
Total
2,235
2,361
2020
1,009
79
36
111
-
1,235
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
2022 was 10 (year ended 30 June 2021: 10; year ended 30 June 2020: 7).
10. Finance income and expense
(US dollars in thousands)
2022
2021
2020
Year Ended 30 June
Finance income
Foreign exchange gains
Interest received
Total finance income
173
-
173
2,176
-
2,176
27
-
27
Page | 75
Year Ended 30 June
2022
2021
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
(US dollars in thousands)
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
Foreign exchange losses
Other finance costs
Total finance expense
3,351
217
-
-
24
133
3
4,709
167
8,604
2020
1,653
1,185
-
-
52
44
-
-
40
1,986
1,228
(995)
-
7
42
-
92
90
2,450
2,974
Page | 76
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
11. Taxation
a)
Tax charge/(credit)
(US dollars in
thousands)
Current tax
UK tax
Foreign tax
Total current tax
Deferred tax
Current year
UK tax
Foreign tax
Total deferred
tax
Year Ended 30 June
Year Ended 30 June
Year Ended 30 June
2022
Dis-
2021
Dis-
Continuing
continued Total Continuing
continued Total Continuing
2020
Dis-
continued Total
(52)
818
766
-
-
-
(52)
818
766
-
(825)
(825)
-
(23)
(848)
(23)
(848)
-
24
24
-
29
29
-
53
53
(96)
1,297
-
(96)
149 1,446
(51)
1,014
-
(51)
- 1,014
(202)
(564)
-
(202)
-
(564)
1,201
149 1,350
963
-
963
(766)
-
(766)
Total income tax
1,968
149 2,117
138
(23)
115
(742)
29
(713)
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)
Loss before income tax
Year Ended 30 June
2022
2021
2020
(22,912)
(8,165)
(4,080)
Group weighted average corporation tax rate
26.6%
22.2%
24.6%
Tax at standard rate
Effects of:
Expenses that are not deductible for tax
purposes
Adjustment to prior year tax provisions
6,095
1,813
1,004
-
-
(833)
(106)
137
-
Deferred tax assets not recognised on tax losses
(4,127)
(979)
(1,640)
Total income tax for the period Recognised
in the Consolidated Statement of
Comprehensive Income/(Loss)
1,978
138
(742)
Page | 77
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
b) Deferred tax
(US dollars in thousands)
Deferred tax assets
Deferred tax liabilities
Net deferred tax asset
These assets and liabilities are analysed as follows:
Deferred tax assets
Tax losses
30 June 2019
Credit to comprehensive
income
30 June 2020
Charged to
comprehensive income
Acquisitions
30 June 2021
Credit to comprehensive
income
1,005
(191)
814
776
263
1,853
As at 30 June
2022
2021
4,668
2,495
2020
1,347
(1,234)
(411)
-
3,434
2,084
1,347
Other timing
differences
1,108
(575)
533
109
-
642
Total
2,113
(766)
1,347
885
263
2,495
2,227
(54)
2,172
30 June 2022
4,080
588
4,667
Deferred tax liabilities
30 June 2020
Credit to comprehensive income
Accelerated
allowances
Other timing
differences
-
-
-
78
Total
-
78
Acquisition of subsidiary (Note 12)
-
(489)
(489)
30 June 2021
-
(411)
(411)
Credit to comprehensive income
-
(823)
(823)
30 June 2022
-
(1,234)
(1,234)
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.
Page | 78
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
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
(541)
(1,024)
(181)
(578)
(398)
(282)
2,092
USD
4,942
123
730
206
263
(665)
(1,259)
(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 | 79
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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
Net outflow of cash - investing activities
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
4,021
1,779
4,916
2,173
4,942
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
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.
Page | 80
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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
991
12,248
Page | 81
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
13. Property, plant and equipment
(US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant and
Equipment
Fittings and
Equipment
Right-of-
Use Assets
Cost
At 30 June 2019
Foreign exchange
Additions
Disposals
At 30 June 2020
Foreign exchange
Additions
Acquisitions
Disposals
At 30 June 2021
Additions
Acquisitions
Disposals
545
(11)
36
(94)
476
41
125
-
(80)
562
(41)
28
0
1,282
1,240
(26)
359
(252)
1,363
145
230
4
(174)
1,568
(154)
184
(150)
(26)
189
(171)
1,232
26
395
114
(156)
1,611
(146)
343
(48)
(320)
1,440
190
(4)
9
-
195
18
6
-
(97)
122
(10)
209
-
(74)
247
Reclass to assets held for sale
At 30 June 2022
(231)
318
(1,015)
433
(1,295)
(2,935)
3,599
6,037
US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant and
Equipment
Fittings and
Equipment
Right-of-
Use Assets
Depreciation
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
Foreign exchange
Charge for the period (including
discontinued operations)
Disposals
Reclass to assets held for sale
At 30 June 2022
404
(7)
55
(79)
373
31
66
(71)
399
(33)
69
-
(197)
238
937
(15)
171
(257)
836
85
206
655
(11)
107
(4)
747
70
167
74
(1)
13
-
86
8
8
(157)
(112)
(46)
970
(95)
186
(131)
(719)
211
872
(93)
179
(9)
(232)
717
56
(6)
22
-
(43)
29
Total
5,499
(113)
1,163
(1,000)
5,549
426
938
206
(565)
6,554
(565)
3,234
(251)
Total
2,548
(37)
898
(346)
3,063
271
1,089
(444)
3,979
(394)
1,208
(193)
2,242
(46)
570
(483)
2,283
196
182
88
(58)
2,691
(214)
2,470
(53)
478
(3)
552
(16)
1,021
77
642
(58)
1,682
(167)
752
(53)
(1,115)
1,099
(2,306)
2,294
Page | 82
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
(US dollars in thousands)
Computer
Equipment
Motor
Vehicles
Plant &
Equipment
Fittings &
Equipment
Right-of-
Use Assets
Net book value
At 30 June 2020
At 30 June 2021
At 30 June 2022
103
163
80
527
598
222
485
739
723
109
66
218
1,262
1,009
2,500
Total
2,486
2,575
3,743
The non-solar segment of Kenshaw Solar (formerly J.A. Martin Electrical PTY Limited) was sold on 01 July
2022 and is reported in the current period as a discontinued operation. Revenues relating to the
discontinued operation for the period amounted to $15.2 million (30 June 2021: $15.2 million; 30 June
2020: $14.9 million). The total expenses amounted to $14.4 million (30 June 2021: $17.6 million; 30 June
2020: $16.9 million).
14. Intangible assets
(US dollars in thousands)
Goodwill
Other intangible assets
Total
a)
Goodwill
(US dollars in thousands)
As at 1 July
Reclass held for sale assets
Goodwill on acquisition of Tembo
Foreign exchange
Carrying value
As at 30 June
2021
25,794
21,655
47,449
2022
18,269
21,812
40,081
2022
25,794
(5,289)
-
(2,236)
18,269
As at 30 June
2021
21,919
-
1,698
2,177
25,794
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
13,658
10,319
1,817
25,794
2022
7,222
9,451
1,595
18,269
2020
21,919
7,930
29,849
2020
22,387
-
-
(468)
21,919
2020
12,483
9,436
-
21,919
Page | 83
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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
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 (being Critical Power Services) 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 11% (June 30, 2021: 10%; June 30, 2020: 10.6%) and annual growth rate
of 3% per annum.
The solar element of the CGU represented by VivoPower Pty Ltd goodwill 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 11.3% (June
30, 2021: 10.7%), an average annual growth rate in years 1-5 of 72% during the rapid growth phase of the
business, with the assumption that an average of 50% of electric light vehicles sold by the Company in fleet
sizes over 50 vehicles will be sold with an additional sustainable energy solution.
The CGU represented by Tembo e-LV and subsidiaries was assessed to have a value in excess of its carrying
value. Key assumptions used in the assessment of impairment were discount rate based on the weighted
average cost of capital of 11% and average annual growth rate of 280% per annum in years 1-5. Growth rates
reflect commencement of planned series production at volume during the 5 year period, as the product
development project is completed for the current variant, to meet customer demand per sales agreements
of over 6,609 units with major international distribution partners, including Acces, Bodiz and GHH. No
sensitivity analysis is provided as the Company expects no foreseeable changes in the assumptions that
would result in impairment of the goodwill.
The CGU represented by Caret LLC solar projects was assessed to have a value in excess of its carrying value
and hence no adjustments to capitalized development costs were considered necessary. Key assumptions
used in the assessment of impairment were weighted average cost of capital of 11.2%, $2.3 million free cash
flow from project sales in years 1-4, 26% retained equity interest post spin off deal, resulting in first post
funding round free cash flow in year 5; 3% growth beyond year 5.
Page | 84
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
b) Other intangible assets
(US dollars in
thousands)
Customer
Relationships
Trade
Names
Favourable
Supply
Contracts
Solar
Projects
Product
development
Other
Intangible
Assets
Total
Intangible
Assets
Cost
At 30 June 2019
Foreign exchange
Additions
Disposals
At 30 June 2020
Foreign exchange
Additions
Acquisitions
Disposals
At 30 June 2021
Foreign exchange
Additions
Disposals
Reclass to Assets
held for sale
At 30 June 2022
(US dollars in
thousands)
Amortisation
At 30 June 2019
Foreign exchange
Amortisation
Disposals
At 30 June 2020
Foreign exchange
Amortisation
At 30 June 2021
Foreign exchange
Amortisation
Disposals
Reclass to Assets
held for sale
At 30 June 2022
4,992
(103)
461
(968)
2,450
(51)
-
-
4,382
2,399
411
46
1,492
(550)
225
-
404
-
4,185
(86)
-
-
4,099
385
-
-
-
-
-
-
-
-
-
-
12,248
-
5,781
3,028
4,484
12,248
(542)
(271)
(376)
-
-
-
(9)
(2,687)
(1,385)
-
-
-
-
878
-
-
-
-
-
-
-
-
513
-
-
513
(63)
3,355
-
-
169
(4)
-
(9)
156
13
-
-
-
169
(13)
19
-
-
2,552
1,363
4,108
13,126
3,805
175
11,796
(244)
461
(977)
11,036
1,034
559
14,144
(550)
26,223
(1,265)
4,252
(9)
(4,072)
25,129
Customer
Relationships
Trade
Names
Favourable
Supply
Contracts
Solar
Projects
Product
development
Other
Intangible
Assets
Total
Intangible
Assets
1,158
(24)
404
(133)
1,405
131
622
2,158
(208)
405
-
421
(9)
160
-
572
54
229
855
(79)
181
-
(1,232)
1,123
(462)
495
720
(15)
273
-
978
92
298
1,368
(115)
274
-
-
1,527
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
18
(2)
(10)
10
-
16
122
(2)
31
-
151
18
-
169
(13)
-
-
-
156
2,421
(50)
868
(133)
3,106
295
1,167
4,568
(417)
850
10
(1,694)
3,317
Page | 85
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
(US dollars in
thousands)
Net book value
At 30 June 2020
At 30 June 2021
At 30 June 2022
Customer
Relationships
Trade
Names
Favourable
Supply
Contracts
Solar
Projects
Product
development
Other
Intangible
Assets
Total
Intangible
Assets
2,977
3,623
1,429
1,827
2,173
868
3,121
3,116
2,581
-
12,248
13,126
-
495
3,789
5
-
19
7,930
21,655
21,812
Customer relationships, trade names and favourable supply contracts have an average remaining period of
amortisation of 8 years, 11 years and 11 years respectively. Solar projects and electric vehicle product
development costs are incomplete and not generating revenue and therefore are not amortized in FY2022.
Additions in the year comprise $3.4 million electric vehicle product development costs in Tembo and $0.9
million of solar project development costs in Caret LLC. $2.1 million net book value of customer
relationship and trade name intangible assets of Kenshaw Solar ex-solar business sold to ARA in July 2022,
was reclassified out of intangible assets into assets held for sale as at 30 June 2022.
15. Investment in subsidiaries
The principal operating undertakings in which the Group’s interest at 30 June 2022 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
Caret, LLC
Caret Decimal, 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
Tembo EV Australia Pty Ltd.
Kenshaw Solar Pty Ltd (formerly J.A.
Martin Electrical Pty Limited)
Kenshaw Electrical Pty Limited
VivoPower International IMEA DMCC
VivoPower Philippines Inc.
VivoPower RE Solutions Inc.
V.V.P. Holdings Inc. *
Percentage of
ordinary shares held Registered address
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
64%
64%
40%
28 Esplanade, St Helier, Jersey, JE2
3QA
251 Little Falls Drive, Wilmington, DE,
USA 19808
153 Walker St, North Sydney
NSW, Australia 2060
Unit No: 4522, DMCC Business Centre,
Level No 1, Jewellery & Gemplex 3,
Dubai, United Arab Emirates
Unit 10A, Net Lima Building, 5th Avenue
cor. 26th Street, E-Square Zone,
Page | 86
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Subsidiary undertakings
ordinary shares held Registered address
Percentage of
Tembo e-LV B.V.
Tembo 4x4 e-LV B.V.
FD 4x4 Centre B.V.
Crescent Park West, Bonifacio Global
City, Taguig, Metro Manila
Marinus van Meelweg 20, 5657 EN,
Eindhoven, Netherlands
100%
100%
100%
* 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
50%
As at 30 June
2022
2021
-
-
-
-
2020
8,225
8,225
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
an approved development budget fIr the ISS Joint Venture. To 29 June 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.
Page | 87
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Reconciliation of the ISS Joint Venture investment is as follows:
(US dollars in thousands)
Capital commitment
Commission credit
Discontinued projects
Acquisition costs
Total
As at 30 June
2022
-
2021
-
-
-
-
-
-
-
-
-
2020
15,044
(770)
(2,079)
110
12,305
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
Total
As at 30 June
2021
-
-
-
2022
-
-
-
2020
4,080
8,225
12,305
The table below provides summarized financial information for the ISS Joint Venture. The information disclosed
reflects the amounts presented in the financial statements of ISS Joint Venture, amended to reflect adjustments
made by the Company when using the equity method, including fair value adjustments and modifications for
differences in accounting policy. The summarized financial information for the ISS Joint Venture does not
represent the Company’s share of those amounts.
(US dollars in thousands)
Current assets
Non-current assets
Total
Reconciliation to carrying amounts of the ISS Joint Venture:
(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
As at 30 June
2021
-
-
-
2022
-
-
-
As at 30 June
2022
-
2021
24,390
-
-
-
-
-
-
-
N/A
-
-
-
-
-
-
-
-
(13,900)
(10,490)
-
N/A
-
-
-
-
2020
2
23,277
23,279
2020
28,294
(1,546)
144
90
-
(2,592)
-
24,390
50%
12,195
-
110
12,305
Page | 88
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
17. Cash and cash equivalents
(US dollars in thousands)
Cash at bank and in hand
As at 30 June
2022
1,285
2021
8,604
2020
2,824
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
2021
5,423
-
2
3,179
8,604
As at 30 June
2021
1,140
-
1,140
2022
171
-
2
1,112
1,285
2022
1,195
-
1,195
2020
-
-
554
2,270
2,824
2020
1,013
-
1,013
At 30 June 2022, there is a total of $1.2 million (30 June 2021, $1.1 million; 30 June 2020, $1.0 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.
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
2021
4,959
2,723
2,837
2,011
182
2020
3,112
3,382
432
5,475
155
12,712
12,556
2022
3,866
694
787
3,507
182
9,036
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.
Page | 89
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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
2022
3,866
-
3,866
The maximum exposure to credit risk for trade receivables by geographic region was:
(US dollars in thousands)
Australia
Netherlands
Total
The aging of the trade receivables, net of provisions is:
(US dollars in thousands)
0-90 days
Greater than 90 days
Total
20. Inventory
(US dollars in thousands)
Raw materials
Total
21. Assets classified as held for sale
(US dollars in thousands)
Caret, LLC (formerly Innovative
Solar Ventures I, LLC)
Kenshaw Solar Pty Ltd (formerly
J.A. Martin Electrical Pty Limited)
Total
%
Owned
50%
100%
As at June 30
2021
4,349
610
4,959
As at June 30
2021
4,918
41
4,959
As at June 30
2021
1,537
1,537
As at 30 June
2021
-
-
-
2022
2,684
1,181
3,866
2022
3,306
560
3,866
2022
1,435
1,435
2022
-
8,214
8,214
2020
3,119
(7)
3,112
2020
3,112
-
3,112
2020
3,055
57
3,112
2020
-
-
2020
4,080
-
4,080
The ex-solar operations of Kenshaw Solar (formerly J.A. Martin Electrical PTY Limited) were sold to ARA
Electrical Engineering Services Pty Limited on 01 July 2022. As disclosed in note 22, the assets and liabilities
of the disposed operation meet the definition of discontinued operation under IFRS 5. Accordingly assets
and liabilities of the discontinued operation have been reclassified to assets and liabilities held for sale. As
detailed in note 22, assets held for sale of $8.2 million as at 30 June 2022 comprise goodwill $5.3 million,
intangible assets $2.1 million, property, plant and equipment $0.6 million and trade and other receivables
$0.2 million.
Page | 90
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
The Company’s portfolio of U.S. solar projects was held through 50% ownership in the ISS Joint Venture until
29 June 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.
22. Discontinued operations
On 01 July 2022, the ex-solar operations of J.A. Martin Electrical Pty Limited were sold to ARA Electrical
Engineering Services Pty Limited. As the intention to sell and process to locate a buyer for the business was
initiated prior to 30 June 2022, but the sale only became definitive on 01 July 2022, the results of the non-
solar segment business of J.A.Martin Electrical Pty Limited are reported in the current period as a
discontinued operation, and also adjusted in comparative periods. The associated assets and liabilities of
the discontinued operation are presented as held for sale within current assets (see note 21) and current
liabilities as at 30 June 2022.
Financial information relating to the discontinued operation for the period to the date of disposal is set out
below:
Financial performance and cash flow information
The financial performance and cash flow information presented are for the years ended 30 June 2022, 2021
and 2020:
(US dollars in thousands)
Revenues
Other income
Expenses
Profit before income tax
Income tax expense
Loss from discontinued operations
Net cash inflow/(outflow) from operating
activities
Net cash inflow/(outflow) from investing
activities
Net cash inflow/(outflow) from financing
activities
2022
15,168
324
(16,266)
(774)
149
(625)
(625)
-
-
As at 30 June
2021
16,436
552
(16,895)
92
(23)
69
69
-
-
2020
14,857
292
(15,459)
(310)
29
(281)
(281)
-
-
Net increase in cash generated by subsidiary
(625)
69
(281)
Page | 91
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in relation to the discontinued
operation as at 30 June 2022:
(US dollars in thousands)
Assets classified as held for sale
Trade and other receivables
Property, plant and equipment
Goodwill
Intangible assets
2022
239
629
5,289
2,056
2021
-
-
-
-
Total assets of disposal group classified as held for sale
8,214
-
Liabilities directly associated with assets classified as held for sale
Trade and other payables
Provisions - current
Lease liabilities - current
Provisions - non-current
Lease liabilities - non-current
Total liabilities of disposal group classified as held for sale
Consideration received or receivable
Cash
Fair value of contingent consideration
Less costs to sell
Total disposal consideration
Estimated carrying amount of net assets sold
Gain on sale
91
1,126
157
74
49
1,497
USD 000
2,623
4,472
(345)
6,750
6,716
34
-
-
-
-
-
-
AUD 000
3,807
6,490
(500)
9,797
9,747
50
Disposal consideration $6.8 million comprised cash purchase price $3.4 million (A$5.0 million) less working
capital adjustment $0.8 million (A$1.2 million). Fair value of contingent consideration $4.5 million applied a
contracted 4.5x multiple to year 1 forecast EBITDA of $2.7 million, discounted at 10% to net present value,
less purchase price paid. Costs to sell comprised advisory fees of $0.3 million. Net book value of net assets
sold was $6.7 million, resulting in gain on disposal of $0.03 million.
23. Trade and other payables
(US dollars in thousands)
Trade payables
Accruals
Related party payable
Payroll liabilities
Sales tax payable
Contract liabilities
Other creditors
Total
As at 30 June
2021
4,325
648
-
1,413
624
1,129
778
8,917
2022
5,685
3,978
477
2,210
949
974
833
15,106
2020
4,807
370
504
1,383
496
6,013
1,822
15,395
Page | 92
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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 $1.1 million deferred income balance at June 30, 2021, $0.9 million was recognized as revenue in the
year ended June 30, 2022. The $6.0 million of the contract liabilities balances at June 30, 2020, was fully
recognized as revenue in the year ended June 30, 2021. It is expected that the total $1.0 million deferred
income balance as at June 30, 2022, will be included in revenue in the year ended June 30, 2023.
24. Provisions
(US dollars in thousands)
Current provisions
Employee entitlements
Litigation
Warranty
Remediation
Total current provisions
Non-current provisions
Employee entitlements
Total non-current provision
Total provisions
As at 30 June
2021
1,802
485
209
306
2,802
165
165
2,967
2022
635
-
116
353
1,104
57
57
1,161
2020
1,561
1,104
232
-
2,897
169
169
3,066
Employee entitlements include long term leave and vacation provisions. $1.13 million current provisions
and $0.07 million long term provisions relating to discontinued ex-solar JA Martin operations were
reclassified to liabilities held for sale in current liabilities, as at 30 June 2022.
Of the $0.5 million provision for disputed legal success fees recorded at 30 June 2021 in relation to litigation
of the Company’s former Chief Executive Officer, Mr. Comberg, for alleged breach of contract, $0.4 million
was utilized in the year, whilst $0.1 million remained unused and was reversed in the year.
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.
Page | 93
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
(US dollars in thousands)
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
Foreign exchange
Additional provisions
Reverse unused provisions
Disposals and transfers to
AHFS
Unwinding of discount
Provisions utilised
At 30 June 2022
Employee
Entitlements
Employee
Terminations
Remediation
1,657
(41)
1,659
(72)
-
(1,473)
1,730
170
1,306
(67)
(1,172)
1,967
(165)
1,312
(35)
(1,200)
6
(1,192)
692
113
-
176
(28)
-
(261)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
306
-
-
306
(37)
84
-
-
-
-
353
Onerous
Contracts
2,048
-
-
-
(2,048)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Litigation Warranty
Total
-
-
-
-
3,818
(41)
1,104
232
3,171
-
-
-
-
-
-
(100)
(2,048)
(1,734)
1,104
232
3,066
-
2,042
14
122
184
3,776
(112)
(179)
(2,661)
(47)
(3,880)
485
-
209
(18)
103
(100)
(142)
2,967
(221)
1,500
(277)
-
-
-
-
(1,200)
6
(385)
(37)
(1,614)
-
116
1,161
25. 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
Total non-current liabilities
Total liabilities
As at 30 June
2022
2021
2020
-
505
4,285
142
-
145
32
5,109
1,959
21,121
264
108
-
23,452
28,561
-
669
-
88
59
152
36
1,004
326
21,175
244
183
159
22,087
23,091
508
641
-
51
-
66
46
1,312
714
23,401
249
-
278
24,642
25,954
Page | 94
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
On 30 June 2021, the Company agreed a refinancing of its existing $21.1 million shareholder loan with AWN, with
repayment of principal from 1 January 2023 in sixty monthly instalments of $0.35 million to loan maturity on 31
December 2027. The interest rate and line fee was agreed at 8% and 0.8% respectively, but no interest or line fee
settlements were required until after a corporate liquidity event had occurred. In addition, the Company agreed
to cash settle a refinancing fee of approximately $0.34 million in two tranches on 30 June 2022 and 31 December
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.
On 30 June 2022 further amendments to the loan were agreed with AWN, (i) to defer repayment of principal to
commence on 01 October 2023, with repayments over 60 months to 30 September 2028, (ii) to defer interest
payments from 01 October 2021, becoming due and payable on the earlier of a) completion by VivoPower of a
debt or equity raise of at least US$25 million, and b) 01 October 2023.
During the period from 01 October 2021 to the earlier of a) 30 September 2023 or b) the date a minimum
Prepayment of US$1,000,000 is made, the interest rate and line fee will increase to 10.00% and 2.00% per annum
respectively. The previous refinancing fee of $0.34 million remains accruing but becomes payable at the earlier
of a) US$1.0 million prepayment being made or b) 01 October 2023.A new facility extension fee of $0.355 million
was agreed with AWN, to accrue immediately but becoming payable on 01 October 2023.
In December 2021, a short term loan of $1.1 million (A$1.5 million) was provided from AWN to Aevitas O Holdings
Pty Limited at an interest rate of 10.0%, increasing to 12.5% from 01 January 2022. The term of the loan was
initially set as 30 April 2022, then extended to the earlier of 01 October 2023 or the completion by VivoPower
International PLC of a debt or equity raise of at least US$25 million. A facility extension fee of $29,000 (A$40,000)
is payable on 01 October 2023.
A short term $3.0 million loan was provided from AWN Holdings to Aevitas O Holdings Pty Limited on 22 February
2022, with interest rate of 10.00% per annum payable on the principal sum upon maturity. The initial expiry date
of 13 May 2022 was extended to the earlier of a) 01 October 2023 or the b) completion by VivoPower International
PLC of a debt or equity raise of at least US$25 million. A new facility extension fee of US$85,000 was also agreed
to accrue immediately, but payable on 01 October 2023.
Lease liabilities have increased by $1.5 million in the year to $2.5 million, following $1.0 million capitalization of
a new leased right-of-use asset in December 2021 in Kenshaw Electrical Pty Ltd, on relocation to a new larger
facility in Newcastle, New South Wales, and $1.0 million in May 2022 due to the relocation of Tembo operations
to a new larger facility in Eindhoven, offset by lease payments in the year and transfer of $0.2 million of lease
liabilities to liabilities held for sale following announcement of the sale of the ex-solar business of Kenshaw Solar
to ARA.
Depreciation expense on right-of-use assets and interest expense on associated lease liabilities for the year
ended 30 June 2022 amounting to $0.8 million and $0.1 million respectively, are recognized in the Consolidated
Statement of Comprehensive Income. Total lease payments for the year ended 30 June 2022 amounted to $0.4
million.
The obligations under lease liabilities are as follows:
Minimum lease Payments
As at 30 June
Present value of minimum lease
payments
As at 30 June
2022
2021
2020
2022
2021
2020
Amounts payable under
lease liabilities:
Less than one year
Later than one year but not
more than five
Future finance charges
Total lease obligations
546
2,546
3,091
(627)
2,464
683
379
1,062
(67)
995
695
759
1,454
(99)
1,355
444
2,020
2,464
-
2,464
669
326
995
-
995
641
714
1,355
-
1,355
Page | 95
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
26. Called up share capital
(US dollars in thousands)
Allotted, called up and fully paid
Ordinary shares of $0.012 each
Number allotted
Ordinary shares of $0.012 each
As at 30 June
2022
2021
2020
$255,819
21,318,118
$255,819
$222,074
18,506,064
$222,074
$162,689
13,557,376
$162,689
Following the issuance of ordinary share capital in the equity capital raise in October 2020, utilizing over $40,000
nominal amount of authorized shares allotment, at the Company’s Exceptional General Meeting on 18
December 2020, the Directors were given a new authority to allot shares up to an aggregate nominal amount of
$180,000.00.
Movements in ordinary shares:
Shares
Par value
Share premium
Total
No.
USD 000
USD 000
USD 000
At 30 June 2019
At 30 June 2020
Capital raises1
THFC investment2
Employee share scheme issues3
Acquisition of non-controlling interest in
subsidiary4
At 30 June 2021
Conversion of equity instruments5
Capital raises1
Other share issuances6
Employee share scheme issues3
13,557,376
13,557,376
4,091,019
49,750
792,126
15,793
18,506,064
2,005,190
82,644
42,000
682,220
163
163
49
1
9
-
222
24
1
1
8
40,215
40,378
40,215
40,378
34,317
34,366
499
961
237
500
970
237
76,229
76,451
20,442
20,466
243
217
244
218
2,287
2,295
21,318,118
At 30 June 2022
99,674
1. During the year ended 30 June 2021, 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. In the year ended 30 June 2022, a further
82,644 ordinary shares were issued under the same registration statement.
In February 2021, 49,750 ordinary shares were issued to Tottenham Hotspurs Football Club (“THFC”) as part of the exclusive global battery
partnership agreement.
99,418
256
2.
3. During the year ended 30 June 2022, 682,220 shares (year ended 30 June 2021: 792,126 shares) were issued were issued to employees and
4.
directors of the Company and consultants to the Company under the Omnibus Incentive Plan.
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.
5. 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 entities owned
by AWN Holdings Limited, the Company’s largest individual shareholder.
6. During the year ended 30 June 2022, 42,000 restricted shares were issued to corporate advisors in exchange for investor relations
services.
Page | 96
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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 27). Share premium has also been recorded in respect of the share
capital related to employee share awards.
Page | 97
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
27. Other reserves
(US dollars in thousands)
At 30 June 2019
Equity instruments
Other reserves
Employee share scheme
At 30 June 2020
Conversion to Aevitas
h
f
Interest on equity instruments
Equity instruments payments
Conversion to ordinary shares
i
Vi P
di
Capital raising costs
i
Share issuance costs
Equity incentives cost less
h
d
Other movements
i
At 30 June 2021
Issuance of shares
Share issuance costs
Capital raising costs
Equity incentives cost less
h
d
Other movements
i
Equity
instruments1
26,087
Preference
shares1
-
Shares
pending
issue2
-
Capital
raising
costs3
(9,722)
Equity
incentive
costs4
-
Share
awards
issuance4
-
Treasury
shares5
(13)
970
-
-
27,057
(2,998)
114
(3,317)
(20,466)
-
-
-
-
-
-
-
2,998
185
(123)
-
-
-
-
(390)
210
-
-
-
-
-
-
-
20,466
-
-
-
-
-
3,713
-
(6,009)
-
-
-
-
(2,804)
(15)
1
17
326
344
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,078
(971)
-
-
3,270
20,466
(8,828)
1,422
(971)
-
-
-
-
-
-
-
-
-
-
-
(20,466)
-
-
-
-
-
-
-
(122)
-
-
-
(1,879)
-
-
-
-
-
1,318
-
Share
option
reserve6
3,713
-
(3,713)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Foreign
exchange
Total
11
20,076
-
-
5
971
17
344
16
21,408
-
-
-
-
-
-
-
(61)
(45)
-
-
-
-
-
299
(3,440)
-
(2,804)
(15)
107
(241)
15,314
(20,466)
(1,879)
(122)
1,318
(283)
(283)
-
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 30 June 2022
-
3,270
(8,950)
2,740
(2,850)
-
-
(328)
(6,118)
Page | 98
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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 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 31 August
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 31 August 2020, had earned $26,708 interest on the convertible loan note in the year ended 20
June 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.
During the year ended 30 June 2021, $20.5 million was recognized 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 21 July 2021.
The $0.1 million of transaction costs incurred in the year ended 30 June 2022 (year ended 30 June 2021: $2.8 million) relate primarily
to capital raises on Nasdaq.
During the year ended 30 June 2022, $1.9 million was expensed towards share incentive awards to employees, directors, and consultants
of the Company under the Omnibus Incentive Plan (year ended 30 June 2021: $1.4 million). Amounts are expensed at the award grant
price over the vesting period, adjusted for actual quantities upon vesting. Of the expenses recorded, $1.9 million of shares were delivered
to participants (year ended 30 June 2021: $1.0 million).
2.
3.
4.
During the years ended 30 June 2021 and 30 June 2022, the following awards under the Incentive Plan
have been granted, and have vested or forfeit:
Outstanding at 30 June 2020
Granted
Vested
Forfeit
Outstanding at 30 June 2021
Granted
Vested
Forfeit
Outstanding at 30 June 2022
Number of
RSUs, PSUs
and BSAs
(thousands)
$’000
Weighted
average grant
date fair value
812
184
(535)
-
462
527
(612)
(98)
279
662
1,621
(1,095)
-
$1,188
1,367
(1,460)
(233)
862
Page | 99
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
28. Earnings / (loss) per share
The earnings / (loss) and weighted average numbers of ordinary shares used in the calculation of earnings /
(loss) 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)
29. Pensions
As at 30 June
2022
(21,569)
2021
(7,571)
2020
(5,103)
20,722
16,307
13,557
(1.04)
(1.04)
(0.49)
(0.49)
(0.38)
(0.38)
The Company’s principal pension plan comprises the compulsory superannuation scheme in Australia,
where the Company contributes 10% during the year, and for FY2023, the Company will contribute 10.5%. A
pension scheme is also in place for U.K. employees, where the Company contributes 7% (year ended 30 June
2021: 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 $0.9 million (year ended 30 June 2021: $0.79 million; year ended 30 June 2020:
$0.79 million).
30. 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
6,970
8,604
1,140
16,714
23,091
5,751
28,842
8,587
2,824
1,013
12,424
25,954
7,504
33,458
2022
7,373
1,285
1,195
9,853
28,561
10,973
39,534
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.
Page | 100
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
(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 liquidity risk is effectively managed and mitigated. The Group held unrestricted cash
resources of $1.3 million at 30 June 2022 (30 June 2021: $8.6 million; 30 June 2020: $2.8m). The ratio of
current assets to current liabilities at 30 June 2022 is 0.92 (30 June 2021: 1.79; 30 June 2020: 1.04).
The Group maintained a A$2.1 million debtor finance facility to support its working capital requirements
in JA Martin, of which nil was drawn at 30 June 2022 (30 June 2021: nil; 30 June 2020: $0.5 million). Following
sale of ex-solar JA Martin operations on 01 July 2022, the JA Martin debtor finance facility was cancelled,
but indicative terms for a new facility with a limit of A$2.5 million and variable interest rate that is currently
7.75% have been received by Kenshaw, as well as a trade finance facility of $0.5 million.
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:
Year ended 30 June 2022
(US dollars in thousands)
Less than
1 year
1-3
years
3-5
years
More than 5
years
Total
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)
10,973
10,973
-
-
Borrowings
Lease liabilities
Total
26,097
2,464
4,604
11,283
10,211
506
846
1,112
39,534
16,083
12,129
11,323
-
-
-
-
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
5,751
-
-
Borrowings
Lease liabilities
Total
22,096
995
28,842
411
669
11,424
10,261
326
-
6,831
11,750
10,261
-
-
-
-
Page | 101
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Year ended 30 June 2020
(US dollars in thousands)
Contractual maturity of financial liabilities
Total
Less than
1 year
1-3
years
3-5
years
More than
5 years
Trade and other payables (financial liabilities)
7,504
Borrowings
Lease liabilities
Total
(c) Credit risk
24,598
1,356
33,458
7,504
688
649
-
23,873
654
8,841
24,527
-
37
53
90
-
-
-
-
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.
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 2022:
• Cash and cash equivalents $0.8 million denominated in AUD, $0.3 million denominated in EUR and
$0.1 million denominated in GBP.
• Restricted cash $1.2 million denominated in AUD.
• Trade and other receivables $5.7 million denominated in AUD, $2.1 million denominated in EUR and
$1.0 million denominated in GBP.
• Trade and other payables $7.5 million denominated in AUD, $1.8 million in EUR and $0.6 million in
GBP.
• Borrowings $2.0 million denominated in AUD and $1.1 in EUR.
• Provisions $0.8 million denominated in AUD and $0.4 million in EUR.
The non-current shareholder loan of $21.1 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.
Page | 102
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
31. Related party transactions
AWN is not the ultimate controlling party of VivoPower, but retains a significant influence. As at 30 June 2022,
AWN held a 47.5% equity interest in the Company, reducing to $42.8% following the shelf issuance in July
2022.
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.
On 30 June 2021, the Company agreed a refinancing of its existing $21.1 million shareholder loan with AWN, with
repayment of principal from 1 January 2023 in sixty monthly instalments of $0.35 million to loan maturity on 31
December 2027. The interest rate and line fee was agreed at 8% and 0.8% respectively, but no interest or line fee
settlements were required until after a corporate liquidity event had occurred. In addition, the Company agreed
to cash settle a refinancing fee of approximately $0.34 million in two tranches on 30 June 2022 and 31 December
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.
On 30 June 2022 further amendments to the loan were agreed with AWN, (i) to defer repayment of principal to
commence on 01 October 2023, with repayments over 60 months to 30 September 2028, (ii) to defer interest
payments from 01 October 2021, becoming due and payable on the earlier of a) completion by VivoPower of a
debt or equity raise of at least US$25 million, and b) 01 October 2023.
During the period from 01 October 2021 to the earlier of a) 30 September 2023 or b) the date a minimum
Prepayment of US$1,000,000 is made, the interest rate and line fee will increase to 10.00% and 2.00% per annum
respectively. The previous refinancing fee of $0.34 million remains accruing but becomes payable at the earlier of
a) US$1.0 million prepayment being made or b) 01 October 2023.A new facility extension fee of $0.355 million was
agreed with AWN, to accrue immediately but becoming payable on 01 October 2023.
In December 2021, a short-term loan of $1.1 million (A$1.5 million) was provided from AWN to Aevitas O Holdings
Pty Limited at an interest rate of 10.0%, increasing to 12.5% from 01 January 2022. The term of the loan was initially
set as 30 April 2022, then extended to the earlier of 01 October 2023 or the completion by VivoPower International
PLC of a debt or equity raise of at least US$25 million. A facility extension fee of $29,000 (A$40,000) is payable on
01 October 2023.
A short term $3.0 million loan was provided from AWN Holdings to Aevitas O Holdings Pty Limited on 22 February
2022, with interest rate of 10.00% per annum payable on the principal sum upon maturity. The initial expiry date
of 13 May 2022 was extended to the earlier of a) 01 October 2023 or the b) completion by VivoPower International
PLC of a debt or equity raise of at least US$25 million. A new facility extension fee of US$85,000 was also agreed to
accrue immediately, but payable on 01 October 2023.
Michael Hui, non-executive director of VivoPower International PLC, is also an employee and director of AWN.
During the year ended 30 June 2022, Mr. Hui invoiced the Company $50,000 for director fees. At 30 June 2022,
the Company had an account payable of $8,333 in respect of these services. Furthermore annual 3,500 RSUs
($2,625) and 8,124 quarterly PSUs ($6,093) 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 2022, $343,806 was recharged to the Company (year ended 30 June 2021: $1,028,096). At
30 June 2022, the Company has a payable to AWN in respect of recharges of $313,688 (30 June 2021: $4,345;
30 June 2020: $202,024).
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 with 4,697 Aevitas Preference Shares of face value A$46,970.
The Panaga Group Trust earned $2,729 ($1,880) dividends on the Aevitas Preference Shares during the year
ended 30 June 2022.
Chief Executive fees for Kevin Chin in the amounts of $434,969 and training annual allowance of $51,388 were
charged to the Company by Arowana International U.K. Limited (“AWE”) during the year ended 30 June 2022.
Page | 103
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
On 01 July 2020, Arowana International U.K. 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 years ended 30 June 2021 and 2022.
Chairman’s fees for Kevin Chin in the amounts of $91,029 were charged to the Company by Arowana Partners
Group Pty Ltd (“APG”) in the current year. A further $219,608 costs incurred by APG on behalf of the Company
were recharged to the Company in the year. At 30 June 2022, the Company had an account payable of
$163,263 in respect of these services. Mr. Chin is a shareholder and director of Arowana Partners Group Pty
Ltd during the year ended 30 June 2022.
Annual 17,740 RSUs ($13,080) and 40,479 quarterly PSUs ($30,359) and 70,000 ($229,600) RSUs related to
short term incentive compensation for the year ended 30 June 2021, vested to APG for Mr. Chin as Chief
Executive in the current year.
On 26 November 2021, APG provided a loan of $0.37 million to Caret LLC, to provide working capital
assistance. The loan incurred interest during the year of $22,895 at 8% plus a 2% facility fee, plus a one-off
establishment fee of $7,400. The loan plus interest were repaid in August 2022.
32. Subsequent events
On 01 July 2022, the ex-solar operations of Kenshaw Solar (formerly J.A. Martin Electrical PTY Limited) were
sold to ARA Electrical Engineering Services Pty Limited. Disposal consideration $6.8 million comprised cash
purchase price $3.4 million (A$5.0 million) less working capital adjustment $0.8 million (A$1.2 million). Fair
value of contingent consideration $4.5 million applied a contracted 4.5x multiple to year 1 forecast EBITDA
of $2.7 million, discounted at 10% to net present value, less purchase price paid. Costs to sell comprised
advisory fees of $0.3 million. Net book value of net assets sold was $6.7 million, resulting in gain on disposal
of $0.03 million.
On 29 July 2022, the Company entered into a Securities Purchase Agreement to issue and sell, in a registered
direct offering directly to an investor, (i) an aggregate of 2,300,000 ordinary shares (the “Shares”), nominal
value $0.012 per share, at an offering price of $1.30 per share and (ii) an aggregate of 1,930,770 pre-funded
warrants exercisable for Ordinary Shares at an offering price of $1.2999 per Pre-Funded Warrant, for gross
proceeds of approximately $5.5 million before deducting the placement agent fee and related offering
expenses.
The Pre-Funded Warrants were sold to the Investor whose purchase of Ordinary Shares in the Registered
Offering would otherwise result in the Investor, together with its affiliates and certain related parties,
beneficially owning more than 4.99% of the Company’s outstanding Ordinary Shares immediately following
the consummation of the Registered Offering, in lieu of Ordinary Shares. Each Pre-Funded Warrant
represents the right to purchase one Ordinary Share at an exercise price of $0.0001 per share. The Pre-
Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded
Warrants are exercised in full.
In a concurrent private placement, we agreed to issue to the investor, Series A Warrants exercisable for an
aggregate of 4,230,770 Ordinary Shares at an exercise price of $1.30 per share. Each Series A Warrant will be
exercisable on February 2, 2023 and will expire on February 2, 2028. The Series A Warrants and the Ordinary
Shares issuable upon the exercise of the Series A Warrants were offered pursuant to the exemption provided
in Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b)
promulgated thereunder.
33. 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.
Page | 104
Notes to the Financial Statements
VivoPower International PLC for the year ended 30 June 2022
34. Ultimate controlling party
As at 30 June 2022, AWN held a 47.5% equity interest in the Company, reducing to 42.8% following the shelf
issuance in July 2022. Since 30 June 2021, the Company no longer has an ultimate controlling party.
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.
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
Caret, LLC
Caret Decimal, LLC
Tembo EV Australia Pty Ltd
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
Kenshaw Solar Pty Ltd (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.
VivoPower International IMEA DMCC
Jurisdiction
Jersey
United States
United States
United States
United States
United States
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Philippines
Philippines
Philippines
The Netherlands
The Netherlands
The Netherlands
United Arab Emirates
Page | 105
Company Statement of Financial Position
VivoPower International PLC for the year ended 30 June 2022
Company Statement of Financial Position
(US dollars in thousands)
Note
2022
2021
2020
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
37
38
39
40
41
41
42
-
14,513
-
14,513
9
54,642
54,651
69,164
2,350
-
2,350
256
99,418
(9,061)
(23,799)
66,814
69,164
-
14,513
-
14,513
5,256
51,357
56,613
71,126
1,786
485
2,271
222
76,229
12,087
(19,683)
68,855
71,126
-
7,388
24,850
32,238
306
16,534
16,840
49,078
3,750
1,104
4,854
163
40,215
19,185
(15,339)
44,224
49,078
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 2022 was $4,116,000 (year
ended 30 June 2021 was $4,343,000; year ended 30 June 2020 was $1,952,000).
These financials were approved by the Board of Directors on 27 September 2022 and signed on its behalf by:
Kevin Chin
Chairman
Page | 106
Company Statement of Cash Flow
VivoPower International PLC for the year ended 30 June 2022
Company Statement of Cash Flow
(US dollars in thousands, except per share
amounts)
Cash flows from operating activities
Year ended 30 June
Note
2022
2021
2020
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
(4,116)
(4,343)
(1,952)
-
30
-
13
(485)
815
564
-
87
-
2
(620)
1,291
(1,203)
-
-
-
46
-
-
-
Net cash used in operating activities
(3,179)
(4,787)
(1,906)
Cash flows from investing activities
Acquisition of subsidiary
-
(7,125)
Intercompany loan funding / (repayments)
(4,129)
(14,708)
Net cash (used in)/from investing activities
(4,129)
(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
Cash and cash equivalents at the end of the
period
-
2,223
2,223
-
(12)
(12)
305
1
2,074
(13)
2,061
(5,247)
5,256
31,570
-
31,570
4,950
306
9
5,256
306
Page | 107
Company Statement of Changes in Equity
VivoPower International PLC for the year ended 30 June 2022
Company Statement of Changes in Equity
(US dollars in thousands)
Share
Capital
Share
Premium
Other
Reserves
Retained
Deficit
Total
At 30 June 2019
163
40,215
18,330
(13,387)
45,321
Total comprehensive loss for the
period
Equity instruments
Employee share scheme
At 30 June 2020
Total comprehensive loss for the
period
Capital raises
Equity instruments
Other share issuances
Employee share awards
At 30 June 2021
Total comprehensive loss for the
period
Capital raises
Equity instruments
Other share issuances
Employee share awards
-
-
-
-
163
-
-
-
-
-
(460)
(1,952)
(2,412)
971
344
855
-
-
971
344
(1,952)
(1,097)
40,215
19,185
(15,339)
44,224
-
-
(4,344)
(4,344)
49
34,317
(2,821)
-
736
961
(4,383)
-
107
-
-
-
-
31,545
(4,383)
737
1,077
36,014
(7,098)
(4,344)
24,631
76,229
12,087
(19,683)
68,855
-
-
(4,116)
(4,116)
243
121
20,442
(20,466)
217
2,287
(144)
(417)
-
-
-
-
123
-
74
1,878
23,189
(21,148)
(4,116)
(2,041)
-
1
9
59
222
-
1
24
1
8
34
At 30 June 2022
256
99,418
(9,061)
(23,799)
66,814
For further information on “Other Reserves” please see Note 27 within the consolidated financial
statements.
Page | 108
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2022
Notes to the Company Financial Statements
35. 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.
36. 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 31 within the consolidated financial
statements.
37. 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
2022
2021
2020
7,125
7,388
7,125
7,388
14,513
14,513
-
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 | 109
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2022
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.
38. Other receivables
(US dollars in thousands)
Amounts owed by group undertakings
Prepaid expenses
Total
39. Trade and other payables
(US dollars in thousands)
Trade payables
Accrued expenses
Payroll tax liabilities
Other borrowings
Amounts owed to group undertakings
As at 30 June
2021
49,484
1,873
51,357
As at 30 June
2021
1,334
401
15
36
-
2022
53,583
1,059
54,642
2022
1,319
971
28
32
-
Total
2,350
1,786
40. Provisions
(US dollars in thousands)
At 30 June 2020
Charged/(credited) to profit or loss:
Additional provisions
Provisions utilised
At 30 June 2021
Charged/(credited) to profit or loss:
Additional provisions
Provisions utilised
At 30 June 2022
Litigation
1,104
2,042
(2,661)
485
(100)
(385)
-
2020
16,338
196
16,534
2020
2,792
157
4
46
751
3,750
Total
1,104
2,042
(2,661)
485
(100)
(385)
-
Page | 110
Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2022
41. Share capital
(US dollars in thousands)
Allotted, called up and fully paid:
Ordinary shares of $0.012 each
Number allotted:
As at 30 June
2021
2022
2020
$255,819
$ 222,074
$ 162,689
Ordinary shares of $0.012 each
21,318,118
18,506,064
13,557,376
At 30 June 2019
At 30 June 2020
Capital raises1
THFC investment2
Employee share scheme issues3
Acquisition of non-controlling interest in subsidiary4
At 30 June 2021
Conversion of equity instruments
Capital raises1
Other issuances5
Employee share scheme issues3
At 30 June 2022
Par
value
USD
000
163
163
49
1
9
-
Share
premium
USD 000
40,215
40,215
34,317
499
961
237
Total
USD 000
40,378
40,378
34,366
500
970
237
Shares
No.
13,557,376
13,557,376
4,091,019
49,750
792,126
15,793
18,506,064
2,005,190
222
24
76,229
20,442
76,451
20,466
82,644
42,000
682,220
1
1
8
243
217
244
218
2,287
2,295
21,318,118
256
99,418
99,674
1
2
3
4
5
6
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. In the year ended 30 June 2022, a further 82,644 ordinary
shares were issued under the same registration statement.
In February 2021, 49,750 ordinary shares were issued to Tottenham Hotspurs Football Club (“THFC”) as part of the exclusive global
battery partnership agreement.
During the year ended 30 June 2022, 682,220 shares (year ended 30 June 2021: 792,126) were issued to employees and directors of the
Company and consultants to the Company under the Omnibus Incentive Plan.
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 entities owned
by AWN Holdings Limited, the Company’s largest individual shareholder.
During the year ended 30 June 2022, 21,000 restricted shares were issued to Corporate Profile LLC and 21,000 restricted shares were
issued to FON Consulting Ltd in exchange for investor relations services.
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 42). Share premium has also been recorded in respect of the share
capital related to employee share awards.
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Notes to the Company Financial Statements
VivoPower International PLC for the year ended 30 June 2022
42. Other reserves
(US dollars in
thousands)
Equity
instruments
Shares
pending
issue
Capital
raising
costs
Equity
incentive
costs
Share
awards
issuance
Treasury
shares
Share
option
reserve
Foreign
exchange
Total
At 30 June 2019
Equity instruments
Share options
lapsed
Equity incentives
At 30 June 2020
Capital raises
Equity instruments -
conversion
Equity instruments -
other
Equity incentives
Other movements
(2,229)
At 30 June 2021
Equity instruments -
conversion
Share issuance
costs
Capital raising costs
Equity incentives
Other movements
At 30 June 2022
-
-
-
-
-
-
-
-
43. Employee and directors
26,108
971
-
-
971
27,079
-
-
(9,722)
-
-
-
-
-
3,713
-
3,713
-
(6,009)
-
(2,821)
(20,466)
20,466
(4,384)
-
-
-
-
(27,079)
20,466
(2,821)
-
-
-
-
20,466
(8,830)
(20,466)
-
-
-
-
-
-
(121)
-
-
-
-
-
350
350
350
-
-
-
-
-
-
-
-
-
-
-
-
1,078
(971)
-
1,078
1,428
-
-
-
1,318
(6)
-
(971)
(971)
-
(1,879)
-
-
-
(20,466)
(121)
1,312
(1,879)
-
(8,951)
2,740
(2,850)
(14)
3,713
(1,755)
18,330
-
-
14
-
(3,713)
-
-
971
-
-
(480)
(116)
14
(3,713)
(480)
855
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,235)
19,185
-
-
-
-
2,229
(2,821)
-
(4,384)
107
-
2,229
(7,098)
(6)
12,087
-
-
-
-
6
6
-
(20,466)
(1,879)
(121)
1,318
-
(21,148)
(9,061)
The company employed one member of staff during the course of the year. Contractual agreements are in
place for five directors to serve on the board of VivoPower International PLC.
See the Directors’ Report in the consolidated financial statements for full details of the directors.
Page | 112
Company Information
VivoPower International PLC for the year ended 30 June 2022
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 31 August 2022, the Company’s issued share capital consists of 23,369,763 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 25 October 2022. The notice of the meeting will be sent to shareholders at
least 21 days before the meeting.
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