20-F/A: VivoPower International PLC Files Amendment No. 2 to Form 20-F/A for Fiscal Year Ended June 30, 2023

VivoPower International PLC files an amendment to its annual report on Form 20-F/A to revise items in response to SEC comments, reporting a net loss of $24.355 million for the fiscal year ended June 30, 2023.

Summary

• VivoPower International PLC filed Amendment No. 2 to its Annual Report on Form 20-F/A for the fiscal year ended June 30, 2023, in response to SEC comments.
• The amendment revises Items 5, 17, 18, and 19 of the original filing.
• The Group generated total revenue of $15.1 million, a gross loss of $2.3 million, an operating loss of $15.3 million, and a net loss of $22.4 million for the year ended June 30, 2023.
• Continuing operations generated revenue of $15.1 million, a gross loss of $2.3 million, an operating loss of $11.1 million, and a net loss of $18.1 million.
• Adjusted EBITDA for the year ended June 30, 2023, was a loss of $9.9 million.
• The results reflect a reduction in Aevitas Solar projects and the impact of weather events on the Edenvale project, incurring a $3.9 million loss.
• Current assets were $10.3 million, and current liabilities were $18.9 million as of June 30, 2023.
• The Company had net assets of $3.7 million, including intangible assets of $42.2 million as of June 30, 2023.
• Cash outflow for the year was $0.7 million, with cash reserves of $0.6 million and debt of $32.4 million.
• The Company is reliant on raising additional financing to grow revenue streams and sustain operations.
• There is a material uncertainty that may cause significant doubt about the going concern nature of the Group.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's net losses, reliance on external financing, and the material uncertainty about its ability to continue as a going concern.

Positives

• General and administrative expenses decreased by $6.2 million to $7.6 million for the year ended June 30, 2023.
• The decrease includes a $1.1 million decrease in marketing expenses, a $1.7 million decrease in non-cash equity remuneration, and a $3.6 million decrease in salaries and other overheads from reduction in Tembo and Aevitas executive management and administrative team.

Negatives

• The Group reported a net loss of $22.4 million for the year ended June 30, 2023.
• The Edenvale project incurred a $3.9 million loss due to severe weather events.
• Current assets were $10.3 million, while current liabilities were $18.9 million as of June 30, 2023.
• The Company had cash reserves of $0.6 million and debt of $32.4 million as of June 30, 2023.
• The Company is reliant on raising additional financing to grow revenue streams and sustain operations.
• There is a material uncertainty that may cause significant doubt about the going concern nature of the Group.

Risks

• The Company is reliant on raising additional financing to grow revenue streams and sustain operations.
• There is a material uncertainty that may cause significant doubt about the going concern nature of the Group.
• Market demand for products and services is heavily influenced by governmental economic, fiscal, and political policies.
• Operational scale up of electric vehicle assembly and delivery capabilities 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.
• Materials deliveries from suppliers are at risk of disruption due to external events and factors such as COVID-19, semiconductor shortages and conflict in Ukraine.
• The economic volatility attributable initially to COVID-19 and then to Russias 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 our business.
• 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.
• 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.
• 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 caliber talent quickly.

Future Outlook

The Company expects significant growth in revenues and continued EBITDA generation in critical power systems, a material increase in revenue and costs in scaling up the Electric Vehicles business as the operation scales series production of its EUV23 conversion kits to match the demand from its signed partnerships. 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.

Industry Context

The document provides insight into the financial performance of a company operating in the renewable energy and electric vehicle sectors, industries that are currently experiencing significant growth and investment. The company's focus on sustainable energy solutions and electric vehicles aligns with global trends towards decarbonization and electrification.

Comparison to Industry Standards

• It is difficult to compare VivoPower's results directly to industry standards without knowing the specific sub-sectors and geographic markets in which it operates.
• However, the company's financial performance can be assessed in the context of its peers in the renewable energy and electric vehicle industries.
• For example, companies like Tesla (TSLA) and Enphase Energy (ENPH) have demonstrated strong revenue growth and profitability in the electric vehicle and solar energy markets, respectively.
• VivoPower's financial results, particularly its net losses and reliance on external financing, suggest that it is still in a growth phase and has not yet achieved profitability.
• The company's adjusted EBITDA loss of $9.9 million for the year ended June 30, 2023, is a key metric to watch, as it indicates the company's underlying operating performance before accounting for non-cash expenses and other items.
• Comparable companies in the renewable energy and electric vehicle industries often trade at high valuations based on their growth potential, but investors should carefully assess the company's financial performance and risk factors before making investment decisions.

Related Party Transactions

• On June 30, 2021, the Company agreed a refinancing of its existing $21.1 million shareholder loan with AWN, with repayment of principal from January 1, 2023 in sixty monthly instalments of $0.35 million to loan maturity on December 31, 2027.
• On June 30, 2022 further amendments to the loan were agreed with AWN: (i) to defer repayment of principal to commence on October 1, 2023, with repayments over 60 months to September 30, 2028, (ii) to defer interest payments from October 1, 2021, becoming due and payable on the earlier of a) completion by VivoPower of a debt or equity raise of at least $25 million, and b) October 1, 2023.
• On January 11, 2023, further amendments to the loan were agreed with AWN: (i) to defer repayment of principal to commence on April 1, 2025, with repayments over 60 months to March 31, 2030. (ii) to defer interest payments from October 1, 2023, becoming due and payable on the earlier of a) completion by VivoPower of a debt or equity raise of at least $25 million, and b) October 1, 2024.
• On June 30, 2023, further amendments to the loan were agreed with AWN: (i) to defer interest payments from October 1, 2024 to April 1, 2025, and to replace the conditional requirement to repay accrued interest upon completion by VivoPower of a debt or equity raise of at least $25 million, with the conditional requirement to make repayments of interest and/or principal to meet the mandatory repayment schedule described in sections (ii) and (iii) below following a qualifying liquidity event.
• From time to time, costs incurred by AWN on behalf of VivoPower are recharged to the Company. During the year ended June 30, 2023, $1,138,346 was recharged to the Company (year ended June 30, 2022: $343,806,year ended June 30, 2021:$1,028,096 ).
• At June 30, 2023, the Company has a payable to AWN in respect of recharges of $1,392,303 ( June 30, 2022:$313,688, June 30, 2021: $4,345).
• 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.
• Chairmans fees for Kevin Chin in the amount of 68,000 ($81,819) were charged to the Company by Arowana Partners Group Pty Ltd (APG) in the current year.
• A further $130,863 costs incurred by APG on behalf of the Company were recharged to the Company in the year.
• On November 26, 2021, APG provided a loan of $0.37 million to Caret, to provide working capital assistance.

Stakeholder Impact

• Shareholders: The company's net losses and reliance on external financing may negatively impact shareholder value.
• Employees: The company's restructuring activities and workforce reductions may impact employee morale and job security.
• Customers: The company's ability to deliver goods and services to customers may be affected by supply chain disruptions and other external factors.
• Creditors: The company's high debt levels and reliance on external financing may increase the risk of default and negatively impact creditors.
• Suppliers: The company's ability to pay suppliers may be affected by its financial performance and liquidity.

Next Steps

• The Company expects significant growth in revenues and continued EBITDA generation in critical power systems, a material increase in revenue and costs in scaling up the Electric Vehicles business as the operation scales series production of its EUV23 conversion kits to match the demand from its signed partnerships.
• 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.

Key Dates

Keywords

VivoPower, Financial Results, Annual Report, Amendment, SEC, Net Loss, Revenue, EBITDA, Electric Vehicles, Solar, Debt, Financing, Going Concern