DevvStream

VivoPower International PLC Reports Financial Results for the Six Months Ended December 31, 2021

24 February 2022
  • Key strategic initiatives executed upon despite COVID-19 disruptions
  • Revenue, GP and EBITDA decline due to strict prolonged COVID-19 lockdowns in key markets, especially Australia
  • Definitive distribution partnerships for Tembo e-LV kits executed with GHH and Bodiz
  • Full ownership of US solar portfolio secured, rebranded to Caret and launched cryptomining venture, Caret Decimal

VivoPower International PLC (NASDAQ: VVPR) (“VivoPower”, the “Company”) today announced its half year results for the six months ended December 31, 2021.

Highlights for the half year ended December 31, 2021:

  • Group revenue declined 11% to $18.9 million due to strict COVID-19 lockdowns affecting projects and deliveries.
  • Group gross profit down 85% year on year to $0.5 million as a result, with group gross profit margin down to 3% (from 16%).
  • Underlying group adjusted EBITDA loss of $4.9 million, representing a decline versus $1.2 million profit in previous corresponding period.
  • Full control of U.S. solar joint venture secured with plans to launch renewable powered digital asset mining business, Caret Decimal.
  • B Corp recertification completed and recognized as a top global impact company for the second consecutive year by the Real Leaders Impact Awards

Kevin Chin, VivoPower’s Executive Chairman and Chief Executive Officer, said, “Our half year results reflect another period where we have been adversely impacted by extended lockdowns in our key markets, particularly in Australia (which further tightened its international and interstate domestic borders from July 2021). These lockdowns and border restrictions have caused significant delays in both projects and deliveries, resulting in revenues being below budget. This includes a one off loss of $1.1 million at the gross margin level, attributable to the Bluegrass solar project in Australia, which became unprofitable directly as a consequence of COVID related interstate border closures and strict COVID related rules and regulations. Furthermore, the imposition of additional COVID-19 related compliance costs as well as increases in supply chain and logistics costs eroded our gross profit margins. As a result of these factors, we decided to delay some of our budgeted opex and capex investment until such time there was greater clarity on when lockdowns would be lifted and borders would be reopened. At the time of writing, it is pleasing to note that our key markets, including Australia, have announced the reopening of international borders from late February 2022 and we have been prepared in anticipation.

“While plans for both our Aevitas and Tembo business units were materially curtailed over the past six months, we were able to make significant progress with our US solar business, which has been renamed to Caret. During this period, we secured 100% ownership of the business, rebranded, announced a new Power-to-X strategy and signed a letter of intent to form a renewable powered cryptocurrency mining company, Caret Decimal together with an experienced New York based cryptomining group, Decimal Digital. As part of this deal, we expect to contribute 206.5 MW-DC of solar power development sites to Caret Decimal for a value of $20 million, received in the form of equity in Caret Decimal. Post balance date, Caret Decimal has signed a letter of intent to acquire the assets of Decimal Digital, which includes 1,000 mining rigs and relevant contracts. Caret Decimal has engaged capital raising advisers and is progressing with a $50+ million raising at the Caret Decimal level.

“We are pleased to have successfully passed our B Corp reassessment and retained our B Corp status. In addition, we are proud to have been recognized for the 2nd year in a row as one of the world’s top 100 impact companies by the Real Leaders Impact Awards. Upholding our B Corp and impact leadership status is an ongoing priority for the board and management team. In the spirit of this, I am pleased to also announce that we have nominated Peter Jeavons, who is a non-executive director on the board to be the Company’s Senior Independent Director. In addition, Matthew Cahir will step off the board and focus on his executive role. The rationale for this is to ensure there is a clear majority of independent directors on the board and that they are sufficiently empowered to deliver on their fiduciary duties. As appropriate, we will also seek to appoint another independent non-executive director.”

A reconciliation of IFRS (“International Financial Reporting Standards”) to non-IFRS financial measures has been provided in the financial statement table included in this press release. An explanation of these measures is also included below, under the heading “About Non-IFRS Financial Measures.”

About Non-IFRS Financial Measures

Our preliminary results include certain non-IFRS financial measures, including adjusted EBITDA, adjusted net after-tax loss and adjusted EPS. Management believes that the use of these non-IFRS financial measures provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our results of operations, and also facilitates comparisons with peer companies, many of which use similar non-IFRS or non-GAAP (“Generally Accepted Accounting Principles”) financial measures to supplement their IFRS or GAAP results. Non-IFRS results are presented for supplemental informational purposes only to aid in understanding our results of operations. The non-IFRS results should not be considered a substitute for financial information presented in accordance with IFRS and may be different from non-IFRS or non-GAAP measures used by other companies.

The tables included in this press release titled “Reconciliation of Adjusted (Underlying) EBITDA to IFRS Financial Measures” and “Reconciliation of Adjusted (Underlying) Net After-Tax Loss and Adjusted (Underlying) EPS to IFRS Financial Measures” provide reconciliations of non-IFRS financial measures to the most recent directly comparable financial measures calculated and presented in accordance with IFRS.

Reconciliation of Adjusted (Underlying) EBITDA to IFRS Financial Measures

  Six months ended December 31
(US dollars in thousands) 2021   2020 
Net loss (10,031)  (382)
Income tax (815)  366 
Net finance expense / (income) 3,021   (2,259)
Share based compensation 1,284   704 
Restructuring & other non-recurring costs 514   1,900 
Depreciation and amortization 1,173   889 
Adjusted (Underlying) EBITDA (4,854)  1,218 

Reconciliation of Adjusted (Underlying) Net After-Tax Loss and Adjusted (Underlying) EPS to IFRS Financial Measures 

  Six months ended December 31
(US dollars in thousands except per share amounts) 2021   2020 
Net loss (10,031)  (382)
Restructuring & other non-recurring costs 514   1,900 
Adjusted (Underlying) Net After-Tax Profit / (Loss) (9,517)  1,518 
      
Group Basic EPS (dollars per share) (0.49)  (0.03)
Restructuring & other non-recurring costs (dollars per share) 0.02   0.13 
Group Adjusted (Underlying) EPS (dollars per share) (0.47)  0.10 

About VivoPower

VivoPower is a sustainable energy solutions company focused on battery storage, electric solutions for customized and ruggedized fleet applications, solar and critical power technology and services. The Company's core purpose is to provide its customers with turnkey decarbonization solutions that enable them to move toward net zero carbon status. VivoPower is a certified B Corporation with operations in Australia, Canada, the Netherlands, the United Kingdom, the United States and the United Arab Emirates.

Forward-Looking Statements

This communication includes certain statements that may constitute “forward-looking statements” for purposes of the U.S. federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about the benefits of the events or transactions described in this communication and the expected returns therefrom. These statements are based on VivoPower’s management’s current expectations or beliefs and are subject to risk, uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of VivoPower’s business. These risks, uncertainties and contingencies include changes in business conditions, fluctuations in customer demand, changes in accounting interpretations, management of rapid growth, intensity of competition from other providers of products and services, changes in general economic conditions, geopolitical events and regulatory changes and other factors set forth in VivoPower’s filings with the United States Securities and Exchange Commission. The information set forth herein should be read in light of such risks. VivoPower is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of new information, future events, changes in assumptions or otherwise.

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Sophie Morello / Jessica Hodson Walker / Richard Bicknell  

 


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