UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

(Amendment No. 2)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the fiscal year ended June 30, 2023

Commission file number 1-37974

VIVOPOWER INTERNATIONAL PLC

(Exact name of Registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

The Scalpel, 18th Floor, 52 Lime Street

London EC3M 7AF

United Kingdom

(Address of principal executive offices)

Kevin Chin, Chief Executive Officer

Tel: +44-203-667-5158

The Scalpel, 18th Floor, 52 Lime Street, London EC3M 7AF, United Kingdom

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary Shares, nominal value $0.012 per share	VVPR	The Nasdaq Capital Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or Ordinary Shares as of the close of the period covered by the annual report.

Ordinary Shares, nominal value $0.012 per share 25,788,260

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes   ☐     No   ☒

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒     No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   ☒     No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐             Accelerated filer  ☐          Non-accelerated filer  ☒            Emerging growth company  ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐	International Financial Reporting Standards as issued	Other
	by the International Accounting Standards Board  ☒	☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    

Item 17   ☐     Item 18   ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

EXPLANATORY NOTE

VivoPower International PLC (the “Company” or “our”) is filing this Amendment No. 2 on Form 20-F/A (this “Amendment”) to its Annual Report on Form 20-F for the year ended June 30, 2023, which was initially filed with the Securities and Exchange Commission on October 2, 2023 and amended by Amendment No. 1 on Form 20-F/A on October 6, 2023 (as so amended, the “Original Filing”), in response to comments received from the U.S. Securities and Exchange Commission (the “SEC”). We are filing this Amendment to revise Items 5, 17, 18 and 19 of the Original Filing.

Except for the matters described above, this Amendment does not modify or update disclosures in, or exhibits to, the Original Filing.

TABLE OF CONTENTS 

PART I	1
Item 5. Operating and Financial Review and Prospects	1
A.     Operating Results	1
B.     Liquidity and Capital Resources	12
C.     Research and Development, Patents, Licenses, etc.	16
D.     Trend Information	16
E.     Critical Accounting Estimates	16
PART III	18
Item 17. Financial Statements	18
Item 18. Financial Statements	18
Item 19. Exhibits	18

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of numerous factors, including, but not limited to, the risks discussed in this Annual Report in “Item 3. Key Information - D. Risk Factors” or in other parts of this Annual Report. Our audited consolidated financial statements included elsewhere in this Annual Report are prepared in accordance with IFRS, as issued by the International Accounting Standards Board and are presented in U.S. dollars.

Note, results reported in years ended June 30, 2022 and 2021 have been adjusted to exclude the results of the ex-solar operations of Aevitas Solar and shown as a single line item in the income statement after profit after tax. Details of results for discontinued operations are included in Note 22 to the financial statements.

A. Operating Results

Overview

	Year Ended June 30
	2023									2022 (restated)									2021
(US dollars in thousands)	Continuing			Discontinued			Total			Continuing			Discontinued			Total			Continuing			Discontinued			Total
Revenue from contracts with customers		15,060			-			15,060			22,448			15,168			37,616			23,975			16,436			40,411
Cost of sales		(13,472	)		-			(13,472	)		(20,308	)		(13,842	)		(34,150	)		(19,614	)		(14,470	)		(34,084	)
Cost of sales - non-recurring events		(3,850	)		-			(3,850	)		(1,881	)		-			(1,881	)		-			-			-
Gross profit		(2,262	)		-			(2,262	)		259			1,326			1,585			4,361			1,966			6,327
General and administrative expenses		(7,620	)		-			(7,620	)		(13,811	)		(1,485	)		(15,296	)		(9,651	)		(1,482	)		(11,133	)
Other gains/(losses)		30			(4,207	)		(4,177	)		(13	)		-			(13	)		769			-			769
Other income		119			-			119			662			324			986			960			552			1,512
Depreciation of property and equipment		(750	)		-			(750	)		(770	)		(445	)		(1,215	)		(638	)		(451	)		(1,089	)
Amortization of intangible assets		(831	)					(831	)		(850	)		(322	)		(1,172	)		(815	)		(352	)		(1,167	)
Operating (loss)/profit		(11,314	)		(4,207	)		(15,521	)		(14,523	)		(602	)		(15,125	)		(5,014	)		233			(4,781	)
Restructuring and other non-recurring costs		(2,084	)		-			(2,084	)		(443	)		-			(443	)		(2,877	)		(3	)		(2,880	)
Finance income		1,156			-			1,156			173			2			175			2,176			3			2,179
Finance expense		(7,366	)		-			(7,366	)		(8,604	)		(174	)		(8,778	)		(2,450	)		(140	)		(2,590	)
Loss before income tax		(19,608	)		(4,207	)		(23,815	)		(23,397	)		(774	)		(24,171	)		(8,165	)		93			(8,072	)
Income tax		(540	)		-			(540	)		1,968			149			2,117			138			(24	)		114
Loss for the period		(20,148	)		(4,207	)		(24,355	)		(21,429	)		(625	)		(22,054	)		(8,027	)		69			(7,958	)
Adjusted EBITDA(1)		(5,735	)		(4,207	)		(9,942	)		(9,122	)		166			(8,956	)		(2,483	)		1,035			(1,448	)

⁽¹⁾ Adjusted EBITDA is a non-IFRS financial measure. See “Non-IFRS Financial Information” below for additional information about this measure and a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with IFRS.

Management analyzes our business in five reportable segments: Critical Power Services, Electric Vehicles, Sustainable Energy Solutions, Solar Development, and Corporate Office.

During the year ended June 30, 2023, the Group (including discontinued operations) generated total revenue of $15.1 million, gross loss of $2.3 million, operating loss of $15.3 million and a net loss of $22.4 million. Of these amounts, continuing operations of the Group generated revenue of $15.1 million, gross loss of $2.3 million, operating loss of $11.1 million and a net loss of $18.1 million. For the year ended June 30, 2022, the Group (including discontinued operations) generated total revenue of $37.6 million, gross profit of $1.6 million, operating loss of $15.1 million and a net loss of $22.1 million. Of these amounts, continuing operations of the Group generated revenue of $22.4 million, gross profit of $0.3 million, operating loss of $14.5 million and a net loss of $21.4 million, including $0.5 million prior year adjustments relating to timing on the recognition of general and administration expenses from 2023 to 2022.

Adjusted EBITDA (including discontinued operations) for the year ended June 30, 2023 was a loss of $9.9 million, compared to a loss of $9.0 million for the previous year. Adjusted EBITDA for continuing operations was a loss of $5.7 million, compared to a loss of $9.1 million for the previous year, restated for $0.5 million of general and administration expenses from 2023 to 2022.

1

The results for the year ended June 30, 2023 reflect a reduction in the number of Aevitas Solar projects completed in the year and the impact of severe one-off weather events on the Edenvale project, which incurred a $3.9 million loss.

Revenue in Critical Power Services (excluding discontinued operations) declined by $7.4 million to $13.6 million in the year, impacted by $6 million from a reduction in the number of solar projects undertaken by Aevitas Solar. Kenshaw, which expanded into an additional facility in Newcastle, New South Wales due to increasing demand, saw revenues flat compared to the previous year on a constant AUD to USD exchange rate, with an increase in higher margin sales in generator service and motor sales and overhaul, offset by a reduction in generator sales and installation due to competitive market conditions and constrained supply chain. Electric Vehicles contributed $1.5 million revenue in the year, predominantly from non-EV ruggedization conversions, whilst EV activity is focused entirely on product development. There was no revenue contribution from Solar Development or Sustainable Energy Solutions in the year ended June 30, 2023 (year ended June 30, 2022: nil).

Gross profit (including discontinued operations) decreased by $3.8 million to a loss of $2.3 million, although on a continuing basis excluding J.A. Martin ex-Solar operations, gross profit decreased by $2.5 million to a loss of $2.3 million. In percentage terms, gross margin from continuing operations fell from 1% to (14%), largely driven by one-off extreme weather events impact on Aevitas Solar projects in FY2023, having a more significant impact than COVID-19 lockdowns and impact on supply chain in the prior year. Gross loss in FY2023 includes $3.9 million specific costs of non-recurring extreme weather events on Edenvale project for Aevitas Solar. In the prior year, $1.9 million of non-recurring costs on the Blue Grass project were also incurred in Aevitas Solar, due to state border closures during the project execution phase. Excluding these non-recurring costs, gross margin for continuing operations increased from 9.2% in the prior year, to 10.5% in FY2023, reflecting increased focus on high margin service revenues in Kenshaw. Electric Vehicles contributed nil gross profit (prior year: nil) while Solar Development contributed nil (prior year: nil).

The gain on Solar Development projects from continuing operations was net nil for the year ended June 30, 2023 . Included within discontinued operations was a $4.2 million loss on disposal of J.A. Martin ex-solar operations in July 2022. Compared to the book value of assets less liabilities held for sale as at June 30, 2023, the loss results primarily from a reduction in the contingent consideration payable based on the earn out fee calculated as a multiple of the post disposal earnings of J.A. Martin ex-solar in FY2023. The gain on Solar Development projects from continuing operations was net nil for the year ended June 30, 2022, comprising a $0.1 million write off of costs incurred on uneconomic projects in Caret, offset by a $0.1 million gain on sale of tangible assets in Critical Power Systems.

The results for the year ended June 30, 2023 also reflect a restated $6.2 million decrease in general and administrative costs related to continuing operations to $7.6 million. 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.

The results of operations for the year ended June 30, 2023 include $2.1 million restructuring and other non-recurring costs primarily due a provision in respect of fiscal refunds on prior receivables, which the Company is defending.

Net finance costs from continuing operations of $6.2 million for the year ended June 30, 2023 include $3.8 million interest on related party loans, $1.6 million net foreign exchange losses and $0.8 million combined from dividends from Aevitas Preference Shares, interest on leases and interest on other debt.

As at June 30, 2023, the Group’s current assets were $10.3 million (as at June 30, 2022: $21.7 million restated; June 30, 2021: $24.5 million restated), representing a decrease from June 30, 2022, mostly due to the disposal of assets held for sale relating to the J.A. Martin ex-solar segment (as at June 30, 2022: $8.2 million) upon the sale of the business to ARA in July 2022. Current assets were comprised of $0.6 million of cash and cash equivalents (as at June 30, 2022: $1.3 million; June 30, 2021: $8.6 million), $0.6 million of restricted cash (as at June 30, 2022: $1.2 million; June 30, 2021: $1.1 million;), and $7.0 million of trade and other receivables (as at June 30, 2022: $9.1 million; June 30, 2021: $12.8 million), and $2.1m of inventory (as at June 30, 2022: $1.9 million; June 30, 2021: $2.0 million). 30 June 2022 and 30 June 2021 current assets were restated for a $0.5m reclassification from Intangible Assets to Deposits. 

Current liabilities were $18.9 million as at June 30, 2023 (as at June 30, 2022, $23.3 million restated; June 30, 2021: $13.4 million). The decrease from prior year reflects negotiation of shareholder loans and accrued interest to non-current terms, and disposal of liabilities held for sale (as at June 30, 2022, $1.5 million) following sale of J.A. Martin ex-solar to ARA in July 2022. 30 June 2022 current liabilities were restated for an accrual of $0.5m expenses relating to 2022 but incurred in 2023.

Current asset-to-liability ratio as at June 30, 2023 was 0.54:1 (as at June 30, 2022 restated: 0.93:1; June 30, 2021 restated: 1.82:1). 

2

As at June 30, 2023, the Company had net assets of $3.7 million (as at June 30, 2022 restated, $21.6 million; June 30, 2021: $40.4 million), including intangible assets of $42.2 million (as at June 30, 2022 restated: $39.6 million; June 30, 2021 restated: $46 million). Property, plant and equipment remained at $3.7 million as at June 30, 2023 (as at June 30, 2022, $3.7 million), mainly reflecting $0.6 million capital expenditure on plant and equipment, an additional leased property in Kenshaw, offset by depreciation charges. 30 June 2022 and 30 June 2021 were restated for a $0.5m reclassification from Intangible Assets to Deposits.

Cash outflow for the year ended June 30, 2023, was $0.7 million, arising from cash outflows from operating activities of $8.6 million and from cash used in investing activities of $1.9 million partially offset by cash inflow from financing activities of $9.8 million. At June 30, 2023, the Company had cash reserves of $0.6 million (June 30, 2022: $1.3 million) and debt of $32.4 million (June 30, 2022: $28.6 million), giving a net debt position of $31.8 million (June 30, 2022: $27.3 million).

Net cash outflows from investing activities of $1.9 million in the current year comprised $1.0 million net purchases of property, plant and equipment and $3.9 million investment in additional intangible assets pertaining to the EUV23 development project in Tembo, offset by the $2.9 million proceeds from the J.A Martin sale. 

Cash inflows from financing activities of $9.8 million in the year ended June 30, 2023 comprises $5.1 million net proceeds from the Nasdaq shelf raise in July 2022 and $3.6 million bridging loans from related party AWN, $1.3 million additional debtor financing, less $0.9 million repayments of related party and other borrowings paid.

Non-IFRS Financial Information

Adjusted EBITDA is a non-IFRS financial measure that we calculate 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. Adjusted EBITDA is disclosed here and elsewhere in this Annual Report to provide investors with additional information regarding our results of operations. We have presented Adjusted EBITDA for continuing operations, discontinued operations and the total Group for comparative purposes (see Note 22 to the financial statements for additional information on the results for discontinued operations).

We have included Adjusted EBITDA in this Annual Report because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses, non-operating income/(expense), and material non-recurring items. Accordingly, we believe that Adjusted EBITDA provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe it is useful to exclude non-cash charges, such as depreciation and amortization and share-based compensation expense, from our Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax benefit/(expense) and net finance expenses as these items are not components of our core business operations. We believe it is useful to exclude material non-recurring items, which is not indicative of our performance in the future. Adjusted EBITDA has limitations as a financial measure, and you should not consider it in isolation or as a substitute for profit/loss for the period as a profit measure or other analysis of our results as reported under IFRS. Some of these limitations are:

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;

• Adjusted EBITDA does not reflect share-based compensation, which has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy;

• Although share-based compensation expenses are non-cash charges, we cannot assure that we will not perform a buy-back or other similar transaction which leads to a cash outflow;

• While losses are resulted from material non-recurring events, there is no assurance that such or similar losses will not recur in the future; and

• Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, operating profit/loss, profit/loss for the period and our other IFRS results.

3

The following table presents a reconciliation of loss for the period to Adjusted EBITDA for each of the periods indicated above:

	Year Ended June 30
	2023									2022 (restated)									2021
(US dollars in thousands)	Continuing			Discontinued			Total			Continuing			Discontinued			Total			Continuing			Discontinued		Total
Loss for the period		(20,148	)		(4,207	)		(24,355	)		(21,429	)		(625	)		(22,054	)		(8,027	)		69		(7,958	)
Income tax expense/(credit)		540			-			540			(1,968	)		(149	)		(2,117	)		(138	)		24		(114	)
Net finance expense		6,210			-			6,210			8,431			172			8,603			274			137		411
Depreciation and amortization		1,581			-			1,581			1,620			767			2,387			1,453			803		2,256
Share-based compensation expense		148			-			148			1,900			-			1,900			1,078			-		1,078
Restructuring and other non-recurring costs		5,934			-			5,934			2,324			-			2,324			2,877			3		2,880
Adjusted EBITDA		(5,735	)		(4,207	)		(9,942	)		(9,122	)		166			(8,956	)		(2,483	)		1,035		(1,448	)

4

Year Ended June 30, 2023, Compared to Years Ended June 30, 2022 and June 30, 2021

	Continuing operations																		Discontinued operations			Total
Year Ended June 30, 2023	Critical Power			Solar			Electric			Sustainable Energy			Corporate			Total			Critical Power
(US dollars in thousands)	Services			Development			Vehicles			Solutions			Office			Continuing			Services
Revenue from contracts with customers		13,596			-			1,464			-			-			15,060			-			15,060
Costs of sales - other		(11,900	)		-			(1,572	)		-			-			(13,472	)		-			(13,472	)
Cost of sales - non-recurring events		(3,850	)		-			-			-			-			(3,850	)		-			(3,850	)
Gross profit		(2,154	)		-			(108	)		-			-			(2,262	)		-			(2,262	)
General and administrative expenses		(1,390	)		(297	)		(1,005	)		(367	)		(4,561	)		(7,620	)		-			(7,620	)
Other gains/(losses)		-			-			-			30			-			30			(4,207	)		(4,177	)
Other income		50			69			-			-			-			119			-			119
Depreciation and amortization		(895	)		-			(673	)		(3	)		(10	)		(1,581	)		-			(1,581	)
Operating loss		(4,389	)		(228	)		(1,786	)		(340	)		(4,571	)		(11,314	)		(4,207	)		(15,521	)
Restructuring and other non-recurring costs		(1	)		-			(214	)		-			(1,869	)		(2,084	)		-			(2,084	)
Finance expense - net		(6,841	)		(34	)		936			(50	)		(221	)		(6,210	)		-			(6,210	)
Profit/(loss) before income tax		(11,231	)		(262	)		(1,064	)		(390	)		(6,661	)		(19,608	)		(4,207	)		(23,815	)
Income tax		(619	)		-			(40	)		119			-			(540	)		-			(540	)
Loss for the year		(11,850	)		(262	)		(1,104	)		(271	)		(6,661	)		(20,148	)		(4,207	)		(24,355	)

	Continuing operations																		Discontinued operations			Total
Year Ended June 30, 2022 (restated)	Critical Power			Solar			Electric			Sustainable Energy			Corporate			Total			Critical Power
(US dollars in thousands)	Services			Development			Vehicles			Solutions			Office			Continuing			Services
Revenue from contracts with customers		20,958			-			1,490			-			-			22,448			15,168			37,616
Costs of sales - other		(18,804	)		-			(1,504	)		-			-			(20,308	)		(13,842	)		(34,150	)
Cost of sales - non-recurring events		(1,881	)		-			-			-			-			(1,881	)		-			(1,881	)
Gross profit		273			-			(14	)		-			-			259			1,326			1,585
General and administrative expenses		(1,568	)		(80	)		(2,901	)		(1,660	)		(7,602	)		(13,811	)		(1,485	)		(15,296	)
Gain/(loss) on solar development		103			(139	)		-			23			-			(13	)		-			(13	)
Other income		662			-			-			-			-			662			324			986
Depreciation and amortization		(1,165	)		-			(443	)		(3	)		(9	)		(1,620	)		(767	)		(2,387	)
Operating loss		(1,695	)		(219	)		(3,358	)		(1,640	)		(7,611	)		(14,523	)		(602	)		(15,125	)
Restructuring and other non-recurring costs		45			-			(429	)		-			(59	)		(443	)		-			(443	)
Finance expense - net		(7,470	)		-			(974	)		23			(10	)		(8,431	)		(172	)		(8,603	)
Profit/(loss) before income tax		(9,120	)		(219	)		(4,761	)		(1,617	)		(7,680	)		(23,397	)		(774	)		(24,171	)
Income tax		1,349			-			575			192			(148	)		1,968			149			2,117
Loss for the year		(7,771	)		(219	)		(4,186	)		(1,425	)		(7,828	)		(21,429	)		(625	)		(22,054	)

	Continuing operations																	Discontinued operations			Total
Year Ended June 30, 2021	Critical Power			Solar			Electric			Sustainable Energy		Corporate			Total			Critical Power
(US dollars in thousands)	Services			Development			Vehicles			Solutions		Office			Continuing			Services
Revenue		22,396			185			1,394			-		-			23,975			16,436			40,411
Costs of sales - other		(18,322	)		-			(1,292	)		-		-			(19,614	)		(14,470	)		(34,084	)
Cost of sales - non-recurring events		-			-			-			-		-			-			-			-
Gross profit		4,074			185			102			-		-			4,361			1,966			6,327
General and administrative expenses		(1,522	)		(1,309	)		(1,923	)		-		(4,897	)		(9,651	)		(1,482	)		(11,133	)
Other gains/(losses)		36			733			-			-		-			769			-			769
Other income		960			-			-			-		-			960			552			1,512
Depreciation and amortization		(1,099	)		(4	)		(346	)		-		(4	)		(1,453	)		(803	)		(2,256	)
Operating profit/(loss)		2,449			(395	)		(2,167	)		-		(4,901	)		(5,014	)		233			(4,781	)
Restructuring and other non-recurring costs		(24	)		-			(631	)		-		(2,222	)		(2,877	)		(3	)		(2,880	)
Finance expense - net		1,824			(24	)		(1	)		-		(2,073	)		(274	)		(137	)		(411	)
Profit/(loss) before income tax		4,249			(419	)		(2,799	)		-		(9,196	)		(8,165	)		93			(8,072	)
Income tax		(691	)		96			733			-		-			138			(24	)		114
Loss for the year		3,558			(323	)		(2,066	)		-		(9,196	)		(8,027	)		69			(7,958	)

5

Income Statement from continuing operations

Revenue

Revenue from continuing operations for the year ended June 30, 2023 decreased $7.4 million or 33% to $15.1 million, from $22.4 million in the year ended June 30, 2022. Revenue from continuing operations for the year ended June 30, 2022 decreased $1.5 million or 6% to $22.4 million, from $24.0 million in the year ended June 30, 2021. 

Revenue from continuing operations by product and service is follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Electrical products and related services	$	13,596	$	20,958	$	22,581
Electric vehicles & related products & services		1,464		1,490		1,394
Total revenue	$	15,060	$	22,448	$	23,975

The sale of electrical products, related services and solutions is generated from our Australian-based Critical Power Services businesses and is focused on the design, supply, installation and maintenance of power and control systems. Revenue generated in these operations is recognized in two ways. On smaller projects, revenue is recognized when the project is completed and is invoiced at that time. On larger projects, revenue is recognized on the achievement of specific milestones defined in each individual project. When the milestones and performance obligations are reached, the customer is invoiced, and the revenue is then recognized.

Revenue from continuing operations from electrical products, related services and solutions for the year ended June 30, 2023, of $13.6 million decreased $7.4 million compared to the $21.0 million earned for the year ended June 30, 2022. This is primarily a result of a $6.0 million reduction in solar project revenue in Aevitas Solar, as a result of (i) Edenvale Solar Project being the only major active project during the current period, compared to having two major active projects, Hillston and Bluegrass, in the prior period, and (ii) ongoing skills shortages in the electrical and building & construction industry causing difficulties in resourcing projects to meet demand. Revenue was also impacted by a net $0.9 million reduction in Kenshaw revenues, although on a constant AUD to USD exchange rate basis, revenues in Kenshaw were flat on the prior year. This comprises a $3.0 million reduction in generator sales and installation, offset by a $2.2 million increase in higher margin sales in generator service and motor sales and overhaul.

Revenue from electric vehicles, related products, services and solutions is generated from our Electric Vehicles businesses in the Netherlands: Tembo 4x4 and FD 4x4 Centre and is focused on electric vehicle conversion kits, and vehicle ruggedization products. Revenue generated in these operations is recognized when the products are delivered to customers. Revenue from electric vehicles and related products and services amounted to $1.5 million for the year ended June 30, 2023 compared to $1.5 million for the year ended June 30, 2022. No significant revenue was recognised on EUV conversion kit development whilst the EUV23 development project advanced towards production. Vehicle conversion revenues for ruggedization of non-EV vehicles benefitted from a significant ruggedization contract for 15 vehicles with Boliden mine in Ireland in FY2023. It should be noted that orders for the EUV23 conversion kits received in FY2023 were accounted for in Deferred Revenues on the Balance Sheet.

Revenue from continuing operations by geographic location is follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Australia	$	13,596	$	20,958	$	22,581
Netherlands		1,464		1,490		1,394
United States		-		-		-
Total revenue	$	15,060	$	22,448	$	23,975

Australian revenue of $13.6 million for the year ended June 30, 2023 was comprised solely of $13.6 million revenue from Critical Power Services provided by Kenshaw and Aevitas Solar. This compares to $21.0 million in the year ended June 30, 2022 and $22.6 million for the year ended June 30, 2021. The decrease in Australian revenue in the year ended June 30, 2023, compared to the prior year, is primarily driven by (i) Edenvale Solar Project being the only major active project during the current period, compared to having two major active projects, Hillston and Bluegrass, in the prior period, and (ii) ongoing skills shortages in the electrical and building & construction industry causing difficulties in resourcing projects to meet demand.

Netherlands revenue was $1.5 million for the year ended June 30, 2023 and $1.5 million for the year ended June 30, 2022, representing contribution from the Electric Vehicle business unit, in particular driven by Boliden ruggedization contracts in FY2023. The business remains primarily focused on development of its core EUV23 conversion kit solution for which it has already received orders. It should be noted that the cash down-payment on orders for the EUV23 conversion kits received in FY2023 were accounted for in Deferred Revenues on the Balance Sheet.

The Group had one customer representing more than 10% of revenue for the year ended June 30, 2023 (year ended June 30, 2022: one). This customer represented approximately $2.6 million of the Company’s total revenues and is reported within the Critical Power Services segment for the year ended June 30, 2023.

6

Cost of Sales

Cost of sales from continuing operations by product or service is as follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Electrical products and related services - other	$	11,900	$	18,804	$	18,322
Electrical products and related services - extreme weather and COVID 19 disruption		3,850		1,881		-
Electric vehicles & related products & services		1,572		1,504		1,292
Other revenue				-		-
Total cost of sales	$	17,322	$	22,189	$	19,614

Total cost of sales from continuing operations were $17.3 million for the year ended June 30, 2023, as compared to $22.2 million for the year ended June 30, 2022, and $19.6 million for the year ended June 30, 2021.

Cost of sales related to electrical products and related services consists of material purchases and direct labor costs, motor vehicle expenses and any directly related costs attributable to manufacturing, service, or other cost of sales. Cost of sales for electrical products and related services for the year ended June 30, 2023 included $3.9 million of non-recurring costs on the Edenvale project in Aevitas Solar, and $1.9 million of non-recurring costs on the Blue Grass project in Aevitas Solar in the prior year. Other Cost of sales related to electrical products and related services was $11.9 million for the year ended June 30, 2023, as compared to $18.8 million for the year ended June 30, 2022 and $18.3 million for the year ended June 30, 2021. The decrease in cost of sales was primarily driven by the impact of reduction in solar projects in Aevitas Solar, and generator installations in Kenshaw.

Cost of sales related to electric vehicles and related products consists of material purchases and direct labor costs and any other costs directly attributable to assembly. Cost of sales related to electric vehicles and related products were $1.6 million for the year ended June 30, 2023 and $1.5 million for the year ended June 30, 2022.

Gross Profit

Gross profit from continuing operations by product and service is as follows:

Gross profit/(loss) by product or service is as follows:

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
Electrical products and related services	$	(2,154	)	$	273		$	4,259
Electric vehicles & related products & services		(108	)		(14	)		102
Other revenue		-			-			-
Total gross (loss)/profit	$	(2,262	)	$	259		$	4,361

The Company’s gross (loss)/ profit from continuing operations is equal to revenue less cost of sales and totaled a loss of $(2.3) million for the year ended June 30, 2023, a profit of $0.3 million for the year ended June 30, 2022, and a profit of $4.4 million for the year ended June 30, 2021. Excluding one-off extreme COVID-19 disruption costs of $3.9 million on Edenvale project in FY2023 and $1.9 million on the Blue Grass project in the prior year, gross profits decreased from $2.2 million in the prior year to $1.7 million in FY2023. In percentage terms, gross margins decreased from 1.2% in the prior year, to (15.9%) in FY2023, but excluding one-off extreme weather and COVID-19 disruption costs, increased from 9.5% in the prior year to 11.2% in FY2023.

The gross (loss) / profit from electrical products and related services (the Critical Power Services business) was a loss of $(2.2) million for the year ended June 30, 2023, compared to a profit of $0.3 million in the prior year. Excluding one-off extreme COVID-19 disruption costs of $3.9 million on Edenvale project in FY2023 and $1.9 million on Blue Grass project in the prior year, gross profits decreased from $2.2 million to $1.7 million in FY2023. In percentage terms, gross margins decreased from 1.2% in the prior year, to (15.9%) in FY2023, but excluding one-off extreme weather and COVID-19 disruption costs, increased from 10.3% to 12.5% in FY2023.

The Electric Vehicle business generated a gross loss of $(0.1) million in the year ended June 30, 2023, (June 30, 2022, £nil), reflecting customized test kit componentry and assembly during low volume product development phase.

7

General and Administrative Expenses

	Year Ended June 30
(US dollars in thousands)	2023		2022 (restated)
Salaries and benefits	$	3,333	$	8,670
Professional fees		2,325		2,198
Insurance		570		474
Travel		187		141
IT licensing and support		694		482
Marketing and public relations		199		1,279
Office and other expenses		312		567
Total general and administrative expenses	$	7,620	$	13,811

General and administrative expenses from continuing operations decreased by $6.2 million to $7.6 million for the year ended June 30, 2023, compared to $13.8 million for the year ended June 30, 2022 restated. These expenses consist primarily of operational expenses, such as those related to employee salaries and benefits, professional fees, insurance, travel, IT, marketing, office and other expenses, as well as vesting at grant date share price of non-cash equity incentive costs of share awards previously granted under the Company’s Omnibus Incentive Plan, in accordance with IFRS 2 Share-based Payments.

Salaries and benefits were $3.3 million for the year ended June 30, 2023, (year ended June 30, 2022 restated, $8.7 million), accounting for 44% of total general and administrative expenses, (year ended June 30, 2022, 63%). Non-cash equity incentive costs contributed $0.1 million (year ended June 30, 2022: $1.9 million) to the salaries and benefits expense. Underlying cash salaries and benefits of $3.2 million decreased by $3.6 million or 53% in the year, reflecting a realignment of the team onto product development project activity and a commensurate increase in capitalized intangible costs, and reduction in Aevitas personnel following the sale of the J.A. Martin ex-solar business. 30 June 2022 was restated for $0.1 million payroll costs paid in the period 30 June 2023 but relating to services provided in the period to 30 June 2022.

Professional fees of $2.3 million for the year ended June 30, 2023 or 31% of total general and administrative expenses (year ended June 30, 2022 restated, $2.2 million), were comprised of audit and accounting fees, consulting fees to support business development and legal fees. 30 June 2022 was restated for $0.3m legal expenses originally capitalised in the period to 30 June 2023 in Caret but should be expensed in the period to 30 June 2022.

Insurance expense of $0.6 million for the year ended June 30, 2023 was marginally higher than the $0.5 million for the year ended June 30, 2022 reflecting improved coverage.

IT licensing and support expenses represent the costs of accounting, operations, email and office, file storage, and security software products and licenses. IT expenses increased by $0.2 million to $0.7 million for the year ended June 30, 2023, comprising $0.2 million in the Corporate Office segment due to increased activity to support growth activities and automate processes with scalable software.

Marketing expenses include promotional advertisements and trade shows. Marketing costs of $0.2 million for the year ended June 30, 2023 reduced significantly compared to the prior year, relying more efficiently on sales team-driven partnerships and customer presentations, than paid marketing arrangements. 

Office and other expenses include office and meeting space rental, communication, bank fees and general office administrative costs. Office and other expenses of $0.3 million for the year ended June 30, 2023 decreased by $0.3 million in the year due to savings in Aevitas following sale of J.A. Martin ex-solar.

Gain/(loss) on Solar Development

Gain on Solar Development projects from continuing operations was nil for the year ended June 30, 2023. This compares to a nil gain in the year ended June 30, 2022, comprising a $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. In the year ended June 30, 2021 a gain of $0.8 million arose comprising a $0.9 million bargain purchase gain on acquisition of the remaining 50% interest in Caret offset by a $0.2 million loss on solar development projects in VivoPower Pty Ltd in Australia. 

Other Income

Other income of $0.1 million for the year ended June 30, 2023 compares to $0.7 million for the year ended June 30, 2022, mainly relating to COVID-19 grants and subsidies in Critical Power Services in Australia.

8

Depreciation and amortization

Depreciation is charged on property, plant and equipment on a straight-line basis and is charged in the month of addition. We depreciate the following class of assets at differing rates dependent on their estimated useful lives. The net book value of assets held as of June 30, 2023, was $3.7 million (June 30, 2022: $3.7 million).

Tangible asset	Estimated useful life (in years)
Computer equipment		3
Fixtures and fittings	3	to	20
Motor vehicles		5
Plant and equipment	3.5	to	10
Right-of-use assets	Remaining useful life

Amortization costs relate to the amortization of intangible assets generated on the acquisition of:

● VivoPower Australia and Aevitas - customer relationships and trade names

● Caret - solar project development expenditure

● Tembo - customer relationships and trade names

The intangible assets identified above, and their estimated useful life is provided in the table below:

Identifiable intangible asset	Estimated useful life (in years)
Development expenditure	5	to	10
Customer relationships		10
Trade names	15	to	25
Favorable supply contracts		15
Other		5

Under IFRS, intangible assets and goodwill are subject to an annual impairment review. No impairment charge was recorded for the year, following the impairment review as of June 30, 2023.

An impairment review tests the recoverable amount of the cash-generating unit which gave rise to the intangible asset or goodwill in order to determine the existence or extent of any impairment loss. The recoverable amount is the higher of fair value less costs to sell and the value in use to the Group. An impairment loss is recognized to the extent that the carrying value exceeds the recoverable amount. In determining a cash-generating unit’s or asset’s value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time-value of money and risks specific to the cash-generating unit or asset that have not already been included in the estimate of future cash flows. All impairment losses are recognized in the Statement of Comprehensive Income.

The Group conducts impairment tests on the carrying value of goodwill annually, or more frequently if there are any indications that goodwill might be impaired. The recoverable amount of the Cash Generating Unit (“CGU”) to which goodwill has been allocated are determined from value in use calculations. The key assumptions in the calculations are the discount rates applied, expected operating margin levels and long-term growth rates. Management estimates discount rates that reflect the current market assessments while margins and growth rates are based upon approved budgets and related projections.

The Group prepares cash flow forecasts using the approved budgets for the coming fiscal year and management projections for the following two years. Cash flows are also projected for subsequent years as management believe 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 12% (June 30, 2022: 11%; June 30, 2021: 10%) 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, 2022: 11.3%; June 30, 2021: 10.7%), an average annual growth rate in years 2-5 of 60% during the rapid growth phase of the business, with 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 12% and average annual growth rate of 33% per annum in years 2-5. 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 15,000 units with international distribution partners, including Acces, Bodiz, GHH, ETC, Ulti-Mech, Petrosea and Fourche Maline. 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 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 12.9%, $4 million free cash flow from project sales in years 1-4, $14.4 million development fees from power-to-x partnerships.

9

Restructuring and Other Non-Recurring Costs

Restructuring costs by nature are one-time incurrences, and therefore, we believe have no bearing on the financial performance of our business. To enable comparability in future periods, the costs are disclosed separately on the face of our Statement of Comprehensive Income.

(US dollars in thousands)	Year Ended June 30
	2023			2022			2021
Corporate restructuring - legal and other fees	$	200		$	189		$	179
Corporate restructuring - litigation provision		-			(128	)		2,042
Fiscal refunds provision		1,768			-			-
Impairment and write-off		422			-			-
Relocation		-			-			27
Remediation costs		(361	)		382			-
Acqusition related costs		55						631
Total restructuring costs	$	2,084		$	443		$	2,880

For the year ended June 30, 2023, the Company incurred non-recurring costs primarily related to a provision in respect of fiscal refunds on prior receivables, which the Company is defending. This also includes restructuring activities of $0.2 million and provision for inventory obsolescence and write-off of bad debts of $0.4 million, offset by $0.4 million release of remediation provision. For the year ended June 30, 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. For the year ended June 30, 2021, the Company incurred non-recurring costs for legal fees as well as a litigation provision relating to legal costs and settlement monies pertaining to the Comberg Claims of $0.2 million and $2.0 million respectively (see “Item 8. Financial Information – A. Consolidated Statements and Other Financial Information – Legal Proceedings”).

Finance Income and Expense

Finance income of $1.2 million, $0.2 million and $2.2 million for the years ended June 30, 2023 and 2022and 2021 respectively comprise foreign exchange gains for the year.

Finance expense of $7.4 million for the year ended June 30, 2023 consists primarily of interest expense associated with the interest payable on outstanding related party loans with AWN of $3.8 million and foreign exchange losses of $2.7 million. In the year ended June 30, 2022, the Company incurred finance costs of $8.6 million comprising $3.4m interest on AWN loans, interest on Aevitas Preference Shares of $0.2 million, interest on lease liabilities of $0.1 million and net foreign exchange losses of $4.7 million. In the year ended June 30, 2021, the Company incurred finance costs of $2.5m consisting of $2.0 million on the parent company loan, interest on the Aevitas convertible preference share, loan notes and non-convertible preference shares of $1.2 million, interest and fees on debtor invoice financing in Critical Power Services of $0.1 million, and interest on lease liabilities of $0.1 million offset by $1.0 million of waived dividends and interest on convertible preference shared and loan notes.

The components of net finance expense from continuing operations are as follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Shareholder loan	$	3,801	$	3,351	$	1,986
Convertible preference shares and loan notes		254		217		1,228
Debtor invoice financing		100		24		96
Interest on leases		171		133		91
Other finance costs		330		167		90
Foreign exchange		1,554		4,540		(2,222	)
Waived dividends and interest on convertible preference shares and loan notes		-		-		(995	)
Total net finance expenses	$	6,210	$	8,431	$	274

Foreign exchange gain/losses consists primarily of foreign exchange fluctuations related to short-term intercompany accounts and foreign currency exchange gains and losses related to transactions denominated in currencies other than the functional currency for each of our subsidiaries. We expect our foreign currency exchange gains and losses to continue to fluctuate in the future as foreign currency exchange rates change. 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. AWN loans of $32.4 million are mostly denominated in USD, upon which there is minimal foreign currency risk.

10

Income Tax

We are subject to income tax for the year ended June 30, 2023 at rates of 19% to 25%, 21%, 26% to 30%, 9% and 15% to 25.8% in the U.K., the U.S., Australia, United Arab Emirates and the Netherlands respectively. We use estimates in determining our provision for income taxes. We account for income taxes in accordance with IFRS Standard IAS 12 Income Taxes, using an asset and liability approach that requires recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax basis, and for net operating loss and tax credits.

Key Factors Affecting Our Performance

We believe that the growth of our business and our future success are dependent upon a number of key factors, including the following:

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 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 and geopolitical tension in Ukraine 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, characterized by rapidly changing technologies, new competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. 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 ruggedized 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 EUV conversion kits. Meeting the technical specifications, quality and safety standards of our customers and partners is a key driver of ensuring Tembo’s brand, reputation, revenue and future prospects. Product failures in service could leave us exposed to future warranty claims. Failure to meet the required regulations and standards in the markets we serve could require product recalls and fines and penalties.

Development and scale up of the SES solutions business. Whilst we have experience in developing, financing, building and operating solar power systems and distributed generation solar systems, we have limited experience and track record in combining this experience to then develop and offer a complete SES solution with microgrids, battery recycling and reuse and are still in the process of building the capabilities in the team. Developing and/or acquiring these capabilities is a key factor in expanding our SES solutions business.

Supply chain execution. Materials deliveries from suppliers are at risk of disruption due to external events and factors such as COVID-19, semiconductor shortages and conflict in Ukraine. 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 initially to COVID-19 and then to 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 our 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 caliber talent quickly.

11

B. Liquidity and Capital Resources

Our principal sources of liquidity in the year ended June 30, 2023 were $3.6 million from AWN loans, $5.1 million net proceeds from capital raises, $2.9m of proceeds on sale of J.A. Martin and $1.3m from debtor financing. Our principal uses of cash have been $8.6 million outflow from operating activities, including $17.2 million growth focused operating costs in the Electric Vehicles, Solar Development, Sustainable Energy Solutions and Corporate segments less a $8.6 million decrease in working capital comprising movements in trade and other receivables and payables, $1.0 million purchase of property, plant and equipment including capitalized lease facilities in Tembo and Kenshaw, $3.9 million development capital expenditure in Tembo and Caret.

Our principal sources of liquidity in the year ended June 30, 2022 were $4.2 million from AWN short-term loans and $0.3 million net proceeds from capital raises. Our principal uses of cash have been $5.1 million outflow from operating activities, including $14.7 million growth focused operating costs in the Electric Vehicles, Solar Development, Sustainable Energy Solutions and Corporate segments less a $9.6 million decrease in working capital comprising movements in trade and other receivables and payables, $0.6 million payment of interest on AWN loans, $1.2 million purchase of property, plant and equipment including capitalized lease facilities in Tembo and Kenshaw, $4.3 million development capital expenditure in Tembo and Caret.

Our principal sources of liquidity in the year ended June 30, 2021, were $32.0 million net proceeds from capital raises and $0.4 million proceeds from sale of solar projects. Our principal uses of cash have been $5.0 million outflow from operating activities, including net inflows in Critical Power Services offset by growth operating costs in the Electric Vehicles, Solar Development, Sustainable Energy Solutions and Corporate segments, a $10.4 million increase in working capital primarily comprising a decrease in trade and other payables, $2.1 million net cash outflow on the acquisition of Tembo e-LV, comprising $7.1 million consideration less $4.9 million acquired cash, $2.2 million repayment of AWN related party loan principal, $5.3 million payment of interest on the AWN loan, Aevitas hybrids and other borrowings, including catch up of related party arrears, $0.9 million purchase of property, plant and equipment and $0.5 million net repayment of variable short term debtor finance facilities for J.A. Martin and Kenshaw.

The following table shows net cash provided by (used in) operating activities, net cash used in investing activities, and net cash provided by (used in) financing activities for the year ended June 30, 2023, 2022 and 2021:

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
Net cash used in operating activities		(8,552	)		(5,130	)		(15,377	)
Net cash used in investing activities		(1,921	)		(5,343	)		(2,682	)
Net cash provided by financing activities		9,804			3,555			23,537
Total cash flow		(669	)		(6,918	)		5,478

If we continue to experience losses and we are not able to raise additional financing to provide the funding to grow the revenue streams of the Company to become profit making, or generate cash through sales of assets, we may not have sufficient liquidity to sustain our operations and to continue as a going concern, accordingly there is a material uncertainty that may cause significant doubt about the going concern nature of the Group. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. See section 2.1 on “Basis of Preparation”.

Operating Activities

Our net cash outflow from operating activities in the year ended June 30, 2023, was $8.6 million. This was attributable to a net inflow from working capital movements of $8.6 million and a net cash outflow after tax from operations of $17.2 million. The working capital movements of $8.6 million comprise of increase in trade and other payables of $2.3 million, decrease in trade and other receivables of $5.9 million, an increase in inventory of $0.2 million and increase in provisions of $0.7 million. The $17.2 million outflow after tax from operations consists of the $24.4 million loss, other non-cash and non-operating components of earnings including $4.9 million of net finance expense, $1.6 million depreciation and amortization, $0.1 million share-based payments, and $0.6 million tax.

Our net cash outflow from operating activities in the year ended June 30, 2022, was $5.1 million. This was attributable to a net inflow from working capital movements of $9.6 million and a net cash outflow after tax from operations of $14.7 million. The working capital movements of $9.6 million comprise of increase in trade and other payables of $6.6 million, decrease in trade and other receivables of $3.4 million, decrease in inventory of $0.1 million and a decrease in provisions of $0.6 million. The $14.7 million outflow after tax from operations consists of the $22.1 million loss, other non-cash and non-operating components of earnings including $5.3 million of net finance expense, $1.9 million depreciation and amortization, $2.0 million share-based payments, less $1.9 million tax credits.

Our net cash outflow from operating activities in the year ended June 30, 2021, was $15.4 million. This was attributable to a net outflow from working capital movements of $10.4 million and a net cash outflow after tax from operations of $6.1 million. The working capital movements of $10.3 million comprise a decrease in trade and other payables of $9.5 million, an increase in inventory of $0.8 million and a decrease in provisions of $0.1 million. The $6.1 million outflow after tax from operations consists of the $8.0 million loss, other non-cash and non-operating components of earnings including $1.1 million share-based payments, $0.4 million of net finance expense, $0.8 million gain on solar development and $2.3 million depreciation and amortization.

12

Investing Activities

Net cash outflow from investing activities of $1.9 million in the year ended June 30, 2023 comprised of $1.0 million investment in property, plant and equipment in particular new leased properties for Tembo and Kenshaw, and a net $3.9 million net cash outflow attributable to additional investment in capital projects in Tembo and Caret. This is offset by $2.9 million proceeds from the sale of J.A Martin operations.

Net cash outflow from investing activities of $5.3 million in the year ended June 30, 2022comprised of $1.1 million investment in property, plant and equipment in particular new leased properties for Tembo and Kenshaw, and a net $4.3 million cash outflow attributable to additional investment in capital projects in Tembo and Caret.

Net cash outflows from investing activities of $2.7 million in the year ended June 30, 2021 comprised $0.4 million proceeds from sale of solar project assets in Australia, offset by $0.9 million investment in property, plant and equipment, and a net $2.1 million cash outflow attributable to the acquisition of Tembo e-LV. The net acquisition outflow comprised $7.1 million cash consideration, less $4.9 million cash acquired.

No companies were acquired by the Group in the years ended June 30, 2023 and June 30, 2022. In the year ended June 30, 2021, two acquisitions were consummated. These comprised Tembo e-LV B.V. and subsidiaries, for cash consideration of $7.1 million, or $2.2 million net of cash acquired, and Caret for cash consideration of $1, also $l net of cash acquired. 

Financing Activities

Cash generated from financing activities for the year ended June 30, 2023, was $9.8 million. This comprised $3.6 million AWN loans, $1.3 million debtor financing and $5.1 million capital raises net of capital raise costs, partly offset by $0.9 million repayment of other financing costs.

Cash generated from financing activities for the year ended June 30, 2022, was $3.6 million. This comprised $4.2 million AWN short term loans and $0.2 million capital raises net of capital raise costs. This is partly offset by $0.6 million interest paid to AWN on shareholder loans, and other financing costs.

Cash generated from financing activities for the year ended June 30, 2021, was $23.5 million. This comprised $32.6 million capital raise proceeds net of $2.8 million capital raise costs, less $0.4 million lease repayments in Critical Power Services businesses, $2.2 million repayment of AWN related party loan principal, $0.5 million net repayments against the debtor finance facility in Critical Power Services businesses and $5.3 million AWN loan and Aevitas hybrid interest, including catch up on amounts accrued from prior periods.

Borrowing obligations outstanding at the end of the period were as follows:

	As at June 30
(US dollars in thousands)	2023		2022		2021
Current liabilities:
Debtor financing		1,329		-		-
Lease liabilities		462		505		669
Project financing agreement		-		-		59
Short-term shareholder loan		497		4,285		-
Bank loan		7		145		152
Chattel mortgage		89		142		88
Other borrowings		-		32		36
		2,384		5,109		1,004
Non-current liabilities:
Shareholder loan – payments due beyond 12 months		28,111		21,121		21,175
Lease liabilities		1,843		1,959		326
Financing agreement		-		108		183
Bank loan		-		-		159
Chattel mortgage		50		264		244
		30,004		23,452		22,087
Total borrowings		32,388		28,561		23,091

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Tembo, Aevitas Solar and Kenshaw have lease arrangements in place to finance business properties and motor vehicle fleets. During the year ended June 30, 2023, lease liabilities have decreased by $0.2 million to $2.3 million mainly due to amortization during the year. The obligation for future minimum lease payments under the facilities are as follows:

	Minimum lease payments									Present value of minimum lease payments
	As at June 30									As at June 30
(US dollars in thousands)	2023			2022			2021			2023		2022		2021
Amounts payable under finance leases:
Less than one year		576			546			683			462		444		669
Later than one year but not more than five		2,223			2,545			379			1,843		2,020		326
		2,799			3,091			1,062			2,305		2,464		995
Future finance charges		(494	)		(627	)		(67	)		-		-		-
Total obligations under finance lease		2,305			2,464			995			2,305		2,464		995

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. 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 a refinancing fee of $0.34 million in two tranches on June 30, 2022 and December 31, 2022. Security granted to AWN comprised of a specific security deed over the assets of Aevitas (the "Specific Security Deed") and a general security over the assets of the Company (the "General Security").

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.

(iii) to increase the interest rate and line fee to 10.00% and 2.00% per annum respectively during the period from October 1, 2021 to the earlier of a) September 30, 2023 or b) the date a minimum prepayment of $1,000,000 is made.

(iv) the initial refinancing fee of $0.34 million is to be amended to accrue incrementally at 1.6% per annum from July 1, 2021 and become payable at the earlier of a) $1.0 million prepayment being made or b) October 1, 2023.

(v) a new fixed facility extension fee of $0.355 million is payable in return for this amendment, to accrue immediately but becoming payable on 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.

(iii) to extend the increased interest rate and line fee of 10.00% and 2.00% per annum respectively commenced on October 1, 2021 to the earlier of a) March 31, 2025 or b) the date a minimum prepayment of $1,000,000 is made.

(iv) to extend the initial refinancing fee accruing incrementally at 1.6% per annum from July 1, 2021 and become payable at the earlier of a) $1.0 million prepayment being made or b) April 1, 2025.

(v) to defer the repayment date of the previous fixed facility extension fee of $0.355 million, becoming payable on April 1, 2025.

(vi) In addition to previously agreed refinancing fees, an additional $0.855 million fixed refinancing fee will accrue immediately and become payable on April 1, 2025.

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. 

(ii) upon completion by VivoPower International PLC of a qualifying liquidity event of at least $5.0 million, Aevitas O Holdings Pty Limited are required to make mandatory prepayment of principal and interest to AWN in accordance with the following schedule:

a) proceeds $5 million to $7.5 million - pay 25% of amounts raised;

b) proceeds $7.5 million to $12.5 million - pay $1.875 million plus 45% of amounts raised;

c) proceeds $12.5 million and above - pay $4.125 million plus 50% of amounts raised.

(iii) for the purposes of the mandatory prepayment requirement, a ‘qualifying liquidity event’ excludes direct investments into VivoPower’s subsidiary, Tembo, and debt raised in respect of working capital finance facilities, but includes:

a) equity or debt raise;

b) trade sale of underlying subsidiary or business unit (including, for example, Aevitas and Caret); and

c) loan repayment from Tembo to VivoPower.

(iv) as consideration for the concessions agreed with AWN, VivoPower International PLC committed to issue AWN with 500,000 warrants, with a duration of 12 months, at an exercise price of $0.90 per share.

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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 January 1, 2022. The loan is set to expire on April 1, 2025 (initially set as April 30, 2022, then extended on June 30, 2022, to October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower International PLC of a debt or equity raise of at least $25 million was dropped on June 30, 2023. Facility extension fees of $29,000 (A$40,000) and $43,500 (A$60,000) are payable upon maturity, relating to the two extensions respectively.

On February 22, 2022, a short term $3.0 million loan was provided from AWN to Aevitas O Holdings Pty Limited, with interest rate of 10.00% per annum payable on the principal sum upon maturity. The loan is set to expire on April 1, 2025 (initially set as May 13, 2022, then extended on June 30, 2022, to October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower of a debt or equity raise of at least $25 million was dropped on June 30, 2023. Facility extension fees of $85,000 and $110,000 are payable upon maturity, relating to the two extensions respectively.

On December 22, 2022, a short term $3.0 million loan was provided from AWN to Aevitas O Holdings Pty Limited, with interest rate of BBSY bid floating rate (on average 3.60% for the period from inception to June 30, 2023) plus fixed margin of 15.0% per annum payable on the principal sum upon maturity. A 1% facility establishment fee of $30,000 was deducted upon initial loan drawdown, and a further 3% exit fee of $90,000 is payable on expiry. The loan is set to expire on April 1, 2025 (initially set as October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower of a debt or equity raise of at least $25 million was agreed on January 11, 2023, then dropped on June 30, 2023. A facility extension fee of $115,000 is payable upon maturity. 

In February and March 2023, further short term loans of A$0.5 million and A$0.25 million were established between AWN and Aevitas O Holdings Pty Limited, drawn down between February and May 2023. The loans have interest rate of BBSY bid floating rate plus fixed margin of 15.0% per annum payable on the principal sum upon maturity, with expiry dates of June 30, 2023. 1% facility establishment fees of total A$7,500 were deducted upon loan drawdowns, and further 3% exit fees of total A$22,500 are payable on expiry. On June 30, 2023, the expiry of the loans was amended to August 31, 2023.

Following the sale of ex-solar J.A. Martin operations on July 1, 2022, the J.A. Martin debtor finance facility was cancelled, but a new facility with a limit of A$2.5 million and variable interest rate (initial rate 7.75%) was opened by Kenshaw, as well as a trade finance facility of $0.5 million. The debtor finance facility was partially drawn down at June 30, 2023, with an outstanding balance of $1.3 million (A$2.0 million), due to timing of operating activities (June 30, 2022: nil).

Cash Reserves and Liquidity

Cash reserves at June 30, 2023, of $0.6 million are unrestricted and are domiciled as follows:

	Local currency			Amount in USD
AUD		800,542			543,044
EUR		15,184			19,547
USD		18,364			18,364
GBP		(21,983	)		(27,741	)
Total cash reserve					553,214

Our treasury policy is to maintain sufficient cash reserves denominated in the currencies required for near term working capital to minimize the risk of currency fluctuation. Cash reserves are monitored on a daily basis to maximize capital efficiency. Our cash position is reviewed weekly by senior management to ensure the allocation best meets the coming needs of the business.

The SES business is reliant for liquidity on the completion of and, or sale of specific projects. As the projects are dependent on negotiations with external parties, delays in the sale process could adversely affect our liquidity.

The Electric Vehicles business is reliant for liquidity on financing from asset and working capital financing, equity capital raises, and a growing revenue stream as the business scales.

We review our forecasted cash flows on an on-going basis to ensure that we will have sufficient capital from a combination of internally generated cash flows and proceeds from financing activities, if required, in order to fund our working capital and capital expenditure requirements and to meet our short-term debt obligations and other liabilities and commitments as they become due.

If we continue to experience losses and we are not able to raise additional financing to provide the funding to grow the revenue streams of the Company to become profit making, or generate cash through sales of assets, we may not have sufficient liquidity to sustain our operations and to continue as a going concern, accordingly there is a material uncertainty that may cause significant doubt about the going concern nature of the Group. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. See section 2.1 on “Basis of Preparation”.

15

C. Research and Development, Patents and Licenses, etc.

Research and development expenditure includes the product development project for Tembo’s ruggedized electric vehicles, comprising pre-series-production expenditure on developing vehicle specifications and production processes that are fit for purpose for rugged off road environments including mining sites. Capitalized costs include primarily internal payroll costs, external expert consultants, equipment and technology hardware and software. In addition, there is additional research and development being conducted into other elements of vehicle electrification for off-road and rugged environments, including specialized batteries, charging devices, electric wire harnesses, telemetry, data capture and analytics and software tools.

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.

The Company 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 asset can be measured reliably. Accordingly, the development expenditure is recognized under IAS 38 – Intangible Assets as an intangible asset.

D. Trend Information

Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources.

E. Critical Accounting 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 recognized in the consolidated financial statements are discussed below.

Revenue from contracts with customers – determining the timing of satisfaction of services

As disclosed in Note 2.15 to the Financial Statements, the Group concluded that Solar Development revenue and revenue from other long-term projects is recognized over time as the customer simultaneously receives and consumes the benefits provided. The Group determined that the percentage completion basis is the best method in measuring progress because there is a direct relationship between the Group’s effort and the transfer of services to the customer. The judgement used in applying the percentage completion basis affects the amount and timing of revenue from contracts.

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 and operating performance (which includes production and sales volumes), 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.

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).

16

Litigation provision

No litigation provision was recorded at June 30, 2023. The provision of $0.5 million for disputed legal success fees related to the Mr. Comberg litigation recorded at June 30, 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 June 30, 2022, and the remainder released.

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 June 30, 2023, the carrying amount of capitalized development costs were $7.9 million (June 30, 2022: $3.8 million).

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 J.A. Martin ex-solar business, as at June 30, 2023, were 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. The fair value of contingent consideration of $0.6 million applied a contracted 4.5x multiple to year 1 forecast EBITDA of $0.8 million, less purchase price paid. Final settlement of the contingent consideration was paid in August 2023, and the receivable amount and loss on disposal adjusted accordingly.

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.

Deferred tax assets

Deferred tax assets for unused tax losses amounting to $4.3 million at June 30, 2023 (June 30, 2022: $4.1 million; June 30, 2021: $1.9 million) are recognized to the extent that it is probable that sufficient taxable profit will be available against which the losses can be utilized. Management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the deferred tax assets recorded at the reporting date could be impacted.

Exchangeable preference Shares, exchangeable notes and Aevitas Preference Shares

As part of the IPO listing process VivoPower acquired Aevitas. The instruments previously issued by Aevitas were restructured to become exchangeable into Ordinary Shares of the Company. The Company considered IAS 32 paragraph 16 in determining the accounting treatment of the exchangeable instruments. 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 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.

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.

17

PART III

ITEM 17. FINANCIAL STATEMENTS

See Item 18.

ITEM 18. FINANCIAL STATEMENTS

Financial statements are filed as part of this Annual Report, starting on page F-1.

ITEM 19. EXHIBITS

Exhibit Number	Description
1.1	Articles of Association (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form F-4 (File No. 333-213297), filed with the SEC on August 24, 2016).
4.1	Omnibus Incentive Plan, adopted September 5, 2017 and amended July 28, 2023 (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 (File No. 333-273520), filed with the SEC on July 28, 2023).
4.2	Equity Distribution Agreement, dated November 12, 2021, between VivoPower International PLC and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on November 21, 2021).
4.3	Amendment No. 1 to Equity Distribution Agreement, dated July 29, 2022, between VivoPower International PLC and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 10.1 to the Current Report Form 6-K (File No. 001-37974), filed with the SEC on July 29, 2022).
4.4	Strategic Direct Investment in Tembo dated June 28, 2023 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on June 28, 2023).
4.5	Placement Agency Agreement, dated July 29, 2022, between VivoPower International PLC and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 1.1 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on August 2, 2022).
4.6	Form of Series A Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on August 2, 2022).
4.7	Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on August 2, 2022).
4.8	Form of Securities Purchase Agreement, dated July 29, 2022, between VivoPower International PLC and the purchaser identified therein (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on August 2, 2022).
4.9*	Refinancing of Loan Arrangements, dated June 30, 2023, between AWN Holdings Limited and Aevitas O Holdings Pty Ltd.
4.10*	Advance Subscription Agreement, dated June 23, 2023, between TAG Intl DMCC and Tembo E-LV.
4.11	Form of Subscription Agreement, dated June 9, 2023, between VivoPower International PLC and ASEAN Foundation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 6-K (File No 001-37974), filed with the SEC on June 13, 2023).
4.12	Form of Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 6-K (File No. 001-37974), filed with the SEC on June 13, 2023).
8*	List of Subsidiaries.
11.1	Code of Business Conduct and Ethics (incorporated by reference to Exhibit 11 to the Annual Report on Form 20-F (File No. 001-37974), filed with the SEC on August 1, 2017).
11.2*	Insider Trading Policy.
12.1+	Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

18

ITEM 19. EXHIBITS CONTINUED

Exhibit Number	Description
12.2+	Certification of Group Finance Director Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1+	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2+	Certification of Group Finance Director Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1+	Consent of Independent Registered Public Accounting Firm.
97.1*	Clawback Policy.
101.INS+	Inline XBRL Instance Document
101.SCH+	Inline XBRL Taxonomy Extension Schema
101.CAL+	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF+	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB+	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE+	Inline XBRL Taxonomy Extension Presentation Linkbase
104+	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Previously filed with the Original Filing.

+ Filed herewith.

19

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

VIVOPOWER INTERNATIONAL PLC
By:	/s/ Kevin Chin
Name:	Kevin Chin
Title:	Chief Executive Officer

Date: February 16, 2024

VIVOPOWER INTERNATIONAL PLC

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 2814)	F-2
Consolidated Statement of Comprehensive Income for the Year Ended June 30, 2023, June 30, 2022 and June 30, 2021	F-4
Consolidated Statement of Financial Position as at June 30, 2023, June 30, 2022 and June 30, 2021	F-5
Consolidated Statement of Cash Flow for the Year Ended June 30, 2023, June 30, 2022 and June 30, 2021	F-6
Consolidated Statement of Changes in Equity (Deficit) for the Year Ended June 30, 2023, June 30, 2022 and June 30, 2021	F-8
Notes to Consolidated Financial Statements	F-9

F-1

Independent Auditor’s Report to the Members of VivoPower International PLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF VIVOPOWER INTERNATIONAL PLC

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of VivoPower International plc and its subsidiaries (the “Company”) as of June 30, 2023, 2022 and 2021, and the related consolidated statements of comprehensive income, consolidated statements of cash flow and consolidated statements of changes in equity for each of the year ended June 30, 2023, 2022 and 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2023, 2022 and 2021, and the results of its operations and its cash flows for the year ended June 30, 2023, 2022 and 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 2 in the consolidated financial statements, which indicates that the group has significant outstanding liabilities and needs to raise funds either through debt or equity in order to meet its obligations as they fall due and to support the planned growth of the Group during the going concern period. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in note 2. As stated in note 2, these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s ability to continue to adopt the going concern basis of accounting included a review of the group and budgets and cash flow forecasts for the period of at least twelve months from the date of approval of the financial statements, including checking the mathematical accuracy of the budgets and discussion of significant assumptions used by the management. We have also reviewed the latest available post year end management accounts, bank statements, regulatory announcements and board minutes and assessed subsequent events impacting going concern. 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

F-2

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to those charged with governance and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgements. The communication of critical audit matters do not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter	How we addressed the matter in our audit
Revenue recognition
Revenue for the year ended June 30, 2023 amounted to $15.1 million and details of the related critical judgements and estimates are disclosed in note 3.1. There is a risk of misstatement of revenue from contracts with customers arising from the following areas which makes this a key focus for our audit: ●    identification of performance obligations in customer contracts; ●    judging the timing of satisfaction of performance obligations; ●    allocation of transaction price; ●    measuring the stage of completion for long term contracts (outputs versus inputs method) and ●    determining the costs incurred to obtain or fulfil contracts with customers.		Our work in this area included: ●Updating our understanding of the internal control environment in operation for the significant revenue streams, and checking by walkthrough tests our understanding of the internal control environment for the significant income streams; ● Reviewing the work undertaken by component auditors in accordance with the issued component instructions, including regular communication throughout the audit; ● 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 June 30, 2023 the carrying value of goodwill and intangible assets was $42.2 million. Details of these assets and the related critical judgements and estimates are disclosed in notes 3.2 and 14. Each year management is required to assess whether goodwill is impaired and consider whether the carrying value exceeds the recoverable amount using discounted cash flows. Intangible assets subject to amortization are assessed for indicators of impairment. Impairment assessments require the use of estimates, judgements and assumptions. The calculation of the recoverable amount is dependent on various significant judgements and estimates, including forecasts and discount rates. The subjectivity of the judgements and estimates and the significant carrying value of the assets makes this a key area of focus for our audit.		Our work in this area included: ● Reviewing and challenging management’s value in use calculations including the rationale behind the key assumptions and cash flow forecasts; ● Checking the mathematical accuracy of the value in use calculations; ● Performing sensitivity analysis on reasonably possible changes in key assumptions and the impact on the headroom; ● Assessing the accuracy of budgets and forecasts used in prior periods to actual results; ● Performing an independent assessment to identify any indicators of impairment; and ● Assessing the appropriateness of  group’s disclosures in respect of the judgements and estimates on whether an impairment exists and the sensitivity analysis on the headroom (refer to Note 14).

We have served as the Company’s auditors since 2017.

/s/ PKF Littlejohn LLP
PKF Littlejohn LLP	15 Westferry Circus
	Canary Wharf
October 2, 2023	London E14 4HD

F-3

Consolidated Statement of Comprehensive Income

for the Year Ended June 30, 2023

		Year Ended June 30
(US dollars in thousands, except per share amounts)	Note	2023			2022 (restated)			2021
Revenue from contracts with customers	4		15,060			22,448			23,975
Cost of sales			(13,472	)		(20,308	)		(19,614	)
Cost of sales - non-recurring events			(3,850	)		(1,881	)		-
Gross (loss)/profit			(2,262	)		259			4,361
General and administrative expenses			(7,620	)		(13,811	)		(9,651	)
Other gains/(losses)	5		30			(13	)		769
Other income	6		119			662			960
Depreciation of property, plant and equipment	13		(750	)		(770	)		(638	)
Amortization of intangible assets	14		(831	)		(850	)		(815	)
Operating loss	7		(11,314	)		(14,523	)		(5,014	)
Restructuring and other non-recurring costs	8		(2,084	)		(443	)		(2,877	)
Finance income	10		1,156			173			2,176
Finance expense	10		(7,366	)		(8,604	)		(2,450	)
Loss before income tax			(19,608	)		(23,397	)		(8,165	)
Income tax	11		(540	)		1,968			138
Loss from continuing operations			(20,148	)		(21,429	)		(8,027	)
(Loss)/profit from discontinued operations	22		(4,207	)		(625	)		69
Loss for the period			(24,355	)		(22,054	)		(7,958	)
Losses attributable to:
Equity owners of VivoPower International PLC			(24,355	)		(22,054	)		(7,571	)
Non-controlling interests			-			-			(387	)
			(24,355	)		(22,054	)		(7,958	)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences recognized directly in equity			1,236			1,043			1,601
Total comprehensive loss for the period attributable to owners of the company			(23,119	)		(21,011	)		(6,357	)
Earnings per share attributable to owners of the company (dollars)
Continuing Operations
Basic	28		(0.82	)		(1.03	)		(0.49	)
Discontinued Operations
Basic	28		(0.17	)		(0.03	)		(0.00	)

See notes to financial statements

F-4

Consolidated Statement of Financial Position

As at June 30, 2023

		Year Ended June 30
(US dollars in thousands)	Note	2023			2022 (restated)			2021 (restated)
ASSETS
Non-current assets
Property, plant and equipment	13		3,742			3,743			2,575
Intangible assets	14		42,175			39,577			46,945
Deferred tax assets	11		5,136			4,668			2,495
Investments accounted for using the equity method	16		66			-			-
Total non-current assets			51,119			47,988			52,015
Current assets
Cash and cash equivalents	17		553			1,285			8,604
Restricted cash	18		608			1,195			1,140
Trade and other receivables	19		7,021			9,088			12,785
Inventory	20		2,115			1,887			1,968
Assets classified as held for sale	21/22		-			8,214			-
Total current assets			10,297			21,669			24,497
TOTAL ASSETS			61,416			69,657			76,512
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables	23		14,597			15,457			8,917
Income tax liability			156			132			708
Provisions	24		1,778			1,104			2,802
Loans and borrowings	25		2,384			5,109			1,004
Liabilities classified as held for sale	22		-			1,497			-
Total current liabilities			18,915			23,299			13,431
Non-current liabilities
Other payables	23		6,443			-			-
Provisions	24		76			57			165
Loans and borrowings	25		30,004			23,452			22,087
Deferred tax liabilities	11		2,232			1,234			411
Total non-current liabilities			38,755			24,743			22,663
Total liabilities			57,670			48,042			36,094
Equity
Share capital	26		308			256			222
Share premium	26		105,018			99,418			76,229
Cumulative translation reserve			1,203			(139	)		(1,465	)
Other reserves	27		(6,492	)		(5,984	)		15,314
Accumulated deficit			(96,291	)		(71,936	)		(49,882	)
Equity and reserves attributable to owners			3,746			21,615			40,418
Non-controlling interest			-			-			-
Total equity			3,746			21,615			40,418
TOTAL EQUITY AND LIABILITIES			61,416			69,657			76,512

These financial statements were approved by the Board of Directors on October 2, 2023, and were signed on its behalf by Kevin Chin.

See notes to consolidated financial statements

F-5

Consolidated Statement of Cash Flow

for the Year Ended June 30, 2023

		Year Ended June 30
(US dollars in thousands)	Note	2023			2022 (restated)			2021
Cash flows from operating activities
Loss from continuing operations			(20,148	)		(21,429	)		(8,027	)
(Loss)/profit from discontinued operations	22		(4,207	)		(625	)		69
Income tax			561			(1,926	)		(115	)
Finance income			-			-			(2,397	)
Finance expense			4,917			5,334			2,889
Depreciation of property, plant and equipment	13		750			770			1,089
Amortization of intangible assets	14		831			1,172			1,167
Other gains/(losses)			(30	)		13			(769	)
Share-based payments			147			2,010			1,078
Decrease/(increase) in trade and other receivables			5,903			3,459			(813	)
(Increase)/decrease in inventory			(228	)		81			-
Increase/(decrease) in trade and other payables			2,278			6,583			(9,453	)
Increase/(decrease) in provisions			674			(572	)		(95	)
Corporation tax payments			-			-			-
Net cash used in operating activities			(8,552	)		(5,130	)		(15,377	)
Cash flows from investing activities
Proceeds on sale of property plant and equipment			110			57			36
Purchase of property, plant and equipment			(1,029	)		(1,165	)		(937	)
Investment in capital projects	14		(3,857	)		(4,254	)		-
Proceeds on disposal of J.A Martin ex-solar business	22		2,874			-			-
Proceeds on sale of capital projects			47			19			366
Acquisitions - consideration			(66	)		-			(7,089	)
Acquisitions - cash acquired			-			-			4,942
Net cash used in investing activities			(1,921	)		(5,343	)		(2,682	)

F-6

Consolidated Statement of Cash Flow

for the Year Ended June 30, 2023 (continued)

		Year Ended June 30
(US dollars in thousands)	Note	2023			2022			2021
Cash flows from financing activities
Other borrowings	25		(108	)		(85	)		18
Lease repayments	25		(43	)		-			(360	)
Proceeds from investor	23		300			-			-
Capital raise proceeds	26		5,500			243			34,866
Equity instruments and capital raise costs	27		(397	)		(47	)		(2,819	)
Debtor finance borrowings/(repayments)	25		1,297			(4	)		(518	)
Loans from related parties	25		3,572			4,231			-
Repayment of loans from related parties	25		(370	)		-			(2,226	)
Bank loan borrowings	25		(138	)		(166	)		(33	)
Chattel mortgage borrowings	25		(267	)		74			32
Finance expense	10		(129	)		(636	)		(5,296	)
Transfer from/(to) restricted cash	18		587			(55	)		(127	)
Net cash from financing activities			9,804			3,555			23,537
Net (decrease)/increase in cash and cash equivalents			(669	)		(6,918	)		5,478
Cash and cash equivalents at the beginning of the period	17		1,285			8,604			2,824
Effect of exchange rate movements on cash held			(63	)		(401	)		302
Cash and cash equivalents at the end of the period	17		553			1,285			8,604

Non-cash investing and financing transactions during the year ended June 30, 2023 comprise:

● 102,252 shares issued to Incentive Award participants at grant date value: $0.1 million;

● Right-of-use assets additions and the related lease liability during the year: $0.2 million and $0.2 million (Refer to Note 25)

See notes to consolidated financial statements

F- 7

Consolidated Statement of Changes in Equity

for the Year Ended June 30, 2023

(US dollars in thousands)	Share capital		Share premium		Cumulative translation reserve			Other reserves			Accumulated deficit			Non- controlling interest			Total
At June 30, 2020		163		40,215		(3,307	)		21,408			(40,773	)		184			17,890
Loss for the year		-		-		-			-			(7,571	)		(387	)		(7,958	)
Other comprehensive income/(expense)		-		-		1,842			(241	)		-			-			1,601
		163		40,215		(1,465	)		21,167			(48,344	)		(203	)		11,533
Transactions with owners in their capacity as owners
Equity instruments		-		-		-			(3,141	)		-			-			(3,141	)
Capital raises		49		34,317		-			(2,804	)		-			-			31,562
Other share issuances		1		736		-			(15	)		-			-			722
Employee share awards		9		961		-			107			-			-			1,077
Non-controlling interest		-		-		-			-			(1,538	)		203			(1,335	)
		59		36,014		-			(5,853	)		(1,538	)		203			28,885
At June 30, 2021		222		76,229		(1,465	)		15,314			(49,882	)		-			40,418
Loss for the year		-		-		-			-			(21,569	)		-			(21,569	)
Prior year adjustments		-		-		-			-			(485	)		-			(485	)
Restated loss for the year		-		-		-			-			(22,054	)		-			(22,054	)
Other comprehensive income/(expense)		-		-		1,326			(283	)		-			-			1,043
		222		76,229		(139	)		15,031			(71,936	)		-			19,407
Transactions with owners in their capacity as owners
Capital raises		1		243		-			(122	)		-			-			122
Other share issuances		1		217		-			(144	)		-			-			74
Employee share awards		8		2,287		-			(283	)		-			-			2,012
Conversion of Aevitas equity instruments		24		20,442		-			(20,466	)		-			-			-
		34		23,189		-			(21,015	)		-			-			2,208
At June 30, 2022		256		99,418		(139	)		(5,984	)		(71,936	)		-			21,615
Loss for the year		-		-		-			-			(24,355	)		-			(24,355	)
Other comprehensive income/(expense)		-		-		1,342			(106	)		-			-			1,236
		256		99,418		1,203			(6,090	)		(96,291	)		-			(1,504	)
Transactions with owners in their capacity as owners
Equity instruments		-		-		-			49			-			-			49
Capital raises		51		5,449		-			(446	)		-			-			5,054
Employee share awards		1		151		-			(5	)		-			-			147
Non-controlling interest		-		-		-			-			-			-			-
		52		5,600		-			(402	)		-			-			3,746
At June 30, 2023		308		105,018		1,203			(6,492	)		(96,291	)		-			3,746

For further information on “Other Reserves” please see Note 27.

F-8

Notes to Consolidated Financial Statements

for the Year Ended June 30, 2023

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 June 30, 2021, the Company no longer has an ultimate controlling party, as AWN Holdings Limited (collectively with its affiliates and subsidiaries, "AWN") holds less than 50% equity interest in the Company, being 39.5% as at June 30, 2023. In prior periods, the ultimate controlling party and the results into which these financials were consolidated was AWN, 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 at June 30, 2023, the Company had unrestricted cash totalling $0.6 million, compared to $1.3 million as at  June 30, 2022 and $8.6 million as at June 30, 2021. It also has outstanding debt and borrowing totaling $32.4 million, compared to $28.6 million as at June 30, 2022 and $23.1 million as at June 30, 2021. Most of these borrowings do not fall due for repayment until 1 April 2025 and are thus classified under long-term liabilities.

Over the next twelve months, 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. The Company will also be investing in property, plant and equipment, particularly in Tembo.

This expected growth implies sizeable funding requirements over FY2024, which the Company is planning to finance through significant equity capital raises, asset-backed financing, debtor financing, working capital optimization with suppliers and customers, and tax relief on R&D expenditure, either at Group or subsidiary levels depending on what is best suited to the Company’s growth needs and optimizing for cost of capital. 

F- 9

 

To ensure success of the business, the directors have 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., Europe and Australia 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 ("Caret"), formerly Innovative Solar Ventures I, LLC ("ISV");

● Purchase order financing, debtor financing facilities;

● Staging the timing of equity raises to minimize dilution; and

● Renegotiation of terms on loans and supply chain.

Based on the foregoing expectations of funding needs, and actions prepared and presented by management to the Board of Directors, the Directors consider that these actions can provide sufficient cash to support business operations and meet funding requirements as they become due, despite financial, economic and political uncertainty. If we continue to experience losses and we are not able to raise additional financing to provide the funding to grow the revenue streams of the Company to become profit making, or generate cash through sales of assets, we may not have sufficient liquidity to sustain our operations and to continue as a going concern, accordingly there is a material uncertainty that may cause significant doubt about the going concern nature of the Group. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

All financial information presented in US dollars has been rounded to the nearest thousand.

2.2 Basis of consolidation

The consolidated financial statements include those of VivoPower International PLC and all of its subsidiary undertakings.

Subsidiary undertakings are those entities controlled directly or indirectly by the Company. The Company controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of the subsidiaries acquired are included in the Consolidated Statement of Comprehensive Income from the date of acquisition using the same accounting policies of those of the Group. All business combinations are accounted for using the purchase method. The consideration transferred in a business combination is the fair value at the acquisition date of the assets transferred and the liabilities incurred by the Group and includes the fair value of any contingent consideration arrangement. Acquisition-related costs are recognized in the income statement as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group balances and transactions, including any unrealized income and expense arising from intra-group transactions, are eliminated in full in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

2.3 Business combination

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

● fair values of the assets transferred

● liabilities incurred to the former owners of the acquired businesses

● equity interests issued by the Company

● fair value of any asset or liability resulting from a contingent consideration arrangement, and

● fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognizes 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.

F- 10

 

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 recognized 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 recognized in profit or loss.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognized in profit or loss.

2.4 Intangible assets

All intangible assets, except goodwill, are stated at fair value less accumulated amortization and any accumulated impairment losses. Goodwill is not amortized and is stated at cost less any accumulated impairment losses. Any gain on a bargain purchase is recognized 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 of ISV from Innovative Solar Systems, LC ("ISS"), constituting a bargain purchase. The gain was immediately recognized in the profit and loss during the year ended June 30, 2021.

Other intangible assets

Intangible assets acquired through a business combination are initially measured at fair value and then amortized over their useful economic lives. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

Development expenditure includes the product development project for ruggedized electric vehicles in Tembo, pre-series-production expenditure on developing vehicle specifications and production processes. Capitalized costs include primarily internal payroll costs, external consultants and computer software.

F- 11

 

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 asset can be measured reliably. Accordingly, the development expenditure is recognized under IAS 38 – Intangible Assets as an intangible asset.

All other expenditure, including expenditure on internally generated goodwill and brands, and research costs, are recognized in profit or loss as incurred.

Amortization 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

● Favorable 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 recognized for any subsequent write-down of the asset to fair value less costs to sell.

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.

F- 12

 

2.8 Leases

The Group leases offices, workshops, motor vehicles, and equipment for fixed periods of 2 months to 8 years but may have extension options. Extension options are not recognized by the Group in the determination of lease liabilities unless renewals are reasonably certain.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

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 recognized to the extent that the carrying value exceeds the recoverable amount. In determining a cash-generating unit’s or asset’s value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time-value of money and risks specific to the cash-generating unit or asset that have not already been included in the estimate of future cash flows. All impairment losses are recognized in the Statement of Comprehensive Income.

An impairment loss in respect of goodwill is not reversed. In the case of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. These impairment losses are reversed if there has been any change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent so that the asset’s carrying amount does not exceed the carrying value that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

F- 13

 

2.10 Financial instruments

Financial assets and liabilities are recognized in the Group’s Statement of Financial Position when the Group becomes a party to the contracted provision of the instrument. The following policies for financial instruments have been applied in the preparation of the consolidated financial statements.

The Company classifies its financial assets in the following measurement categories:

● those to be measured subsequently at fair value through profit or loss; and,

● those to be measured at amortized cost.

The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial assets are classified as at amortized cost only if both of the following criteria are met:

● the asset is held within a business model whose objective is to collect contractual cash flows; and,

● the contractual terms give rise to cash flows that are solely payments of principal and interest.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

● in the principal market for the asset or liability; or,

● in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Cash and cash equivalents

For the purpose of preparation of the Statement of Cash Flow, cash and cash equivalents includes cash at bank and in hand.

Restricted cash

Restricted cash are cash and cash equivalents whose availability for use within the Group is subject to certain restrictions by third parties.

Bank borrowings

Interest-bearing bank loans are recorded at the proceeds received. Direct issue costs paid on the establishment of loan facilities are recognized over the term of the loan on a straight-line basis. The initial payment is taken to the Statement of Financial Position and then amortized over the full-length of the facility.

Trade and other receivables

Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any allowance for the expected future issue of credit notes and for non-recoverability due to credit risk. The Group applies the IFRS 9 – 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 amortized cost using the effective interest method.

F- 14

 

Share capital

Ordinary Shares, nominal value $0.012 per share (the "Ordinary Shares") are classified as equity. Incremental costs directly attributable to the issue of Ordinary Shares are recognized as a deduction from equity, net of any tax effects.

Repurchase of share capital (treasury shares)

When share capital recognized as equity is repurchased as equity by the Company the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity, and excluded from the number of shares in issue when calculating earnings per share.

2.11 Taxation

Income tax expense comprises current and deferred tax.

Current tax is recognized 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 recognized 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 realized simultaneously.

Current and deferred tax are recognized in the Statement of Comprehensive Income, except when the tax relates to items charged or credited directly to equity, in which case it is dealt with directly in equity.

2.12 Provisions

Provisions are recognized 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 (“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. 

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.

F- 15

 

Exchange gains and losses arising are charged to the Statement of Comprehensive Income within finance income or expenses. The Statement of Comprehensive Income and Statement of Financial Position of foreign entities are translated into US dollars on consolidation at the average rates for the period and the rates prevailing at the end of the reporting period respectively. Exchange gains and losses arising on the translation of the Group’s net investment foreign entities are recognized as a separate component of shareholders’ equity.

Foreign currency denominated share capital and related share premium and reserve accounts are recorded at the historical exchange rate at the time the shares were issued, or the equity created.

2.15 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 recognized 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 recognized 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 recognized on a percentage completion basis using an input method. Revenue for stand-alone equipment sales is recognized 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 recognized when the job is complete and accepted by the customer.

Revenue for sale of electric vehicles, kits for electric vehicles and related products is recognized 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 recognized for goods and services rendered by the Company exceeds amounts that the Company is entitled to bill the customer, a contract asset is recognized. If amounts billed exceed the revenue recognized for goods and services rendered, a contract liability is recognized.

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.

F- 16

 

2.17 Employee benefits

Pension

The employer pension contributions are associated with defined contribution schemes. The costs are therefore recognized 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 recognized 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 recognized 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 recognized over the expected vesting period, using the grant date share price, in accordance with IFRS 2 Share-based Payments.

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 and impairment and write-off of nonrecoverable items.

Other non-recurring costs also include provisions in respect of fiscal refunds on prior receivables, which the Company is defending.

F- 17

 

2.19 New standards, amendments and interpretations not yet adopted by the Group

At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

International Accounting Standards (amendments)	Effective date*
IAS 1 - Amendments regarding the classification of liabilities	1 January 2023
IAS 1, IFRS Practice Statement 2 - Amendments to IAS 1 and IFRS Practice Statement 2	1 January 2023
IAS 1 - Amendments regarding non-current liabilities with covenants	1 January 2024
IAS 8 (amendments) - Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates	1 January 2023
IFRS 16 - Amendments regarding lease liability in a sale and leaseback	1 January 2024
*Years beginning on or after

The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group or Company in future periods.

3. Significant accounting judgements and estimates

In preparing the consolidated financial statements, the directors are required to make judgements in applying the Group’s accounting policies and in making estimates and making assumptions about the future. These estimates could have a significant risk of causing a material adjustment to the carrying value of assets and liabilities in the future financial periods. The critical judgements that have been made in arriving at the amounts recognized 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 to the Financial Statements the Group concluded that Solar Development revenue and revenue from other long-term projects is recognized over time as the customer simultaneously receives and consumes the benefits provided. The Group determined that the percentage completion basis is the best method in measuring progress because there is a direct relationship between the Group’s effort and the transfer of services to the customer. The judgement used in applying the percentage completion basis affects the amount and timing of revenue from contracts.

3.2 Impairment of non-financial assets

The carrying values of property, plant and equipment, investments and intangible assets other than goodwill are reviewed for impairment only when events indicate the carrying value may be impaired. Goodwill is tested annually for impairment or when events or changes to circumstances indicate that it might be impaired.

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 and operating performance (which includes production and sales volumes), 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).

F- 18

 

3.4 Litigation provision

No litigation provision was recorded at June 30, 2023. The provision of $0.5 million for disputed legal success fees related to the Mr. Comberg litigation recorded at June 30, 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 June 30, 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 June 30, 2023, the carrying amount of capitalized development costs were $7.8 million (2022: $3.8 million).

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 J.A. Martin ex-solar business, as at June 30, 2022, were 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. The fair value of contingent consideration of $4.5 million applied a contracted 4.5x multiple to year 1 forecast EBITDA of AUD$2.7 million, less purchase price paid, discounted at 10% to net present value, less purchase price paid. Final settlement of the contingent consideration was paid in August 2023, and the receivable amount and loss on disposal adjusted accordingly.

F- 19

 

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 $4.3 million at June 30, 2023 ( June 30, 2022: $4.1 million; June 30, 2021: $1.9 million) are recognized to the extent that it is probable that sufficient taxable profit will be available against which the losses can be utilized. Management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable profits. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the deferred tax assets recorded at the reporting date could be impacted.

3.9 Exchangeable preference shares, exchangeable notes and Aevitas preference shares

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.

3.10 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.

F- 20

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 of the Company (the "Board"), which is the Group’s chief operating decision maker.

Management analyzes 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 Solar Pty Ltd (previously J.A. Martin) (“Aevitas Solar”) 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 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 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 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:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Australia		13,596		20,958		22,581
Netherlands		1,464		1,490		1,394
United Kingdom		-		-		-
United States		-		-		-
Total revenues		15,060		22,448		23,975

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Revenue by product and service is as follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Electrical products and related services		13,596		20,958		22,396
Development fees		-		-		185
Vehicle spec conversion		-		789		137
Conversion kits		1,394		301		1,219
Accessories		70		400		38
Total revenues		15,060		22,448		23,975

The Group had one customer representing more than 10% of revenue for the year ended June 30, 2023 (year ended June 30, 2022: one; year ended June 30, 2021: none). This customer represented approximately $2.6 million of the Company’s total revenues and is reported within the Critical Power Services segment for the year ended June 20, 2023.

4.2 Operating segments

a) Segment results of operations

Results of operations by reportable segment are as follows:

	Continuing operations																		Discontinued operations			Total
Year Ended June 30, 2023	Critical Power			Solar			Electric			Sustainable Energy			Corporate			Total			Critical Power
(US dollars in thousands)	Services			Development			Vehicles			Solutions			Office			Continuing			Services
Revenue from contracts with customers		13,596			-			1,464			-			-			15,060			-			15,060
Costs of sales - other		(11,900	)		-			(1,572	)		-			-			(13,472	)		-			(13,472	)
Cost of sales - non-recurring events		(3,850	)		-			-			-			-			(3,850	)		-			(3,850	)
Gross profit		(2,154	)		-			(108	)		-			-			(2,262	)		-			(2,262	)
General and administrative expenses		(1,390	)		(297	)		(1,005	)		(367	)		(4,561	)		(7,620	)		-			(7,620	)
Other gains/(losses)		-			-			-			30			-			30			(4,207	)		(4,177	)
Other income		50			69			-			-			-			119			-			119
Depreciation and amortization		(895	)		-			(673	)		(3	)		(10	)		(1,581	)		-			(1,581	)
Operating loss		(4,389	)		(228	)		(1,786	)		(340	)		(4,571	)		(11,314	)		(4,207	)		(15,521	)
Restructuring and other non-recurring costs		(1	)		-			(214	)		-			(1,869	)		(2,084	)		-			(2,084	)
Finance expense - net		(6,841	)		(34	)		936			(50	)		(221	)		(6,210	)		-			(6,210	)
Profit/(loss) before income tax		(11,231	)		(262	)		(1,064	)		(390	)		(6,661	)		(19,608	)		(4,207	)		(23,815	)
Income tax		(619	)		-			(40	)		119			-			(540	)		-			(540	)
Loss for the year		(11,850	)		(262	)		(1,104	)		(271	)		(6,661	)		(20,148	)		(4,207	)		(24,355	)

F- 22

 

	Continuing operations																		Discontinued operations			Total
Year Ended June 30, 2022 (restated)	Critical Power			Solar			Electric			Sustainable Energy			Corporate			Total			Critical Power
(US dollars in thousands)	Services			Development			Vehicles			Solutions			Office			Continuing			Services
Revenue from contracts with customers		20,958			-			1,490			-			-			22,448			15,168			37,616
Costs of sales - other		(18,804	)		-			(1,504	)		-			-			(20,308	)		(13,842	)		(34,150	)
Cost of sales - non-recurring events		(1,881	)		-			-			-			-			(1,881	)		-			(1,881	)
Gross profit		273			-			(14	)		-			-			259			1,326			1,585
General and administrative expenses		(1,568	)		(80	)		(2,901	)		(1,660	)		(7,602	)		(13,811	)		(1,485	)		(15,296	)
Gain/(loss) on solar development		103			(139	)		-			23			-			(13	)		-			(13	)
Other income		662			-			-			-			-			662			324			986
Depreciation and amortization		(1,165	)		-			(443	)		(3	)		(9	)		(1,620	)		(767	)		(2,387	)
Operating loss		(1,695	)		(219	)		(3,358	)		(1,640	)		(7,611	)		(14,523	)		(602	)		(15,125	)
Restructuring and other non-recurring costs		45			-			(429	)		-			(59	)		(443	)		-			(443	)
Finance expense - net		(7,470	)		-			(974	)		23			(10	)		(8,431	)		(172	)		(8,603	)
Profit/(loss) before income tax		(9,120	)		(219	)		(4,761	)		(1,617	)		(7,680	)		(23,397	)		(774	)		(24,171	)
Income tax		1,349			-			575			192			(148	)		1,968			149			2,117
Loss for the year		(7,771	)		(219	)		(4,186	)		(1,425	)		(7,828	)		(21,429	)		(625	)		(22,054	)

	Continuing operations																	Discontinued operations			Total
Year Ended June 30, 2021	Critical Power			Solar			Electric			Sustainable Energy		Corporate			Total			Critical Power
(US dollars in thousands)	Services			Development			Vehicles			Solutions		Office			Continuing			Services
Revenue		22,396			185			1,394			-		-			23,975			16,436			40,411
Costs of sales - other		(18,322	)		-			(1,292	)		-		-			(19,614	)		(14,470	)		(34,084	)
Cost of sales - non-recurring events		-			-			-			-		-			-			-			-
Gross profit		4,074			185			102			-		-			4,361			1,966			6,327
General and administrative expenses		(1,522	)		(1,309	)		(1,923	)		-		(4,897	)		(9,651	)		(1,482	)		(11,133	)
Other gains/(losses)		36			733			-			-		-			769			-			769
Other income		960			-			-			-		-			960			552			1,512
Depreciation and amortization		(1,099	)		(4	)		(346	)		-		(4	)		(1,453	)		(803	)		(2,256	)
Operating profit/(loss)		2,449			(395	)		(2,167	)		-		(4,901	)		(5,014	)		233			(4,781	)
Restructuring and other non-recurring costs		(24	)		-			(631	)		-		(2,222	)		(2,877	)		(3	)		(2,880	)
Finance expense - net		1,824			(24	)		(1	)		-		(2,073	)		(274	)		(137	)		(411	)
Profit/(loss) before income tax		4,249			(419	)		(2,799	)		-		(9,196	)		(8,165	)		93			(8,072	)
Income tax		(691	)		96			733			-		-			138			(24	)		114
Loss for the year		3,558			(323	)		(2,066	)		-		(9,196	)		(8,027	)		69			(7,958	)

F- 23

 

b) Segment net assets

Net assets by reportable segment are as follows:

As at June 30, 2023	Critical Power			Solar		Electric			Sustainable Energy			Corporate
(US dollars in thousands)	Services			Development		Vehicles			Solutions			Office			Total
Assets		18,034			12,726		17,493			10,343			2,819			61,416
Liabilities		(15,539	)		-		(7,564	)		(645	)		(33,921	)		(57,670	)
Net assets/(liabilities)		2,495			12,726		9,929			9,698			(31,102	)		3,746

As at June 30, 2022	Critical Power			Solar			Electric			Sustainable Energy			Corporate
(US dollars in thousands)	Services			Development			Vehicles			Solutions			Office			Total
Assets		30,878			22,505			14,202			1,170			903			69,657
Liabilities		(13,452	)		(377	)		(4,528	)		(485	)		(29,200	)		(48,042	)
Net assets/(liabilities)		17,426			22,128			9,673			685			(28,297	)		21,615

As at June 30, 2021	Critical Power			Solar			Electric			Sustainable Energy		Corporate
(US dollars in thousands)	Services			Development			Vehicles			Solutions		Office			Total
Assets		35,604			24,693			9,027			-		7,188			76,512
Liabilities		(9,442	)		(767	)		(2,093	)		-		(23,792	)		(36,094	)
Net assets/(liabilities)		26,162			23,926			6,934			-		(16,604	)		40,418

F- 24

5. Other gains/(losses) 

	Year Ended June 30
(US dollars in thousands)	2023		2022			2021
Australia solar projects		30		23			(165	)
ISS Joint Venture - 50% share of discontinued projects		-		-			(6,950	)
Gain on acquisition of remaining 50% ISV from ISS		-		-			7,848
Other gains/(losses)		-		(36	)		36
Total gain/(loss) on Solar Development		30		(13	)		769

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 June 1, 2021. The loss on sale of $0.2 million comprised disposal of $0.2 million net book value of intangible assets. Additionally, the Company recognized $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, Caret, prior to acquisition of the remaining 50% interest by the Company on June 30, 2021.

On June 30, 2021, the Company completed its acquisition of the remaining 50% share in Caret. 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 Solar Development segment.

F- 25

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 recognized 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. This also includes a previous year deposit which was refunded in March 2023.

7. Operating profit/(loss)

Operating profit/(loss) from continuing operations is stated after charging/(crediting):

	Year Ended June 30
(US dollars in thousands)	2023			2022		2021
Amortization of intangible assets		831			850		815
Depreciation of property, plant and equipment		750			770		638
Auditors' remuneration - audit fees		218			177		163
Auditors' remuneration - tax services		8			12		12
Directors' emoluments		719			693		676
(Gain)/loss on disposal of assets		(30	)		13		(769	)

8. Restructuring and other non-recurring costs

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
Corporate restructuring - professional fees		200			189			179
Corporate restructuring - litigation provision		-			(128	)		2,039
Fiscal refunds provision		1,768			-			-
Impairment and write-off		422			-			-
Remediation		(361	)		382			-
Relocation		-			-			27
Acquisition related and other costs		55			-			632
Total		2,084			443			2,877

In the year ended June 30, 2023, the Company incurred non-recurring costs related to a provision in respect of fiscal refunds on prior receivables, which the Company is defending of $1.8 million, restructuring activities of $0.2 million and provision for inventory obsolescence and write-off of bad debts of $0.4 million, offset by $0.4 million release of remediation provision.

In the year ended June 30, 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 June 30, 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.

F- 26

 

In FY 2021, 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. 

9. Staff numbers and costs

The average number of employees (including directors) during the period was:

	Year Ended June 30
	2023		2022		2021
Sales and Business Development		11		13		13
Central Services and Management		18		29		35
Production		64		212		164
Total		93		254		212

Their aggregate remuneration costs comprised:

	Year Ended June 30
(US dollars in thousands)	2023		2022 (restated)		2021
Salaries, wages and incentives		5,465		15,372		14,550
Social security costs		430		730		795
Pension contributions		369		844		850
Short-term compensated absences		366		1,277		1,200
Total		6,630		18,223		17,395

Directors’ emoluments for the year ended June 30, 2023 were $347,179 (year ended June 30, 2022: $376,043; year ended June 30, 2021: $675,807) of which the highest paid director received $81,819 (year ended June 30, 2022: $91,029; year ended June 30, 2021: $92,119). Director emoluments include employer social security costs. 

Key Management Personnel:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Salaries, wages and incentives		1,120		1,578		1,949
Social security costs		38		151		101
Pension contributions		60		114		64
Equity incentives		-		392		244
Short-term compensated absences		-		-		2
Total		1,218		2,235		2,361

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 June 30, 2023 was 10 (year ended June 30, 2022: 10; year ended June 30, 2021: 10).

F- 27

10. Finance income and expense

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Finance income
Foreign exchange gain		1,150		173		2,176
Interest income		6		-		-
Total finance income		1,156		173		2,176

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Finance expense
Related party loan interest payable		3,801		3,351		1,986
Convertible loan notes and preference shares interest payable		254		217		1,228
Waived dividends on convertible preference shares		-		-		(327	)
Waived dividends on convertible loan notes		-		-		(668	)
Debtor invoice finance interest payable		100		24		7
Lease liability interest payable		171		133		42
Bank interest payable		47		3		-
Foreign exchange losses		2,704		4,709		92
Other finance costs		289		167		90
Total finance expense		7,366		8,604		2,450

11. Taxation

(a) Tax (charge)/credit

	Year Ended June 30
	2023								2022								2021
(US dollars in thousands)	Continuing			Discontinued		Total			Continuing			Discontinued		Total			Continuing			Discontinued			Total
Current tax
UK corporation tax		-			-		-			(52	)		-		(52	)		-			-			-
Foreign tax		(924	)		-		(924	)		818			-		818			(825	)		(24	)		(849	)
Total current tax		(924	)		-		(924	)		766			-		766			(825	)		(24	)		(849	)
Deferred tax
Current year
UK tax		-			-		-			(96	)		-		(96	)		(51	)		-			(51	)
Foreign tax		382			-		382			1,297			149		1,446			1,014			-			1,014
Total deferred tax		382			-		382			1,201			149		1,350			963			-			963
Total income tax		(541	)		-		(541	)		1,968			149		2,117			138			(24	)		114

F- 28

 

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.

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
Loss before income tax before continuing operations		(17,604	)		(23,397	)		(8,165	)
Group weighted average corporation tax rate		29.1	%		26.6	%		22.2	%
Tax at standard rate		5,118			6,224			1,813
Effects of:
Expenses that are not deductible for tax purposes								(833	)
Adjustment to prior year tax provisions								137
Deferred tax assets not recognized on tax losses		(5,660	)		(4,256	)		(979	)
Total income tax from continuing operation for the period recognized in the
Consolidated Statement of Comprehensive Income		(541	)		1,968			138

(b) Deferred tax

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
Deferred tax assets		5,136			4,668			2,495
Deferred tax liabilities		(2,232	)		(1,234	)		(411	)
Net deferred tax asset		2,904			3,434			2,084

The deferred tax assets are analyzed as follows:

Deferred tax assets	Tax losses		Other timing differences			Total
June 30, 2020		814		533			1,347
Credit to comprehensive income		776		109			885
Acquisitions		263		-			263
June 30, 2021		1,853		642			2,495
Credit/(charged) to comprehensive income		2,227		(54	)		2,173
June 30, 2022		4,080		588			4,668
Credit to comprehensive income		196		272			468
June 30, 2023		4,276		860			5,136

F- 29

 

The deferred tax liabilities are analyzed as follows:

Deferred tax liabilities	Accelerated allowances		Other timing differences			Total
June 30, 2020		-		-			-
Charged to comprehensive income		-		78			78
Acquisition of subsidiary		-		(489	)		(489	)
June 30, 2021		-		(411	)		(411	)
Charged to comprehensive income		-		(823	)		(823	)
June 30, 2022		-		(1,234	)		(1,234	)
Charged to comprehensive income				(998	)		(998	)
June 30, 2023		-		(2,232	)		(2,232	)

Deferred tax has been recognized in the current period using the tax rates applicable to each of the tax jurisdictions in which the Group operates. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities.

12. Business Combination

(a)  Tembo e-LV

On November 5, 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 February 2, 2021.

Purchase consideration
(Amounts in thousands)	EUR		USD
Cash consideration for 51% acquisition		4,000		4,916

The fair value of the identifiable assets and liabilities recognized, as a result of the acquisition, are as follows:

(Amounts in thousands)	EUR			USD
Cash and cash equivalents		4,021			4,942
Trade and other receivables		100			123
Inventory		594			730
Property, plant and equipment (Note 13)		167			206
Deferred tax asset (Note 11)		214			263
Trade and other payables		(541	)		(665	)
Related party payable		(1,024	)		(1,259	)
Other non-current liabilities		(181	)		(222	)
Deferred income		(578	)		(711	)
Deferred tax liability (Note 11)		(398	)		(489	)
Remediation provision		(282	)		(336	)
Fair value of identifiable net assets acquired		2,092			2,582
Non -controlling interests (49%)		(1,025	)		(1,260	)
Net assets acquired		1,067			1,322
Cash consideration for 51% acquisition		4,000			4,916
Surplus on acquisition:		2,933			3,594
Allocated of surplus:
Goodwill (Note 14a)		1,340			1,698
Other intangible assets (Note 14b)		1,593			1,896
		2,933			3,594

F- 30

 

	EUR			USD
Acquisition of Non-controlling interest:
Cash paid		1,800			2,173
Ordinary Shares issued		197			237
Total consideration for non-controlling interest		1,997			2,410
Non-controlling interest acquired:
At acquisition		(1,025	)		(1,259	)
Loss attributable to non-controlling interest		319			387
At date of acquisition of non-controlling interest		(706	)		(873	)
Surplus on acquisition of non-controlling interests		1,291			1,538

Purchase consideration - cash outflow
(Amounts in thousands)	EUR		USD
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration - 51%		4,000		4,916
Cash consideration - 49%		1,800		2,173
Less: Balances acquired
Cash		4,021		4,942
Net outflow of cash - investing activities		1,779		2,147

Acquisition-related costs of $0.6 million that were not directly attributable to the issue of shares are included within restructuring and other non-recurring costs in the income statement, and in operating activities in the cash flow 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 recognized and do not meet the criteria for recognition as an intangible asset under IAS 38. None of the goodwill recognized is expected to be deductible for income tax purposes. Separately recognized 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.

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 recognizes 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 November 5, 2020 and February 2, 2021, total $0.9 million, was acquired by the Company on February 2, 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 debited directly to equity.

The remediation provision recognized 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 to June 30, 2021, 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 fiscal year 2021, Group revenue from continuing operations would have been $41.1 million and loss before tax from continuing operations would have been $8.3 million.

(b) ISS Joint Venture

On June 30, 2021, the Company purchased the remaining 50% share of ISV from ISS for a consideration of $1, as part of the litigation settlement with the other 50% joint venture owners, plus the $5.4 million fair value of pre-acquisition equity interest held by the Company.

F- 31

 

Fair value of net assets acquired included capitalized project expenses and were recorded at fair value.

The acquisition resulted in a bargain purchase of $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 in Note 5.

(US dollars in thousands)
Purchase consideration
Cash		-
Fair value of pre-acquisition equity interest		5,393
Total consideration		5,393
Less: Fair value of acquired net assets:
Cash	2
Deposits	991
Capitalized project development expenses (Note 14b)	12,248
		13,241
Gain on bargain purchase - included in gain/(loss) on SES development (Note 5)		7,848

No revenue or profit or loss has been recognized since the acquisition date.

The net cash flow resulting from the acquisition was $ nil.

F- 32

13. Property, plant and equipment

(US dollars in thousands)	Computer Equipment			Motor Vehicles			Plant & Equipment			Fixtures & Fittings			Right-of-Use Assets			Total
Cost
At June 30, 2020		476			1,363			1,232			195			2,283			5,549
Foreign exchange		41			145			26			18			196			426
Additions		125			230			395			6			182			938
Acquisition		-			4			114			-			88			206
Disposals		(80	)		(174	)		(156	)		(97	)		(58	)		(565	)
At June 30, 2021		562			1,568			1,611			122			2,691			6,554
Foreign exchange		(41	)		(154	)		(146	)		(10	)		(214	)		(565	)
Additions		28			184			343			209			2,470			3,234
Disposals		-			(150	)		(48	)		-			(53	)		(251	)
Reclass to assets held for sale		(231	)		(1,015	)		(320	)		(74	)		(1,295	)		(2,935	)
At June 30, 2022		318			433			1,440			247			3,599			6,037
Reclassifications/corrections		-			-			-			-			(707	)		(707	)
Foreign exchange		(10	)		(23	)		(32	)		(9	)		(43	)		(117	)
Additions		36			92			558			10			239			935
Disposals		(37	)		(39	)		(250	)		-			(54	)		(380	)
At June 30, 2023		307			463			1,716			248			3,034			5,768

(US dollars in thousands)	Computer Equipment			Motor Vehicles			Plant & Equipment			Fixtures & Fittings			Right-of-Use Assets			Total
Depreciation
At June 30, 2020		373			836			747			86			1,021			3,063
Foreign exchange		31			85			70			8			77			271
Charge for the year		66			206			167			8			642			1,089
Disposals		(71	)		(157	)		(112	)		(46	)		(58	)		(444	)
At June 30, 2021		399			970			872			56			1,682			3,979
Foreign exchange		(33	)		(95	)		(93	)		(6	)		(167	)		(394	)
Charge for the year (including discontinued operations)		69			186			179			22			752			1,208
Disposals		-			(131	)		(9	)		-			(53	)		(193	)
Reclass to assets held for sale		(197	)		(719	)		(232	)		(43	)		(1,115	)		(2,306	)
At June 30, 2022		238			211			717			29			1,099			2,294
Reclassifications/corrections		-			-			-			-			(685	)		(685	)
Foreign exchange		(5	)		(10	)		(18	)		(1	)		(29	)		(63	)
Charge for the year		48			90			179			22			411			750
Disposals		(26	)		(28	)		(171	)		-			(45	)		(270	)
At June 30, 2023		255			263			707			50			751			2,026

The non-solar segment of Kenshaw Solar Pty Ltd was sold on July 1, 2022 and was reported in the prior period as a discontinued operation. Revenues relating to the discontinued operation in the year ended June 30, 2022 amounted to $15.2 million ( June 30, 2021: $15.2 million). The total expenses in the year ended June 30, 2022 amounted to $14.4 million ( June 30, 2021: $17.6 million).

F- 33

14. Intangible assets

	Year Ended June 30
(US dollars in thousands)	2023		2022 (restated)		2021 (restated)
Goodwill		17,697		18,269		25,794
Other intangible assets		24,478		21,308		21,151
Total		42,175		39,577		46,945

a) Goodwill

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
As at July 1		18,269			25,794			21,919
Reclassification to held for sale assets		-			(5,289	)		-
Goodwill on acquisition of Tembo		-			-			1,698
Foreign exchange		(572	)		(2,236	)		2,177
Carrying value		17,697			18,269			25,794

b)

The carrying amounts of goodwill by Cash Generating Unit (“CGU”) are as follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Aevitas O Holdings Limited (allocated to the Critical Power Services segment)		6,946		7,222		13,658
VivoPower Pty Ltd (allocated to the Solar Development segment)		9,091		9,451		10,319
Tembo (allocated to the Electric Vehicle segment)		1,660		1,595		1,817
Total		17,697		18,269		25,794

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 is 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 fiscal year and management projections for the following two years. Cash flows are also projected for subsequent years as management believe 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.

F- 34

 

The CGU represented by Aevitas (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 12% ( June 30, 2022: 11%; June 30, 2021: 10%) 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, 2022: 11.3%, June 30, 2021: 10.7%), an average annual growth rate in years 2-5 of 60% 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 12% ( June 30, 2022: 11%) and average annual growth rate of 33% per annum in years 2-5 ( June 30, 2022: 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 15,000 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 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 12.9% ( June 30, 2022: 11.2%), $4 million free cash flow from project sales in years 1-4 ( June 30, 2022: $2.3 million), $14.4 million development fees from power-to-x partnerships.

F- 35

 

(b) Other intangible assets

(US dollars in thousands)	Customer Relationships			Trade Names			Favorable Supply Contracts			Solar Projects			Product Development			Other Intangible Assets			Total Intangible Assets
Cost
At June 30, 2020		4,382			2,399			4,099			-			-			156			11,036
Foreign exchange		411			225			385			-			-			13			1,034
Additions		46			-			-			-			513			-			559
Acquisitions		1,492			404			-			12,248			-			-			14,144
Disposals		(550	)		-			-			-			-			-			(550	)
Prior year restatement		-			-			-			(504	)		-			-			(504	)
At June 30, 2021 restated		5,781			3,028			4,484			11,744			513			169			25,719
Foreign exchange		(542	)		(271	)		(376	)		-			(63	)		(13	)		(1,265	)
Additions		-			-			-			878			3,355			19			4,252
Acquisitions		-			-			-			-			-			-			-
Disposals		-			(9	)		-			-			-			-			(9	)
Reclass to Assets held for sale		(2,687	)		(1,385	)		-			-			-			-			(4,072	)
At June 30, 2022 restated		2,552			1,363			4,108			12,622			3,805			175			24,625
Foreign exchange		4			(25	)		(157	)		-			302			(1	)		123
Additions		-			-			-			103			3,725			29			3,857
Acquisitions		-			-			-			-			-			-			-
Disposals		-			-			-			(47	)		-			-			(47	)
At June 30, 2023		2,556			1,338			3,951			12,678			7,832			203			28,558

Amortization	Customer Relationships			Trade Names			Favorable Supply Contracts			Solar Projects		Product Development			Other			Total
At June 30, 2020		1,405			572			978			-		-			151			3,106
Foreign exchange		131			54			92			-		-			18			295
Amortization		622			229			298			-		18			-			1,167
At June 30, 2021		2,158			855			1,368			-		18			169			4,568
Foreign exchange		(208	)		(79	)		(115	)		-		(2	)		(13	)		(417	)
Amortization		405			181			274			-		-			-			860
Disposals		-			-			-			-		-			-			-
Reclass to Assets held for sale		(1,232	)		(462	)		-			-		-			-			(1,694	)
At June 30, 2022		1,123			495			1,527			-		16			156			3,317
Foreign exchange		(1	)		(8	)		(61	)		-		2			-			(68	)
Amortization		385			137			266			-		43			-			831
Disposals		-			-			-			-		-			-			-
At June 30, 2023		1,507			624			1,732			-		61			156			4,080

Net book value	Customer Relationships		Trade Names		Favorable Supply Contracts		Solar Projects		Product Development		Other		Total
At June 30, 2021 restated		3,623		2,173		3,116		11,744		495		-		21,151
At June 30, 2022 restated		1,429		868		2,581		12,622		3,789		19		21,308
At June 30, 2023		1,049		714		2,219		12,678		7,771		47		24,478

F- 36

 

Customer relationships, trade names and favorable supply contracts have an average remaining period of amortization of 7 years, 10 years and 10 years respectively. Solar projects and electric vehicle product development costs are incomplete and not generating revenue and therefore are not amortized in FY2023.

Additions for the year comprise $3.7 million electric vehicle product development costs in Tembo and $0.4 million of solar project development costs in Caret. $2.1 million net book value of customer relationship and trade name intangible assets of Aevitas Solar ex-solar business sold to ARA in July 2022, was reclassified out of intangible assets into assets held for sale as at June 30, 2022. The prior year restatement in the year 30 June 2021 relates to the reclassification of deposits originally reported within intangible assets.

15. Investment in subsidiaries

The principal operating undertakings in which the Group’s interest at  June 30, 2023 is 20% or more are as follows:

Subsidiary Undertakings	Percentage of shares held			Registered address
VivoPower International Services Limited		100	%	28 Esplanade, St Helier, Jersey, JE2 3QA
VivoPower USA, LLC		100	%
VivoPower US-NC-31, LLC		100	%
VivoPower US-NC-47, LLC		100	%	251 Little Falls Drive, Wilmington, DE,
VivoPower (USA) Development, LLC		100	%	USA 19808
Caret, LLC (formerly Innovative Solar Ventures I, LLC)		100	%
Caret Decimal, LLC		100	%
VivoPower Pty Ltd		100	%
Aevitas O Holdings Pty Ltd		100	%
Aevitas Group Limited		100	%
Aevitas Holdings Pty Ltd		100	%	153 Walker St, North Sydney NSW, Australia 2060
Electrical Engineering Group Pty Limited		100	%
Kenshaw Solar Pty Ltd (formerly J.A. Martin Electrical Pty Limited)		100	%
Kenshaw Electrical Pty Limited		100	%
Tembo EV Australia Pty Ltd		100	%
VivoPower Philippines Inc.		64	%	Unit 10A, Net Lima Building, 5th Avenue cor. 26th Street,
VivoPower RE Solutions Inc.		64	%	E-Square Zone, Crescent Park West, Bonifacio Global City,
V.V.P. Holdings Inc. *		40	%	Taguig, Metro Manila
Tembo e-LV B.V.		100	%
Tembo 4x4 e-LV B.V.		100	%	Marinus van Meelweg 20, 5657 EN, Eindhoven, NL
FD 4x4 Centre B.V.		100	%
VivoPower International IMEA DMCC		100	%	Unit 4522, DMCC Business Centre, Level No 1, Gemplex 3, Dubai, UAE

* V.V.P. Holdings Inc. is controlled by VivoPower Pty Ltd, notwithstanding only owning 40% of the ordinary share capital.

F- 37

16. Investments accounted for using the equity method

In April 2017, the Company entered into a 50% joint venture with an early-stage solar development company, ISS, 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 Caret, 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 for the ISS Joint Venture. To June 29, 2021, the Company contributed $13.1 million of the $14.1 million commitment to the ISS Joint Venture, leaving a remaining capital commitment at June 30, 2021, of $1.1 million, which was recorded in trade and other payables. 20 projects within the portfolio were discontinued in the year ended June 30, 2021, resulting in a write off of capitalized costs of $7.0 million related to those projects.

The joint venture was accounted for as an investment under the equity method at March 31, 2018. During the year ended March 31, 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 June 30, 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 realization timeframe. Accordingly, the portion of the investment that was expected to be realized 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 June 30, 2021, the Company acquired the remaining 50% of Caret from ISS, for a consideration of $1. Accordingly, the book value of $8.1 million of the investments accounted for using the equity method have been derecognized upon acquisition, and the fair value of 100% of the consolidated capitalized project development costs recorded as an intangible asset upon acquisition, as detailed in Note 12b.

F- 38

 

Reconciliation of the ISS Joint Venture investment is as follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Capital commitment		-		-		-
Commission credit		-		-		-
Discontinued projects		-		-		-
Acquisition costs		-		-		-
Total		-		-		-

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 June 30, 2021, was as follows:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Assets classified as held for sale		-		-		-
Investments accounted for using the equity method		-		-		-
Total		-		-		-

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.

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Current assets		-		-		-
Non-current assets		-		-		-
Total		-		-		-

Reconciliation to carrying amounts of the ISS Joint Venture:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Opening net assets		-		-		24,390
Commission credit		-		-		-
Commission credit on abandonments		-		-		-
Sundry income		-		-		-
Project swaps		-		-		-
Abandoned projects		-		-		(13,900	)
Acquisition of controlling interest		-		-		(10,490	)
Net assets		-		-		-
VivoPower share in %		N/A		N/A		50	%
VivoPower share in $ (excluding funding obligation)		-		-		-
Commission credit		-		-		-
Acquisition costs		-		-		-
Net Assets		-		-		-

F- 39

17. Cash and cash equivalents

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Cash at bank and in hand		553		1,285		8,604

The credit ratings of the counterparties with which cash was held are detailed in the table below.

	Year Ended June 30
(US dollars in thousands)	2023			2022		2021
A+		(12	)		171		5,423
A		-			-		-
A-		2			2		2
AA-		563			1,112		3,179
Total		553			1,285		8,604

18. Restricted cash

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Bank guarantee security deposit		608		1,195		1,140

At June 30, 2023, there is a total of $0.6 million ( June 30, 2022, $1.2 million ; June 30, 2021$1.1 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

	Year Ended June 30
(US dollars in thousands)	2023		2022 (restated)		2021 (restated)
Current receivables
Trade receivables		1,649		3,866		4,959
Contract assets		893		694		2,723
Prepayments		277		787		2,837
Other receivables		4,027		3,055		1,580
Deposits		-		504		504
Current tax receivable		175		182		182
Total		7,021		9,088		12,785

The prior year restatements in the years ending 30 June 2021 and 2022 relate to $0.5 million of deposits that were originally reported within intangible assets and have been reclassified to current assets and $0.4 million of inventory that was originally reported within other receivables.

In accordance with IFRS 15, contract assets are presented as a separate line item. The Company has not recognized any loss allowance for contract assets.

F- 40

 

Analysis of trade receivables:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
Trade and other receivables		1,649		3,866		4,959
Less: credit note provision		-		-		-
Total		1,649		3,866		4,959

The maximum exposure to credit risk for trade receivables by geographic region was: 

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
United States		-		-		-
United Kingdom		-		-		-
Australia		1,451		2,684		4,349
Netherlands		198		1,181		610
Total		1,649		3,866		4,959

The aging of the trade receivables, net of provisions is:

	Year Ended June 30
(US dollars in thousands)	2023		2022		2021
0-90 days		1,410		3,306		4,918
Greater than 90 days		239		560		41
Total		1,649		3,866		4,959

20. Inventory

	Year Ended June 30
(US dollars in thousands)	2023		2022 (restated)		2021 (restated)
Raw materials		2,115		1,887		1,968
Total		2,115		1,887		1,968

The prior year restatements in the years ending 30 June 2021 and 2022 relate to $0.4 million of inventory that was originally reported within other receivables.

21. Assets classified as held for sale

				Year Ended June 30
(US dollars in thousands)	% Owned			2023		2022		2021
Kenshaw Solar Pty Ltd (formerly J.A. Martin Electrical Pty Limited) - ex solar		100	%		-		8,214		-
Total					-		8,214		-

The ex-solar operations of Kenshaw Solar Pty Ltd were sold to ARA on July 1, 2022. As disclosed in note 22, the assets and liabilities of the disposed operation met the definition of discontinued operation under IFRS 5 at June 30, 2022. Accordingly, assets and liabilities of the discontinued operation were reclassified to assets and liabilities held for sale as at June 30, 2022. As detailed in note 22, assets held for sale of $8.2 million as at June 30, 2022 comprised goodwill $5.3 million, intangible assets $2.1 million, property, plant and equipment $0.6 million and trade and other receivables $0.2 million. Following sale completion, the assets held for sale were disposed of, as detailed in note 22.

F- 41

22. Discontinued operation

On July 1, 2022, the ex-solar operations of Kenshaw Solar Pty Ltd were sold to ARA. As the intention to sell and process to locate a buyer for the business was initiated prior to June 30, 2022, but the sale only became definitive on July 1, 2022, the results of the non-solar segment business of Aevitas Solar and adjustments to anticipated net realisable value of disposal assets and liabilities held for sale, were reported in discontinued operations in the year ended June 30, 2022. The associated assets and liabilities of the discontinued operation were presented as held for sale within current assets (see Note 21) and current liabilities as at June 30, 2022. Loss on disposal, including finalisation of sale price, including working capital adjustments on completion, and finalisation of the deferred consideration, are recorded in discontinued operations in the year ended June 30, 2023.

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 June 30, 2023, 2022 and 2021:

	Year Ended June 30
(US dollars in thousands)	2023			2022			2021
Revenues		-			15,168			16,436
Other income		-			324			552
Loss on disposal of business		(4,207	)		-			-
Expenses		-			(16,266	)		(16,895	)
(Loss)/profit before income tax		(4,207	)		(774	)		92
Income tax expense		-			149			(23	)
(Loss)/gain from discontinued operations		(4,207	)		(625	)		69
Net cash (outflow)/inflow from operating activities		(4,207	)		(625	)		69
Net cash inflow/(outflow) from investing activities		-			-			-
Net cash inflow/(outflow) from financing activities		-			-			-
Net (decrease)/increase in cash generated by subsidiary		(4,207	)		(625	)		69

Assets and liabilities of disposal group as held for sale

The following assets and liabilities were reclassified as held for sale in relation to the discontinued operations as at June 30, 2022 and subsequently disposed of in the year ended June 30, 2023:

	Year Ended June 30
(US dollars in thousands)	2023		2022
Assets classified as held for sale
Trade and other receivables		-		239
Property, plant and equipment		-		629
Goodwill		-		5,289
Intangible assets		-		2,056
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		-		91
Provisions - current		-		1,126
Lease liabilities - current		-		157
Provisions - non-current		-		74
Lease liabilities - non-current		-		49
Total liabilities of disposal group classified as held for sale		-		1,497

F- 42

 

	USD 000			AUD 000
Consideration received or receivable
Cash		2,874			4,336
Fair value of contingent consideration		624			941
Less costs to sell		(362	)		(525	)
Total disposal consideration		3,136			4,752
Estimated carrying amount of net assets sold		6,989			10,143
Loss on sale		(3,854	)		(5,391	)

Disposal consideration comprised cash purchase price including completion working capital adjustments of $2.9 million (A$4.3 million). Initial estimate of fair value of deferred contingent consideration of $4.5 million, as recorded in July 2022, payable 12 months after completion, applied a contracted 4.5x multiple to year 1 forecast EBITDA of AUD$2.7 million, discounted at 10% to net present value, less purchase price paid. The final deferred consideration of $0.6 million (A$ 0.9 million) was received in August 2023. Costs to sell comprised advisory fees of $0.4 million (A$0.5 million). Net book value of net assets sold was $7.0 million (A$10.1 million), resulting in a loss on disposal of $3.9 million (A$5.4 million).

Reconciliation of adjusted loss on sale	USD 000			AUD 000
Gain on sale - as estimated at June 30, 2022		34			50
Cash consideration adjustment		378			529
Fair value of contingent consideration adjustment		(3,965	)		(5,548	)
Cost to sell adjustment		(18	)		(25	)
Carrying amount of net assets sold adjustment		(283	)		(397	)
Loss on sale		(3,854	)		(5,391	)

23. Trade and other payables

	Year Ended June 30
(US dollars in thousands)	2023		2022 (restated)		2021
Current trade and other payables
Trade payables		7,725		5,692		4,324
Shares to be issued		2,500		-		-
Accruals		1,321		4,322		648
Related party payable		-		477		-
Payroll liabilities		2,077		2,210		1,413
Sales tax payable		116		949		624
Deferred income		318		974		1,129
Other creditors		540		833		778
Total current trade and other payables		14,597		15,457		8,917
Non-current other payables
Non-current accrued interest		6,129		-		-
Non-current accrued loan and other fees		314		-		-
Total non-current other payables		6,443		-		-

In accordance with IFRS 15 – Revenue from Contracts with Customers, deferred income is presented as a separate line item. Deferred income relates 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. Deferred income is recorded as revenue when the Company fulfils its performance obligations under the contract.

Of the $1.0 million deferred income balance at June 30, 2022, $0.9 million was recognized as revenue in the year ended June 30, 2023. $0.9 million of the $1.1 million deferred income balance at June 30, 2021 was recognized as revenue in the year ended  June 30, 2022. It is expected that the total $0.3 million deferred income balance will be included in revenue in the year ending  June 30, 2024.

Non-current accrued interest relates to interest on AWN related party loans, where pursuant to amendments to loan terms agreed on June 30, 2023, obligations to pay accrued interest on all loans except bridging loans issued after December 31, 2022 are deferred until April 30, 2025. 

The restatement in the year ended 30 June 2022 relates to $0.4m of expenses reclassified from the year ended 30 June 2023 that had not been accrued for in the year ended 30 June 2022.

F- 43

24. Provisions

	As at June 30
(US dollars in thousands)	2023		2022		2021
Current provisions
Employee entitlements		502		635		1,802
Fiscal		1,174
Litigation		-		-		485
Warranty		102		116		209
Remediation		-		353		306
Total current provisions		1,778		1,104		2,802
Non-current provisions
Employee entitlements		76		57		165
Total non-current provisions		76		57		165
Total provisions		1,854		1,161		2,967

Employee entitlements include long term leave and vacation provisions. $1.13 million provisions and $0.07 million long-term provisions relating to discontinued ex-solar J.A. Martin operations were reclassified to liabilities held for sale in current liabilities, as at June 30, 2022.

The fiscal provision comprises a provision in respect of fiscal refunds on prior receivables, which the Company is defending.

The remediation provision comprised additional work required on electric vehicles, comprising a combination of remediation, testing or conversion of drivetrains to 72kwH. No further remediation work is anticipated that is separately identifiable from ongoing capitalized development activities, accordingly the provision has been released in FY2023.

Of the $0.5 million provision for disputed legal success fees recorded at June 30, 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 ended June 30, 2022, whilst $0.1 million remained unused and was reversed in the year ended June 30, 2022.

Warranty provisions in Australia relate to the servicing of generators and is based on a percentage of revenue generated.

(US dollars in thousands)	Employee Entitlements			Remediation			Taxes		Litigation			Warranty			Total
At June 30, 2021		1,967			306			-		485			210			2,967
Foreign exchange		(165	)		(37	)		-		-			(18	)		(221	)
Charged/(credited) to profit or loss:					-
Additional provisions		1,312			84			-					103			1,500
Reverse unused provisions		(35	)		-			-		(100	)		(142	)		(277	)
Disposals and transfers to AHFS		(1,200	)													(1,200	)
Unwinding of discount		6			-			-		-			-			6
Provisions utilized		(1,192	)		-			-		(385	)		(37	)		(1,614	)
At June 30, 2022		692			353			-		-			116			1,161
Foreign exchange		(27	)		8			-		-			(4	)		(23	)
Charged/(credited) to profit or loss:		-			-			1,174		-			-			1,174
Reverse unused provisions		(1	)		(361	)		-		-			(10	)		(372	)
Provisions utilized		(86	)		-			-		-			-			(86	)
At June 30, 2023		578			-			1,174		-			102			1,854

F- 44

25. Loans and borrowings

	As at June 30
(US dollars in thousands)	2023		2022		2021
Current liabilities
Debtor invoice financing		1,329		32		36
Lease liabilities		462		505		669
Shareholder loans		497		4,285		-
Chattel mortgage		89		142		88
Financing agreement		-		-		59
Bank loan		7		145		152
Total		2,384		5,109		1,004
Non-current liabilities
Lease liabilities		1,843		1,959		326
Shareholder loan		28,111		21,121		21,175
Chattel mortgage		50		264		244
Financing agreement		-		108		183
Bank loan		-		-		159
Total		30,004		23,452		22,087
Total		32,388		28,561		23,091

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. 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 a refinancing fee of $0.34 million in two tranches ong June 30, 2022 and December 31, 2022. Security granted to AWN comprised of the Specific Security Deed and the General Security.

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. 

(iii) to increase the interest rate and line fee to 10.00% and 2.00% per annum respectively during the period from October 1, 2021 to the earlier of a) September 30, 2023 or b) the date a minimum prepayment of $1,000,000 is made.

(iv) the initial refinancing fee of $0.34 million is to be amended to accrue incrementally at 1.6% per annum from July 1, 2021 and become payable at the earlier of a) $1.0 million prepayment being made or b) October 1, 2023.

(v) a new fixed facility extension fee of $0.355 million is payable in return for this amendment, to accrue immediately but becoming payable on 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. 

(iii) to extend the increased interest rate and line fee of 10.00% and 2.00% per annum respectively commenced on October 1, 2021 to the earlier of a) March 31, 2025 or b) the date a minimum Prepayment of $1,000,000 is made.

(iv) to extend the initial refinancing fee accruing incrementally at 1.6% per annum from July 1, 2021 and become payable at the earlier of a) $1.0 million prepayment being made or b) April 1, 2025. 

(v) to defer the repayment date of the previous fixed facility extension fee of $0.355 million, becoming payable on April 1, 2025. 

(vi) In addition to previously agreed refinancing fees, an additional $0.855 million fixed refinancing fee will accrue immediately and become payable on April 1, 2025.

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. 

(ii) upon completion by VivoPower International PLC of a qualifying liquidity event of at least $5.0 million, Aevitas is required to make mandatory prepayment of principal and interest to AWN in accordance with the following schedule:

a) proceeds $5 million to $7.5 million - pay 25% of amounts raised;

b) proceeds $7.5 million to $12.5 million - pay $1.875 million plus 45% of amounts raised;

c) proceeds $12.5 million and above - pay $4.125 million plus 50% of amounts raised.

(iii) for the purposes of the mandatory prepayment requirement, a ‘qualifying liquidity event’ excludes direct investments into VivoPower’s subsidiary, Tembo, and debt raised in respect of working capital finance facilities, but includes:

a) equity or debt raise;

b) trade sale of underlying subsidiary or business unit (including, for example, Aevitas and Caret); and

c) loan repayment from Tembo to VivoPower. 

(iv) as consideration for the concessions agreed with AWN, VivoPower International PLC committed to issue AWN with w warrants, with a duration of 12 months, at an exercise price of $0.90 per share.

F- 45

 

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 January 1, 2022. The loan is set to expire on April 1, 2025 (initially set as April 30, 2022, then extended on June 30, 2022, to October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower International PLC of a debt or equity raise of at least $25 million was dropped on June 30, 2023. Facility extension fees of $29,000 (A$40,000) and $43,500 (A$60,000) are payable upon maturity, relating to the two extensions respectively.

On February 22, 2022, a short term $3.0 million loan was provided from AWN to Aevitas, with interest rate of 10.00% per annum payable on the principal sum upon maturity. The loan is set to expire on April 1, 2025 (initially set as May 13, 2022, then extended on June 30, 2022, to October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower of a debt or equity raise of at least $25 million was dropped on June 30, 2023. Facility extension fees of $85,000 and $110,000 are payable upon maturity, relating to the two extensions respectively.

On December 22, 2022, a short term $3.0 million loan was provided from AWN to Aevitas, with interest rate of BBSY bid floating rate (on average 3.60% for the period from inception to June 30, 2023) plus fixed margin of 15.0% per annum payable on the principal sum upon maturity. A 1% facility establishment fee of $30,000 was deducted upon initial loan drawdown, and a further 3% exit fee of $90,000 is payable on expiry. The loan is set to expire on April 1, 2025 (initially set as October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower of a debt or equity raise of at least $25 million was agreed on January 11, 2023, then dropped on June 30, 2023. A facility extension fee of $115,000 is payable upon maturity. 

In February and March 2023, further short term loans of A$0.5 million and A$0.25 million were established between AWN and Aevitas, drawn down between February and May 2023. The loans have interest rate of BBSY bid floating rate plus fixed margin of 15.0% per annum payable on the principal sum upon maturity, with expiry dates of June 30, 2023. 1% facility establishment fees of total A$7,500 were deducted upon loan drawdowns, and further 3% exit fees of total A$22,500 are payable on expiry. On June 30, 2023, the expiry of the loans was amended to August 31, 2023.

Following the sale of ex-solar J.A. Martin operations on July 1, 2022, the J.A. Martin debtor finance facility was cancelled, but a new facility with a limit of A$2.5 million and variable interest rate (initial rate 7.75%) was opened by Kenshaw, as well as a trade finance facility of $0.5 million. The debtor finance facility was partially drawn down at June 30, 2023, with an outstanding balance of $1.3 million (A$2.0 million), due to timing of operating activities (nil: June 30, 2022).  

Lease liabilities have decreased by $0.2 million in the year to $2.3 million, following $0.2 million capitalization of a new right-of-use asset in June 2023 in Kenshaw Electrical Pty Ltd, on entry into a new lease of an additional workshop facility in Newcastle, New South Wales, offset by $0.3 million lease payments in the year. Depreciation expense on right-of-use assets and interest expense on associated lease liabilities for the year ended  June 30, 2023 amounting to $0.4 million and $0.2 million respectively, are recognized in the Consolidated Statement of Comprehensive Income. Total lease payments for the year ended  June 30, 2023 amounted to $0.5 million ( June 30, 2022: $0.4 million)

The obligations under lease liabilities are as follows:

	Minimum Lease Payments									Present Value of Minimum Lease Payments
	As at June 30									As at June 30
(US dollars in thousands)	2023			2022			2021			2023		2022		2021
Amounts payable under lease liabilities:
Less than one year		576			546			683			462		444		669
Later than one year but not more than five		2,223			2,545			379			1,843		2,020		326
		2,799			3,091			1,062			2,305		2,464		995
Future finance charges		(494	)		(627	)		(67	)		-		-		-
Total lease obligations		2,305			2,464			995			2,305		2,464		995

26. Called up share capital

	As at June 30
	2023		2022		2021
Allotted, called up and fully paid
Ordinary shares of $0.012 each	$	307,815	$	255,819	$	222,074
Number allotted		25,651,140		21,318,118		18,506,064
Ordinary shares of $0.012 each	$	307,815	$	255,819	$	222,074

At the Company’s last Annual General Meeting on November 10, 2022, the Directors were given a new authority to allot shares up to an aggregate nominal amount of $180,000.00.

F- 46

 

Movements in Ordinary Shares:

	Shares No.		Par value USD 000		Share premium USD 000		Total USD 000
At June 30, 2021		18,506,064		222		76,229		76,451
Conversion of Aevitas equity instruments 3		2,005,190		24		20,442		20,466
Capital raises 1		82,644		1		243		244
Other share issuance 4		42,000		1		217		218
Employee share scheme issues 2		682,220		8		2,287		2,295
At June 30, 2022		21,318,118		256		99,418		99,674
Capital raises 1		4,230,770		51		5,449		5,500
Employee share scheme issues 2		102,252		1		151		152
At June 30, 2023		25,651,140		308		105,018		105,326

1 On  July 29, 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 were exercised on November 22, 2022.

In a concurrent private placement, the Company 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.

During the year ended June 30, 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, at the market price (an ATM offering), pursuant to an F-3 registration statement filed with the SEC on December 21, 2020. In the year ended June 30, 2022, a further 82,644 Ordinary Shares were issued under the same registration statement. 

2 During the year ended June 30, 2023, 102,252 shares (year ended June 30, 2022: 682,220; year ended June 30, 2021: 792,126) were issued to employees and directors of the Company and consultants to the Company under the Omnibus Incentive Plan.

3 On  June 30, 2021, holders of convertible preference shares and convertible loan notes in Aevitas Group Limited ("Aevitas Group"), exercised their right to convert the debt instruments into Ordinary Shares in VivoPower International PLC. A total of 2,005,190 restricted Ordinary Shares were issued at a contracted price of $10.20 on  July 21, 2021. Of the 2,005,190 Ordinary Shares issued, 1,959,339 were issued to entities owned by AWN, the Company’s largest individual shareholder.

4 During the year ended June 30, 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 27). Share premium has also been recorded in respect of the share capital related to employee share awards.

F- 47

27. Other reserves

(US dollars in thousands)	Equity instruments 1		Preference shares 1			Shares pending issue 2			Capital raising costs 3			Equity incentive costs 4		Share awards issuance 4			Foreign exchange			Total
At June 30, 2021		-		3,270			20,466			(8,828	)		1,422		(971	)		(45	)		15,314
Issuance of shares		-		-			(20,466	)		-			-		-			-			(20,466	)
Share issuance costs		-		-			-			-			-		(1,879	)		-			(1,879	)
Capital raising costs		-		-			-			(122	)				-			-			(122	)
Equity incentives cost less shares issued		-		-			-			-			1,452		-			-			1,452
Other movements		-		-			-			-			-		-			(283	)		(283	)
At June 30, 2022		-		3,270			-			(8,950	)		2,874		(2,850	)		(328	)		(5,984	)
Interest on equity instruments		-		198			-			-			-		-			-			198
Equity instruments payments		-		(149	)		-			-			-					-			(149	)
Capital raising costs		-		-			-			(446	)		-		-			-			(446	)
Equity incentives cost less shares issued		-		-			-			-			147		(154	)		-			(7	)
Other movements		-					-			-			-		-			(104	)		(104	)
At June 30, 2023		-		3,319			-			(9,396	)		3,021		(3,004	)		(432	)		(6,492	)

¹ Equity instruments held at June 30, 2020 were convertible preference shares and convertible loan notes in Aevitas Group which must convert to shares of VivoPower at $10.20 per share no later than June 30, 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 June 30, 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 capitalized 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 $10.20 per share

On August 7, 2020, the Company offered one new Aevitas Preference Share, with an issue price of $10, in exchange for each combined convertible note and convertible preference share, with an issue price of $7 and $3 respectively. Dividends are payable quarterly, in arrears, at a rate of 7%. Of the 2,473,367 holders of combined convertible note and convertible preference shares, 426,528 holders accepted the terms of the new Aevitas Preference Shares and received 426,528 Aevitas Preference Shares (A$4,265,280) on August 31, 2020, in exchange for the combined convertible notes and convertible preference shares previously held. The new Aevitas Preference Shares are subordinated to all creditors of Aevitas Group, rank equally amongst themselves, and rank in priority to Aevitas Group Limited Ordinary Shares for the payment of dividends.

The 426,528 holders which exchanged on August 31, 2020, had earned $26,708 interest on the convertible loan note in the year ended June 20, 2021, up until exchange, and this was paid in full along with $11,447 dividends that accrued over the same pre-exchange period on the convertible preference shares. Post-exchange, $185,480 dividends of the Aevitas Preference Shares were earned in the year ended June 20, 2021, with $121,905 of those paid by June 30, 2021. And the 426,528 Aevitas Preference Shares have a face value of $3,208,922 (A$10 per share), recognized together with the dividends payable.

On June 30, 2021, the remaining 2,005,190 holders of convertible preference shares and convertible loan notes in 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 June 30, 2021 of $20.5 million, was redeemed on that date, and VivoPower International PLC recognized the requirement to issue 2,005,190 restricted Ordinary Shares, based on a contracted conversion price of $10.20 per share.

2 During the year ended June 30, 2021, $20.5 million was recognized in equity for the 2,005,190 restricted Ordinary Shares pending issuance at a contracted conversion price of $10.20 per share. The 2,005,190 restricted Ordinary Shares were issued on July 21, 2021.

3 The $0.4 million of transaction costs incurred in the year ended June 30, 2023 (year ended June 30, 2022: $0.1 million; year ended June 30, 2021: $2.8 million) relate primarily to capital raises on Nasdaq.

F- 48

 

4 During the year ended June 30, 2023, $0.1 million was expensed towards share incentive awards to employees, directors, and consultants of the Company under the 2017 Omnibus Incentive Plan (year ended June 30, 2022:$1.9 million). Amounts are expensed at the award grant price over the vesting period, adjusted for actual quantities upon vesting. Of the expenses recorded, $0.1 million of shares were delivered to participants (year ended June 30, 2022:$1.9 million). During the years ended June 30, 2022 and June 30, 2023, the following awards under the Incentive Plan have been granted, and have vested or forfeit:

	Number of RSUs, PSUs and BSAs (thousands)			Weighted average grant date fair value $000
Outstanding at June 30, 2021		460		$	1,186
Granted		706			1,838
Vested		(755	)		(1,877	)
Forfeit		(132	)		(676	)
Outstanding at June 30, 2022		279		$	471
Granted		912			303
Vested		(356	)		(123	)
Forfeit		(178	)		(320	)
Outstanding at June 30, 2023		657		$	331

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:

	As at June 30
(US dollars in thousands)	2023			2022 (restated)			2021
Loss for the year / period attributable to equity owners		(24,355	)		(22,054	)		(7,571	)
Weighted average number of shares in issue (‘000s)		24,672			20,722			16,306
Basic earnings/(loss) per share (dollars)		(0.99	)		(1.06	)		(0.49	)
Diluted earnings/(loss) per share (dollars)		(0.99	)		(1.06	)		(0.49	)

29. Pensions

The Company’s principal pension plan comprises the compulsory superannuation scheme in Australia, where the Company contributed 10.5% during the year, and for FY2024, the Company will contribute 11%. A pension scheme is also in place for U.K. employees, where the Company contributes 7% (year ended June 30, 2022: 7%; year ended June 30, 2021: 7%). 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 $0.4 million (year ended June 30, 2022: $0.9 million; year ended June 30, 2021: $0.8 million).

30. Financial instruments

	As at June 30
(US dollars in thousands)	2023		2022		2021
Financial assets at amortized cost
Trade and other receivables		6,506		6,921		6,539
Cash and cash equivalents		553		1,285		8,604
Restricted cash		608		1,195		1,140
Total		7,667		9,401		16,283
Financial liabilities at amortized cost
Loans and borrowings		32,388		28,561		23,091
Trade and other payables		16,029		11,324		5,750
Total		48,417		39,885		28,841

The amounts disclosed in the above table for trade and other receivables and trade and other payables do not agree to the amount reported in the Company’s Consolidated Statement of Financial Position as they exclude prepaid expenses, payroll liabilities and sales tax payable, current tax receivables and contract assets and liabilities which do not meet the definition of financial assets or liabilities.

F- 49

 

(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

● Foreign currency risk

● Interest rate risk

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 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 $0.6 million at  June 30, 2023 ( June 30, 2022: $1.3m; June 30, 2021: $8.6m). The ratio of current assets to current liabilities at June 30, 2023 is 0.54 ( June 30, 2022: 0.93; June 30, 2021: 1.82).

Following sale of ex-solar J.A. Martin operations on July 1, 2022, the A$2.1 million J.A. Martin debtor finance facility (drawn down at June 30, 2022: nil; June 30, 2021: nil) was cancelled and a new facility with a limit of A$2.5 million and variable interest rate that is currently 7.75% was established 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 June 30, 2023			Less than						More than
(US dollars in thousands)	Total		1 year		1-3 years		3-5 years		5 years
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)		16,029		16,029		-		-		-
Borrowings		30,083		1,922		12,323		8,447		7,391
Lease liabilities		2,305		462		1,375		415		53
Total		48,417		18,413		13,698		8,862		7,444

Year Ended June 30, 2022			Less than						More than
(US dollars in thousands)	Total		1 year		1-3 years		3-5 years		5 years
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)		10,973		10,973		-		-		-
Borrowings		26,097		4,604		11,283		10,211		-
Lease liabilities		2,464		506		846		1,112.00		-
Total		39,534		16,083		12,129		11,323		-

Year Ended June 30, 2021			Less than						More than
(US dollars in thousands)	Total		1 year		1-3 years		3-5 years		5 years
Contractual maturity of financial liabilities
Trade and other payables (financial liabilities)		5,751		5,751		-		-		-
Borrowings		22,096		411		11,424		10,261		-
Lease liabilities		995		669		326		-		-
Total		28,842		6,831		11,750		10,261		-

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(c) Credit risk

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 June 30, 2023:

● Cash and cash equivalents $0.54 million denominated in AUD, $0.02 million in EUR and ($0.03) million in GBP.

● Restricted cash $0.6 million denominated in AUD.

● Trade and other receivables $3.4 million denominated in AUD, $1.0 million in EUR and $2.6 million in GBP.

● Trade and other payables $5.0 million denominated in AUD, $2.0 million in EUR and $2.7 million in GBP.

● Borrowings $2.9 million denominated in AUD and $0.9 million in EUR.

● Provisions $0.7 million denominated in AUD and $1.2 million in GBP.

Of the total shareholder loan of $28.6 million, $27.1 million is denominated in USD and $1.5 million is denominated in AUD.

(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.

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31. Related party transactions

AWN is not the ultimate controlling party of VivoPower but retains a significant influence. As at June 30, 2023, AWN held a 39.5% equity interest in the Company.

Kevin Chin, Chairman and Chief Executive Officer of VivoPower, is also Chief Executive Officer 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 January 11, 2023, amendments to the related party 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. 

(iii) to extend the increased interest rate and line fee of 10.00% and 2.00% per annum respectively commenced on October 1, 2021 to the earlier of a) March 31, 2025 or b) the date a minimum Prepayment of $1,000,000 is made.

(iv) to extend the initial refinancing fee accruing incrementally at 1.6% per annum from July 1, 2021 and become payable at the earlier of a) $1.0 million prepayment being made or b) April 1, 2025. (v) to defer the repayment date of the previous

fixed facility extension fee of $0.355 million, becoming payable on April 1, 2025. 

(vi) In addition to previously agreed refinancing fees, an additional $0.855 million fixed refinancing fee will accrue immediately and become payable on April 1, 2025.

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. 

(ii) upon completion by VivoPower International PLC of a qualifying liquidity event of at least $5.0 million, Aevitas is required to make mandatory prepayment of principal and interest to AWN Holdings in accordance with

the following schedule:

a) proceeds $5 million to $7.5 million - pay 25% of amounts raised;

b) proceeds $7.5 million to $12.5 million - pay $1.875 million plus 45% of amounts raised;

c) proceeds $12.5 million and above - pay $4.125 million plus 25% of amounts raised.

(iii) for the purposes of the mandatory prepayment requirement, a ‘qualifying liquidity event’ excludes direct investments into VivoPower’s subsidiary, Tembo, and debt raised in respect of working capital finance facilities, but includes:

a) equity or debt raise;

b) trade sale of underlying subsidiary or business unit (including, for example, Aevitas and Caret); and

c) loan repayment from Tembo to VivoPower.

(iv) as consideration for the concessions agreed with AWN, VivoPower International PLC committed to issue AWN with 500,000 warrants, with a duration of 12 months, at an exercise price of $0.90 per share.

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 January 1, 2022. The loan is set to expire on April 1, 2025 (initially set as April 30, 2022, then extended to the earlier of October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower International PLC of a debt or equity raise of at least S$25 million was dropped on June 30, 2023. Facility extension fees of A$29,000 (A$40,000) and $43,500 (A$60,000) are payable upon maturity, relating to the two extensions respectively.

On February 22, 2022, a short-term $3.0 million loan was provided from AWN to Aevitas, with an interest rate of 10.00% per annum payable on the principal sum upon maturity. The loan is set to expire on April 1, 2025 (initially set as May 13, 2022, then extended to the earlier of October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower International PLC of a debt or equity raise of at least S$25 million was dropped on June 30, 2023. Facility extension fees of $85,000  and $110,000 are payable upon maturity, relating to the two extensions respectively.

On December 22, 2022, a short-term $3.0 million loan was provided from AWN to Aevitas, with an interest rate of BBSY bid floating rate (on average 3.60% for the period from inception to June 30, 2023) plus fixed margin of 15.0% per annum payable on the principal sum upon maturity. A 1% facility establishment fee of $30,000 was deducted upon initial loan drawdown, and a further 3% exit fee of $90,000 is payable on expiry. The loan is set to expire on April 1, 2025 (initially set as October 1, 2023, then extended on January 11, 2023 to April 1, 2025). The requirement for the loan to expire upon completion by VivoPower International PLC of a debt or equity raise of at least S$25 million was agreed on January 11, 2023, then dropped on June 30, 2023. A facility extension fee of $115,000 is payable upon maturity. 

In February and March 2023, further short term loans of A$0.5 million and A$0.25 million were established between AWN and Aevitas, drawn down between February and May 2023. The loans have an interest rate of BBSY bid floating rate plus fixed margin of 15.0% per annum payable on the principal sum upon maturity, with expiry dates of June 30, 2023. 1% facility establishment fees of total A$7,500 were deducted upon loan drawdowns, and further 3% exit fees of total A$22,500 are payable on expiry. On June 30, 2023, the expiry or the loans was amended to August 31, 2023.

Mr. Hui is paid fees of $50,000 per annum during the year. Mr. Hui elected to receive 100% of his fees in cash. $25,000 remaining accrued and payable as at June 30, 2023. 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, 6,314 RSUs ($4,736) vested in the current year. A further 20,000 annual retention RSUs ($5,200) were granted to Mr. Hui on January 11, 2023, vesting annually from December 2023 to December 2025.   

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).

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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 A$3,302 ($2,188) dividends on the Aevitas Preference Shares during the year ended June 30, 2023. 

Chairman’s 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. At June 30, 2023, the Company had an account payable of $157,036 in respect of these services. Mr. Chin is a shareholder and director of Arowana Partners Group Pty Ltd during the year ended June 30, 2023. 

As CEO, Mr. Chin is paid £325,000 base fees, £38,000 annual professional development allowance. Of the base salary, 4 months were paid in cash, whilst for 8 months, Mr. Chin agreed to receive payment in the form of 541,666 cashless warrants in VivoPower shares, exerciseable in the period June 3, 2024 to June 3, 2029 at an exercise price of $0.60. Shares issued following exercising of warrants will remain restricted for 12 months. Mr. Chin has allocated these warrants to a benevolent cause, the ASEAN Foundation.

Mr. Chin 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 April 1, 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, 31,456 RSUs ($23,592) vested in the current year. In December 2021, the Remuneration Committee approved an equity award of RSUs in relation to short-term incentives for the year ended June 30, 2022, vesting in June 2023 deferred from June 2022. The award vested 94,291 RSUs ($275,330), based on Mr. Chin's base salary £325,000 x 1.3237 exchange rate x 64% performance measurement / $2.92 VWAP (Volume weighted average price). A further 20,000 annual retention RSUs ($5,200) were granted to Mr. Chin on January 11, 2023, vesting annually from December 2023 to December 2025.    

On November 26, 2021, APG provided a loan of $0.37 million to Caret, 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

An extraordinary general meeting of shareholders was held on July 6, 2023, which included a consideration and approval, in accordance with section 618 of the Companies Act 2006, that the Company (acting by its Board) be and is hereby authorised to consolidate, or consolidate and divide, all or such number of its existing Ordinary Shares of $0.012 each into such reduced number of Ordinary Shares of such increased nominal value as the Company’s Board may at any time prior to 23 October 2023 determine is appropriate in order to ensure that the Company remains compliant with the applicable rules of Nasdaq concerning the minimum trading price of the Company’s shares. The Ordinary Shares existing after any exercise of this power by the Company shall have the same rights and be subject to the same restrictions (save as to nominal value) as the existing Ordinary Shares of $0.012 each in the capital of the Company as set out in the Company’s articles of association for the time being.  This resolution was approved by The Company’s shareholders by no less than 96% of votes cast.

Tembo signed a landmark joint venture agreement with Francisco Motors, the pioneering manufacturer of jeepneys in the Philippines. Under the agreement, Tembo will develop and supply EUV electrification kits for a new generation of electric jeepneys. One of the country’s cultural icons, jeepneys are the most common utility vehicle in the Philippines and the main mode of public transportation, accounting for just over 40% of public transportation in the country. There are more than 200,000 jeepneys on the road in the Philippines, of which more than 90% are at least 15 years old and running on second-hand diesel engines. Under the Public Utility Vehicle Modernization Program, the Philippine Government requires that all jeepneys and other public utility vehicles with at least 15 years of service be replaced with Euro 4-compliant or electric-powered vehicles. This creates a US$10bn+ addressable market for the replacement of the old jeepneys. Francisco Motors and Tembo have already secured their first orders and have commenced work to deliver on those orders. The agreement will also give Tembo access to low-cost assembly in the Philippines.

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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.

34. Ultimate controlling party

As at June 30, 2023, AWN held a 39.5% equity interest in the Company. Since June 30, 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, a company registered in Australia.

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.

35. Prior year adjustments

For the year ended 30 June, 2022, $0.5 million of expenses were erroneously not booked until 2023 that related to services provided in the year end 30 June 2022 for which no accruals had been created. These expenses included $0.4 million professional services but also included $0.1 million equity incentives. The impact was a reduction in the profit and loss of $0.5 million, a $0.4 million increase current liabilities and $0.1 million increase in equity accounts.

For the year ended 30 June 2021, $0.5 million of deposits had been incorrectly classified as intangible assets for which these deposits were refunded in the year ended 30 June 2023. The reclassification resulted in current assets increasing by $0.5 million and an opposite reduction in long term assets with no impact on profit and loss or gross assets.

For the years ended 30 June, 2022 and 30 June, 2021, it was noted that $0.4 million of inventory had incorrectly been classified within other receivables. This has now been corrected with an increase in inventory in both years of $0.4 million and a reduction in other receivables.

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