Half Year 2023 VivoPower International PLC Earnings Call

Good day, and thank you for standing by and welcome to the vivo power International plc fiscal year 2023 half year earnings Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded I would now.

And the conference over to your speaker today.

Jim.

Good morning, ladies and gentlemen, welcome to the veto power half year results presentation for the period ended 31 December 2022.

I'll take you firstly to page three of the presentation.

The executive summary.

So at a headline level, we made very good strategic progress during the half year.

However, our results were affected by seasonal weather and foreign exchange.

Our revenue declines due to project timing.

And a decline in the Australian dollar versus the U S dollar foreign exchange rates.

<unk> revenue decreased 23% year on year to $8 7 million.

This is primarily attributable to timing of project execution with one major solid projects, even Vale undertaken Australia.

Versus two in the prior period.

Skill shortages have had an impact on our ability to take on new projects.

However, on a constant Australian dollar U S dollar.

Change rate basis, our revenue decrease was reduced 17%.

Our gross profit and GP margin also declined this was due to the decrease in revenue as well as one off <unk> project losses.

So half year gross profit decreased by $3 $1 million year on year.

Negative $3 6 million.

This does include $3 $6 million of specific one off weather driven cost overruns on the Eaton Vance solid project.

This was due to climate change related higher than forecast rainfall.

Leading to damage the project works and delays in execution.

<unk> in a reasonable part of Australia, which normally doesn't accounts extensive rainfall that was experienced unfortunately gerry.

The projects.

GP margin as a result declines too.

Negative 42% versus the prior year minus 4%.

However, adjusted for Eden Vale cost overruns.

It was minus 1%.

For the half year, we also incurred EBITDAR.

Operating losses due to principally the one off it and valve projects loss.

So for the half year.

Adjusted EBITDA loss.

<unk> even val.

Actually improved to negative $3 9 million versus $4 5 million negative in the prior corresponding period.

Operating losses did increase to negative $8 2 million versus $7 7 million for the first half.

This fiscal year.

Losses were also driven by foreign exchange not moving favorably.

And reduced revenues in Australia.

As previously mentioned.

With respect to our balance sheet cash position actually increased at 31 December 2022.

From the $1 3 million as at June 32022.

Increased to $3 2 billion assets half year end.

Cash was principally invested 410, both scale up and product developments.

One off Eaton Vance Sola.

Loss was obviously on plans.

We did partially derisk, our balance sheet through the extension of the repayments.

Sam's and duration with our major shareholder AWS.

It's extended the loan.

By 18 months to the first of April 2025.

Strategically we've made good progress as I mentioned beforehand.

So distribution partner network for timber.

We've been able to further.

Expand that globally.

And also have entered into the much larger.

<unk> hand addressable markets.

Our EV kit commitments in order book has now increased to over 10000 kits.

Importantly, the development of next generation electric utility vehicle, which we called <unk> 23 is on targets.

Positive feedback from key customers, who have visits and test driven.

The vehicle.

We also.

<unk> the divestiture of a noncore business JA Matson electrical.

As well as completed further financing and strategic investment initiatives at <unk>.

Great.

Last but not least in terms of the summary, we were named one of the best <unk> in the world for governance.

With verified scored in the top 10% of all satisfied the cops in the world.

And we were again recognized as a top 300 global impact company for the third year in a row.

But the real latest impact awards.

Moving on to page four.

So this covers some of the key items and key developments since the half year ended 30 <unk>.

December 23 two.

So firstly, we've commenced shipping out vehicles to partners and we've also received our first orders for the.

The next generation <unk> 23.

So we are thankful to our key partner in Canada <unk> for.

For our first material order of the <unk> conversion kits.

We are in.

The.

Midst of prioritizing ramping up production over the coming months.

To fulfill this order as well as others that we already have.

Customer deliveries have been scheduled and agreed for <unk>, South Africa as well as the ankle in the UK over the course of February and March 2023.

The first version of the <unk> 23 is on track with regards to testing.

<unk> already covered more than 400 kilometers trouble free with vehicle.

And difficult terrain and.

Now we're focused on extensive preproduction testing.

To define final third party suppliers for the production ramp up.

We've also completed supplier audits for our major component suppliers. So very much focused on the next stage with respect to Teva, which is production and delivery ramp up.

We've also executed on financing and strategic transactions post.

Post the half year balanced states. So we've secured further bridge financing from our major shareholder <unk>.

And Thats been followed by private investment.

Out of the Emirates committed September directly.

For an initial 2 million, noting that view of power still maintains majority control of timber.

These funds will be used for timber growth, including engineering assembly and delivery of conversion kits.

We've also been taking advantage of the.

EV Winter, if you will thats occurred over the last six months and accelerated in the past three months.

To recruit on a selective basis great talent.

From other EV companies, who are either downsizing or.

Or <unk> business.

So.

Vivo parent sambo remain one of the very few E&P companies in the world.

Our in hiring mode at the moment.

We are being very selective about it.

I was saying that.

There is an abundance of talent now available in the markets that wasn't the case a year ago.

Last but not least and very importantly, we are including on the Eden Vale.

Project, which has been clearly very disappointing and has hurt us financially over the last six months.

Given the climate change related to why the patents that we've had.

Had to deal with there.

So at this stage.

We expect to conclude that project at the end of February 20th Phase III, a few days time.

Weather appears to be positive at the moment, so that that should be on track.

In addition to that we're seeing are Ken sure electrical business or spot business as well.

Start to really build up its order book and pipeline.

And recently.

Past few weeks.

<unk>.

Executed a three year umbrella agreements with glencore for reactive and schedule maintenance repair and overhaul.

The sale of critical electric Motors in New South Wales, Australia.

So.

We.

Expect to see further momentum from cancer over the next six months.

Moving on to slide five this is the objectives and key results that we set for ourselves at the start of this fiscal year back in.

July 2022.

We have completed eight out of the 18.

We set for ourselves to achieve.

As I mentioned before very much focused now on ramping up.

Assembly and production as well as deliveries over the next <unk>.

Six months to 12 months.

And we'll be looking to build.

Buildup, our team's capabilities in order to do that.

Jumping ahead to page seven.

I will talk a little bit more about timber so.

In terms of the.

The results for timber for the half year revenues.

Nine mill.

Were achieved.

Underlying EBITDA loss was negative five mill, reflecting growth in Opex investment.

Especially.

Engineering talent.

As mentioned the first version of our next generation <unk> 'twenty three platform.

<unk> available on time in December which is a material upgrade on the previous generation 28 kilowatt hour battery battery system.

Distribution partner network expanded seven with over 5000 additional kits and the commitment and order book pipeline.

And we've entered into the second hand electrification and Repowering markets.

Through.

Deal with <unk> in Kenya as.

As well as.

Deal with evolution in Australia, and New Zealand.

This this is a very significant move for us.

Clearly expands our addressable market considerably.

We've also beefed up the talent pool.

And hyatt's amongst others, a new head of engineering field backer.

Since since December so it's been a lot of progress on the timber fronts.

Both commercially operationally and with respect to.

Sales pipeline.

And commitments globally.

Turning to page eight.

As I mentioned before the big disappointment here has been.

The unplanned and uncontrollable weather dynamic, which.

As terms what was supposed to be a very profitable.

Project for Us at Eden Vale into a loss, making one obviously hurts coming off the.

Hotels are blue cross, which affected our results in the previous six months.

So.

We are very mindful now.

Very cautious about whether patents.

<unk>.

But notwithstanding that we still see a lot of potential for growth in the space given the build out of solar.

Australia.

As I mentioned before the.

Potential business is starting to see a pickup and a rebound in terms of its pipeline and order book and what confidence that that business will.

Continuing to grow and resume its growth over the second half.

Of this year and beyond.

Turning to page nine sustainable energy solutions we.

Have.

Pivoted, our focus in that respect to mining and other industries to augment.

The customers and the partners requirements.

For the Tambo vehicles.

And in that regards.

We have secured.

Some capabilities through experienced advisors and partners.

For example, we have identified and EV charging partner with hardware already.

<unk> tested in collaboration with <unk>. This is a global company.

Distribution contract negotiations are ongoing at this stage.

But what confidence of that.

We will secure that and.

Be able to offer a more holistic solution.

To our customers.

Moving on to page 10.

At solar.

<unk>.

As foreshadowed.

A year ago.

<unk> strategy for this to power <unk> applications, including looking at.

Bitcoin minus.

Obviously, there's been a correction in the bitcoin.

Market, which has slowed things down with respect to.

Our strategy in relation to this portfolio.

However in recent weeks, we've seen a reemergence of interest.

Following the rebounds.

Point price.

In addition to that we've seen interest reemerge can in terms of.

Our solid developers seeking to.

Buy into or partner with us on these projects and this is in response to the inflation reduction Act, which has seen.

<unk> tax credits.

Incentive being.

Being restored in the unit.

States.

So.

Thats.

Wrap up for me in terms of the half year results are disappointing financial results due to.

Weather climate change.

However that said.

That's now.

Stemmed.

And.

Off the back of very strong strategic and operational.

<unk> in the first half with confidence.

Executing on our objectives for the second half of the year.

Thank you everyone for joining.

That wraps up the half year presentation for vivo Pal.

Thank you.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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