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spk01: Good day, and thank you for standing by. Welcome to the Vivo Power International PLC Fiscal Year 2022 Full 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 like to hand the conference over to your speaker today, Kevin.
spk03: Thank you, Victor, and welcome, everyone, to the F.22 conference. earnings call for a beautiful deal. We'll jump straight into slide two, which is the executive summary. So in a nutshell, we've made significant strategic progress over the last 12 months, but we've had to contend with quite a few headwinds, including lingering COVID effects on our businesses in Australia, as well as foreign exchanges. So going through key points, firstly, revenue declines to 37.7%, primarily attributable to these COVID lockdowns, which we previously flagged as a half-year result, which unfortunately did extend through the majority of periods over the last six months as well. That caused delays to distribute works for our businesses yesterday. In addition, there's been a sharp drop in the exchange rate on a constant effective basis. Our revenue declined by 3% year on year. In terms of gross profits, this includes the discontinued operations. They decreased by $4.7 million to $1.4 million for the same reasons I mentioned before, and in addition to that, In particular, we had a $1.9 million cost overrun on the bluegrass project due to interstate border closures in Australia. Our GDP margin declined to 4% versus 16% year-on-year, and this in turn reflects increased compliance costs, increased supply chain costs, as well as the one-off bluegrass solar project GP margin adjusted for the cost overruns for bluegrass was 9% for FY22 and excluding the discontinued operations was 10%. EBITDA including discontinued operations declined to 10.4 mil loss versus 1.4 mil loss in the previous year. Operating losses widened to 14.6 mil versus Again, this was driven by FX, the reduced lockdown period revenues in the first half of the year, and the Bluegrass Solar project overruns. We did progress with budgeted increase in growth OPEX to support high-performing business. In terms of our cash balance, as at year end, it was $1.3 million, down from $8.6 million in the previous year. However, post-balance date, we replenished this to $8.9 million. That was because of the sale of the non-core business units, as well as the shelf-raising we did in July. In terms of uses of cash during the year, we were quite judicious in terms of how we invest cash for TEMBO scale up in product development. That said, we did incur, as I mentioned, 1.9 mil in one-off bluegrass solar costs that were unplanned and beyond our control. We did execute on a number of transformational strategic initiatives despite significant disruptions. In terms of our distribution partnership network, we expanded that six continents and 50 countries with EV commitments and orders increasing to over 8,000. Very importantly, we secured a commercial design services agreement with Toyota Australia with prioritization of the developments of the next generation for what our and version 2 battery conversion kit as the key focus. We divested non-core businesses within a business and enabled proceeds to be reinvested in our higher growth business. And we also established Vivo Power and Tembo two-series operating units in markets globally. As soon as borders reopened, that included the UAE, as well as South Africa. Last but not least, we recertified our B Corp status, which is a mandatory requirement from B Corp in terms of a reassessment. We were named again as one of the best B Corps in the world for governance and 100th year in a row.
spk04: by the related impact rules.
spk03: Turning to slide three, this is a recap of the year and as well as an update on some of the prior announcements that we made. So significant strategic and operational progress, key achievements included during the definitive agreement with Greater Australia, as well as with DHH and BODIS. and winning record levels of solar electrical solutions contracts in Australia. Just going specifically to some of the previous announcements and updates on those, we had acquired full control of the US solar portfolio. We rebranded that back in August of 2021 and pivoted to a power-to-air strategy uh with a view to uh then a renewable powered digital asset mining uh operation to be spun off company uh that is on hold at the moment due to marketing uh so uh obviously there's been a lot in terms of mining we have uh put that on hold uh Other updates, we executed an LOI to acquire 100% of GB Auto on a consensual basis to cease that LOI, as well as the distribution agreement. And that's basically because Jimbo is now directly and we will proceed to selling directly in our own rights. As I said, GB Auto remains a trusted and valued partner as well as a subcontractor. We will still be working with them in terms of the recognition of kits for the mining sector. Elsewhere, as I mentioned, we've established subsidiaries and operating units now for Tembo in key markets globally. That is very much a focus and a priority going forward in terms of scallop assembly and production capabilities in key markets around the world, close to our customers. It doesn't make a huge amount of sense to assemble and manufacture out of the Netherlands and send it to far away in Australia or Asia or Africa for that matter. So that is a real focus. Going to the next slide, in terms of key objectives that we set out at the start of the fiscal year back in July last year, we've delivered on 13 out of the 18 objectives that we've set. In terms of the ones that are still outstanding, assembly and production is still to be executed upon. It's been a challenging period with legit blockchain issues around the world. I mentioned it and to do scale-up production out of Holland to send kits around the world. So we have been producing and sending kits out. They haven't hit the up stage in terms of volume. The other area where we have had slippages to the right is in terms of the SDH business unit. So we created feasibility studies for a partnership. That said, in terms of building our engineering and sales teams, we've not yet. Priority has been very much on the EV side of things. focus our resources and attention on that front. That said, on a post-balance date basis, we have executed a couple of investments in joint ventures to increase our capabilities, and that includes an investment in a Australian mining energy storage company called Green Gravity.
spk04: On to the next slide.
spk03: This is a quick update in terms of the team. So we've been focused in the last six months on reshaping the team for the next phase of strategic execution. And our HR strategy in that regard has three objectives. Number one is orient leadership team to capabilities in operations, product, engineering, assembly, as well as manufacturing. We've also wanted to strengthen our safety quality development testing capabilities in Tembo. And we have also executed on middle office and back office functions to help us to scale that level. Some of the key hires that we've made during the year, Alan Evans has joined as Tembo Head of Quality, Nathan McCormick as Tembo Head of Functional and John Diego Bannon, who's with me on the call today, as Viva Power's head of global development also joined recently. Key promotions, Matthew Nestor has stepped up to the head of global partnerships. He's taking over from Matt Carr, who's been instrumental in really getting Viva Power and Tembo to where we are today. will be leaving to focus on personal matters and NET is taking the baton and has been really instrumental in driving all the partnerships that we have here today. Gary Chaloner has been promoted to Group Chief Operating Officer and done a great job, particularly in relation to the Toyota relationship as well as helping to internationalized though it's mindset as well as focus. And Ian Foley has been promoted to financial controller in the Asia Pacific region. He's been overseeing the Avitis operations in particular. So his impact and growth in America. Onto the next slide. We, as I mentioned, retained our B Corp and have been recognized again for global impact leadership. Importantly, we were named one of the best B Corps in governance by B Lab UK, and this is a very important attribute as a group. Moving on to page seven, just delving into the numbers a bit more. So in terms of the Ovidus critical power operations, you'll see there a breakdown between the discontinued as well as retained operations, which include the fast-growing solid segment. The operations account for $2.2 million of revenues and that in terms of So Group GP declined, as you can see, from 6.3 mil to 1.6 mil. That includes the 1.9 mil of cost overruns on the bluegrass project. And in terms of dusted underlying, as mentioned, widened from 1.4 to 6.4 mil over the last 12 months. Moving to the next slide, so just breaking down further the P&L from a basis and reconciling that to continuing operations. So for FY22, you can see there that account of $15.2 million of revenues, GP attributable $1.3 million. For continuing operations, 22.4 mil was the revenue. And if we exclude the bluegrass, one of them was 2.2. If you look back at the prior year, which was less COVID affected, you can see there that continuing operations, 24 mil, Ross, 4.4 mil, which is around 18%. mentioned in previous announcements, we decided to sell the distilled operations to really reinvest in the fast growing segment, which includes the solar electrical solutions business unit in Australia. So that's been retained. As a word of note, the P&L after-tax figures here are not really representative units.
spk04: post divesting the non-core operations. Next slide, I won't go through in detail.
spk03: That just shows the reconciliation to underlying EBITDA from net loss, but we had quite a number of non-core operations, including foreign exchange.
spk04: Similarly, on the next slide, page 10, I won't go through that in detail either.
spk03: Going to the balance sheet on page 11, so project investments increased from $4.5 million to $16.4 million. That includes intangible development costs that have been capitalized in both Carrot as well as Kimbell. We had our cash balance decline from $8.6 million to $1.3 million, but on a post-balance date on a basis, it's been replenished to $8.9 million. In terms of net debt, that increased from $14.5 million to $13.3 million. On a pro-forma basis, however, that increased to $19.7 million.
spk04: And most of that in terms of debt is attributable to the shareholder loan from Andrew and colleagues, which is, as mentioned before, a very supportive shareholder as well.
spk03: Going to the individual business units, so firstly for Tembo, we made significant progress during the year, but deliveries have . The outlook remains very positive. We get approached on a daily basis by people seeking to convert . And we are, as mentioned, from a focused perspective, prioritizing the release in early calendar 2023, and we expect to go into scale-up production release of that kit for late 2023. We're very much focused on continuing execution with respect to our microfiber practice, and the rollout of the e-microscope. We have identified the UAE, Southeast Asia, and markets to launch these micro-factories. In addition, what we're also doing is opportunistically recruiting world-class EV talent that has become available as a result of the headcount reductions that are going on at many other EV companies. The capital that we've raised enabling us to attract talent would not have been available if we rewind 12 to 18 months ago. So we are taking advantage of the markets and the other EV players to add to our talent base. One development in The Middle East, just a flag is that we have signed a MOU with a Jordanian state-owned enterprise, which involves 1,000 EVs. And so, you know, our president of the UAE last year is starting to pay for it. With regards to Toyota, that's a partnership in relation to this news, and we're very much enjoying working with the Toyota credit team and looking to hit the mutual objectives that we've set. Protected Australian lockdowns very much impacted our results, but the outlook is very positive. There is an unprecedented pipeline of over 27 gigawatts of solar farm projects being built across Australia at the moment, and this has been void by the election of a new federal-led parliament in May 2020, who are very supportive of towards more renewables across Australia. We are very much experiencing a green rush, if you will, in Australia, very much the old rush of the 19th century. And we are targeting for our solar electrical solutions business to deliver revenues exceeding the revenues that were contributed by the investors. In terms of compounding growth rate, that solar electrical solutions business has grown 50% year-on-year since 2019, and we have a very strong pipeline with significant opportunities to take advantage of it. Looking for that to contribute in excess of what we've been able to do. In terms of SES, we have decided to focus on the mining sector, augmenting our TEMBO EV, as well as other industries. So we're seeing an increasing number of SES opportunities for small customers to see fleet electrification solutions. And all the stations have now pivoted to not just but also on-site critical power EV charging, EV maintenance, energy storage, microgrids, battery recycling as well. So we're focused on expanding our capabilities through partnerships and joint ventures. And as mentioned before, we've made a seed investment in green gravity and energy storage in Australia focused on the money. And that will help expand our capabilities as well as In terms of carrots, we created incremental value over the year through development activities, but very much feel there's more to come from the Inflation Reduction Act, which is very positive for carrot solar. There is a renewed focus on data infrastructure, including mining. And we are seeing more inbound interest in partnerships involving our various solar projects. And so notwithstanding the digital asset mining correction that we've had over the last six months, we are still looking ahead with our power to extra energy, albeit time that appropriately as far as the investment. Overall, the plan is to spin off this business unit and to reinvest the proceeds into our core EV as well as our SES and solar equipment. Turning to FY23 and our key objectives, so focus is on scale-up assembly and production for a combo EV kit. I won't go through every single item here, but there's 18 items that we're targeting on. And the microfactory is a key element and a key enabler of the scale-up assembly and production. Just to touch on page 17, advanced post-management year-end. So we've got a solid importance up to FY23. So we secured a thousand new kits in terms of EV commitments from the Jordanian state-owned enterprise, as I mentioned before. We have, however, put on pause the Arctic traffic LOI, given our need to very much focus on the Toyota Australia and Land Cruiser. Arctic trucks focus on pilafs, which we very much need to electrify as well, but even resource and time commitments, we do need to focus on Toyota Estrella as well as the Land Cruiser, which is what most of the distributors and customers want. Obviously executed on strategic transactions to bolster our cash balance at 8.9 million in divesting the non-core units as well as competing with offering on NASDAQ. We are capitalizing on opportunities to hire world-class EV talent and take advantage of the many EV winter that's happening with many other companies at the moment. We're one of very few that are still in hiring mode, so we're doing it on a very collective and judicious basis. Very importantly, we secured important ESG certifications and awards. We've reorientated the GB auto relationship, as mentioned, this involves to acquire GB Auto, but they very much remain a valued and preferred partner for subcontracting services. And last but not least, we've engaged advisors in relation to Carrot spin-off. The Inflation Reduction Act is real positive and we're looking to spin off Carrot as a power to exit the business.
spk04: reinvest the proceeds back into Viva Power. That's it for my presentation.
spk03: There have been a number of questions sent through, and with the audio, I might just address those questions that have come through. One of those questions is, if EVs and underground mining is relatively new, is VIVO involved with helping write safety guidelines for electric vehicles and underground mines through approved trials? If not directly involved, are you working with such as the Global Mining Guidelines Group? Are you up to date with new guidelines so that customers can find or certify it with current guidelines? The short answer is yes. We have one of the world's foremost mining safety experts advising us in relation to safety requirements for mines, particularly underground. So yes, we are deeply entrenched in terms of ensuring that electric vehicle conversions are safe. That is the absolute number one priority and consideration for customers in the mining sector, as well as for us. The second question is, does the 70 series have digitalization features to allow for location and there's capability to help an engine vehicle to lead to an inside mines? And what are you doing to make sure you're on top of technology within the mines as battery electric vehicles are being used more and more? Are you looking for ways to create new technologies or making sure the technologies are compatible with mining technologies? This is a great question, and the short answer is yes. Some of these theories can accommodate digitization features that allow for geolocation, status tracking, and that is very much data that's important for the miners. And in terms of our software, including telemetry, this very much is designed to capture some data. And yes, we are always looking forward to create new technologies, new IP. And so the short answer to that is yes. Next question is, knowing the demand for the 70 Series is high, combined with supply chain and semi-converter coordinates, is still having ripple effects. How's the Toyota pause on the 70 Series affecting your production? Have there been conversations with Toyota to produce only the necessary components to speed up the installation? Could something like this help Toyota to ship the semi-series out faster? And is this a possible solution to help streamline production? Again, a great question. Obviously, Toyota is the gatekeeper in terms of releasing vehicles, their own vehicles, and with respect to the semi-series, I think we can say without breach of confidence, we are comfortable in terms of what's available to meet short-term requirements, especially in Australia, where most of the demand is coming from at the moment. And we will continue to work very closely with Toyota to ensure mutually that our approach are met. So at this moment, we don't see any in the short term. And I think in terms of medium term, we're all expecting that the supply chain and semiconductors coming on stream, particularly semiconductors. So short-term, we don't envisage a real issue. Medium-term, yes, it's continued upon supply chain. Next question is, can you confirm or deny whether the Tembo kits broke during testing? And this, I think, came out in a report a few months ago. Again, without sort of breaching confidences, we have not put out a statement to deny that, nor has any other party involved. So, yeah, I think we're very confident and you know, say that one Land Cruiser has it inside, it becomes a very powerful animal. You know, the torque is amazing. And for those who are into off-road driving, as I am, you would appreciate the effect of EV torque on an off-road vehicle. Next question is, you know, when are you expecting to buy shares? I made... commitments that I would. Unfortunately, or perhaps fortunately, I have been not able to because of information that we've had for most of the last six months where we've had deals and transactions in our agreements that have been delayed in terms of being able to announce and therefore not being able to buy. So I have committed for my salary to be directed And once we're in an open window, I will be buying. So that has changed. As I mentioned before, it's very much a long mission that the team is very determined to
spk04: successfully deliver on and to customers and the impact those were the key questions I think we'll wrap up on that basis obviously if there's questions feel free to reach out to
spk03: the shareholders that give up hours of mine. We have a dedicated person now building that.
spk04: And thank you for joining the call.
spk02: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.
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