Ladies and gentlemen, thank you for standing by and welcome to VivoPower International PLC FY2022 Half Year Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would like to turn the conference over to your host, Mr. Kevin Chin. Please go ahead.

Thank you, and welcome everyone to the half year results presentation for VivoPower. Let’s jump straight to Page 4. The executive summary so headline is we've made good strategic progress over the last six months, but our results have been affected by extended COVID lockdowns in our key markets, particularly Australia. So the six month revenue decreased 11% year-on-year to $18.9 million, reflecting the lockdown regime that we had to contend with principal in Australia which extended from July 21. And really just has finished now in February 22. And that's caused delays to scheduled works for the Aevitas business units, as well as significantly curtailing kit deliveries has dropped. Our gross profit and GP margin both declined as a result of the revenue drop. And in additionally incurred $1.1 million a one-off COVID-driven loss on the Bluegrass solar project in Australia that was principally due to the Queensland border closure, which prevented us from sending staff up to Queensland. And additionally, we had a COVID outbreak on south, unfortunately in January as well. EBITDA wise, our adjusted EBITDA declined to minus $4.9 million versus positive $1.2 million from previous corresponding period. Our operating loss increased to $7.3 million versus $0.4 million for the prior year. So this reflects the drivers I mentioned before in addition, we've also increased corporate costs and invested in growth OpEx that's worth scaling up in particular, the Tembo business. In terms of balance sheet cash that's declined from $8.6 million to $3.3 million, reflecting the investment the Bluegrass loss as far as the increase in OpEx costs. But that has increased post balance data as we started to see data collections come in as well as some strategic funding that we've received from the major shareholder. As mentioned, key strategic initiatives, we have executed upon a number of those over the last six months despite the disruptions that we've had to deal with. We've expanded our distribution partner network to six continents, our recently established subsidiary in the UAE, which is the largest off-road market in the world. We've also prioritized the developments of 72 kilowatt hour battery kits which is a significant upgrade on the previous 28 kilowatt hour and we've achieved full control of us solar joint and has foreshadowed at the full year results presentation in August last year. We have now entered some LOI to launch renewable powered digital asset mining business, Caret Decimal and we've contributed an initial 206.5 megawatts DC from our solar portfolio at evaluation of $20 million, which is really above the book value of $12.1 million for the entire portfolio. Last but not least and importantly, we have been recertified as a B Corp. That's a difficult process. So following the mandatory reassessment review, we're pleased to have been recertified and happy also to have been recognized again as a top global impact company for the second year in a row. Moving onto Page 5. So wanted to also go through some updates from post 1st January so firstly on this front, as mentioned difficult last six months but pleasing uses that are ahead of work is actually up 72% year-on-year versus this time last year, reflecting pent-up work and additional projects in the solar data center and infrastructure sectors. Cash flow is also improving with material cash in-flow since mid-January, as mentioned. On the Tembo front so we've secured a new facility. So we'll be moving to an expanded facility next to Eindhoven airport on the 1st of May. The new facility comprises just under 30,000 square foot of space which is more than double the current facility and can potentially accommodate assembly of up to 5,000 e-LV kits per annum that is however subject to the micro factory strategy that we're working on at the moment in relation to how best to scale up assembly on a global basis going forward. On a couple of the collaborations that have been outstanding TMCA and Artic Trucks. So firstly on TMCA that collaboration has experienced delays but negotiations in an agreement with TMCA for the exclusive supply of LC kits focused on the mining sector in Australia remain ongoing. The Artic Trucks LOI has been extended to end of June and to allow time for further assessment of the next-generation batteries. We continue to work on non-dilutive funding, work streams and have made good progress in that regard. So the key ones there, firstly, in the UK, R&D tax offsets work up to 33% of R&D spend and there are other UK government mobility, automotive innovation and green grants that we qualify for. So going through a process there in terms of getting access to those funds. In the EU, we have access to the European Innovation Council granted up to $2.8 million and there's also potential equity investment. So it's a fund scale up cost of up to $17 million. And last but not least in a global scale. And this is the most important aspect of funding, which is working capital. There are numerous facilities, data finance, supply chain and trade finance, some of which we've already secured, but we continue to work to build that up. So as I mentioned last year funding through the equity markets is not something we will look to do especially given where current share price levels are at, after market sentiment is that and there are other leaders being these ones I've talked about so that we're primarily focused on. Next slide on the GB Auto LOI is being expanded for now there's been disruption on our end since December that's caused delays to the due diligence program. So that extension is expected to provide a buffer for any further disruption. And last but not least, Caret Decimal has also executed the LOI to acquire Decimal Digital, which is a partner on the digital asset mining side. And that will deliver over 1,000 latest generation mining weeks that will be for initial consideration of $14 million and will accelerate the part to revenue generation for Caret Decimal. So fundraising has already commenced that the Caret Decimal level, again, this is not at VivoPower level with capital raising advisors engaged to raise $15 million for us on that front. And as mentioned last year, ultimately we see this business potentially spinning off and out of VivoPower. Going on to the next slide. These were the objectives we set out back in August last year when we announced our full year. The keys items of what we’ve completed, we are just in progress. We remain on track despite disruptions to date and to get as many of these objectives done before the end of our fiscal year in June. So now moving on to the specific business units, and I’ll take you to Page 8, which is Tembo electric vehicles. September revenues were up versus last year $0.9 million. However, impacted and lower the budget due to operational disruption and delays in assembly and delivery of kits. Underlying EBITDA loss of $2.3 million, as mentioned, reflects primarily growth in OpEx investments and work is progressing on the next generation 72 kilowatt hour battery platform. Moving on to critical power on Page 9 and unpacking the numbers a bit more. So the Aevitas business itself recorded $18 million in revenue, which is down 14% year-on-year really due to sort of the effects of very long and sort of hard lockdown in Australia. Gross profit was down to $0.8 million versus $2.3 million in the prior year. That does, however, include a one-off of $1.1 million for the Vivo Solar project, so excluding that it would’ve been $1.9 million. Underlying EBITDA excluding Vivo is $1.3 million. We remain very positive on this business going forward given the head of works that I mentioned and given that Australia for all business purposes is now open. There are no more intercountry in each states lockdowns of notes, except for Western Australia, which has announced that it was finally reopening in early March. And also international borders are now reopened. That took effect from Monday the 21st, so three days ago. We’ve been awarded to electrical works for 119 megawatts in Hillston Solar Farm. So that’s been very positive development in the last few weeks as well. Moving on to Page 10 with respect to SES, this is obviously a new established segment. So revenues are immaterial at this point, and we’ve not incurred any significant cost to date. We are on track with Tottenham with respect to what they want to do at their training ground and adjacent to the stadium. And in addition to that, we’ve commenced dialogue with major mining and board infrastructure companies to commence feasibility studies for whole of facility electrification projects that could lead to not just vehicle kits being ordered, but also microgrids charge stations et cetera. We also signed MOU with new electric car, a leading supplier of battery energy storage systems utilizing second life EV batteries. And we are collaborating further to explore redeployment of tender batteries with reelectrify. And last but not least, we’ve now developed tools to allow total cost of ownership and ROI to be assessed at a more sophisticated level for our customers. Going up to Page 11, which is Caret Solar which is the name for our solar business in the U.S. And that’s been rebrand – that’s been rebranded and a power to our strategy, which was for shattered last year as progressed. We’ve also mentioned, contributed 206.5 megawatts of more advanced projects out of the 682 that we have to Caret Decimal at evaluation of $20 million. We’ve also commenced reassessment of previously market projects, they total about 1.1 gigawatts. And so we’re reevaluating the development. What we’re seeing across the U.S. is a very strong interest in renewal the power sites including from crypto hosting companies who at the moment are facing lead times of 12 months plus to accommodate future customers, wanting to mine crypto on their platforms. So they’re looking for more sites. We’ve had a number of parties approach us, but we’re very much focused on the Caret Decimal opportunity and fundraising at that level at the moment. The next few slides, Slides 12, 13, 14 and 15 show you some schematics of the three initial sites that we are looking to develop. They’re all in Texas. So there’s TX 145, TX 144 and TX 165 all relatively close to each other. One of those sites also has the option, it’s a significantly upsized the load which will create incremental value. And on Page 13, 14 and 15, you can see the design schematics of these sites. So they’re practically ready to build subject to financing being completed. And we would look to commence construction later this year. So these sites, primarily comprise the solar array that you can see as well as data centers to house leaks and all very strategically located. Now moving on to the financial review, I’ll take care of that as well. So going on to Page 17, this unpacks the P&L further. So you can see there the numbers that I’ve sort of shared before in terms of both critical power and electric vehicles and all sort of cascading down into liquid cross profit level of $0.5 million. But that is an optimal $1.1 million one-off loss attributable to Bluegrass and compares to $3.3 million in the prior year. And that again cascades down into the underlying EBITDA of negative $4.9 million versus $1.2 million for the previous corresponding period. So again, as mentioned looking for a rebound now in terms of the – particularly, the Aevitas business and being unshackled on the EV side as well. What we will have to, however navigate is supply chain issues. So just like everyone else, we’re starting to see that really come to the full. So that is something we’ll need to navigate. Next two slides are really just a reconciliation of adjusted EBITDA and adjusted EPS to IFRS financial measures. And then on Page 20, the last slide is set out that the balance sheet. So as mentioned the first line item, the project investments that represents principally Caret for which there’s $13 million of caring value and unrestricted cash of $3.3 million as of the balance state as mentioned, that’s now increased. And with respect to borrowings, that’s increased slightly as at the balance date, so translating into a net debt figure that that is now $21.9 million versus $14.5 million. Important to note that there’s practically no external debt per se, this is all shareholder lines from the larger shareholder who’s been very supportive of VivoPower for a number of years. So on that note, I think key takeaway it’s been tough six months. We really felt like we’ve been running against the hard wind but very pleased now to have broader restrictions and lockdowns removed in our key markets and some positive developments in the post balance state period in terms of pipeline, in terms of cash, in terms of fund and in terms of strategic developments. I’ll end on that note. So I’m happy to open it up to Q&A. Thank you all for tuning in.

Thank you, Mr. Chin. [Operator Instructions] First question comes from the line of Jeffrey Campbell from Alliance Global. Your line is open.

Hi, Kevin. I noted the Tembo roofline expansion in the Netherlands of interest. I wondered if there’s still interest in creating Tembo facilities closer to Southeast Asia, Australia.

Definitely, definitely is. And I think I’ve mentioned that Thailand was one market that we had looked at in the past. We’re very close to relationships with some of the leading families in Thailand as well as we have government officials. Thailand’s got a very good automotive ecosystem. So the Thailand has also been closed. And they are just starting to reopen again, so definitely we’ll look at a micro factory strategy close to our key markets. And we see the United Arab Emirates as another potential location. So Netherlands is not the only site that we’ll be looking at.

Great. Thanks for that color. I’d like to ask a couple of Caret questions and then I’ll be done. The Caret Decimal press release indicated that the primary endpoints for developing the 206 megawatts of solar power was cryptocurrency mining and other power intensive blockchain computing applications. Could you add some color on these other blockchain applications that’s referring to?

Yes, no problem. So yes, you see Caret Decimal is principally an infrastructure business underpinned by the renewable sites that that we have and the data centers that will be built on them. And in future, this will accommodate not just crypto mining and if you look at blockchain, it’s really the blockchain and the process of cryptography that is very energy intensive. And the way I look at it that there are basically three Cs in terms of segments of blockchain. So one is crypto, is it a crypto mining? Two is content. And you can include, NFTs in that you can include VR, AR, the metaverse and all the sort of products that are being developed. They’re all very energy intensive, and then last but not least contracts. So three Cs, crypto, content, contracts, contracts being smart contracts and numerous Fortune 500 companies and leaders globally are now getting into smart contracts in a big way. So that is also very energy intensive. So what we’re looking to do is create an infrastructure that goes beyond this crypto mining that is able to effectively be a HBC facility that accommodates other applications such as what I just mentioned.

Okay, great. And, and finally, bearing in mind that crypto’s undergone increasing U.S. regulatory scrutiny lately, and I refer to metas recent failed effort as an example, how does your strategy, your current strategy take this into account and should something untoward change? What do you think of as the best backup uses for the infrastructure that you're developing, should crypto somehow become uneconomical or regulated in some way that makes it less attractive than it is now?

Yes. Good question, Jeff. Our own view is that crypto will be regulated. And that's not necessarily adapting. However, to your point, there is a risk that renders it uneconomic for mining. But that sort of goes back to our strategy, which is really, this is infrastructure that's designed ultimately for blockchain applications and related high energy intensive computing applications as well. So you can see from the designs there that there are data centers in place, adjacent to the solar arrays. And these sites are very strategically we can see, one of them is very close to it, Tesla substation and ultimately our view is, and our strategy is to do these things so that they're not dependent on crypto mining, just so happens that crypto mining is the highest and best use for now. But there are multiple use cases for these sites even without crypto. The trend here is the mega trend is not just crypto mining, but blockchain and other high energy intensive computing applications.

Yes. I appreciate that color and I'm not sure that a lot of investors really appreciate that. Blockchain is actually quite mature. I mean offshore drillers were using a blockchain to pull together all the disparate parts that go onto a drill ship or onto a production platform four, five years ago. So yes, I appreciate that answer very much. Thank you.

Yes. I mean, spot on Jeff and today call it, the computing or high performance computing industry contributes to 3.7% of global emissions has compared to say the mobility, including the auto industry, which is north of 11%. That's the highest in production of steel and iron ore is number two. I think HPC computing is going to be the fastest growing in terms of emissions. And with the amount of content that's being generated for online consumption, whether it's metaverse, or even with Netflix and the sort of computing power associated with that, and the energy intensity of that, that's not sort of widely understood.

Yes, that's a great point. I mean, we didn't really hit our question that way, but I'm certainly seeing increasing ESG scrutiny of computing in general, data centers in general, and crypto and the rest. So what you just said makes perfect sense. Thank you for the color.

No worries. Thank you. Happy to take other question as well.

Thank you. [Operator Instructions] I’m not seeing any further question at this time. You may continue Mr. Chin.

Thank you. Well again, thank you everyone for joining. I know there's a lot going on in the world at the moment. So I appreciate the time and I wish you all well. Let’s close this meeting now. Thank you.

Thank you everyone. This concludes today’s conference call. You may now disconnect.