Verditek PLC Annual Report 2021

FY2021 Annual Report · Verditek PLC

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Registered in England and Wales number 10114644

Verditek PLC

Group Annual Report and Financial Statements

Year Ended 31 December 2021

CONTENTS

2021 HIGHLIGHTS ................................................................................................................................ 1

CHAIRMAN’S STATEMENT........................................................................................................................... 1

CHIEF EXECUTIVE’S REVIEW ........................................................................................................................ 3

STRATEGIC REPORT ..................................................................................................................................... 6

FINANCIAL REVIEW ..................................................................................................................................... 8

PRINCIPAL RISKS AND UNCERTAINTIES ....................................................................................................... 9

GOVERNANCE .................................................................................................................................... 13

BOARD OF DIRECTORS .............................................................................................................................. 13

CORPORATE GOVERNANCE REPORT ......................................................................................................... 15

AUDIT COMMITTEE REPORT ..................................................................................................................... 20

DIRECTORS’ REMUNERATION REPORT ..................................................................................................... 21

CORPORATE AND SOCIAL RESPONSIBILITY ............................................................................................... 23

DIRECTORS’ REPORT ................................................................................................................................. 24

STATEMENT OF DIRECTORS’ RESPONSIBILITIES........................................................................................ 27

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC ............................................. 28

FINANCIAL STATEMENTS .................................................................................................................... 34

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ................................................................... 34

CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................................ 35

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................. 36

CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................................................... 37

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ....................................................................... 38

COMPANY STATEMENT OF CHANGES IN EQUITY ..................................................................................... 63

NOTES TO THE COMPANY FINANCIAL STATEMENTS ................................................................................ 64

OFFICERS AND ADVISERS .......................................................................................................................... 70

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

2021 HIGHLIGHTS

 During 2021 Verditek launched its next generation panel with a power output of 340W

 Verditek worked with partners to manufacture solutions that incorporate its semi-flexible solar panel

product

 Verditek agreed a new joint development project with Paragraf, with a focus on commercialization of

graphene solar cells

 Revenues for the year were £107,632 (2020: £21,521) with a loss after tax of £974,079 (2020:

£2,324,121)



Corporate bonds issued during the year contributed £353k cash

CHAIRMAN’S STATEMENT

The year to 31 December 2021 was one of commercial challenge for Verditek. Although there has been a modest
growth in sales and a focus on building repeat customer relationships, the conversion of pipeline projects was
lower than anticipated, as customer capital projects were either postponed or cancelled due to the ongoing impact
of the global pandemic. Production was correspondingly scaled back at the start of the year in order to focus on
fulfilling orders.

Operationally there was a focus on developing the lightweight semi-flexible solar panel product, improving the
quality of manufacturing processes, and strengthening the skills of the production team through recruitment and
training. As a result, the Group achieved ISO9001 in Quality Management for its manufacturing facility in Milan
towards the end of the year.

Following product developments in the year, the Group launched its next generation solar panel with an enhanced
power output of 340W on a 60-cell panel. This represents a higher power output than the previous product
offering, along with a higher efficiency rating. Verditek’s solar modules are particularly lightweight compared to
conventional PV modules. The Group sees its key markets as both on-grid and off-grid projects that otherwise
cannot consider solar energy to address their power requirements. A stronger, more reliable product leaves the
Group well placed for commercial growth in 2022.

The Group had hoped to achieve international certification on its this enhanced product during the year, which
would have allowed the Group to market its product more widely for on-grid applications, but this was not
concluded in the period and is expected to be confirmed in due course. The Group therefore concentrated its sales
efforts on off-grid markets during the period and other projects that do not require panel certification.

An exciting area of focus with a great deal of potential are collaborations with partners to incorporate Verditek
panels into their products. We have worked closely with strategic partners to develop solar roofing solutions. We
were delighted to have delivered our first integrated solar roof-panel system through our partnership with UK
company Bradclad Group, and also an integrated solar roof tile product in partnership with Belgian company
Metrotile. These solutions can be used on a wide variety of buildings, and significantly expands the potential reach
of Verditek’s product offering.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Verditek’s commitment to pioneering research in solar cell technology continues. Towards the end of the year, a
new joint development arrangement was signed with Paragraf, an innovative company producing graphene. This
project builds on previous joint development projects, with a particular focus on exploring the future
commercialisation of graphene in silicon solar cells. This is an exciting area of research which has the potential to
transform the durability and performance of solar cells.

In 2021 the Group entered into a debt arrangement with Crowd for Angels. Corporate bonds of £353,000 were
issued with a term of 2 years, along with associated warrants, which provided working capital for the Group.

2021 was a frustrating year for Verditek. Ongoing uncertainty from the pandemic and rising fuel costs have resulted
in delays of capital projects and increasing price pressure. In response, Verditek has streamlined its operational
production and focussed efforts on product quality and strategic solution partnerships. The near-term outlook for
clean technology in general and Verditek in particular is very positive. A renewed global focus on green energy
following the 2021 IPCC report and COP26 summit has meant companies and public sector bodies are scrutinising
their green strategy and being challenged to invest. As a result, the Group has seen a growing number of enquiries
and pilot projects towards the end of the year and in early 2022, which point to promising signs of commercial
growth for 2022.

The Rt Hon. Lord David Willetts FRS
Non-Executive Chairman

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

CHIEF EXECUTIVE’S REVIEW

Overview

The year to December 2021 has been a frustrating one for Verditek. The Group has focussed on commercializing
its flexible, lightweight solar panels, but conversion of the sales pipeline was lower than anticipated as customers
have delayed their transition to green energy as a result of the ongoing tough economic environment.

Verditek has however spent time investing in its solar product and building partnerships with solutions providers,
and is confident that this enhanced offering leaves Verditek well placed for commercial growth in 2022.

Strategy

The Group’s historic strategy has been to identify early-stage business opportunities in the clean technology sector,
invest in them and see them through to commercial success. Whilst this remains the Group’s long-term objective,
the focus during 2021 was on refining the Group’s solar offering and working to build and convert the sales
pipeline.

The Group solar strategy is to manufacture high quality panels with a focus on B2B sales through engaging
distributors and sales representatives in different regions. The Group also aims to partner with solutions providers,
who develop and bring to market innovative solutions with integrated solar panels.

In light of the climate emergency, the world needs to evolve from its dependency on hydrocarbon-based energy
sources to cleaner, more environmentally friendly energy. We believe the Verditek Solar product is extremely well
positioned to become a market leader in the ultra-lightweight, flexible solar market. The Company's TUV approved
basic product has numerous potential applications that are not available to the traditional, heavy and fragile solar
panel technology. We believe major new market opportunities for our lightweight product will open up in areas
such as military, transportation, cellular telecoms masts, new build homes (as part of an integrated roof tile
system), and warehousing (where roofing structures are less rigid). Here the advantages of a highly durable,
efficient ultra-lightweight solar solution can now be embraced.

We believe the trend in the world moving from burning hydrocarbons as a primary energy source towards utilising
solar solutions will accelerate.

Operations

The Group’s solar operations are based in a modern 2,000 square meter factory located in Lainate on the outskirts
of Milan, Italy, with a production capacity in excess of 80MW per annum. From here a core staff together with a
further flexible contract labour team manufacture Verditek’s flexible lightweight solar panels using the latest
components sourced from around the world.

The technology used in cells continues to evolve and the Group has developed its ‘Generation 1.2’ panel during
the year, where a standard sized panel (with 60 cells) has a power output of 340W. Whilst the Group has significant
stock of its first-generation panel with a power output of 288W per panel, these are still suitable for most
applications as solar solutions are sold by power output and not per panel.

Although the certification process for the next-generation panels commenced in 2021, the process unfortunately
did not conclude in 2021 and is still ongoing at the date of publication of this report, but the Company hopes to
confirm such certification in due course. This certification covers the panels over a broad range of applications and
covers temperature, fire, hail damage and wind as well as durability.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

The Group is currently developing its Generation 2 panels with enhanced fire-resistance, with a target of producing
the world’s first lightweight semi-flexible Class-A rated fire-resistant solar panel. This will open up potential
markets for solar roof-top applications in the UK, Italy and Australia.

During the year Verditek Solar was unfortunately the victim of theft from its factory in Milan, carried out by a
former contractor. The Group is pursuing criminal charges and has commenced legal proceedings to recover civil
damages. There is an expense of £346,841 within Direct Costs in the year relating to theft of goods.

Sales and Marketing

The Group has various routes to market, including commission only sales agents, employed sales consultants,
distributors and solutions partners. Their efforts have led to a significant pipeline, however many of these have
been slow to close for various reasons including the ongoing effects of the pandemic and tough trading conditions.

Verditek continue to supply panels for various marine applications including conventional yachts, electric powered
yachts, and canal boats.

The Group has two highly promising partnerships with roofing providers. Verditek Solar has collaborated with
Bradclad Group, a UK supplier of standing seam roofs, and is pleased to report that they have launched their Energi-
Roof concept which integrates Verditek panels onto various roofing materials using proprietary bonding
techniques. Verditek Solar are also currently collaborating with Metrotile, who are developing Verditek solar panel
solutions for their roof tile products. Both these opportunities enhance the potential for commercial growth in the
lucrative roofing sector.

Other Opportunities

We are in discussions to license our manufacturing technology to a larger scale, automated plant and we have
received expressions of interest from others to build similar plants elsewhere in the world.

We have an exciting relationship in place with Paragraf, a Cambridge (UK) based start-up which has developed
world-leading graphene technology. Together we have completed two Joint Development Projects (“JDP”), and
have recently committed to a third.

The objectives of JDP 1 and 2 were for Verditek and Paragraf to grow large scale (e.g. 3x3cm) graphene surfaces
directly on photovoltaic (“PV”) Proof of Concept (“PoC”) chips and eventually entire industrial PV wafers
(15x15cm). The advantages of adding graphene to PV cells include:





increased efficiency by removing the topside busbar shading of the PV surface
increased efficiency by harvesting electrons from the entire topside surface
improved robustness of the wafer due to the physical resilience of graphene

This technology has the potential to transform the durability and performance of PV cells, opening up new
applications of solar technology. In the course of JDP 1 and 2 we successfully designed conditions to grow
graphene on an industrial grade mono-silicon PV wafer PoC with good adhesion, reliable conductivity and control
over deposition of graphene layers.

JDP3 has recently commenced in 2022, which builds on the previous JDPs and aims to explore the performance
and scalability of test structures. The ultimate aim of JDP3 is to build a viable PoC for commercialisation of
graphene PV cells.

Finance

For the year to 31 December 2021 the Group had revenues of £107,632 and recorded a loss after tax of £1.0m.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

During the year the Group entered into a bond arrangement with Crowd for Angels, issuing bonds of £353,253
during the year. At the year-end the business had debt of £277,080 (Principal balance of £324,858, net of bond
issue costs of £47,778). The bonds mature in 2023 and have an associated coupon of 7%.

During the year the overhead base of the Group has been reduced in order to conserve cash balances as the
conversion period for prospects to become fee paying customers has taken longer than expected.

Outlook and Conclusion

We are excited about the outlook for Verditek and believe the future remains positive despite the modest
commercial growth in 2021.

Verditek was established with the vision of building a leading clean technology Group and delivering game
changing technological solutions. Whilst the business remains early stage, we believe our significant investment
into the development of our flexible, lightweight solar panels will prove fruitful.

I would like to take this opportunity to thank my fellow Board members, staff, valued shareholders and advisers
for their support. We look forward to delivering on the vision of building a cash-generative and profitable clean
technology company together.

Rob Richards,
Chief Executive Officer
29 June 2022

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

STRATEGIC REPORT

Verditek is a cleantech company with its principal interest being the manufacture and commercialistion of leading-
edge solar technologies. Verditek Solar Italy (100% owned subsidiary) operates from a modern factory in Lainate,
Italy and has manufacturing capacity to produce over 80MW innovative lightweight solar modules per annum.

Verditek’s light weight solar modules offer several innovations including: interconnectivity of individual PV cells,
increased flexibility, and are particularly light weight compared to conventional PV modules.

The market for Verditek’s solar products covers both on grid and off grid installations and has applications from
single panel use such as in Tuk Tuks in Thailand to large projects which deliver power where conventional fossil
fuel power production is both expensive and logistically difficult to manage. For such large rural projects, Verditek
has developed its PowerMat concept where circa 250kw of panels are connected by one of two systems and are
stored when not in use in a shipping container for easy transportation and re-use in different locations.

Verditek has recently partnered with specialist roofing solution providers to bring to market integrated solar
products, which broaden the reach of Verditek’s solar offering.

Verditek has entered into a series of joint development programmes with Paragraf, a pioneer in graphene
technology, in order to develop potentially transformative PV cell technology.

In addition to its solar business the Group has investments in two other clean tech businesses, BBR and ICSI. Post
year end however, the Group sold its stake in ICSI to an external buyer, see Note 25 to the financial statements.

For a full review of the business during the year, please refer to the Chief Executive’s Review on page 3. For an
analysis of financial performance indicators, please refer to the Finance Review on page 8.

Principal risks and uncertainties facing the business

A full review of principal risks and uncertainties facing the business is given on pages 9 to 12.

COVID-19

We have considered the impact of the COVID-19 pandemic on the businesses of the Group both in terms of
experience to date and our assessment of its potential impact on the markets which Verditek expects to
commercialise its products in.

Europe continued to see the ongoing impact of COVID-19 in 2021. Fortunately, our factory in Italy was able to
operate at required levels for all of the year with minimal interruptions. However, a number of pipeline projects
we had expected to close during the year have been postponed, often due to the economic uncertainty created
by the pandemic and budgetary pressures which has meant capital projects are delayed.

The Group has prepared financial forecasts to model management’s assessment of going concern, including
ongoing delays in pipeline projects being signed off as orders due to COVID-19, see Note 2.4 of the financial
statements. Steps have been taken by the Directors to protect and manage the business during the coming period,
including the introduction of temporary pay deferrals at Board level and further overhead reductions.

S172 Statement

As required by Section 172 of the Companies Act, a director of a company must act in the way he or she
considers, in good faith, would likely promote the success of the company for the benefit of the shareholders. In
doing so, the director must have regard, amongst other matters, to the following issues:

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

• the likely consequences of any decisions in the long term (see Corporate Governance Report, pages 15 to 19);

• the interests of the company’s employees (see Corporate Social Responsibility report on page 23)

• the need to foster the company’s business relationships with suppliers/customers and others (see Corporate
Governance Report, pages 15 to 19);

• the impact of the company’s operations on the community and environment (see Corporate Social
Responsibility report on page 23);

• the company’s reputation for high standards of business conduct (see Corporate Governance Report, pages 15
to 19); and

• the need to act fairly between members of the company (see Corporate Governance Report, pages 15 to 19).

On behalf of the Board

Rob Richards
Chief Executive Officer
29 June 2022

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

FINANCIAL REVIEW

Income statement

During the year 2021 the Group’s loss after taxation was £974,079 (2020: £2,324,121). The administration
expenses incurred for the year ended 31 December 2021 were £1,501,942 (2020: £1,971,662).

Loss per share

The basic and diluted loss per share was 0.3p (2020: 0.8p).

Financial Position

At 31 December 2021, the Group’s net assets were £1,870,713 (2020: net assets of £2,738,483). This comprised
total assets of £2,719,430 and total liabilities of £848,717. The total assets included property, plant and equipment
of £300,082 (2020: £586,612).

Cashflow

The Group’s cash balance at the period end was £237,613 (2020: £1,711,761). During the period the net cash
outflow from operating activities was £1,656,332 (2020: 2,752,360) with financing activities generating net
proceeds of £204,264 (2020: £4,388,219).

Dividends

No dividend is recommended (2020: £nil) due to the development stage of the Group.

Capital management

The Board’s objective is to maintain a statement of financial position that is both efficient and delivers long term
shareholder value. The Group had cash balances of £237,613 as at 31 December 2021 (2020: £1,711,761). The
Board continues to monitor the balance sheet to ensure it has an adequate capital structure.

Key Performance Indicators

As the Group’s revenues are still at an early stage, the main measures of performance are the level of expenditure
compared to budget and forecast expectations. Going forward the Board will look to develop KPIs to monitor and
report performance.

Events after the reporting period

Events after the reporting period are described in Note 25 to the financial statements.

Vicki Johnson
Chief Financial Officer

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

PRINCIPAL RISKS AND UNCERTAINTIES

The Board is committed to protecting and enhancing our reputation and assets, while safeguarding the interests
of our shareholders. It has overall responsibility for the Group’s system of risk management and internal control.

The Board assesses the Company’s principal risks and monitors the risk management process at least twice a year.
Over the course of the year, the Board has also considered specific risks of intellectual property and physical asset
security, fluctuations in exchange rates and liquidity.

Accepting that it is not possible to identify, anticipate or eliminate every risk that may arise and that risk is an
inherent part of doing business, our risk management process aims to provide reasonable assurance that we
understand, monitor and manage the main uncertainties that we face in delivering our objectives. Our principal
risks are shown in the table below.

Risk Framework

Managing risk is an inherent part of any vital commercial enterprise. The Company has prepared a risk review using
an established framework that assists the recognition and mitigation of risk. Ranking risk and opportunity is critical
to any successful business and assists the executive in managing priorities to extract the maximum value from our
investments, while maintaining vigilance on those aspects which most influence an outcome.

Over the course of the year we have continued to focus on the risk framework developed in our first year of
operation to maintain and enhance a fit for purpose governance model and to ensure compliance. Financial control
continues to figure prominently in this overall framework.

Risk Review

The key risks identified per business are as follows:

RISK

The solar marketplace continues
to have increased efficiency
(power output) and increased
competition.

MITIGATION and
MANAGEMENT

Verditek continues to monitor
the efficiency of cells used in
production of its solar panels,
and seeks to remain at the
forefront of technical
advancements at all times.

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ASSESSMENT

Medium risk

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

RISK

Our products are considered too
expensive versus traditional glass
solar panels or other semi-flexible
panels on the market.

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Our products are not competitive
on cost as we cannot scale up
manufacturing with the existing
manufacturing facilities.

Establishing sales leads is slow.

Limited ability to negotiate bulk
discounts.

ASSESSMENT

High risk

MITIGATION and
MANAGEMENT

In our solar business we are
focused on both off-grid and on-
grid, where traditional solar
panels cannot be used. In its
marketing materials, the Group
distinguishes between
traditional glass solar panels,
versus its semi-flexible,
lightweight solar panels. The
Group’s lightweight solar panel
product is distinguished from
other semi-flexible panel
competitors on customizability
and efficiency.

As the business scales, costs of
raw materials will reduce. The
Group constantly assesses its
costs, and is considering
collaborations to scale up
manufacturing or direct
investments in new
manufacturing sites.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

RISK

Failure to meet AIM corporate
governance requirements.

HSE violations in Group operating
companies.

Failure to secure cashflow and
remain a going concern, also
growth ambitions might outpace
cash reserves.

MITIGATION and
MANAGEMENT

The executive benchmarked its
corporate governance, policies
and procedures against
published QCA guidelines to
ensure compliance. The
Company has regular
discussions with its nominated
advisor and external counsel.

The Group is directly
responsible for installing and
auditing an HSE culture.
Documented operating
procedures are in place at the
manufacturing facility, which
have been reviewed by an
external body.

The Board reviews medium to
long term cashflow forecasts,
and aims to ensure sufficient
funding is in place to meet
requirements.

Factory output levels reduce, poor
quality, other operational issues
including Board members not
being able to visit the factory
during pandemic.

The Group has systems in place
for testing of each panel, and
daily production levels are
monitored and reported on
regularly by local management.

ASSESSMENT

Low risk

Medium risk

High risk

Medium risk

Poorly constructed sales contracts
expose the company to punitive
commercial conditions. Partnering
relationships expose the Company
to unlimited liabilities.

Adverse global trading conditions
due to the COVID-19 pandemic,
with companies and countries
reducing their spend on capital
projects.

The Company has secured
Peachey & Co. LLP as their
single corporate counsel and
have developed a suite of
proforma contracts to ensure
commercial negotiations begin
soundly.

Contingency plans to control
costs, through flex of
production staff and supply
chain streamlining.

Low risk

High risk

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Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

RISK

MITIGATION and
MANAGEMENT

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A
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S
I
G
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L

Non-compliance with the UK’s
anti-bribery and corruption
legislation given the Company’s
potential operations in high-risk
countries.

The Company has an Ethics policy
which is referenced in third party
contracts and there is annual
mandatory training for directors,
employees and contractors.

ASSESSMENT

Medium risk

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

GOVERNANCE

BOARD OF DIRECTORS
The Board of Directors of Verditek plc (“Verditek” or the “Company”) as at the date of signing the report and
accounts comprised:

Rob Richards (Chief Executive Officer)
Rob is the Chief Executive Officer of Verditek plc. Rob is a chartered electrical engineer with over 20 years'
experience in the Oil and Gas and Energy Industry. Rob joined Verditek plc, having held senior management
positions in Ecolog International, FZE, Penspen Ltd, Thailand, KNM Process Systems Sdn Bhd in Malaysia, Siemens
Oil and Gas, Singapore and Alstom Power.

The Rt Hon. Lord David Willetts FRS (Non-Executive Chairman)
The Rt Hon. Lord David Willetts FRS is the Chairman of Verditek plc. He is also the President of the Resolution
Foundation. He served as the Member of Parliament for Havant (1992-2015), as Minister for Universities and
Science (2010-2014) and previously worked at HM Treasury and the No. 10 Policy Unit.

Lord Willetts is a visiting Professor at King’s College London, a Board member of UK Innovation and Research (UKRI)
and of the Biotech Growth Trust. He is an Honorary Fellow of Nuffield College Oxford.

George Katzaros (Non-Executive Director)
George is the founder of Verditek plc, identifying the three core technologies and leading the company to IPO on
AIM. George has over 30 years’ experience in advisory and asset management as well as investment banking and
venture capital particularly for cleantech companies.

Gavin Mayhew (Non-Executive Director)
Gavin was formerly the CEO of Energy Savers FZE, a UAE consultancy providing energy saving solutions to
commercial and industrial clients. Before that Gavin was president of Zubair Terminal Company in Iraq, which was
set up to finance, develop and operate a new commercial port in Iraq and a 38 year port concession was signed
with the Iraqi government in 2018. He has over 20 years of business management experience in Latin America,
Europe and the Middle East. Gavin has an MBA from INSEAD and undergraduate degree from Brown University in
the USA.

The Board and responsibilities
The Board hold monthly meetings to review, formulate and approve the Group’s strategy, budgets, corporate
actions and oversee the Group’s progress towards its goals. There is an Audit Committee and a Remuneration
Committee in place with formally delegated duties and responsibilities and with specific terms of reference. From
time to time separate committees may be set up by the Board to consider specific issues when the need arises.
Due to the size of the Group, the Directors have decided that issues concerning the nomination of directors will be
dealt with by the Board rather than a committee but will regularly reconsider whether a nominations committee
is required.

Details of board meetings held, and attendance of Board directors is shown below:

Board Members

Executive Directors
Rob Richards

Non-Executive Directors

The Rt Hon. Lord David Willetts FRS
George Francis Katzaros
Gavin Mayhew

The Audit Committee

Eligible to
attend

Attended

11
11
11

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

The Audit Committee comprises The Rt Hon. Lord David Willetts FRS as chairman and Gavin Mayhew.

The Audit Committee determines the terms of engagement of the Group’s auditors and will determine, in
consultation with the auditors, the scope of the audit. The Audit Committee receives and reviews reports from
management and the Group’s auditors relating to the interim and annual accounts and the accounting and internal
control systems in use throughout the Group. The Audit Committee has unrestricted access to the Group’s
auditors.

The Audit Committee Report is presented on page 20.

The Remuneration Committee
The Remuneration Committee comprises George Katzaros as chairman and Gavin Mayhew.

The Remuneration Committee reviews the scale and structure of the executive Directors’ and senior employees’
remuneration and the terms of their service or employment contracts, including share option schemes and other
bonus arrangements. The remuneration and terms and conditions of the non-executive Directors are set by the
entire Board.

The Directors’ Remuneration Report is presented on pages 21 - 22.

Investor relations

The General Meeting is the principal forum for dialogue with shareholders. Updates on the progress of the
business are regularly published on the Group’s website.

On behalf of the Board

Rob Richards
Chief Executive Officer

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

CORPORATE GOVERNANCE REPORT

The Directors recognise that good corporate governance is a key foundation for the long-term success of the
Group. As the Company is listed on the AIM market of the London Stock Exchange and is subject to the continuing
requirements of the AIM Rules. The Board has therefore adopted the principles set out in the Corporate
Governance Code for small and midsized companies published by the Quoted Companies Alliance (“QCA Code”).

The principles are listed below with an explanation of how the Company applies each principle, and what we do
and why.

QCA Code Principle

Application (as set out by QCA)

What we do and why

1. Establish a strategy and
business model which
promote long-term value for
shareholders

The board must be able to express
a shared view of the company’s
purpose, business model and
strategy. It should go beyond the
simple description of products and
corporate structures and set out
how the company intends to deliver
shareholder value in the medium to
long-term. It should demonstrate
that the delivery of long-term
growth is underpinned by a clear
set of values aimed at protecting
the company from unnecessary risk
and securing its long-term future.

The Company’s strategy is explained fully
within the Chief Executive’s Report section
of our Report and Accounts for the year
ended 31 December 2021.

Our strategy is focused on reviewing
manufacturing capabilities to optimise the
cost of production and ensure a
competitively priced product, and
developing a “go to market strategy” by
advancing partnerships with solutions
providers to incorporate our panels and
deliver readily saleable solutions.

2. Seek to understand and
meet shareholder needs and
expectations

Directors must develop a good
understanding of the needs and
expectations of all elements of the
company’s shareholder base.
The Board must manage
shareholders’ expectations and
should seek to understand the
motivations behind shareholder
voting decisions.

The key challenges to the business and
how these are mitigated are detailed on
pages 9 to 12 of our Report and Accounts
for the year ended 31 December 2021.
Whilst the company is early stage, the
Board is committed to returning value to
our shareholders through execution of our
strategy.
Verditek plc encourages two-way
communication with its investors and
responds quickly to all queries received.

The Board recognises the AGM as an
important opportunity to meet
shareholders. The Directors are available
to listen to the views of shareholders
informally immediately following the AGM.

The people responsible for shareholder
liaison are:

The Chief Executive Officer
The Chief Financial Officer
Nomad (W.H. Ireland Limited)

The Chief Executive Officer is responsible
for shareholder liaison and he can be
contacted using the “contact” link on the
Company website.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

QCA Code Principle

Application (as set out by QCA)

What we do and why

3. Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success

4. Embed effective risk
management, considering
both opportunities and
threats, throughout the
organisation

5. Maintain the Board as a
well-functioning, balanced
team led by the chair

Long-term success relies upon good
relations with a range of different
stakeholder groups both internal
(workforce) and external (suppliers,
customers, regulators and others).
The board needs to identify the
company’s stakeholders and
understand their needs, interests
and expectations.
Where matters that relate to the
company’s impact on society, the
communities within which it
operates, or the environment have
the potential to affect the
company’s ability to deliver
shareholder value over the medium
to long-term, then those matters
must be integrated into the
company’s strategy and business
model.
Feedback is an essential part of all
control mechanisms, and is
welcomed from all stakeholder
groups.
The board needs to ensure that the
company’s risk management
framework identifies and addresses
all relevant risks in order to execute
and deliver strategy; companies
need to consider their extended
business, including the company’s
supply chain, from key suppliers to
end-customer.
Setting strategy includes
determining the extent of exposure
to the identified risks that the
company is able to bear and willing
to take (risk tolerance and
risk appetite).

The Board members have a
collective responsibility and legal
obligation to promote the interests
of the company and are collectively
responsible for defining corporate
governance arrangements. Ultimate
responsibility for the quality of, and
approach to, corporate governance
lies with the chair of the Board.
The Board (and any committees)
should be provided with high
quality information in a timely
manner to facilitate proper
assessment of the matters requiring
a decision or insight.

The executive maintains communications
with trade and interest groups working in
the markets where our products are sold
and applied.

The Company is committed to developing
green technology, and this forms the
backbone to decision making.

Our website maintains a channel to
receive feedback from all stakeholders.

Risk Management on pages 9 to 12 of our
Report and Accounts for the year ended 31
December 2021 details the risks to the
business and how these are mitigated.

The Board considers risk to the business at
its monthly meetings and reviews the
principal risks to the business and the risk
register quarterly.

The Company is controlled by the Board of
Directors. The Rt Hon. Lord David Willetts
FRS, the Non-executive Chairman, is
responsible for the running of the Board
and Rob Richards, the Chief Executive, has
executive responsibility for running the
Group’s business and implementing Group
strategy.

All Directors receive regular and timely
information on the Group’s operation and
financial performance. Relevant
information is circulated to the Directors in
advance of meetings. All Directors have
direct access to the advice and services of
the Company Secretary and are able to
take independent professional advice in
the furtherance of the duties, if necessary,
at the Company’s expense.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

QCA Code Principle

Application (as set out by QCA)

What we do and why

The Board should have an
appropriate balance between
executive and non-executive
directors and should have at least
two independent non- executive
directors. Independence is a board
judgement.

The Board should be supported by
committees (e.g. audit,
remuneration, nomination) that
have the necessary skills and
knowledge to discharge their duties
and responsibilities effectively.

Directors must commit the time
necessary to fulfil their roles.

The board must have an
appropriate balance of sector,
financial and public markets skills
and experience, as well as an
appropriate balance of personal
qualities and capabilities. The board
should understand and challenge its
own diversity, including gender
balance, as part of its composition.

The Board should not be dominated
by one person or a group of people.
Strong personal bonds can be
important but can also divide a
board.

As companies evolve, the mix of
skills and experience required on
the board will change, and board
composition will need to evolve to
reflect this change.

6. Ensure that between them
the directors have the
necessary up-to-date
experience, skills and
capabilities

7. Evaluate board
performance based on clear
and relevant objectives,
seeking continuous
improvement

The Board should regularly review
the effectiveness of its performance
as a unit, as well as that of its
committees and the individual
directors.

The Board comprises one Executive
Director and three Non-Executive
Directors. The Board considers that all the
Non-Executive Directors bring an
independent judgement to bear.

The Executive Director is full time and the
Non-Executive Directors provide such time
as is required to fully and diligently
perform their duties.

The Board holds monthly Board meetings.
Details of the attendance record of each
Director at Board meetings is included in
the Governance report of the Annual
Report.

The Directors have attended professional
NED instruction and have proven track-
records of serving on boards previously.

The Board will work to increase the
diversity of the Directors.

Further information about the Board’s
skillset, including each Director’s
experience and CV, is set out on the
Company website and additional
information is shown on page 13 of the
Annual Report for the year ending 31
December 2021.
The Company was admitted to trading on
AIM in August 2017. Since that time there
has been a greater than 50% turnover in
Board membership.

A board performance evaluation will be
carried out in the second half of 2022 to
look critically at what we do and to
identify areas of improvement.

An appraisal is scheduled to be carried out
each year with the Executive Director.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

QCA Code Principle

Application (as set out by QCA)

What we do and why

8. Promote a corporate
culture that is based on ethical
values and behaviours

The Board performance review may
be carried out internally or, ideally,
externally facilitated from time to
time. The review should identify
development or mentoring needs
of individual directors or the wider
senior management team.

It is healthy for membership of the
Board to be periodically refreshed.
Succession planning is a vital task
for boards. No member of the
board should become
indispensable.

The Board should embody and
promote a corporate culture that is
based on sound ethical values and
behaviours and use it as an asset
and a source of competitive
advantage.

The policy set by the board should
be visible in the actions and
decisions of the chief executive and
the rest of the management team.

Corporate values should guide the
objectives and strategy of the
company.

The culture should be visible in
every aspect of the business,
including recruitment, nominations,
training and engagement. The
performance and reward system
should endorse the desired ethical
behaviours across all levels of the
company.

The corporate culture should be
recognisable throughout the
disclosures in the annual report,
website and any other statements
issued by the company.

The Company is early stage and as such
the Board has been focussed on ensuring
that sufficient capital is in place to execute
its strategy: first sales; investing in longer
term development opportunities and
developing the organisation.

It is against the performance of this
strategy that the Board is currently
assessed.

No formal succession plans are currently in
place, but the Board will continue to
review this position.

The Corporate and Social Responsibility
section on page 23 of our Report &
Accounts for the year ended 31 December
2021 details the ethical values of the
Company.

The Company’s policies and procedures on
Data Protection; Disciplinary, Dismissal
and Grievance; Ethics; Share Dealing;
Social Media; and Speak-Up were
reviewed, updated and approved by the
Board during the year.

These policies and procedures are made
available to staff and consultants and anti-
bribery and anti-corruption training and
data protection training is mandatory.

Staff and consultants are encouraged to
ask questions and seek clarifications from
senior members of the team on these
policies and procedures.

9. Maintain governance
structures and processes that
are fit for purpose and support

The Company should maintain
governance structures and
processes in line with its corporate
culture and appropriate to its:

The Corporate Governance Report on
pages 15 to 19 of our Report & Accounts
for the year ended 31 December 2021
details the Company’s governance

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

QCA Code Principle

Application (as set out by QCA)

What we do and why

good decision-making by the
board

• size and complexity; and
• capacity, appetite and tolerance
for risk.
The governance structures should
evolve over time in parallel with its
objectives, strategy and business
model to reflect the development
of the company.

10. Communicate how the
company is governed and is
performing by maintaining a
dialogue with shareholders
and other relevant
stakeholders.

A healthy dialogue should exist
between the Board and all of its
stakeholders, including
shareholders, to enable all
interested parties to come to
informed decisions about the
company.

Appropriate communication and
reporting structure should exist
between the Board and all
constituent parts of its shareholder
base. This will assist:



the communication of
shareholders’ views to the
board; and
the shareholders’
understanding of the unique
circumstances and constraints
faced by the company.

It should be clear where these
communication practices are
described (annual report or
website).

structures and why they are appropriate
and suitable for the Company.

The Board has a formal schedule of
matters reserved to it and is supported by
the Audit and Remuneration
Committees. Due to the size of the
Company, the Directors have decided that
issues concerning the nomination of
directors will be dealt with by the Board
rather than a committee but will regularly
reconsider whether a nominations
committee is required

The Audit Committee and a Remuneration
Committee have formally delegated duties
and responsibilities and with specific terms
of reference and these are available on
request.

The Company encourages two-way
communication with its investors and
responds quickly to all queries received.

The Board recognises the AGM as an
important opportunity to meet private
shareholders. The Directors are available
to listen to the views of shareholders
informally immediately following the AGM.

The Chairman and the Chief Executive
Officer are responsible for ensuring
appropriate communication and reporting
to shareholders.

A range of corporate information
(including all Company announcements,
historical annual reports and other
governance related material since the
company was admitted to AIM in August
2017) is also available to shareholders,
investors and the public on the Company’s
website.

The Company will disclose outcomes of all
votes at shareholder meetings in a clear
and transparent manner by either
publishing a market announcement or by
reporting it on the Company website. If a
considerable proportion of votes (20%)
have been cast against a resolution at any
meeting of shareholders, the Company will
include an explanation of what actions it
intends to take to understand the reasons
behind that vote result and, where
appropriate, any different action it has
taken, or will take, as a result of the vote.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

AUDIT COMMITTEE REPORT

The Audit Committee helps the Board discharge its responsibilities regarding financial reporting, external and
internal audits and controls as well as reviewing the Group’s annual and half-year financial statements, other
financial information and internal Group reporting.

This includes:

•

considering whether the Company has followed appropriate accounting standards and, where necessary,
made appropriate estimates and judgments taking into account the views of the external auditors;

reviewing the clarity of disclosures in the financial statements and considering whether the disclosures
made are set properly in context;

• where the audit committee is not satisfied with any aspect of the proposed financial reporting of the

Company, reporting its view to the Board of Directors;

•

reviewing material information presented with the financial statements and corporate governance
statements relating to the audit and to risk management; and

reviewing the adequacy and effectiveness of the Company’s internal financial controls and, unless
expressly addressed by a separate board risk committee composed of independent directors, or by the
Board itself, review the Company’s internal control and risk management systems and, except where dealt
with by the Board or risk management committee, review and approve the statements included in the
annual report in relation to internal control and the management of risk.

The Audit Committee assists by reviewing and monitoring the extent of non-audit work undertaken by external
auditors, advising on the appointment of external auditors and reviewing the effectiveness of the Group’s internal
audit activities, internal controls and risk management systems. The ultimate responsibility for reviewing and
approving the Annual Report and financial statements and the half-yearly reports remains with the Board.

For the year under review, there were no non-audit services rendered to the Group and the Company. The audit
committee considered the nature and scope of engagement and remuneration paid were such that the
independence and objectivity of the auditors were not impaired. Fees paid for audit services are provided in Note
6.

During the financial year, the Audit Committee met twice with the auditor, Crowe U.K. LLP, to review audit planning
and findings with regard to the Annual Report and the review of the interim financial statements.

Significant reporting issues considered during the year included the following:

Going concern

The Committee considered the Going Concern basis on which the accounts have been prepared and can refer
shareholders to the Group’s accounting policy set out in Note 2.4. The directors are satisfied that the going concern
basis is appropriate for the preparation of the financial statements.

The Rt Hon. Lord David Willetts FRS

Chairman – Audit committee

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

DIRECTORS’ REMUNERATION REPORT

This report sets out the remuneration policy operated by the Company in respect of the Executive and Non-
Executive Directors. The remuneration policy is the responsibility of the Remuneration Committee, a sub-
committee of the Board. No Director is involved in discussions relating to their own remuneration.

Remuneration policy

The objective of the proposed remuneration policy is to attract, retain and motivate high calibre executives to
deliver outstanding shareholder returns and at the same time maintain an appropriate compensation balance with
the other employees of the Group.

Directors’ remuneration

The normal remuneration arrangements for Executive Directors consists of base salary, performance bonuses and
other benefits as determined by the Board. The Company currently has one Executive Director, the Chief Executive
Officer, who has a service agreement that can be terminated at any time by either party giving to the other three
months’ written notice. Compensation for loss of office is restricted to base salary and benefits only.

The remuneration packages for Executive Directors are detailed below:

• Base Salary:

Annual review of the base salaries of the Executive Directors are concluded after considering the
Executive Directors’ role, responsibilities and contribution to the Group performance.

• Performance Bonus:

Bonus arrangements are discretionary and are payable depending on the performance of the Executive
Directors in meeting their key performance indicators and in the wider context with the performance of
the Group.

• Benefits:

Benefits include payments for provident funds that are mandatory and statutory pension payments as
required by laws of the resident countries of the Executive Directors, health insurance and other benefits.

•

Longer term incentives:
In order to further incentivise the Directors and employees, and align their interests with shareholders,
the Company has granted share options in the current year. The share options will vest at various future
dates as described in the Note 22 to the financial statements. In addition to service conditions, the vesting
of the share options granted to the Executive Director and the Chairman are subject to an earnings before
interest, tax, depreciation and amortisation (EBITDA) performance condition.

Non-Executive Directors are remunerated solely in the form of Directors’ fees and shares options determined by
the Board and are not entitled to pensions, annual bonuses or employee benefits.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

DIRECTORS’ REMUNERATION REPORT (Continued)

Re-election of Directors

One-third of continuing Directors stand for re-election on an annual basis and all Directors are aware of the need
to maintain their independence and to demonstrate their continued commitment to the role. Succession planning
at the current time is limited due to the current size of the Board.

The remuneration of the Directors in Verditek plc who held office during the year to 31 December 2021 and 2020
were as follows:

The emoluments of the Directors were as follows
(Audited):

Year ended 31 December 2021

Year ended
31 December
2020

Salary &
Directors’
fees
£

Pension
Contributions

Share
based
payment
£

Total

Executive directors

Robert Richards

151,374

Geoff Nesbitt (resigned 7 May 2020)

Tim Lord (resigned 5 August 2020)

Non-executive directors

The Rt Hon. Lord David Willetts FRS

George Katzaros

Gavin Mayhew

Total

50,000*
25,000*
30,000*

256,374

33,707

185,081

123,912

136,037

71,043

10,984

60,984

25,000

30,000

63,024

25,000

55,000

44,691

301,065

473,784

*The salaries and fees for Non-executive directors were paid until April 2021. From May 2021 the Non-executive
directors waived payment of their fees, and these were accrued at the balance sheet date, see Note 24 for more
information.

There are 4,500,000 share options held by The Rt Hon. Lord David Willetts FRS and 14,000,000 share options held
by Robert Richards: details are shown in Note 22. No options were exercised in the year.

George Katzaros

Chairman – Remuneration committee

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

CORPORATE AND SOCIAL RESPONSIBILITY

The Company understands that its impact reaches beyond that of its core business and into the environment and
society in which it operates. With integrity at the heart of our corporate social goals our aim is to make a lasting
positive contribution to all our stakeholders.

In view of the limited number of stakeholders, the Company has not adopted a specific policy on Corporate Social
Responsibility. However, it does seek to protect the interests of stakeholders in the Company through its policies,
combined with ethical and transparent business operations. The Company has adopted an Ethics Policy which
covers anti-bribery and anti-corruption, environmental sustainability, social responsibility, health and safety and
tax evasion.

Environment

Verditek Plc is sensitive to the environment in which it operates and has established well defined operating
guidelines with some of the manufacturing partners where it seeks their compliance with ISO14001 when relevant,
to ensure certain environmental standards are complied with.

Human Rights

Verditek plc is committed to socially and morally responsible research, development and manufacturing processes
for the benefit of all stakeholders. The activities of the Company are in line with applicable laws on human rights.

Employees

Our employees are key to achieving the business objectives of the Company. The Board’s priority is to provide a
working environment in which our employees can develop to achieve their full potential and have opportunities
for both professional and personal development. We aim to invest time and resource to support, engage and
motivate our employees to feel valued, to be able to develop rewarding careers and want to stay with us. The
Company embraces employee participation in issue raising and resolution through regular meetings with managers
and values contributions from all levels regardless of their position in the business.

Shareholders

The Board of Directors actively encourage communication and they seek to protect the interest of shareholders at
all times. The Company updates shareholders regularly through regulatory news, financial reports and research
notes. The Company also engages directly with investors at our Annual General Meeting or investor events.

Health and Safety

Company activities are carried out in accordance with its health and safety policy which adheres to all applicable
laws and are audited both internally and by an external organisation.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

DIRECTORS’ REPORT

The Directors present their report and the audited financial statements for Verditek plc (“Verditek” or the
“Company”) for the year ended 31 December 2021.

The preparation of financial statements is in compliance with UK adopted International Accounting Standards and
the Companies Act 2006. The Group financial statements comprise of the financial information of the parent
Company and its subsidiaries (together the “Group”). The parent Company’s financial statements present
information about the Company as a separate entity and not about its Group.

Principal activities

Verditek plc is a holding company based in UK. The principal activity of the Group is to develop and commercialise
clean technologies.

A detailed review of the business activities of the Group is contained in the Strategic Report.

Business review and future developments

The review of the business’s operations, future developments and key risks is contained in the Strategic Report.
The Directors do not recommend a final ordinary dividend for the year (2020: £nil).

Directors and directors’ interests

The directors who held office during the year and subsequently were as follows:

The Rt Hon. Lord David Willetts FRS
George Francis Katzaros
Gavin Mayhew
Robert Richards

With regard to the appointment and replacement of Directors, the Company is governed by its articles of
association, the Companies Act and related legislation. The articles themselves may be amended by special
resolution of the shareholders.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

DIRECTORS’ REPORT (Continued)

Directors’ interests

The Directors held the following beneficial interests in the shares of Verditek plc at 31st December 2021:

Gavin Mayhew
George Katzaros
Robert Richards

Notes

1.1 Shares held by Gavin Mayhew
- through Platform Securities Nominees Limited

1.2 Shares held by George Katzaros
- through BBHISL NOMINEES LIMITED A/c 120165
- through MF Limited
- directly
- family member

Note

Ordinary shares

1.1
1.2

of £0.0004 each

27,157,381
26,166,675
2,437,833

Issued
share
capital %

7.94%
7.65%
0.71%

27,157,381

10,550,000
5,900,000
9,000,000
716,675
26,166,675

There has been no change between the end of the reporting period and the reporting date.

Directors’ indemnities

The Company has taken out Directors’ and Officers’ indemnity insurance for the benefit of its Directors.

Post Balance Sheet Events

There are no material post balance sheet events to disclose, other than those disclosed in Note 25 of the accounts.

Research and Development Activities

Verditek continues to invest in research and development activities such as the joint development project with
Paragraf Limited to research the application of graphene onto solar devices. Research and development seeks to
develop and enhance the existing product portfolio and new products that will compliment and expand the
product offering. Additional research and development has been made on further generations of the semi-flexible,
lightweight solar panels. The Company also signed a new joint development arrangement with Paragraf in the year
to explore commercialization of graphene

Financial Risk management

Details of financial risk management are provided in Note 3 to the accounts.

Political and charitable contributions

The Group made no charitable or political contributions during the year.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

DIRECTORS’ REPORT (Continued)

Going Concern

As described in note 2.4, the Directors, have made appropriate enquiries regarding going concern. Having
considered base case and worst case scenarios, the Group has secured additional funding by placing of new shares
as announced on 30 June 2022, the Directors believe that the Company and the Group as a whole have adequate
resources to continue in operational existence for the foreseeable future. There is a risk that the Group may need
to raise additional funding in the next 18 months to fund ongoing operations, and therefore acknowledge that
there is material uncertainty around going concern in this respect. On balance, they continue to adopt the going
concern basis in preparing the financial statements.

Substantial shareholdings:
The Company has been advised of the following interests in more than 3% of its ordinary share capital as at 31
December 2021:

Shareholder

No. of Shares

Hargreaves Lansdown (Nominees) Limited
Platform Securities Nominees Limited
Interactive Investor Services Nominees Limited
The Bank Of New York (Nominees) Limited
JIM Nominees Limited
HSDL Nominees Limited
Pershing Nominees Limited
Vidacos Nominees Limited
Apollo Nominees LTD
Lynchwood Nominees Limited

63,143,301
39,119,322
22,409,511
21,152,995
19,261,469
17,402,887
16,704,157
13,849,550
11,414,273
11,395,000

18.45%
11.43%
6.55%
6.18%
5.63%
5.09%
4.88%
4.05%
3.34%
3.33%

Statement of Disclosure to the Auditors
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Group’s auditors for the purposes of their audit and to establish that the auditors
are aware of that information. The Directors are not aware of any relevant audit information of which the auditors
are unaware.

Auditors appointment

Crowe U.K. LLP has indicated its willingness to continue in office and a resolution to re-appoint them will be
proposed at the annual general meeting.

By order of the Board

Rob Richards
Chief Executive Officer

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.

Company law requires the Directors to prepare Group and Company financial statements for each financial year.
Under that law the Directors have elected to prepare the Group consolidated financial statements in accordance
with UK adopted International Accounting Standards (UK IFRSs) and elected to prepare the parent company
financial statements under United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable laws including FRS 101 Reduced Disclosure Framework).

Under company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group
for that period.

In preparing each of the Group and Company financial statements, the Directors are required to:

•

Select suitable accounting policies and then apply them consistently;

Make judgments and estimates that are reasonable and prudent;

State whether they have been prepared in accordance with UK IFRSs or UK Accounting Standards
have been followed, subject to any material departures disclosed and explained;

Prepare the Strategic Report and Directors’ report which comply with the requirements of the
Companies Act 2006; and

Prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of
the Group and the Company and enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also generally responsible for taking such steps as are reasonably open to them to safeguard
the assets of the group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Information published on the website is accessible in many countries and legislation in
the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.

The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s position and performance, business
model and strategy. Each of the directors confirms that, to the best of their knowledge:

The Group financial statements, which have been prepared in accordance with UK IFRSs and Companies Act 2006,
give a true and fair view of the assets, liabilities, financial position and profit of the Group; and the Annual Report
includes a fair review of the development and performance of the business and the position of the Group, together
with a description of the principal risks and uncertainties that it faces.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC

Opinion

We have audited the financial statements of Verditek plc (the ‘parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2021 which comprise the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement
of cash flows, Company statement of financial position, company statement of changes in equity and notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework
that has been applied in the preparation of the Group financial statements is applicable law and UK adopted
International Accounting Standards (UK IFRSs). The financial reporting framework that has been applied in the
preparation of the parent Company financial statements is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).

In our opinion:

•

the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s
affairs as at 31 December 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted International
Accounting Standards;
the parent Company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the parent Company and the Group in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to note 2.4 in the financial statements, which indicates that the Group and the parent Company
may need to seek additional funding to support working capital requirements over the next 24 months period. The
financial statements have been prepared on the going concern basis, which rely on the secured equity fundraising
of £1.5million on 30 June 2022 and the generation of the increased revenues. These conditions, along with the
other matters explained in note 2.4 to the financial statements, indicate the existence of a material uncertainty
which may cast significant doubt about the Group and the parent Company’s ability to continue as a going concern.
The financial statements do not include the adjustments that would results if the Group and the parent Company
were unable to continue as a going concern. Our opinion is not modified in respect of this matter.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)

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 and the parent Company’s ability to continue to adopt the going concern basis of
accounting included:

Tested accuracy of the models used by management in their assessment;


 Challenged with management whether the assumptions are realistic, achievable and consistent when

compare to past performance and other forecast information used during the audit;

 Discussed the going concern assumption with management and evaluated their assessment of the Group

and the parent Company’s liquidity requirements; and

 Assessed the reasonableness of management’s budget/forecasts, including comparison to actual results

achieved in the year and the evaluation of downside sensitivities.

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

Our audit approach

Overview of the scope of our audit

Our audit approach was developed by obtaining a thorough understanding of the Group’s activities and is risk
based. Based on this understanding we assessed those aspects of the Group and subsidiary companies’
transactions and balances which were most likely to give rise to a material misstatement and were most
susceptible to irregularities including fraud or error. Specifically, we identified what we considered to be key audit
matters and planned our audit approach accordingly. We undertook a combination of analytical procedures and
substantive testing on significant transactions, balances and disclosures, the extent of which was based on various
factors such as our overall assessment of the control environment, the effectiveness of controls over individual
systems and the management of specific risks. We used a local sub-contractor to attend the year end physical
inventory count at Italy warehouse under our direction and supervision. All Group companies were within the
scope of our testing.

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it
could reasonably be expected to change the economic decisions of a user of the financial statements. We used the
concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.

Based on our professional judgement, we determined overall materiality for the financial statements as a whole
to be £80,000 based on approximately 5% of Group’s normalised loss for the year (2020: £100,000), which is the
most appropriate measure for an entity which has yet to net cash generative. On completion, we considered that
the level of materiality identified at planning remained appropriate. The materiality is rounded to nearest
thousand. Materiality for the parent Company’s financial statements as a whole was set at £30,000 (2020:
£80,000).

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)

We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the
audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the
judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to
the internal control environment. We determined Group’s performance materiality to be £56,000 (2020: £70,000)
and the parent Company’s performance materiality to be £21,000 (2020: £56,000).

Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party
transactions and directors’ remuneration.

We agreed with the Audit Committee to report to it all identified errors in excess of £3,000. Errors below that
threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

In addition to the material uncertainty in relation to going concern section above, we have determined the matters
described below to be the key audit matters to be communicated in our report. This is not a complete list of all risks
identified by our audit.

Key audit matter

How the scope of our audit addressed the key audit matter

Carrying value of
consolidated financial statements)

inventory (Note 15 to the

The carrying value of the inventory at 31 December
2021 was £0.66 million (2020: £0.64 million).

There is a risk that there would be a material
misstatement relating to the existence of
inventories, or that the valuation of inventories is
impaired.

We performed a number of audit procedures over inventory
existence and valuation as follow:

 We reviewed and evaluated

the design and
implementation of the key controls pertaining to the
existence and valuation of the inventories.

 We attended the year end physical inventory counts
process at Italy warehouse and reconciled the
underlying records with the accounting records of the
Group;



Tested on a sample basis the accuracy of costs for
inventory by verifying the actual production costs,
and testing the net realizable value by comparing to
the most recent selling price.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)

For the parent Company we identified one key audit matter:

Key audit matter

How the scope of our audit addressed the key audit matter

Carrying value of investments and intercompany
receivables – parent Company (see Note 3 to the
parent Company financial statements)

The carrying value of investments in subsidiaries
(including the intercompany receivables) in the
parent Company financial statements at 31
December 2021 was £4.02 million (2020: £2.87
million). The valuation of these investments and
the recovery of the intercompany balance are
almost entirely dependent on the successful
execution of the business plan. A failure to execute
in an
the business plan would
impairment
the
the carrying value of
investments in and loans to subsidiaries.

likely result

operating

discontinued

We discussed with management whether any indications of
impairment existed. We considered the existence of any
indication
activities,
management’s future plans for the business and the ability
of the business to continue to raise new investment. We
challenged the assumptions used by management
in
assessing the ability of the subsidiary companies to generate
cash and remit that to the Parent. We also considered the
market capitalisation of the Group, which is greater than the
carrying value.

Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole.
They were not designed to enable us to express an opinion on these matters individually and we express no such
opinion.

Other information

The directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•

the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal
requirements.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent Company and its environment obtained
in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’
report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:

•

adequate accounting records have not been kept by the parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns;
or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Responsibilities of the directors for the financial statements

As explained more fully in the directors’ responsibilities statement on page 27, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group and the parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent
Company or to cease operations or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below:

We obtained an understanding of the legal and regulatory frameworks within which the Group operates, focusing
on those laws and regulations that have a direct effect on the determination of material amounts and disclosures
in the financial statements. The laws and regulations we considered in this context were relevant company law
and taxation legislation in the UK and Italy jurisdictions in which the Group operates.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud,
to be the override of controls by management. Our audit procedures to respond to these risks included enquiries
of management about their own identification and assessment of the risks of irregularities, sample testing on the
posting of journals and reviewing accounting estimates for biases.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our
audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot
be expected to detect non-compliance with all laws and regulations.

These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may
involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions,
collusion or the provision of intentional misrepresentations.

A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the parent Company's
members those matters we are required to state to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent
Company and the parent Company's members as a body, for our audit work, for this report, or for the opinions we
have formed.

John Glasby (Senior Statutory Auditor)

for and on behalf of

Crowe U.K. LLP

Statutory Auditor

London

29 June 2022

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended
31 December 2021
£

Year ended
31 December 2020
£

Notes

6
5

Revenue
Direct costs
Administrative expenses
Operating loss
Other income
Finance income
Finance costs
Loss before tax

Income Tax

Loss for the period

Other comprehensive income
Items that will or may be reclassified to profit
or loss:
Translation of foreign operations
Total comprehensive loss for the period from
continuing operations

Loss for the period attributable to:
Owners of the Company
Non-controlling interest

Total comprehensive loss for the period
attributable to:
Owners of the Company
Non-controlling interest

107,632
(609,213)
(1,501,942)
(2,003,523)
966,354
335
(60,553)
(1,097,387)

21,521
(320,473)
(1,971,662)
(2,270,614)
-
70
(152,025)
(2,422,569)

123,308

98,448

(974,079)

(2,324,121)

(36,036)

38,656

(1,010,115)

(2,285,465)

(988,479)
14,400
(974,079)

(2,231,105)
(93,016)
(2,324,121)

(1,024,515)
14,400
(1,010,115)

(2,194,053)
(91,412)
(2,285,465)

Loss per ordinary share - basic and diluted (£)

(0.003)

(0.008)

The accompanying notes are an integral part of these financial statements.

All amounts are derived from continuing operations.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes

31 December 2021
£

31 December 2020
£

Assets
Non-current assets
Investments
Property, plant and equipment
Right of use assets
Total non-current assets

Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets

TOTAL ASSETS

Equity and liability
Non-current liabilities
Loans and borrowings
Lease liabilities
Total non-current liabilities

Current liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Total current liabilities

TOTAL LIABILITIES

Equity
Share capital
Share premium account
Share based payment reserve
Accumulated losses
Foreign exchange reserve
Equity attributable to equity holders of the
parent
Non-controlling interests
Total shareholder’s equity

11
12
14

15
16
17

19
20

18
19
20

21
21
22

990,000
300,082
142,391
1,432,473

657,151
392,193
237,613
1,286,957

23,405
586,612
207,104
817,121

636,041
423,853
1,711,761
2,771,655

2,719,430

3,588,776

277,080
90,687
367,767

411,213
-
69,737

480,950

848,717

136,883
10,761,055
213,134
(9,098,300)
(35,172)
1,977,600

(106,887)
1,870,713

-
149,051
149,051

585,359
70,000
45,883

701,242

850,293

136,470
10,733,073
99,184
(8,109,821)
864
2,859,770

(121,287)
2,738,483

TOTAL EQUITY AND LIABILITIES

2,719,430

3,588,776

These financial statements were approved and authorised for issue by the Board of directors on 29 June 2022 and
were signed on its behalf by:

Rob Richards
Chief Executive Officer
Company Registration Number: 10114644
The accompanying notes are an integral part of these financial statements.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Issued
Share
capital
£
91,666
-
-

Share
Premium
£
5,466,376
-
-

Share
based
payment
reserve

21,703
-
-

44,804
-
136,470
-
-
-

5,266,697
-
10,733,073
-
-
-

-
77,481
99,184
-
-
-

Accumulated
losses
£
(5,878,716)
(2,231,105)
-

Foreign
Exchange
reserve
£
(36,189)
-
37,053

Non-
Controlling
interests
£
(29,874)
(93,016)
1,603

Total
£
(365,035)
(2,324,121)
38,656

(2,231,105)

37,053

(91,413)

(2,285,465)

-
-
(8,109,821)
(988,479)
-

-
-
864
-
(36,036)

-
-
(121,287)
14,400
-

5,311,501
77,481
2,738,483
(974,079)
(36,036)

(988,479)

(36,036)

14,400

(1,010,115)

413

27,982

28,395

-
-
136,883

-
-
10,761,055

65,903
48,047
213,134

-
-
(9,098,300)

-
-
(35,172)

-
-
(106,887)

65,903
48,047
1,870,713

Balance as at 1-Jan-20
Loss for the year
Translation of subsidiary
Total comprehensive
loss
Issue of shares net of
expenses
Share based payment
Balance as at 31-Dec-20
Loss for the year
Translation of subsidiary
Total comprehensive
loss
Issue of shares net of
expenses
Issue of warrants –
corporate bond
Share based payment
Balance as at 31-Dec-21

The accompanying notes are an integral part of these financial statements.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities

Loss before tax from continuing operations

(1,097,387)

(2,422,569)

Year ended

31 December 2021

31 December 2020

Adjustments for:
Finance costs

Finance income

ICSI revaluation

Depreciation

Loss on disposal of assets

Share based payment

Working capital adjustments

(Increase) / Decrease in inventory

(Increase) / Decrease in trade and other receivables
Increase / (Decrease) in trade and other payables

Cash used in operations

Taxation

Net cash outflow from operating activities

Investing activities

Sale of property, plant and equipment
Purchase of property, plant and equipment

Net cash outflow from investing activities

Financing activities

Proceeds from issue of ordinary share capital (net of expenses)

Proceeds from corporate green bonds issued (Refer note 20)

Loan interest paid

Interest received
Repayments of loans (Refer note 20)

Payments of lease liabilities

Net cash inflows from financing activities

Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year

Exchange gains on cash and cash equivalents

Cash and cash equivalents at the end of the year

The accompanying notes are an integral part of these financial statements.

60,553

(335)

(966,354)
306,915

1,582

48,047
(1,646,979)

(21,109)

158,455
(146,699)

152,025

(70)

-
164,566

77,481
(2,028,567)

(601,003)

638,595
(761,385)

(1,656,332)

(2,752,360)

(1,656,332)

(2,752,360)

2,048
(7,001)

(4,954)

28,395

353,253

(27,372)

334
(98,395)

(51,950)

204,264

(1,457,022)
1,711,761

(17,126)

237,613

-
(33,215)

(33,215)

5,076,047

(162,894)

62
(455,076)

(69,920)

4,388,219

1,602,644
107,243

1,874

1,711,761

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate information

Verditek plc (“Verditek”, “Company”) is a public limited company incorporated, registered and domiciled in
England and Wales (registration number 10114644), whose shares are quoted on the Alternative Investment
Market on the London Stock Exchange. Its registered office is located at 29 Farm Street, London W1J 5RL. This is
changing as of 1 July 2022, to 5 Chancery Lane, London, WC2A 1LG.

Verditek is the holding company of a group of companies engaged in the clean technology sector.

The consolidated financial statements comprised of the Company and its subsidiaries (together referred to as “the
Group”) as at and for the year to 31 December 2021. The parent Company financial statements present
information about the Company as a separate entity and not about its Group.

The comparative financial information is for the year ended 31 December 2020.

2. Accounting policies
The principal accounting policies applied in the preparation of the consolidated financial statements are set out
below. These policies have been consistently applied to all periods presented, unless otherwise stated.

2.1. Basis of preparation
The financial statements have been prepared in accordance with UK adopted International Accounting Standards
(UK IFRSs) and the Companies Act 2006.

The financial statements have been prepared on the historical cost basis except for certain assets which are stated
at their fair value.

The consolidated financial statements are presented in GBP, which is also the Company’s functional currency.

2.2. Basis of consolidation
The financial information consolidates the financial statements of Verditek plc and the entities controlled by the
Company.

2.2.1. Subsidiaries
Subsidiaries are all entities (including special purpose entities) over whose financial and operating policies the
Group has the power to govern, generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of the potential voting rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which
control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the
policies adopted by the Group.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.3. Changes in accounting policies and disclosures:

2.3.1. New standards, interpretations and amendments adopted in these financial statements:

The following standards, amendments and interpretations became effective from 1 January 2021, however
none of these new standards has had an impact on the Group financial statements:

•

IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors (Amendment – Disclosure Initiative - Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business) Conceptual Framework for Financial
Reporting (Revised)
IBOR Reform and its Effects on Financial Reporting

•
• COVID-19 Related Rent Concessions – Amendment to IFRS 16

2.3.1. Standards, amendments and interpretations to existing standards that are not yet effective and have not been
early adopted by the Company in the 31 December 2021 financial statements:

There are a number of standards, amendments to standards, and interpretations which have been issued
by the IASB that are effective in future accounting periods that the group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2022:

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
• References to Conceptual Framework (Amendments to IFRS 3).
• Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
• IFRS17 Insurance contracts and amendments to IFRS 17 Insurance Contracts
• Disclosure of Accounting Policies (Amendments to IAS 2 and IFRS Practice Statement 2)
• Definition of Accounting Estimates (Amendments to IAS 8)
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

The Directors do not expect that their adoption will have a material impact on the financial statements of the
company in future years.

The Directors continue to monitor the impact of future changes to the reporting requirements but do not
believe the proposed changes will significantly impact the financial statements.

2.4. Going concern

The Going concern review has been based on current cash resources, expected costs and expected revenues. The
Directors have prepared a cash flow forecast covering a period of 24 months period ended 30 June 2024.

COVID-19 has not significantly impacted production capabilities. However, the pandemic and tough economic
environment have affected global trading conditions, which has resulted in delays of expected sales and lower
revenues than anticipated. This correspondingly resulted in a reduction in production activity at the Group’s
manufacturing facility in Lainate, Italy, in 2021. Despite challenging conditions, the Group has grown a substantial
pipeline of commercial opportunities, which management are working to convert into sales. As a result, there has
been moderate growth in orders in the first half of 2022. Since the year end, the Group has been financed by cash

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

receipts for orders, the initial payment received upon completion of the ICSI transaction (see Note 11), and also
receipt of an R&D tax credit.

In order to perform a meaningful Going concern review, the Management’s cash flow forecast contains both the
base case and worst case models of working capital requirements over the next 24 months period. The worst case
model includes assumptions such as selling existing inventory at cost and suspending production at the factory in
Lainate. The model included reduction in variable costs and fixed overheads, and factored in assumptions for fuel-
cost inflation. The model also included an assumption about the requirement of additional fundings to support
working capital requirements. On 30 June 2022 the Company announced a raise of an additional £1.5m by way of
a subscription for ordinary shares (see Note 25 for details). This, along with the positive trading outlook and cost
reduction options available, indicates that the Group is a going concern and will enable the Group to continue to
trade for at least the next 12 months. In the event that trading does not grow as envisaged, sufficient cost
reductions are not made, or if there are unforeseen costs, then it is possible that the Company may need to seek
additional funding in the next 18 months. Management has successfully raised money in the past, but there is no
guarantee that adequate funds will be available when needed in the future. As there can be no guarantee that
any required future funding can be raised in the necessary timeframe, a material uncertainty exists that may cast
significant doubt on the Company’s future ability to continue as a going concern.

The Directors are aware of the risks and uncertainties facing the business and the assumptions used are the
Directors’ best estimate of the future development of the business.

After considering the forecasts and the risks, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Should the Group be unable to continue as a going concern, adjustments would have to be made to restate the
value of assets to their recoverable amounts, to provide for further liabilities that might arise and to reclassify non-
current assets and non-current liabilities as current assets and current liabilities. The effect of these potential
adjustments has not been reflected in the consolidated financial statements.

2.5.

Foreign currency

The Group’s consolidated financial statements are presented in Sterling. The functional currencies of the Group’s
subsidiaries include the Euro and the US dollar. For each entity, the Group determines the functional currency and
items included in the financial statements of each entity are measured using that functional currency.

The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the
reporting date. Income and expenses are translated at weighted average exchange rates for the period. The
exchange differences arising on translation for consolidation are recognized in Other Comprehensive Income.

2.6. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision maker has been identified as the management team
including the two main directors and two non-executive directors.

The Board considers that the Group’s activity constitutes one operating and one reporting segment, as defined
under IFRS 8. Management reviews the performance of the Company by reference to total results against budget.

The total profit measures are operating profit and profit for the period, both disclosed on the face of the income
statement. No differences exist between the basis of preparation of the performance measures used by
management and the figures in the Group’s financial information.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Share-based payments

2.7.
The Group has issued share options to one Non-Executive Director, in return for which the Group receives services
from the Non-Executive Director. The fair value of the services received in exchange for the grant of the options is
recognised as an expense. The Group valued the options at the grant date using the Black Scholes valuation model
to establish the relevant fair values.

The total amount to be expensed is determined by reference to the fair value of the options granted including any
market performance conditions (for example the Group's share price) but excluding the impact of any service or
non-market performance vesting conditions (for example the requirement of the grantee to remain an employee
of the Group).

Non-market vesting conditions are included in the assumptions regarding the number of options that are expected
to vest. The total expense is recognised over the vesting period. At the end of each period the Group revises its
estimates of the number of options expected to vest based on the non-market vesting conditions. It recognises
the impact of any revision in the income statement with a corresponding adjustment to equity.

2.8. Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement
of financial position differs from its tax base, except for differences arising on:






the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination and at the
time of the transaction affects neither accounting or taxable profit; and
investments in subsidiaries where the Group is able to control the timing of the reversal of the difference
and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be
available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted
by the balance sheet date and are expected to apply when the deferred tax liabilities or assets are settled or
recovered. Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax
assets and liabilities.

2.9. Property, plant and equipment
Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the
acquired item, less accumulated depreciation and impairment losses.

Depreciation is provided to write off cost, less estimated residual values, of all property, plant and equipment,
evenly over their expected useful lives, when the asset is available for use, and calculated at the following rates:

Property improvements
Plant and machinery
Computer equipment

- straight line over 5 years
- straight line over 7-10 years
- straight line over 3 years

The carrying value of the property, plant and equipment is compared to the higher of value in use and the fair
value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to
sell the asset, then the asset is impaired and its value reduced by recognising an impairment provision.

2.10. Leased assets
At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, which comprises
of the building, except for short-term leases that have a lease term of 12 months or less and leases of low-value
assets, which are expensed to the profit & loss over the expense term.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

The right-of-use asset is initially recognised at cost, which comprises the initial amount of the lease liability plus
any lease payments made at or before the commencement date, plus any initial direct costs incurred, plus any
costs associated with restoring the asset to its original condition, less any lease incentive received. The right-of-
use asset is subsequently stated at cost less accumulated depreciation and impairment losses.

Lease payments included in the measurement of the lease liability comprise the following:




fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the group is reasonably certain to exercise, lease
payments in an optional renewal period if the group is reasonably certain to exercise such an option to
extend and penalties for early termination of a lease unless the group is reasonably certain not to
terminate early.

The lease liability is measured at amortised cost using the effective interest method. The liability recognised at
inception of the lease comprises the present value of future payments payable under the lease contract,
discounted at the rate implicit in the lease. If there is no discount rate implicit in the lease, then the incremental
rate of borrowing is used. The liability is remeasured when there is a change in future lease payments arising from
a change in an index or rate, or there is a change in the Group's estimate of the amount expected to be payable
under a residual value guarantee, or there is a change arising from the reassessment of whether the Group will be
reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in
profit or loss if carrying amount has been reduced to zero.

2.11. Financial Instruments
The Group classifies a financial instrument, or its component parts, as a financial asset, a financial liability or an
equity instrument in accordance with the substance of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity instrument.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and rewards are transferred.

A financial liability is de-recognised when it is extinguished, discharged, cancelled or expires.

Financial assets

2.11.1.
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and investments in particular at fair value through profit or loss (FVTPL),

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Group has applied the practical expedient, the
Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are measured at the transaction price determined under
IFRS 15.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is de-recognised, modified
or impaired.

The Group’s financial assets at amortised cost includes trade receivables and loan to related parties, are included
under other current financial assets. In the periods presented the Group does not have any financial assets
categorised as fair value through OCI.

Financial liabilities

2.11.2.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the
initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial
liability as at fair value through profit or loss.

Loans after initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as
well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings.

A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expires.

Impairment

2.11.3.
The Group assesses all other current receivables on a forward-looking basis, with expected credit losses (ECL)
associated with debt instruments measured at amortised cost. These are deemed short term (i.e., less than 12
months) and apply the Group policy for credit rating and risk management policies in place.

The impairment stages are defined as:
Stage 1 – When a receivable is recognised, ECLs resulting from default events that are possible within the next 12
months are expensed to the statement of comprehensive income (12-month ECL) and a loss allowance is
established. On subsequent reporting dates, 12-month ECL also applies to existing receivables with no significant
increase in credit risk since their initial recognition. In determining whether a significant increase in credit risk has
occurred since initial recognition, the Company assesses the change, if any, in the risk of default over the expected
life of the receivable (that is, the change in the probability of default, as opposed to the amount of ECLs).

Stage 2 – If the receivables credit risk has increased significantly since initial recognition and is not considered low,
lifetime ECLs are recognised.

Stage 3 – If the receivables credit risk increases to the point where it is considered credit-impaired, lifetime ECLs
are recognised, as in Stage 2.

The impairment methodology applied for the Group is stage 1, which require 12 month expected credit losses to
be recognised until a change in credit risk occurs in which case stage 2 would apply.

2.12. Inventories
Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for, as follows:

 Raw materials: purchase cost on a first-in/first-out basis;


Finished goods and work in progress: cost of direct materials and labour and a proportion of
manufacturing overheads based on the normal operating capacity but excluding borrowing costs.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.

2.13. Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly
liquid investments which are not subject to significant changes in value and have original maturities of less than
three months.

2.14. Revenue recognition
Revenue is generated from the manufacture and supply of lightweight solar panels. The Group recognises
revenue when (or as) a performance obligation in the customer contract is satisfied. Performance obligations
relevant to the customer contract are to manufacture goods in accordance with the specification in the customer
order form and any other regulatory or statutory requirements. The performance obligations are satisfied at the
point in time when the goods are deemed to be delivered. Revenue is measured as the fair value of the
consideration received or receivable and represents amounts receivable for services provided in the normal
course of business, net of discounts and sales-related taxes.

Customers are billed in advance of the delivery of goods, with 30 days terms. Upon receipt of an advanced
payment a contract liability is recognized. The contract liability is released at the point in time goods are delivered.

Under the Group’s standard terms and conditions there is a product warranty for ongoing acceptable function of
the goods for a period of 10 years, effective from the point of installation, or 3 months after delivery, whichever is
earlier.

This warranty is not sold as a separate component. This length of warranty is standard in the industry. This is not a
separate service, and is deemed an “assurance” type warranty under IFRS 15 guidance; and is therefore accounted
for separately under IAS 37 instead.

2.15. Research and Development costs
Expenditure on research activities is recognised in profit or loss as incurred. Development expenditure is capitalised
only if the expenditure can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Group intends to and has sufficient resources to complete
development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to
initial recognition, development expenditure is measured at cost less accumulated amortisation and any
accumulated impairment losses.

2.16. Summary of critical accounting estimates and judgements
The preparation of financial information in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires the directors to exercise their judgement in the process of applying the accounting
policies which are detailed above. These judgements are continually evaluated by the directors and management
and are based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances.

The key estimates and underlying assumptions concerning the future and other key sources of estimation
uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial period are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects both current and
future periods.

The estimates and judgements which have a significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial year are discussed below:

2.16.1. Estimates

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Useful lives of depreciable assets
Management reviews the useful lives and residual value of depreciable assets at each reporting date to ensure
that the useful lives represent a reasonable estimate of likely period of benefit to the Group. Tangible fixed assets
are depreciated over their useful lives taking into account the residual values, where appropriate. The actual lives
of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-
assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes
are taken into account. Residual value assessments consider issues such as future market conditions, the remaining
life of the asset and projected disposal values.

Lease liability discount rate
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment with similar terms, security and
conditions. To determine the incremental borrowing rate, the Group:

• Where possible, uses recent third-party financing received by the individual lessee as a starting point,

adjusted to reflect changes in financing conditions since third party financing was received;

• Uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held

by the company, which does not have recent third party financing; and
• Makes adjustments specific to the lease, e.g. term, currency and security.

The Group used incremental borrowing rates at a prevailing rate of 15%.

Share based payments
Share options are recognised as an expense based on their fair value at date of grant. The fair value of the options
is estimated through the use of a valuation model – which require inputs such as the risk-free interest rate,
expected dividends, expected volatility and the expected option life - and is expensed over the vesting period.
Some of the inputs used to calculate the fair value are not market observable and are based on estimates derived
from available data, such as employee exercise behaviour and employee turnover.

Fair value of investments
The fair value of non-listed financial assets measured at fair value through the profit & loss is estimated at the
balance sheet date based on all information available to the directors. The Group’s investment is non-listed and
therefore valuation is based largely on IFRS 13 Level III principles. Inputs include risk-adjusted forward-looking
information about the business. The Group held an 11.6% stake in ICSI at 31 December 2021 as set out in note 11.
At the year end there was recent information available to management from a potential external buyer, which
provided details about the market value of the investment. The proposed offer was structured over several product
development milestones, with an earn-out over a 5-year period. The revaluation at year end was calculated based
on this information, and includes management assumptions around the achievability of each individual milestone.
This risk-weighted compensation was then discounted at an estimated cost of equity, being 10.43%.

2.16.2. Judgements

Corporate bond

During the period the Company issued corporate bonds through funding platform Crowd For Angels, with a term
of 2 years, as set out in note 19. In tandem with the bond issue, the Company also issued share warrants to Crowd
For Angels, with a term of 3 years. According to the warrant instrument, the share warrants can only be subscribed
for in cash, which means they cannot be exercised in return for a redemption of the bond principal. As such,
management considers that the corporate bonds are not convertible by way of share warrant exercise as there is
a contractual obligation to pay cash, and also no contractual obligation to repay any such funds received in
redemption of the outstanding bonds. Therefore, the fair value of the warrants is viewed as a cost of bond issue
and is deducted from the bond liability balance, rather than as an equity instrument. The warrants were fair valued
using the Black Scholes model, see note 22 for details.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

3. Financial Risk Management

The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout these financial statements.

3.1. Principal financial instruments and their categories
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

Categories of financial assets

Cash and cash equivalents

Trade receivables – net of provision
Amount due from related parties
Total current financial assets at amortised cost

31 December 2021
£

31 December 2020
£

237,613

17,053
100
254,766

1,711,761

206
100
1,712,067

Categories of financial liabilities

Trade payables
Wages payable
Pension payable

Accruals
Amount due to related parties
Trade and other payables

Current loans and borrowings
Non current loans and borrowings
Loans and borrowings

Current lease liabilities
Non current lease liabilities
Lease liabilities

Total financial liabilities at amortised cost

31 December 2021
£

31 December 2020
£

232,011
19,535
508

77,150
70,000
399,205

-
277,080
277,080

69,737
90,687
160,424

836,709

201,453
15,849
175

331,189
-
548,666

70,000
-
70,000

45,883
149,051
194,934

813,600

3.2. General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group's finance function.
The Board receives monthly reports from the CFO through which it reviews the effectiveness of the processes put
in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

3.2.1. Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. In order to minimise this risk, the Group endeavours only to deal with companies which are
demonstrably creditworthy.

The aggregate financial exposure is continuously monitored. The maximum exposure to credit risk is the value of
the outstanding amount of bank balances. The Group’s exposure to credit risk on cash and cash equivalents is
considered low as the bank accounts are with banks with high credit ratings. The analysis of trade receivables and
expected credit loss allocation is detailed in note 16.

3.2.2. Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected
requirements for a period of at least 45 days.

The Group currently holds cash balances to provide funding for normal trading activity and is managed centrally.
Trade and other payables are monitored as part of normal management routine.

The Board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash
balances.

The liquidity risk of each group entity is managed centrally by the group treasury function. Each operation has a
facility with group treasury, the amount of the facility being based on budgets. The budgets are set locally and
agreed by the Board in advance, enabling the Group's cash requirements to be anticipated. Where facilities of
group entities need to be increased, approval must be sought from the group finance director. Where the amount
of the facility is above a certain level, agreement of the Board is needed. The following table sets out the
contractual maturities (representing undiscounted contractual cash-flows, including contractual interest) of
financial liabilities:

31 December 2021

Up to 3
Months

Between 3 and
12 months

Between 1
and 2 year

Between 2
and 5 years

Trade payables
Wages payable
Pension payable
Accruals
Amount due to related parties
Lease liability
Non-current loan – interest
bearing

232,011
19,535
508
77,150
70,000
35,096
5,557

-
-
-
-
-
52,921
16,672

-
-
-
-
-
106,675
325,370

Gross cashflows

439,857

69,737

448,045

-
-
-
-
-
-
-

31 December 2020

Trade payables
Wages payable
Pension payable
Accruals
Lease liability

Up to 3
Months

Between 3 and
12 months

Between 1
and 2 year

Between 2
and 5 years

201,453
15,849
175
331,189
18,396

-
-
-
-
55,464

-
-
-
-
187,012

-
-
-
-
-

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Current related party loan –
interest bearing
Undiscounted financial
liabilities at amortised cost

70,000

637,062

55,464

187,012

3.2.3. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates
primarily to the Group’s debt obligations with floating interest rates.

The Group’s exposure to interest rate risk is limited, as all its loans and borrowings are fixed rate loan. At the
balance sheet there were corporate bonds of £324,858 which had a fixed interest rate of 7% (2020: Convertible
loan notes of £70,000 with an interest rate of 10%).

3.2.4. Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency
other than their functional currency. The Group's policy is, where possible, to allow group entities to settle
liabilities denominated in their functional currency with the cash generated from their own operations in that
currency. Where group entities have liabilities denominated in a currency other than their functional currency (and
have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where
possible, be transferred from elsewhere within the Group.

In the current year the Group is predominantly exposed to currency risk on purchases made in EUR and USD.

The following table details the Group’s exposure at the end of the year to currency risk arising from recognised
assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate.
Differences resulting from the translation of the financial statements of the entity within the Group into the
Group’s presentation currency are excluded:

As of 31 December 2021 the Group’s exposure to changes in foreign exchange rate was as follows:

Forex sensitivity
calculation

Effect on net assets
USD
£

GBP
£

EUR
£

Effect on loss before tax
USD
£

GBP
£

EUR
£

1%
-1%

79
(79)

(1)
1

(53)
53

(79)
79

1
(1)

53
(53)

As of 31 December 2020 the Group’s exposure to changes in foreign exchange rate was as follows:

Forex sensitivity
calculation

Effect on net assets
USD
£

GBP
£

EUR
£

Effect on loss before tax
USD
£

GBP
£

EUR
£

1%
-1%

4,893
(4,893)

-
-

2,382
(2,382)

(4,893)
4,893

-
-

(2,382)
2,382

4. Revenue and segmental information

Revenues

Sale of Goods
Total

Year ended
31 December 2021
£
107,632
107,632

Year ended
31 December 2020
£
21,521
21,521

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

The Group had 2 customers that exceeded 10% of revenue in 2021 (2020: 2 customers).

Segment information

The chief operating decision maker has been identified as the management team including the executive and non-
executive directors. The chief operating decision-maker allocates resources and assesses performance of the
business and other activities at the operating segment level.

The chief operating decision maker has determined that in the year ended 31 December 2021 Verditek had one
operating segment, the development and commercialisation of clean technologies, although it is likely that in
future periods the Group’s segmental reporting will be expanded as different technologies are developed and
commercialised.

Geographical Segments

Apart from holding company activities in the UK the Group’s had operations in Italy in Europe in the period.

An analysis of revenue, operating loss and total assets less current liabilities by geographical market is given
below:

Year ended
31 December 2021
£

Year ended
31 December 2020
£

Revenue

UK
Rest of Europe
Total revenue

Operating loss
UK
Rest of Europe
Total operating loss

Non-current assets
UK
Rest of Europe
Total non current asset

5. Other income
Fair value changes through P&L - ICSI
Total other income

-
107,632
107,632

(643,547)
(1,359,976)
(2,003,523)

990,599
441,875
1,432,474

966,354
966,354

-
21,521
21,521

(1,336,955)
(933,659)
(2,270,614)

24,623
792,498
817,121

-
-

Refer to investment note 11 for further information on the ICSI revaluation.

6. Operating loss

Operating loss is stated after charging:

Year ended
31 December 2021
£

Year ended
31 December 2020
£

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Auditors’ remuneration:
Audit fees – audit of the company and its subsidiaries
pursuant to legislation

Non-audit fees – other assurance services

Direct costs – inventory cost of goods expense
Direct costs – inventory write-down
Direct costs – inventory theft
Direct costs - other
Depreciation of fixed assets
Disposal of fixed assets
Provision against non-trading assets
Director’s fee and staff costs (note 7)
Advertising, marketing and development
Research costs
Other costs

32,500
-

80,176
125,770
346,841
56,785
306,915
1,582
43,551
500,810
184,013
(81,847)
511,560

29,500
2,500

169,751
-
-
150,722
164,566
-
472,150
689,760
220,492
134,496
259,630

7. Employees and directors
The average number of employees (including directors) during the period was made up as follows:

Directors
Production
Administrative
Total

Year ended
31 December 2021
Number
2
7
2
11

Year ended
31 December 2020
Number
4
1
2
7

The cost of staff and directors during the period was made up as follows:

Salaries
Directors’ fees

Share based payments
Social security costs
Pension costs

Costs capitalised as part of inventories

Total staff cost in the statement of comprehensive
income

Consisting of:
Employee costs included in direct costs
Employee costs included in admin expenses

Year ended
31 December 2021
£
362,535
247,374

Year ended
31 December 2020
£
405,630
186,972

48,047

21,340
23,741
703,037
(20,073)

682,964

77,481
36,024
14,211
720,318
(25,297)

695,021

183,727
499,237

5,261
689,760

Key management personnel include both board and non-board members. Key management personnel
compensation is as follows:

Key management personnel compensation

Year ended
31 December 2021

Year ended
31 December 2020

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Salaries
Fees
Share based payments
Social security costs
Pension costs

8. Finance costs

Finance expenses
Interest on loans (note 19)
Amortisation of bond issue costs (note 19)
Finance lease interest
Interest on Overdue Taxation
Total finance expense

Details of the interest rate on the loans are shown in note 19.

Income tax

UK Corporation tax

Tax credit/ (expense)– current year
Tax credit/ (expense)– prior year

Total current tax

Deferred tax

Origination and reversal of timing differences

Total tax credit/(expense)

£
137,500
289,617
46,928
9,746
1,875
485,667

£
273,862
186,972
33,377
23,100
5,444
522,755

Year ended
31 December 2021
£

Year ended
31 December 2020
£

12,623
18,125
29,805
-
60,553

116,616
-
33,300
2,109
152,025

Year ended
31 December 2021
£

Year ended
31 December 2020
£

-
123,308

123,308

-
98,448

98,448

Factors affecting the tax expense
The reasons for the difference between the actual tax expense for the year and the standard rate of corporation
tax in the United Kingdom applied to the result for the year are as follows:

Loss on ordinary activities before income tax
Standard rate of corporation tax
Loss before tax multiplied by the standard rate of
corporation tax
Effects of:

Research and Development tax credit

Losses utilised against chargeable gains
Non-deductible expenses

Difference in overseas tax rates

Deferred tax not recognised

Year ended
31 December 2021
£

Year ended
31 December 2020
£

(1,097,387)
19.00%

(2,422,569)
19.00%

(208,504)

(460,288)

123,308

(183,607)
26,163
(69,432)

435,380

98,448

-
125,878
(48,147)

382,557

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Withholding tax

Tax credit

123,308

98,448

The Group has not recognized deferred tax assets arising from the accumulated tax losses due to uncertainty of
their future recovery. The deferred tax asset not recognized is £1,471,603 at 31 December 2021 (2020:
£1,093,739).

10. Loss per share

Basic and diluted
Loss for the period and earnings used in basic & diluted
EPS (£)
Weighted average number of shares used in basic and
diluted EPS
Loss per share:
Basic and diluted

Year ended
31 December 2021

Year ended
31 December 2020

(974,079)

(2,231,105)

341,351,150

280,609,258

(0.3p)

(0.8p)

Basic loss per share is calculated by dividing the loss for the period from continuing operations of the Group by the
weighted average number of ordinary shares in issue during the period. Due to the loss in the periods and there
are no potentially dilutive ordinary shares, there is no difference between the basic and diluted loss per share.

11. Investments

Cost
At 1 January 2020
Exchange difference
At 31 December 2020
Revalue investment
At 31 December 2021

Financial assets at fair
value through profit or
loss
£

24,229
(824)
23,405
966,595
990,000

Investment
in associates

Loans to
associates

-
-
-
-
-

Total

24,229
(824)
23,405
966,595
990,000

The Company holds a 11.6% investment stake in Industrial Climate Solutions (ICSI), an unlisted company registered
in Canada. The directors estimated the fair value of Verditek’s investment in ICSI at the reporting date to be
£990,000 (2020: £23,405).

The uplift in the investment fair value was due to interest from an external buyer in the ICSI business, which the
Company was aware of at the year-end, which provided information on the market value of the investment. See
Note 2.16.1 for more information on the fair value estimate. The offer was subsequently accepted by a sufficient
number of shareholders and the sale of the ICSI business was completed on 1 February 2022. A further milestone
payment is expected towards the end of 2022.

As the directors have no seat on the board of ICSI and the investment stake is under 20%, they consider that they
do not have significant influence over the business, and therefore that ICSI is not an associate.

12. Property, plant and equipment

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Plant &
Machinery

Computer
equipment

Leasehold
Improvement
s

583,027
32,266
32,757
648,050
3,483
(7,138)
(42,462)
601,933

15,457
108,411
1,916
125,784
250,779
(3,508)
(14,020)
359,035

522,266
242,898

3,023
949
-
3,972
-
-
-
3,972

2,258
495
-
2,753
619
-
-
3,372

1,219
600

72,349
-
4,078
76,427
3,518
-
(5,022)
74,923

7,193
5,642
465
13,300
6,057
-
(1,018)
18,339

63,128
56,584

Total

658,399
33,215
36,835
728,449
7,001
(7,138)
(47,484)
680,828

24,908
114,548
2,381
141,837
257,455
(3,508)
(15,038)
380,746

586,612
300,082

Cost
At 1 January 2020
Additions
Exchange adjustments
At 31 December 2020
Additions
Disposals
Exchange adjustments
At 31 December 2021

Depreciation
At 1 January 2020
Charge for the year
Exchange adjustments
At 31 December 2020
Charge for the year
Disposals
Exchange adjustments
At 31 December 2021

Net book value
At 31 December 2020
At 31 December 2021

At the reporting date a review of useful lives of depreciable assets was conducted. Several individual plant &
machinery assets were identified that had no remaining useful life. This resulted in an acceleration of depreciation
for those assets, with an additional charge of £120,000.

13. Subsidiary undertakings

As at 31 December 2021, the subsidiaries of Verditek plc, all of which have been included in these consolidated
financial statements, are as follows:

Name
Greenflex Energy
Limited

Country of
incorporation

Parent

Verditek plc

Greenflex RSM S.r.l 1

San Marino

Verditek Solar S.r.l
BBR Filtration
Limited2

BBR Filtration USA,
LLC

Italy

USA

Greenflex Energy
Limited

Verditek plc

BBR Filtration
Limited

Proportion of
ownership
interest at 31
December
2021

100%

51%

Nature of business

Dormant

Solar technology
services
Filtration
technology services

50.49%

Dormant

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Verditek USA, Limited

USA

Verditek plc

Verditek Solar
Solutions Limited

Verditek plc

100%

N/A

Dormant

1 - Greenflex RSM S.r.l ceased to trade in July 2018, and an application to liquidate the company was made in
February 2019;

2 – BBR Filtration Limited was dissolved in June 2021.

Name

Registered address

Greenflex Energy Limited

29 Farm Street, London, England, W1J 5RL3

Greenflex RSM S.r.l

Verditek Solar S.r.l

Via L. Cibrario, 25, 47893 Cailungo, San Marino

Via Pogliano, 26, 20020 Lainate, Italy

BBR Filtration Limited

29 Farm Street, London, England, W1J 5RL3

BBR Filtration USA, LLC (99%)
Verditek USA, Limited
Verditek Solar Solutions
Limited

C/o 2605, Ponce De Leon, Boulevard, Coral Gables, Florida 33134
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801

29 Farm Street, London, England, W1J 5RL3

3 Registered office is changing as of 1 July 2022, to 5 Chancery Lane, London, WC2A 1LG

14. Right of use asset

Cost
At 1 January 2020
Remeasurement
Exchange
At 31 December 2020
Additions
Remeasurement
Exchange
At 31 December 2021

Depreciation
At 1 January 2020
Charge for the year
Unwind of discount of lease deposit (other receivables)
Exchange
At 31 December 2020
Charge for the year
Unwind of discount of lease deposit (other receivables)
Exchange
At 31 December 2021

Net book value
At 31 December 2020
At 31 December 2021

Building
£

328,561
(1,906)
18,977
345,632
1,126
-
(22,682)
324,076

78,855
50,471
4,178
5,024
138,528
49,460
3,945
(10,248)
181,685

207,104
142,391

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

The right-of-use asset is the present value of a lease asset on a factory in Lainate, Italy signed in 2018 for 6 years.
The lease term expires in 2024, with an option to renew for another 6 years. The rental amount is reviewed on
an annual basis, with increase in rental value linked to 75% of the consumer price index for white and blue collar
worker households established by ISTAT (a national central statistics institute).

15. Inventories

Finished goods
Raw materials
Total Inventories

2021
£

509,849
147,302
657,151

2020
£

516,144
119,897
636,041

During the period £80,176 inventories relating to revenue were recognized as a cost in the P&L (2020: £169,751).
There was also a provision against inventories to write-down defective stock, £125,770 (2020: £nil). The
defective panels were identified as part of an operational review during the year. During the year there was also
a theft of inventory, which resulted in an expense of £346,841.

16. Trade and other receivables

Trade receivables – gross
Less: provision for expected credit losses

Trade receivables - net
Advance to suppliers and deposits
Amounts due from related parties
VAT and other taxes receivable
Prepayments

Total trade and other receivables

The ageing of trade receivables and ECL allocation is as follows:

31 December 2021

Not past due and not impaired
Up to 30 days past due
31 to 60 days past due
61 to 90 days past due
Over 90 days past due

Total

31 December 2020

Not past due and not impaired
Up to 30 days past due
31 to 60 days past due

61 to 90 days

Gross
£

2,673
-
969
1,180
38,644

43,466

Gross
£

-
206
-

1,536

2021
£

43,466
(26,413)

17,053
42,882
100
170,388
161,770

392,193

ECL
£

-
-
-
-
(26,413)

(26,413)

ECL
£

-
-
-

(1,536)

2020
£

10,256
(10,050)

206
298,055
100
116,249
9,243

423,853

Net
£

2,673
-
969
1,180
12,231

17,053

Net
£

-
206
-

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Over 90 days

Total

17. Cash and cash equivalents

8,514

10,256

(8,514)

(10,050)

2021

206

2020

Cash at bank and in hand

237,613

1,711,761

The fair value of the cash & cash equivalent is as disclosed above. For the purpose of the cash flow statement,
cash and cash equivalents comprise of the amounts shown above.

18. Trade and other payables

Trade payables
Accruals

Contract liability

Wages payable

Pension payable
Other payable

Amounts due to related parties
Financial liabilities at amortised costs other than loans and
borrowings

Social security & other taxes payables

Total trade and other payables

2021
£

232,011
77,150

19,535

508
162

70,000

399,366

11,847

411,213

2020
£

201,452
331,189

29,576

15,849

175
-

578,241

7,118

585,359

During the prior reporting period, a contract liability was recognized in respect of advanced billing of customers

19. Loans and borrowings

Current
Convertible loans
Non – current
Convertible bonds issued to related party
Corporate bonds (net of bond issue costs)
Total current and non – current loans and borrowings

2021
£

2020
£

70,000

25,000
252,080
277,080

-
-
70,000

During the year, a series of corporate green bonds were issued through crowdfunding platform Crowd For Angels
with an interest rate of 7%:

-
-

£225,000 was issued on 28 May 2021 with a term of 2 years, and is secured by way of a floating charge
against the assets of the Company;
£25,000 was issued on 28 May 2021, with the same term, to non-executive director Gavin Mayhew;
£103,253 was issued on 13 August 2021, with a term of 2 years to external investors through the Crowd
For Angels platform and is secured by way of a floating charge against the assets of the Company.

Alongside the corporate bonds, warrants were also issued to Crowd For Angels, including

-
-

2,250,000 warrants on 28 May 2021, with a term 36 months and exercise price 3.1p
1,032,530 warrants on 30 July 2021, with a term 36 months and exercise price 2.75p

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

The warrants were fair valued using the Black Scholes model, see note 22 for details. The fair value of the warrants
was recognised as a bond issue cost (£65,903), and is being amortised over the term of the bonds. During the year
there was a bond amortisation charge of £18,125 recorded within finance costs.

During the year £28,395 of the outstanding corporate green bond balance was repaid.

The balance of Convertible loans in prior year was the remaining unsecured convertible loan notes issued in
December 2018. The balance and associated interest of the convertible loan notes was repaid in cash in January
2021.

Cashflow - net debt analysis

Convertible bonds
Corporate bonds
Corporate bonds
issued to related
party
Lease liability

20. Lease liability

01-Jan-21
£
70,000
-
-

Cash inflow
£
-
328,253
25,000

Cash outflow
£
(70,000)
(28,395)
-

Non-cash

-
(47,778)
-

31-Dec-21
£
-
252,080
25,000

194,934
264,934

-
353,253

(51,950)
(150,345)

17,440
(30,338)

160,424
437,504

Current Lease liability
Non-Current Lease liability
Total Current loans and borrowings

Lease liabilities are payable as follows:

2021
£
69,737
90,687
160,424

2020
£
45,883
149,051
194,934

Future minimum lease
payments
£
88,017

Interest

£
(18,280)

Present value of minimum
lease payments
£
69,737

five

90,687
160,424
The cash outflow on lease liability payments in the year was £51,950 (2020: £69,920). The interest expense on
lease liabilities recognised in the year was £29,805 (2020: £33,300).

(15,988)
(34,268)

106,675
194,692

Less than one year
Between one and
years

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

21. Share capital and reserves

At 1 January 2020
Exercise of shares for cash

Shares issued March 2020
Shares issued May 2020
Shares issued August 2020 – exercise of
warrant
Shares issued October 2020
Share issue costs
Exercise of shares – non-cash

Shares issued September 2020 – satisfaction of
debts
Conversion of convertible loan note to equity
September 2020

At 31 December 2020
Exercise of shares for cash

Shares issued October 2021

At 31 December 2021

Number of Shares
Par Value £0.0004

229,163,534

20,230,000
40,000,000

3,753,456
43,750,000

Share
capital
£
91,666

8,092
16,000

1,501
17,500

Share
premium
£
5,466,376

497,658
984,000

336,309
3,482,500
(267,514)

3,090,909

1,236

115,764

1,184,544

475

117,980

341,172,443

136,470

10,733,073

1,032,530
342,204,973

413
136,882

27,982
10,761,055

During the year there was an exercise of 1,032,530 share warrants to subscribe for ordinary shares at 2.75p per
share.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

22. Share based payment reserve
The Company operates an equity-settled share-based remuneration schemes for Senior Executives, under the
terms of the Company's EMI and Non-Qualifying Share Option Plan (the "Option Plan"). The options are valid for
10 years from the date of grant. After satisfaction of any performance condition included in the award the options
will become exercisable in equal tranches on each anniversary of the Grant Date during the first three years.

The fair value of the employee services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference to the fair value of the options granted
including any market performance conditions (for example the Company's share price) but excluding the impact
of any service or non-market performance vesting conditions (for example the requirement of the grantee to
remain an employee of the Group).

The Company uses a Black Scholes model to estimate the cost of share options. The following information is
relevant in the determination of the fair value of options granted. The assumptions inherent in the use of this
model are as follows:

• The option life is the estimated average period over which the options will be exercised.
• For options issued to Rob Richards and David Willetts in 2021, there is a vesting condition linked to performance
of the company.
• For other options issued in 2021 and earlier, the vesting conditions are 3 years’ continued service with the Group.
• No variables change during the life of the option (e.g. dividend yield remains zero).

During the year there were also warrants issued to Crowd For Angels, please see note 19 for details.

The key assumptions used in the fair value calculation for issues is as follows

Issue date
Stock price at grant date
Volatility
Time to maturity (months)
Risk free rate

28/05/2021
3.1p
107%
36
0.08125%

30/07/2021
2.75p
99%
36
0.07400%

17/09/2021
3.8p
100%
36
0.07088%

06/04/2020
2.0p
73%
60
0.6528%

The movement in outstanding share options and warrants are as follows:

Number of share
options

Number of
warrants

Opening at 1 January 2021

5,500,000

Weighted
average strike
price
(pence)
4.6

Weighted
average term
(years)
8.7

Issued 17/09/21
Issued 28/05/21
Issued 30/07/21
Exercised
At 31 December 2021

14,500,000
-
-
-
20,000,000

2,250,000
1,032,530
(1,032,530)
2,250,000

3.8
3.1
2.75
2.75
3.9

10
3
3
3
8.2

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

1,500,000 options were granted under the scheme in April 2018 to Chairman, Lord David Willetts, with an exercise
price of 9.0p. During 2020 there were 4,000,000 options issued to CEO, Rob Richards at an exercise price of 3.0p.
During the year there were 3,000,000 options issued to Lord David Willetts and 10,000,000 options were issued to
Rob Richards at an exercise price of 3.8p.

The share based payment expense recognized in the income statement during the period was £48,047 (2020:
£77,481).

23. Reserves
The following describes the nature and purpose of each reserve within equity:

Share premium - Amount subscribed for share capital in excess of nominal value. This includes share issue costs,
which are deducted from share premium.

Share based payment reserve - The share based payment reserve represents equity settled share based employee
remuneration until such share options are exercised.

Foreign exchange reserves - Foreign exchange translation gains and losses on the translation of the financial
statements of subsidiary from the functional to the presentation currency, and also foreign exchange on intra-
group funding balances.

Retained earnings - All other net gains and losses and transactions with owners (e.g. dividends) not recognised
elsewhere.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

24. Related Party Transactions

The Group has related party transactions with related parties who are not members of the group.

Geoff John Nesbitt1

Timothy Lord2

The Rt Hon. Lord David Willetts FRS3

Transactions during
the year

Amounts owed by
related parties

Amounts owed to
related parties/loans

2021

2020

2021

2020

66,000

132,662

50,000

25,000

31,053

68,974

50,000

25,000

153,423

151,374

103,327

2021

33,000

16,666

46,053

2020

George Katzaros4

Gavin Mayhew5

Rob Richards

Notes:
1Geoff John Nesbitt
(resigned 7 May
2020)
2Timothy Lord
(resigned 5 August
2020)

3 The Rt Hon. Lord
David Willetts FRS

4George Katzaros

5Gavin Mayhew

6Rob Richards
(appointed 1 June
2020)

Geoff ceased to be a director of the Company in 2020, but has been retained on a
consultancy basis. Mr. Geoff John Nesbitt remains a director of BBR Filtration
Limited.

Timothy Lord ceased to be a director of the Company in 2020 and is therefore no
longer a related party in 2021.
Lord David Willetts, Chairman of the Company, was entitled to fees and services of
£50,000 during the period of which £33,333 remains outstanding at the end of the
year. Lord Willets was also issued some share options in 2018 and 2021, with which
there was an associated £10,974 charge during the year.
Mr. George Katzaros, a non-executive director of Verditek plc, was entitled to
Directors fees of £25,000 during the year. At the year-end George Katzaros was
owed a Directors fee of £16,666.
Gavin Mayhew, non-executive director of the company, during the year he was
entitled to Directors fees of £30,000, at the year-end £20,000 of this remained
unpaid. Gavin Mayhew is also owed £25,000 with an expiry date of 18/05/2023
accruing 7% interest, at the year end this amounted to £26,053.
Robert James Richards, director (appointed June 2020) during the year was entitled
to Directors fees of £151,374 at year end these had all been settled. Rob Richards
was also issued some share options in 2021 and 2020, with which there was an
associated £33,705 charge during the year.

Details of the directors’ emoluments, together with the other related information, are set out in the Directors
Report of the Remuneration Committee.

25. Events subsequent to the reporting date

On 1 February 2022 the Group’s 11.6% share in ICSI was sold for a potential maximum consideration of CAD3.6m
(£2.0m). £308,000 was received on completion, with the remaining earn-out being dependent on achieving certain
milestones over the next 5 years to December 2026.

On 30 June 2022, the Company raised £1,520,000 before expenses by way of a subscription for ordinary shares,
being an issue of 101,333,333 shares at a price of 1.5p.

26. Ultimate controlling party

There is no ultimate controlling party of the Company.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

COMPANY STATEMENT OF FINANCIAL POSITION

Non-current assets

Investments in subsidiaries

Investment

Property, plant and equipment

Total non-current assets

Current assets

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Current liabilities
Trade and other payables

Loans and borrowings

Total current liabilities

Non-current liabilities

Loans and borrowings

Total current liabilities

Net assets

Share capital
Share premium

Share based payment reserve

Retained losses

Total equity

31 December 2021

31 December 2020

Notes

4,018,455

990,000

599

5,009,054

330,333

200,260

530,593

5,539,647

335,517

277,080

2,877,822

23,406

1,218

2,902,446

123,796

1,657,717

1,781,513

4,683,959

268,207

70,000

338,207

4,927,050

4,345,752

136,883
10,761,055

213,134

(6,184,022)

4,927,050

136,470
10,733,073

99,184

(6,622,975)

4,345,752

For the year under review, the amount due from subsidiaries is regarded as net investment and is therefore
reclassified from current assets to non-current assets, and their respective comparatives were also restated.

The Company’s profit for the year was £438,954 (2020: loss of £1,571,129).

These financial statements were approved and authorised for issue by the Board of Directors on 29 June 2022 and
were signed on its behalf by:

Rob Richards
Chief Executive Officer
Company Registration Number: 10114644
The accompanying notes are an integral part of these financial statements.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

COMPANY STATEMENT OF CHANGES IN EQUITY

Share
capital
£

Share
premium
£

Share based
payment
reserve

Retained
losses
£

Total
£

Equity as at 1 January 2020

91,666

5,466,376

21,703

(5,051,846)

527,899

Loss for the year

Total comprehensive loss

Share issue (net of expenses)

44,804

5,266,697

Share based payments

Equity as at 31 December 2020
Profit for the year

136,470
-

10,733,073
-

Total comprehensive loss

Share issue (net of expenses)
Issue of warrants – corporate
bond

Share based payments

413

27,982

77,481

99,184
-

65,903

48,047

(1,571,129)

(6,622,976)
438,954

438,954

5,311,501

77,481

4,345,752
438,954

438,954

28,395

65,903

48,047

Equity as at 31 December 2021

136,883

10,761,055

213,134

(6,184,022)

4,927,050

The accompanying notes are an integral part of these financial statements.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1. Accounting policies

The accounting policies that are applicable, as set out in note 1 to the consolidated financial statements have been
applied together with the following accounting policies that have been consistently applied in the preparation of
these Verditek PLC (“the Company”) financial statements.

Basis of preparation

The financial statements of Verditek PLC have been prepared in accordance with Financial Reporting Standard 101,
‘Reduced Disclosure Framework’ (FRS 101). The financial statements have been prepared under the historical cost
convention, as modified and in accordance with the Companies Act 2006.

The Company has taken advantage of Section 408 of the Companies Act 2006 in not presenting its own statement
of comprehensive income.

The Company has taken advantage of the following disclosure exemptions under FRS 101, on the basis that
equivalent disclosures are, where required, are given in the consolidated financial statements of Verditek plc:
a. a Cash Flow Statement and related notes as required by IAS 7 – ‘Statement of Cashflows’;
b. the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative
information in respect of paragraph 79(a)(IV) of IAS 1 – a reconciliation of the share capital at beginning and
end of the period;

c. the requirements of paragraph 134 – 136 of IAS 1 ‘Presentation of Financial Statements’ to disclose the

management of the capital of the Company;

d. the requirements of paragraphs 30 and 31 of IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and
Errors’ to disclose the new or revised standards that have not been adopted and information about their likely
impact;

e. all of the disclosure requirements of IFRS 7 ‘Financial Instruments: Disclosures’;
f. the requirements of paragraph 17 of IAS 24, ‘Related Party Disclosures’ to disclose key management personnel;

and

g. the requirements in IAS 24 ‘Related Party Disclosures’ to disclose related party transactions entered into
between two or more members of a group, provided that any subsidiaries which is a party to the transaction
is wholly owned by such a member.

Going concern
A going concern review for the Company has been based on current cash resources, expected costs and expected
receipts. The Directors have prepared an expected cash flow forecast covering a period of 24 months period ended
to 31 May 2024, which contains both the base case and the worst case models of working capital requirements.
More detail on this is set out in Note 2.4 to the Group accounts.

Investments in subsidiaries
The Company’s investment in its subsidiaries are carried at cost less provision for any impairment. Investments
include shareholder loans. Investments denominated in foreign currency are recorded using the rate of exchange
at the date of acquisition. The carrying value is tested for impairment when there is an indication that the value of
the investment might be impaired. When carrying out impairment tests, the recoverable amount is based upon
future cash flow forecasts and these forecasts would be based upon management judgement. Where the carrying
value is more than the recoverable amount, no impairment provision is made.

Trade and other receivables
The Company assesses on a forward-looking basis the expected credit loss associated with its receivables carried
at amortised cost. The impairment methodology applied depends on whether there has been a significant increase
in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, resulting in

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

trade receivables recognised and carried at original invoice amount less an allowance for any uncollectible
amounts based on expected credit losses.

Critical accounting estimates and judgments
The preparation of financial information in conformity with FRS 101 requires the use of certain critical accounting
estimates. It also requires the Directors to exercise their judgement in the process of applying the accounting
policies which are detailed above. These judgements are continually evaluated by the Directors and management
and are based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. The judgements that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are as follow:

Impairment of investments in and amount due from subsidiaries

In determining whether there are indicators of impairment of the Company’s investments in, and amounts
receivable from, its subsidiary undertakings, the directors take into consideration various factors including the
economic viability and expected future financial performance of the business of the subsidiary undertakings.
Future cashflows from solar operations requires significant management judgement, as the solar production
business is still in its early stages.

Classification of investments in and amount due from subsidiaries

Investments in subsidiaries are classified as non-current assets. Funding provided to subsidiaries is long-term in
nature and not intended to be repaid on demand, and therefore it is appropriate to present the assets as non-
current. Accordingly, the comparative amount was restated and reclassified to non-current.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

2. Staff costs

The average number of employees (including directors) during the period was made up as follows:

Directors
Administrative
Total

2021
Number
2
2
4

2020
Number
3
1
4

The cost of employees (including directors) during the period was made up as follows:

Salaries (including directors)

Share based payment

Social security costs
Pension cost

Total staff costs

2021

2020

188,589

383,981

12,092

11,977
3,250

77,481

33,883
7,444

215,908

502,789

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Investments in subsidiary undertakings

At 1 January 2020
Additions
Movement for the year
At 31 December 2020
Additions
Movement for the year
At 31 December 2021

IMPAIRMENT
At 1 January 2020
Impairment of investment in subsidiary
At 31 December 2020
Impairment of investment in subsidiary
At 31 December 2021

Net book value
At 31 December 2020
At 31 December 2021

Investment in
subsidiary
£
608,916
-
-
608,916
-
-
608,916

439,462
160,538
600,000
-
600,000

Amount due
from
subsidiary
£
1,734,197
-
1,134,709
2,868,906
-
1,140,633
4,009,539

-
-
-
-
-

Total
£
2,343,113
-
1,134,709
3,477,822
-
1,140,633
4,618,455

439,462
160,538
600,000
-
600,000

8,916
8,916

2,868,906
4,009,539

2,877,822
4,018,455

In 2020, the impairment loss of £160,538 was recognized due to doubts over the recoverability of the investment
in BBR Filtration Limited (BBR) as the Company is not investing further in BBR due to its current focus on the solar
opportunity. The details of the subsidiaries of Verditek plc, are set out in the Note 13 to the consolidated financial
statements.

The directors consider that the carrying amounts owed by and to group undertakings approximates their fair value.
The amounts reported under current assets have no fixed repayment terms and repayment on demand. At 31
December 2021 there was no provision held in respect of the recoverability of amounts due from subsidiaries.

4. Other investments

Cost
At 1 January 2020
Exchange difference
At 31 December 2020
Revalue investment
At 31 December 2021

Financial assets at
fair value through
profit or loss

Investment
in associates

24,229
(823)
23,406
966,594
990,000

-
-
-
-
-

Total

24,229
(823)
23,406
966,594
990,000

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

As the directors have no seat on the board of ICSI and stake is under 20%, they consider that they do not have
significant influence over the business, and therefore that ICSI is not an associate. The investment has therefore
been reclassified as a financial asset measured at fair value through the profit or loss.

5. Property, plant and equipment

Plant and
machinery
£
1,873
-
1,873
-
1,873

Computer
equipment
£
1,328
949
2,277
-
2,277

1,873
-
1,873
-
1,873

-
-

563
496
1,059
619
1,678

1,218
599

Total
£
3,201
949
4,150
-
4,150

2,436
496
2,932
619
3,550

1,218
599

31 December 2021
£
160,245
123,308
46,780
330,333

31 December 2020
£
7,548
98,448
17,800
123,796

At 1 January 2020
Additions
At 31 December 2020
Additions
At 31 December 2021

DEPRECIATION
At 1 January 2020
Charge for the year
At 31 December 2020
Charge for the year
At 31 December 2021

Net book value
At 31 December 2020
At 31 December 2021

6. Trade and other receivables

Prepayments
Corporation tax receivable
VAT receivable
Total trade and other receivables

All amounts are due within three months.

7. Cash and cash equivalent

Cash at bank and in hand

200,260

1,657,717

31 December 2021
£

31 December 2020
£

8. Trade and other payables

Trade payables

Accruals and deferred income

Social security & other taxes payable
Pension cost

31 December 2021
£

31 December 2020
£

212,018

47,617

5,374
508

102,461

155,961

9,610
175

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

Loans from related parties

Total trade and other payables

9. Loans and borrowings

Current

Convertible loans

Non-Current

Corporate bonds

Total loans and borrowings

70,000

335,517

268,207

31 December 2021

31 December 2020

277,080

70,000

See note 19 of the consolidated financial statements for details.

10. Share capital
For details of share capital see note 21 to the consolidated financial statements.

11. Share based payment reserve
For details of the share-based payments see note 22 to the consolidated financial statements.

12. Related party transactions
The Group has related party transactions with entities in which directors have significant financial interests. For
details of the related party transactions see note 25 to the consolidated financial statements.

Details of the directors’ emoluments, together with the other related information, are set out in the Report of the
Directors. There are no other related party transactions.

13. Commitments
The Company has no lease or capital commitments at the end of the reporting period.

14. Contingent liabilities
The Company has no contingent liabilities, other than what has been disclosed already.

15. Ultimate controlling party
The Company does not have an ultimate controlling party.

16. Events after reporting date
For details of events after reporting date see note 25 of the consolidated financial statements.

Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2021

OFFICERS AND ADVISERS

Directors:

Company secretary
and registered
office:

Nominated
Adviser and
Broker:
Bankers:
Auditors:

Solicitors:

Registrars:

Company Number:
Website:

The Rt Hon. Lord David Willetts FRS
George Francis Katzaros
Gavin Mayhew
Robert Richards
CFPro Cosec Limited
5 Chancery Lane,
London,
WC2A 1LG
W H Ireland Limited
24 Martin Lane,
London EC4R 0DR
Natwest Bank plc
Crowe U.K. LLP
55 Ludgate Hill
London, EC4M 7JW
Peachey & Co LLP
95 Aldwych
London, WC2B 4JF
Neville Registrars
Neville House
18 Laurel Lane
Halesowen B63 3DA
10114644
www.verditek.com