Registered in England and Wales number 10114644
Verditek PLC
Annual Report and audited Financial Statements
Year Ended 31 December 2022
CONTENTS
CHAIRMAN’S STATEMENT........................................................................................................................... 1
CHIEF EXECUTIVE’S REVIEW ........................................................................................................................ 2
STRATEGIC REPORT ..................................................................................................................................... 4
FINANCIAL REVIEW ..................................................................................................................................... 6
PRINCIPAL RISKS AND UNCERTAINTIES ....................................................................................................... 7
GOVERNANCE .................................................................................................................................... 10
BOARD OF DIRECTORS .............................................................................................................................. 10
CORPORATE GOVERNANCE REPORT ......................................................................................................... 12
AUDIT ........................................................................................................................................................ 18
DIRECTORS ................................................................................................................................................ 19
CORPORATE AND SOCIAL RESPONSIBILITY ............................................................................................... 21
DIRECTORS’ REPORT ................................................................................................................................. 22
STATEMENT OF DIRECTORS’ RESPONSIBILITIES........................................................................................ 25
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC ............................................. 26
FINANCIAL STATEMENTS .................................................................................................................... 32
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ................................................................... 32
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................................ 33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................................. 34
CONSOLIDATED STATEMENT OF CASH FLOWS ......................................................................................... 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ....................................................................... 36
COMPANY STATEMENT OF FINANCIAL POSITION .................................................................................... 67
COMPANY STATEMENT OF CHANGES IN EQUITY ..................................................................................... 68
NOTES TO THE COMPANY FINANCIAL STATEMENTS ................................................................................ 69
OFFICERS AND ADVISERS .......................................................................................................................... 76
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
CHAIRMAN’S STATEMENT
The year to 31 December 2022 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.
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
Swedish company Lindab AB, 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.
2022 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. The Group has seen a
growing number of enquiries and pilot projects towards the end of the year and in early 2023, which point to
promising signs of commercial growth for 2023.
The Rt Hon. Lord David Willetts FRS
Non-Executive Chairman
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Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
CHIEF EXECUTIVE’S REVIEW
Overview
The year to December 2022 has been a year of transition for Verditek, cementing new relationships with major
European distributors of integrated solar roof product. The Group has focussed on commercializing its flexible,
lightweight solar panels, but conversion of the sales pipeline, although now firmly establishing a solid base, is
only just beginning to show signs of scaling up.
Our work with established partners to develop competitive, applied and integrated, solar PV products for a wide
range of mainstream commercial and residential roofing solutions has greatly expanded our market
opportunities and we are confident that this enhanced offering leaves Verditek well placed for commercial
growth in 2023.
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 2022 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, this has been further accelerated with the ongoing
war which has escalated energy prices across the board. 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 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
After the year end, in May 2023, the Group’s manufacturing operations have been relocated from Lainate to
Tolmezzo in Udine, Italy. This move was to lower the cost base and take advantage of more flexible working
arrangements. From Tolmezzo 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.
Sales and Marketing
The Group has various routes to market, including commission only sales agents, employed sales consultants,
distributors and solutions partners.
Verditek continue to supply panels for various marine applications including conventional yachts, electric
powered yachts, and canal boats.
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Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
The Group has highly promising partnerships with roofing providers. Verditek Solar has signed a long term supply
agreement with Lindab AB, a Scandinavian supplier roof systems, and they have placed multiple orders for
installations in a number of countries.
Verditek Solar is also collaborating with Metrotile, who are incorporating the Verditek solar panel into their roof
tile products. Both these opportunities enhance the potential for commercial growth in the lucrative roofing
sector. Verditek continue to work with two other large roofing companies elsewhere in the world as we develop
a similar offering for their respective markets.
As a result of these collaborations, the value of order intake in the first half of 2023 is approx. £395,000 versus
£232,000 in the first half of 2022. The majority of the order intake will be recognized as revenue in the second
half of 2023.
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 technology company which has
developed world-leading graphene technology. Together we have completed three Joint Development Projects
(“JDP”), and are scoping the fourth.
The intent is that this work will continue as we continue to make good progress.
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
28 June 2023
3
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 Italy.
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.
During the year, the Group sold its stake in ICSI to an external buyer, see Notes 11 and 12 to the financial
statements.
For a full review of the business during the year, please refer to the Chief Executive’s Review on pages 2 and 3.
For an analysis of financial performance indicators, please refer to the Financial Review on page 6.
Principal risks and uncertainties facing the business
A full review of principal risks and uncertainties facing the business is given on pages 7 to 9.
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:
• the likely consequences of any decisions in the long term (see Corporate Governance Report, pages 12 to 17);
• the interests of the company’s employees (see Corporate Social Responsibility report on page 21)
• the need to foster the company’s business relationships with suppliers/customers and others (see Corporate
Governance Report, pages 12 to 17);
• the impact of the company’s operations on the community and environment (see Corporate Social
Responsibility report on page 21);
• the company’s reputation for high standards of business conduct (see Corporate Governance Report, pages
12 to 17); and
• the need to act fairly between members of the company (see Corporate Governance Report, pages 12 to 17).
4
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
On behalf of the Board
Rob Richards
Chief Executive Officer
28 June 2023
5
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
FINANCIAL REVIEW
Income statement
During the year 2022 the Group’s loss after taxation was £1,872,711 (2021: £974,079). The administration
expenses incurred for the year ended 31 December 2022 were £1,661,935 (2021: £1,501,942).
Loss per share
The basic and diluted loss per share was 0.5p (2021: 0.3p).
Financial Position
At 31 December 2022, the Group’s net assets were £1,644,296 (2021: net assets of £1,870,713). This comprised
total assets of £2,274,279 and total liabilities of £629,983. The total assets included property, plant and
equipment of £195,470 (2021: £300,082).
Cashflow
The Group’s cash balance at the period end was £842,632 (2021: £237,613). During the period the net cash
outflow from operating activities was £1,079,319 (2021: 1,656,332) with financing activities generating net
proceeds of £1,394,143 (2021: £204,264).
Dividends
No dividend is recommended (2021: £nil) due to the development stage of the Group.
Capital management
The Board’s objective is to maintain a financial position that is both efficient and delivers long term shareholder
value. The Group had cash balances of £842,632 as at 31 December 2022 (2021: £237,613). 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 26 to the financial statements. Following receipt of the
proceeds of the bond issue and repayment of the Crowd for Angels bonds, the Group had cash of
approximately £290,000 at the end of May 2023.
John McCall
Interim Chief Financial Officer
6
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 regularly. The Board
considers risks to the business at its monthly meetings and reviews the principal risks to the business and the risk
register quarterly. Over the course of the year, the Board has also considered specific risks of managing cash-
flow and working capital, scaling up manufacturing and managing the associated operational risks 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:
DETAIL OF RISK
MITIGATION and MANAGEMENT
ASSESSMENT
Failure to secure cashflow and
remain a going concern, also
growth ambitions might outpace
cash reserves.
The Board reviews medium to long term
cashflow forecasts (including sales forecast),
and aims to ensure sufficient funding is in place
to meet requirements.
High risk (elevated
from prior year)
Operational failings in
manufacturing process.
Technical and operational support for the
factory manager has been put in place with an
operational/quality control structure and
process and a programme of regular audits of
the process.
High risk (elevated
from prior year)
7
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
DETAIL OF RISK
MITIGATION and MANAGEMENT
ASSESSMENT
Products are designed for a specific
segment of the market and
accessing that segment needs to be
done through distribution partners
who typically have greater
negotiating power.
Poorly constructed sales contracts
expose the company to punitive
commercial conditions. Partnering
relationships expose the Company
to unlimited liabilities.
Build network of distribution partners and
ensure review, challenge and understanding of
standard terms and conditions of the
partnerships especially payment terms and
enforceability.
High risk (elevated
from prior year)
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.
Products are not competitive on
cost as the Company cannot scale
up manufacturing with the existing
manufacturing facilities.
Manufacturing has been moved to a larger
automated modern factory unit which will
allow increased productivity, improved quality
and reduce costs per unit.
High risk (unchanged
from prior year)
The Group is considering collaborations to
scale up manufacturing or direct investments
in new manufacturing sites.
Factory output levels reduce, poor
quality, other operational issues.
The Group has systems in place for testing of
each panel, and daily production levels are
monitored and reported on regularly by local
management.
Medium risk
(unchanged from
prior year)
HSE violations in Group operating
companies.
The Group has approved a move to a new
larger factory unit with the aim of allowing
increased productivity, improved quality and
reduce costs per unit.
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.
Medium risk
(unchanged from
prior year)
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.
Medium risk
(unchanged from
prior year)
The solar marketplace continues to
have increased efficiency (power
output) and increased competition.
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.
Medium risk
(unchanged from
prior year)
8
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
DETAIL OF RISK
MITIGATION and MANAGEMENT
ASSESSMENT
Failure to meet AIM corporate
governance requirements.
Adverse global trading conditions
due to the COVID-19 pandemic,
with companies and countries
reducing their spend on capital
projects.
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.
Low risk (unchanged
from prior year)
Contingency plans to control costs, through
flex of production staff and supply chain
streamlining.
Low risk (descend
from prior year)
9
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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
Eligible to
attend
Attended
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14
14
14
14
14
12
13
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Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
The Audit Committee
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 18.
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 19 – 20.
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
11
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 it 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 2022.
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 7 to 9 of our Report and Accounts
for the year ended 31 December 2022.
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
12
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
QCA Code Principle
Application (as set out by QCA)
What we do and why
contacted using the “contact” link on the
Company website.
The Board noted that a resolution at the
Annual General Meeting held in 2022 to
re-appoint one the Directors was passed
with the necessary majority but received
less than 80% of votes in favour. The Board
have engaged with its shareholders to
understand the reasons behind the voting
result.
The executive maintains communications
with trade and interest groups working in
the markets where its products are sold
and applied.
The Company is committed to developing
green technology, and this forms the
backbone to decision making.
The Company’s website maintains a
channel to receive feedback from all
stakeholders.
Risk Management on pages 7 to 9 of our
Report and Accounts for the year ended 31
December 2022 details the risks to the
business and how these are mitigated.
The Board considers risks to the business
at its monthly meetings and reviews the
principal risks to the business and the risk
register quarterly.
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
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).
5. Maintain the Board as a
well-functioning, balanced
team led by the chair
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
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
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Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
QCA Code Principle
Application (as set out by QCA)
What we do and why
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 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
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.
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 Board meetings at least
once a month. 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 10 of the
14
6. Ensure that between them
the directors have the
necessary up-to-date
experience, skills and
capabilities
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
QCA Code Principle
Application (as set out by QCA)
What we do and why
composition will need to evolve to
reflect this change.
Annual Report for the year ending 31
December 2022.
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.
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
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.
It was proposed that a board performance
evaluation be carried out in 2022 to look
critically at what we do and to identify
areas of improvement but this was not
possible given other Board priorities and it
will take place in the second half of 2023.
An appraisal is scheduled to be carried out
each year with the Executive Director.
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 21 of our Report &
Accounts for the year ended 31 December
2022 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 are reviewed
and updated as required and amended
policies were approved by the Board
during the year.
15
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
QCA Code Principle
Application (as set out by QCA)
What we do and why
9. Maintain governance
structures and processes that
are fit for purpose and support
good decision-making by the
board
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 should maintain
governance structures and
processes in line with its corporate
culture and appropriate to its:
• 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
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.
The Corporate Governance Report on
pages 12 to 17 of our Report & Accounts
for the year ended 31 December 2022
details the Company’s governance
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,
16
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
QCA Code Principle
Application (as set out by QCA)
What we do and why
circumstances and constraints
faced by the company.
investors and the public on the Company’s
website.
It should be clear where these
communication practices are
described (annual report or
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.
When 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.
17
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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.
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
18
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 consist 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 package for an Executive Director is detailed below:
• Base Salary:
Annual review of the base salary of the Executive Director considering the Executive Director’s role,
responsibilities and contribution to the Group performance.
• Performance Bonus:
Bonus arrangements are discretionary and are payable depending on the performance of the Executive
Director in meeting his 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 the laws of the resident countries of the Executive Director, health insurance and other
benefits.
•
Longer term incentives:
In order to incentivise the Directors and employees, and align their interests with shareholders, the
Company has granted share options in previous years though no further share options were granted in
the current year. The share options will vest at various future dates as described in the Note 23 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 share options determined by
the Board and are not entitled to pensions, annual bonuses or employee benefits.
19
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 is limited due to the current size of the Board.
The remuneration of the Directors in Verditek plc who held office during the years to 31 December 2022 and
2021 were as follows:
The emoluments of the Directors were as follows
(Audited):
Year ended 31 December 2022
Year ended
31 December
2021
Salary &
Directors’
fees
£
Pension
Contributions
£
Share-
based
payment
£
Total
Total
£
£
Executive directors
Robert Richards
Non-executive directors
The Rt Hon. Lord David Willetts FRS
George Katzaros
Gavin Mayhew
Total
152,037
50,000
25,000
30,000
257,037
-
-
-
-
-
84,678
236,715
185,081
23,330
-
-
73,330
25,000
30,000
60,984
25,000
30,000
108,008
365,045
301,065
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 23. No options were exercised in the year.
George Katzaros
Chairman – Remuneration committee
20
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 (a recognized
standard for Environmental Management Systems) 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.
21
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 2022.
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 (2021: £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.
22
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
DIRECTORS’ REPORT (Continued)
Directors’ interests
The Directors held the following beneficial interests in the shares of Verditek plc at 31st December 2022:
George Katzaros
Gavin Mayhew
Robert Richards
Notes
1.1 Shares held by George Katzaros
- direct
- through Blueview Business Ltd
- through MF Ltd
- Subtotal
- Family member
1.2 Shares held by Gavin Mayhew
- through Vidacos Nominees Limited
- through Platform Securities Nominees Limited
Note
1.1
1.2
Ordinary shares
of £0.0004 each
Issued share
capital %
26,166,675
47,157,381
2,437,833
5.90%
10.63%
0.55%
9,000,000
10,550,000
5,900,000
25,450,000
716,675
26,166,675
46,457,381
700,000
47,157,381
During the year, as part of the share issue mentioned in Note 22 to the financial statements, Gavin Mayhew
subscribed for 20,000,000 shares at 1.5p per share.
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 26 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 aims to
develop and enhance the existing product portfolio and new products that will complement and expand the
product offering. Additional research and development has been undertaken on further generations of the semi-
flexible, lightweight solar panels.
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.
23
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
DIRECTORS’ REPORT (Continued)
Going Concern
As described in note 2.4, the Directors have considered base case and worst-case scenarios, the Group has
secured additional funding by the issue of £500,000 Secured Convertible Loan Notes as announced on 3 May
2023. The Board has used the proceeds of the bond issue principally to repay the Crowd for Angels Bonds which
were due for repayment on 18 May (of £221,605) and 3 August 2023 (of £103,253) and to provide additional
working capital for the business. As such, 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 2022:
Shareholder
Hargreaves Lansdown (Nominees) Limited
Vidacos Nominees Limited
Pershing Nominees Limited
Interactive Investor Services Nominees Limited
The Bank Of New York (Nominees) Limited
HSDL Nominees Limited
JIM Nominees Limited
Platform Securities Nominees Limited
No. of Shares
112,356,046
63,066,239
49,679,387
22,502,014
21,020,495
20,220,028
19,096,257
14,656,941
%
25.33%
14.22%
11.20%
5.07%
4.74%
4.56%
4.31%
3.30%
Statement of Disclosure to the Auditors
The Directors of the Company at the date of approval of this report confirm that:
As far as each director is aware, there is no relevant audit information of which the Company’s and the
Group’s auditor is unaware; and
each Director has taken all reasonable steps that they ought to have taken as a Director to make
themselves aware of any relevant information and to establish that the Company’s and the Group’s
auditor is aware of that information.
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
28 June 2023
24
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 IAS) 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 IAS 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 IAS 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.
25
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 2022 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 IAS). 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 2022 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 12 months
period. The financial statements have been prepared on the going concern basis, which rely on the additional
funding 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.
26
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 the following procedures:
We have obtained and reviewed the Board’s going concern assessment with the supporting working capital
forecasts for a period at least 12 months from the date of the approval of the financial statements. Our audit
procedures were as follows:
We obtained an understanding of the key controls over the working capital forecast and assessed the
appropriateness of the approach and assumptions used by management when performing their going
concern assessment;
We assessed and tested the integrity of the working capital forecast, reviewed and challenged the
management over the underlying data, particularly the future revenue growth and the gross profit
margin assumption, used by management in working capital forecast;
Discussed the going concern assumption with management over the prospect of future fundraising 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, a member firm of Crowe
Global international network, to attend the year end physical inventory count at the Italian warehouse and to
undertake substantive work 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 £75,000 based on approximately 5% of Group’s normalised loss for the year (2021: £100,000), which is the
most appropriate measure for a trading group. Materiality for the parent Company’s financial statements as a
whole was set at £30,000 (2021: £30,000).
27
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 £52,500 (2021:
£70,000) and the parent Company’s performance materiality to be £21,000 (2021: £21,000).
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 £2,250. 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 inventory (note 16)
The carrying value of the inventory at 31 December
2022 was £0.53 million (2021: £0.66 million).
We considered this to be a key audit matter due to
its size, the assumptions used in the valuation and
the judgments involved in estimating the net realis
able value of old and slow-moving inventory.
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; and
We considered and challenged the basis and
methodology
inventory provisions with a
particular focus on the areas for which no provision
has been made.
for
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.
28
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying value of other receivables (note 12)
Our audit procedures included:
The carrying value of other receivables at 31
December 2022 was £0.56 million, set out in note 12
of the consolidated financial statements, (2021:
Investment of £0.99 million (note 11)).
We considered this to be a key audit matter due to
the significant judgment required to estimate the
valuation of the financial asset. There is a risk that
the applicable of inappropriate assumptions could
result in a material misstatement of the fair value.
We reviewed and agreed the material amounts used
in the calculation to sale and purchase agreement;
We tested the key input data and assumption used in
the valuation model and challenged management
over the difference in the calculation; and
We assessed the adequacy of the related disclosures
in note 11 and 12 of the consolidated financial
statements, and considered them to be reasonable.
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.
29
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 25, 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.
30
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 Parent 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
28 June 2023
31
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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
Loss for the period attributable to:
Owners of the parent Company
Non-controlling interest
Total comprehensive loss for the period
attributable to:
Owners of the parent Company
Non-controlling interest
Year ended
31 December 2022
£
Year ended
31 December 2021
£
Notes
4
6
5
8
9
417,457
(670,547)
(1,661,935)
(1,915,025)
91,933
2,084
(73,604)
(1,894,612)
107,632
(609,213)
(1,501,942)
(2,003,523)
966,354
335
(60,553)
(1,097,387)
21,901
123,308
(1,872,711)
(974,079)
41,417
(1,831,294)
(36,036)
(1,010,115)
14
(1,872,711)
-
(1,872,711)
(988,479)
14,400
(974,079)
(1,831,294)
-
(1,831,294)
(1,024,515)
14,400
(1,010,115)
Loss per ordinary share - basic and diluted (p)
10
(0.5)
(0.3)
The accompanying notes are an integral part of these financial statements.
All amounts are derived from continuing operations.
32
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes
At 31 December 2022
£
At 31 December 2021
£
Assets
Non-current assets
Investments
Other receivables
Property, plant and equipment
Right of use asset
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
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
13
15
16
17
18
20
21
19
20
21
22
22
23
24
-
556,783
195,470
48,902
801,155
534,959
95,533
842,632
1,473,124
990,000
-
300,082
142,391
1,432,473
657,151
392,193
237,613
1,286,957
2,274,279
2,719,430
-
-
-
289,995
310,306
29,682
629,983
629,983
177,417
12,205,726
332,806
(10,971,011)
6,245
1,751,183
(106,887)
1,644,296
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
TOTAL EQUITY AND LIABILITIES
2,719,430
These financial statements were approved and authorised for issue by the Board of directors on 28 June 2023
and were signed on its behalf by:
2,274,279
Rob Richards
Chief Executive Officer
Company Registration Number: 10114644
The accompanying notes are an integral part of these financial statements.
33
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-
based
payment
reserve
Issued
Share
capital
£
136,470
-
Share
Premium
£
10,733,073
-
Accumulated
losses
£
(8,109,821)
(988,479)
Foreign
Exchange
reserve
£
864
-
Non-
Controlling
interests
£
(121,287)
14,400
Total
£
2,738,483
(974,079)
-
(36,036)
-
(36,036)
(988,479)
(36,036)
14,400
(1,010,115)
-
-
-
28,395
99,184
-
-
-
-
-
-
-
-
413
27,982
-
-
136,883
-
-
-
10,761,055
-
65,903
48,047
213,134
-
-
-
(9,098,300)
(1,872,711)
-
-
(35,172)
-
-
-
(106,887)
-
65,903
48,047
1,870,713
(1,872,711)
-
-
-
-
-
-
-
41,417
(1,872,711)
41,417
-
-
41,417
(1,831,294)
40,534
-
177,417
1,444,671
-
12,205,726
-
119,672
332,806
-
-
(10,971,011)
-
-
6,245
-
-
(106,887)
1,485,205
119,672
1,644,296
Balance as at 1-Jan-21
Loss for the year
Translation of foreign
subsidiary
Total comprehensive
loss
Issue of shares net of
expenses
Issue of warrants –
corporate bond
Share-based payment
Balance as at 31-Dec-21
Loss for the year
Translation of foreign
subsidiary
Total comprehensive
loss
Issue of shares net of
expenses
Share-based payment
Balance as at 31-Dec-22
The accompanying notes are an integral part of these financial statements.
34
Type text here Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Loss before tax from continuing operations
(1,894,612)
(1,097,387)
Year ended
Year ended
31 December 2022
31 December 2021
£
£
Adjustments for:
Finance costs
Finance income
ICSI revaluation
Depreciation and amortisation
Loss on disposal of assets
Share-based payment
Remeasurement of assets
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 consideration received (ICSI)
Sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash outflow from investing activities
Financing activities
73,604
(2,084)
125,486
195,555
501
119,672
(78,323)
(1,460,201)
122,192
211,395
(97,847)
(1,224,461)
145,142
(1,079,319)
307,731
-
(19,540)
288,191
Proceeds from issue of ordinary share capital (net of expenses)
1,485,205
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 increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at the end of the year
-
(22,210)
2,084
-
(70,936)
1,394,143
603,015
237,613
2,004
842,632
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)
(1,656,332)
-
(1,656,332)
-
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
35
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 AIM on the London Stock
Exchange. Its registered office is located at First Floor, Holborn Gate, 330 Holborn, London WC1V 7QT.
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 2022. 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 2021.
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 IAS) 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.
36
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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 Group has applied the following standards and amendments for the first time for its annual reporting
period commencing 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);
and
● References to Conceptual Framework (Amendments to IFRS 3).
The amendments listed above did not have any impact on the amounts recognised in prior periods and do not
significantly affect the current or future periods.
2.3.2 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 2022 financial statements:
Certain new accounting standards and interpretations have been published that are not mandatory for 31
December 2022 reporting periods and have not been early adopted by the Group.
Effective from 1 January 2023:
● Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
● Definition of Accounting Estimates (Amendments to IAS 8); and
● Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
● IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-
current)
Effective from 1 January 2024:
● IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback)
● IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants)
The Group will continue to assess any impact on the Group from the adoption of these amendments. It is
not anticipated that any of these will have a material impact on the Group’s financial statements.
37
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.4. Going concern
The financial statements have been prepared under the going concern basis as the Directors are satisfied that
sufficient funds are or will become available to the Group to meet its on-going working capital requirements for
at least the next 12 months. The Group’s assessment takes account of current cash resources, expected costs
and expected revenues. The Group has a pipeline of commercial opportunities and promising partnerships, and
is focussed on converting these into sales in the next year. On 3 May 2023 the Company announced a raise of an
additional £175,000 (before expenses) by way of the issue of £500,000 7% Secured Convertible Loan Notes. The
Company used the proceeds principally to repay the existing Crowd for Angels bonds of approx. £325,000 and to
provide working capital.
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 12
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.
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.
38
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
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 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.
39
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Deferred taxation
2.8
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.
2.8. 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:
Leasehold 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.
Leased asset
2.9.
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.
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.
40
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 the carrying amount has been reduced to zero.
2.10. 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
2.10.1.
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value
through other comprehensive income (“FVOCI”), 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.
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 loans to related parties, are
included under other current financial assets. In the periods presented the Group does not have any financial
assets categorised as FVOCI.
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.
41
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Financial liabilities
2.10.2.
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 considering 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
2.10.3.
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, the 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 requires 12-month expected credit losses
to be recognised until a change in credit risk occurs, in which case stage 2 would apply.
42
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.11. 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.
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.
2.12. 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.
2.13. Fair Value measurement
Where financial and non-financial assets and liabilities are measured at fair value, the Group use appropriate
valuation techniques for which sufficient data are available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
Fair value is categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follow:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the assets or liability,
either directly (eg; as prices) or indirectly (eg; derived from prices);
Level 3: input for the assets or liability that are based on observable market data (unobservable input).
The Group recognise transfer between level of fair value hierarchy at the end of the reporting period during
which the changes have occurred.
The carrying amount of cash and cash equivalents, receivables, trade payable, accruals and other current
liabilities in the Group consolidated statement of financial position approximates their fair value because of short
maturities of these instruments.
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.
43
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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. Amortisation on
development costs commences once the asset under development is available for use or sale. Subsequent to initial
recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated
impairment losses.
2.16. Grant income
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in
the period in which they become receivable. Grants are recognised in the statement of comprehensive income as
other income.
2.17. 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:
2.17.1. Estimates
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 [note 23].
Other receivables
Other receivables comprise estimated earn out payments receivable from the sale of the investment in ICSI -
note 11. The estimated earn out payments are structured over several product development milestones to be
achieved through to 2025. The estimated earn out payments to be received as at year end are based on this
information and includes management assessment around the achievability of each individual milestone.
This risk weighted compensation has then been discounted at an estimated cost of equity, being 14.2%.
44
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.17.2. Judgements
Corporate bond
During the prior period the Company issued corporate bonds through funding platform Crowd For Angels, with
a term of 2 years, as set out in note 20. 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 23] for details.
Other receivables
As noted in 2.16.1 above, management has assessed the probabilities of the timing and amount of the estimated
earn out payments due.
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
Other receivables (ICSI)
Cash and cash equivalents
Trade receivables – net of provision
Total current financial assets at amortised cost
31 December 2022
£
556,783
31 December 2021
£
-
842,632
50,911
1,450,326
237,613
17,053
254,666
45
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 2022
£
31 December 2021
£
62,976
29,586
175
139,851
-
232,588
310,306
-
310,306
29,682
-
29,682
572,577
232,011
19,535
508
77,150
70,000
399,205
-
277,080
277,080
69,737
90,687
160,424
836,709
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:
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 17].
46
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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:
47
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
31 December 2022
Up to 3
Months
Between 3 and
12 months
Between 1
and 2 years
Between 2
and 5 years
Trade payables
Wages payable
Pension payable
Accruals
Lease liability
Current loan – interest
bearing
Undiscounted financial
liabilities at amortised cost
31 December 2021
Trade payables
Wages payable
Pension payable
Accruals
Amount due to related
parties
Lease liability
Non-current loan – interest
bearing
Undiscounted financial
liabilities at amortised cost
62,976
29,586
175
139,851
19,369
310,306
-
-
-
-
11,037
-
562,263
11,037
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Up to 3
Months
Between 3 and
12 months
Between 1
and 2 years
Between 2
and 5 years
232,011
19,535
508
77,150
70,000
35,096
5,557
-
-
-
-
-
-
-
-
-
52,921
16,672
-
106,675
325,370
439,857
69,737
448,045
-
-
-
-
-
-
-
-
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
reporting date there were corporate bonds of £324,858 which had a fixed interest rate of 7% (2021: corporate
bonds of £324,858 which had a fixed interest rate of 7%.
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.
48
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 2022 the Group’s exposure to changes in foreign exchange rate was as follows:
Forex
sensitivity
calculation
1%
-1%
Effect on net assets
Effect on loss before tax
USD
£
23
(23)
GBP
£
-
-
EUR
£
39
(39)
CAD
£
5,568
(5,568)
USD
£
(23)
23
GBP
£
-
-
EUR
£
(39)
39
CAD
£
(5,568)
5,568
As of 31 December 2021, the Group’s exposure to changes in foreign exchange rate was as follows:
Forex
sensitivity
calculation
1%
-1%
Effect on net assets
Effect on loss before tax
USD
£
79
(79)
GBP
£
(1)
1
EUR
£
(53)
53
CAD
£
-
-
USD
£
(79)
79
GBP
£
1
(1)
EUR
£
53
(53)
CAD
£
-
-
4. Revenue and segmental information
Revenues
Sale of Goods
Total
Year ended
31 December 2022
£
417,457
417,457
Year ended
31 December 2021
£
107,632
107,632
The Group had 2 customers that exceeded 10% of revenue in 2022 (2021: 2 customers), one customer 18.71%%
and one 18.41%%.
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 2022 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.
49
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Geographical Segments
Apart from holding company activities in the UK the Group had operations in Italy in the period.
An analysis of revenue, operating loss and total assets less current liabilities by geographical market is given
below:
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 assets
5. Other income
Fair value changes through P&L – ICSI
Grant income
Total other income
Year ended
31 December 2022
£
Year ended
31 December 2021
£
18,661
398,796
417,457
-
107,632
107,632
(1,095,726)
(819,299)
(1,915,025)
(643,547)
(1,359,976)
(2,003,523)
571,010
230,145
801,155
(125,486)
217,419
91,933
990,599
441,875
1,432,474
966,354
-
966,354
Refer to investment [note 11 & 12] for further information on the ICSI revaluation.
50
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Operating loss
Operating loss is stated after charging:
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 PPE
Depreciation of ROU asset
Remeasurement of ROU asset
Disposal of PPE
Provision against non-trading assets
Director’s fee and staff costs (note 7)
Advertising, marketing and development
Bad debt
Research costs
Other costs
Year ended
31 December 2022
£
Year ended
31 December 2021
£
48,584
800
253,102
167,417
-
246,213
134,692
60,863
(25,537)
-
-
407,901
249,575
70,202
142,555
558,630
32,500
-
80,176
125,770
346,841
56,785
256,897
50,018
-
1,582
43,551
500,810
184,013
-
(81,847)
511,560
51
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 2022
Number
4
6
1
11
Year ended
31 December 2021
Number
2
7
2
11
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
Year ended
31 December 2022
£
299,108
257,037
Year ended
31 December 2021
£
362,535
247,374
119,672
41,079
1,932
718,828
(-)
718,828
48,047
21,340
23,741
703,037
(20,073)
682,964
Consisting of:
Employee costs included in direct costs
Employee costs included in admin expenses
179,531
539,297
183,727
499,237
Key management personnel include both board and non-board members. Key management personnel
compensation is as follows:
Key management personnel compensation
Salaries
Fees
Share-based payments
Social security costs
Pension costs
Year ended
31 December 2022
£
102,500
288,323
119,672
6,964
-
517,459
Year ended
31 December 2021
£
137,500
289,617
46,928
9,746
1,876
485,667
Please refer to the Directors’ Remuneration report on pages 19-20.
52
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.
Finance costs
Finance expenses
Interest on loans (note 20)
Amortisation of bond issue costs (note 20)
Lease interest
Total finance expense
Year ended
31 December 2022
£
Year ended
31 December 2021
£
23,056
34,446
16,102
73,604
12,623
18,125
29,805
60,553
Details of the interest rate on the loans are shown in [note 20].
9.
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)
Year ended
31 December 2022
£
Year ended
31 December 2021
£
-
21,901
21,901
-
21,901
-
123,308
123,308
-
123,308
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
Capital allowances
Deferred tax not recognised
Withholding tax
Tax credit
Year ended
31 December 2022
£
Year ended
31 December 2021
£
(1,894,611)
19.00%
(1,097,387)
19.00%
(359,976)
(208,504)
21,901
-
20,183
(6,768)
(3,642)
350,203
-
21,901
123,308
(183,607)
26,163
(69,432)
-
435,380
-
123,308
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 £1,515,764 at 31 December 2022 (2021:
£1,471,603).
53
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 2022
Year ended
31 December 2021
(1,872,711)
(974,079)
393,565,703
341,351,150
(0.5p)
(0.3p)
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. There were no potentially dilutive
ordinary shares in either period, therefore was no difference between the basic and diluted loss per share.
11.
Investments
Cost
At 1 January 2021
Exchange Difference
Revalue investment
At 31 December 2021
Disposal
At 31 December 2022
Financial assets at fair value through
profit or loss
£
Total
£
23,405
23,405
966,595
990,000
(990,000)
-
966,595
990,000
(990,000)
-
The Company held at 31 December 2021 a stake in Industrial Climate Solutions (ICSI), an unlisted company
registered in Canada. This has been sold during 2022 for a total consideration comprise cash on completion of
£307,731 and earn out payments payable over 3 years (see note 12). At 31 December 2021, the financial asset
was measured at the fair value less costs of disposal.
54
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. Other receivables
Estimated earn-out from ICSI sale
Fair Value adjustment
Other receivables
2022
£
682,269
(125,486)
556,783
2021
£
-
-
-
The estimated earn out payments are structured over several product development milestones to be achieved
through to 2025. The estimated earn out payments to be received as at year end are based on this information
and includes management assessment around the achievability of each individual milestone. This risk weighted
compensation has then been discounted at an estimated cost of equity, being 14.2%
Sensitivity analysis:
The group's exposure to changes in key assumptions affecting the carrying value are as follows:
1% change in expected cash flows amount and timing
1% change in discount rate
£
5,568
9,480
55
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Property, plant and equipment
Plant &
Machinery
Computer
equipment
Leasehold
Improvement
s
£
648,050
3,483
(7,138)
(42,462)
601,933
14,312
-
32,155
648,400
125,783
250,779
(3,508)
(14,020)
359,034
104,737
-
23,037
486,808
242,900
161,592
£
3,972
-
-
-
3,972
2,708
(949)
-
5,731
2,754
619
-
-
3,373
358
(448)
-
3,283
599
2,448
76,427
3,518
-
(5,022)
74,923
2,520
-
4,015
81,458
13,300
6,057
-
(1,018)
18,339
29,597
-
2,092
50,028
56,583
31,430
Total
£
728,449
7,001
(7,138)
(47,484)
680,828
19,540
(949)
36,170
735,589
141,837
257,455
(3,508)
(15,038)
380,746
134,692
(448)
25,129
540,119
300,082
195,470
Cost
At 1 January 2021
Additions
Disposals
Exchange adjustments
At 31 December 2021
Additions
Disposals
Exchange adjustments
At 31 December 2022
Depreciation
At 1 January 2021
Charge for the year
Disposals
Exchange adjustments
At 31 December 2021
Charge for the year
Disposals
Exchange adjustments
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
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 £37,948.
56
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Subsidiary undertakings
As at 31 December 2022 the subsidiaries of Verditek plc, all of which have been included in these consolidated
financial statements, are as follows:
Country of
incorporation
Parent
Proportion of
ownership
interest at 31
December
2022
Nature of business
UK
Verditek plc
100%
Dormant
Name
Greenflex Energy
Limited
Greenflex RSM S.r.l 1
San Marino
Greenflex Energy
Limited
100%
Dormant
Verditek Solar S.r.l
Italy
Verditek plc
100%
Solar technology
services
BBR Filtration USA,
LLC
Verditek USA, Limited
Verditek Solar
Solutions Limited
USA
USA
BBR Filtration
Limited
Verditek plc
50.49%
100%
Dormant
Dormant
UK
Verditek plc
100%
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;
Name
Registered address
Greenflex Energy Limited
First Floor, Holborn Gate, 330 Holborn, London, WC1V 7QT
Greenflex RSM S.r.l
Verditek Solar S.r.l 2
Via L. Cibrario, 25, 47893 Cailungo, San Marino
Via Pogliano, 26, 20020 Lainate, Italy
BBR Filtration USA, LLC (99%)
C/o 2605, Ponce De Leon, Boulevard, Coral Gables, Florida 33134
Verditek USA, Limited
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801
Verditek Solar Solutions
Limited
First Floor, Holborn Gate, 330 Holborn, London, WC1V 7QT
2 – Verditek Solar S.r.l relocated as of 29th May 2023 to Via dell Industria, 41C 33028 Tolmezzo.
57
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Right of use asset
Cost
At 1 January 2021
Additions
Remeasurement
Exchange
At 31 December 2021
Additions
Remeasurement of asset
Exchange
At 31 December 2022
Depreciation
At 1 January 2021
Charge for the year
Unwind of discount of lease deposit (other receivables)
Exchange
At 31 December 2021
Charge for the year
Unwind of discount of lease deposit (other receivables)
Remeasurement of asset
Exchange
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
Building
£
345,173
1,126
-
(22,224)
324,075
-
(262,655)
7,500
68,920
138,528
49,460
3,945
(10,248)
181,685
60,863
7,306
(233,356)
3,520
20,018
142,391
48,902
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 was due to expire 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). In
2022 notice was given to terminate early this has resulted in changes to the carrying value for future payments
with impact taken to P&L but no penalty is required to be paid.
58
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16.
Inventories
Finished goods
Raw materials
Total Inventories
2022
£
345,032
189,927
534,959
2021
£
509,849
147,302
657,151
During the period £253,102 inventories relating to revenue were recognized as a cost in the P&L (2021: £80,176).
There was also a provision against inventories to write-down defective and slow-moving stock, £167,417 (2021:
£125,770). The defective panels were identified as part of an operational review during the year. During 2021
there was also a theft of inventory, which resulted in an expense of £346,841.
17. 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 2022
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 2021
Not past due and not impaired
Up to 30 days past due
31 to 60 days past due
61 to 90 days
Over 90 days
Total
Gross
£
829
-
3,155
9,829
109,931
123,744
Gross
£
2,673
-
969
1,180
38,644
43,466
2022
£
123,744
(72,833)
50,911
19,503
100
12,483
12,536
95,533
ECL
£
-
-
-
-
(72,833)
(72,833)
ECL
£
-
-
-
-
(26,413)
(26,413)
2021
£
43,466
(26,413)
17,053
42,882
100
170,388
161,770
392,193
Net
£
829
-
3,155
9,829
37,099
50,911
Net
£
2,673
-
969
1,180
12,231
17,053
59
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
18. Cash and cash equivalents
Cash at bank and in hand
2022
£
2021
£
842,632
237,613
The fair value of the cash & cash equivalents is as disclosed above. For the purpose of the cash flow statement,
cash and cash equivalents comprise of the amounts shown above.
19. Trade and other payables
Trade payables
Accruals
Deferred revenue
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
2022
£
62,976
139,851
43,955
29,586
175
173
-
276,716
13,279
289,995
2021
£
232,011
77,150
-
19,535
508
162
70,000
399,366
11,847
411,213
60
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
20. Loans and borrowings
Current
Convertible bonds issued to related party
Corporate bonds (net of bond issue costs)
Non – current
Convertible bonds issued to related party
Corporate bonds (net of bond issue costs)
2022
£
25,000
285,306
-
-
Total current and non – current loans and borrowings
310,306
2021
£
-
-
25,000
252,080
277,080
During the prior 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
The 1,032,530 warrants were exercised in 2021 and the proceeds repaid part of the corporate green bond.
The warrants were fair valued using the Black Scholes model, see note 23 for details. During the year there was
a bond amortisation charge of £33,226 (2021: £18,125) recorded within finance costs.
Reconciliation of liabilities to cashflows arising from financing activities
01-Jan-22
£
Cash inflow
£
Cash outflow
£
Non-cash
31-Dec-22
£
252,080
25,000
-
-
Corporate bonds
Corporate bonds
issued to related
party
Lease liability
252,080
25,000
160,424
437,504
-
-
-
-
(70,936)
(70,936)
(59,806)
(59,806)
29,682
306,762
61
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. Lease liability
Current Lease liability
Non-Current Lease liability
Total Current loans and borrowings
Lease liabilities are payable as follows:
2022
£
29,682
-
29,682
2021
£
69,737
90,687
160,424
Future minimum lease
payments
£
30,406
Interest
£
(724)
Present value of minimum
lease payments
£
29,682
five
-
29,682
The cash outflow on lease liability payments in the year was £70,936 (2021: £51,950). The interest expense on
lease liabilities recognised in the year was £16,102 (2021: £29,805).
-
30,406
-
(724)
Less than one year
Between one and
years
22. Share capital and reserves
At 1 January 2021
Exercise of shares for cash
Shares issued October 2021
Exercise of shares – non-cash
At 31 December 2021
Exercise of shares for cash
Shares issued June 2022
Number of Shares
Par Value £0.0004
341,172,443
Share
capital
£
136,470
Share
premium
£
10,733,073
1,032,530
413
27,982
342,204,973
136,883
10,761,055
101,333,333
40,534
1,463,638
At 31 December 2022
443,538,306
177,417
12,224,693
During 2021 there was an exercise of 1,032,530 share warrants to subscribe for ordinary shares at 2.75p per
share.
62
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
23. 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).
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.
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 prior year there were also warrants issued to Crowd For Angels, please see note 20 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 2022
20,000,000
2,250,000
Weighted
average strike
price
(pence)
3.9
Weighted
average term
(years)
8.2
Issued
Exercised
At 31 December 2022
-
-
20,000,000
-
-
2,250,000
-
-
3.9
-
-
8.2
63
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 prior 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 £119,672 (2021:
£48,047).
24. Reserves
The following describes the nature and purpose of each reserve within equity:
Issued share capital – Amount subscribed for share capital at nominal value.
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.
Non-controlling interests – Represents accumulated profits or losses from subsidiaries where there is less than a
100% holding.
64
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
25. Related Party Transactions
The Group has related party transactions with related parties who are not members of the group.
Transactions during
the year
Amounts owed by
related parties
Amounts owed to
related parties/loans
2022
£
50,000
25,000
31,774
2021
£
50,000
25,000
31,053
152,037
151,374
35,912
25,706
4,199
1,613
2022
£
2021
£
-
-
-
-
-
-
-
-
48,936
5,123
2022
£
29,167
14,583
60,327
-
-
2021
£
33,000
16,666
46,053
-
-
-
-
33,329
1,968
The Rt Hon. Lord David Willetts FRS1
George Katzaros2
Gavin Mayhew3
Rob Richards4
Fly SolarTech Solutions SRL sales5
Fly SolarTech Solutions SRL purchases5
Notes:
1 The Rt Hon. Lord
David Willetts FRS
2George Katzaros
3Gavin Mayhew
4Rob Richards
(appointed 1 June
2020)
5 Fly SolarTech
Solutions SRL
Lord David Willetts, Chairman of the Company, was entitled to fees and services of
£50,000 during the period of which £29,167 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 £23,330 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 £14,583.
Gavin Mayhew, non-executive director of the company, during the year he was
entitled to Directors fees of £30,000, at the year-end £32,500 remained unpaid.
Gavin Mayhew is also owed £25,000 with an expiry date of 18/05/2023 accruing
7% interest, at the year end the total amount due under the loan was £27,827.
Robert James Richards, director (appointed June 2020) during the year was entitled
to Directors fees of £152,037 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 £84,678 charge during the year.
Fly SolarTech Solutions SRL is a company of which a director of Verditek Solar SRL
is also a director and shareholder. Transactions are conducted on an arms length
basis and subject to authorisation by Rob Richards, CEO of Verditek plc.
Details of the directors’ emoluments, together with the other related information, are set out in the Directors
Report of the Remuneration Committee. The Company’s executive and non-executive directors are considered
to be key management personnel for the purposes of this disclosure.
26. Events subsequent to the reporting date
In May 2023 the company raised £500,000 before expenses by the issue of Secured Convertible Loan Notes. The
Notes carry a coupon of 7 per cent. per annum which is payable on the redemption date or earlier if converted.
The Notes are redeemable 2 years from the date of issue and are convertible at the option of the noteholder into
ordinary shares in the Company at the lower of 1.0625 pence per share (being the average VWAP - volume
weighted average price - of the Company's ordinary shares for the 30 days prior to the agreement of the terms of
the Notes) or the subscription price per ordinary share of any fundraising over £250,000 in the 6 months from
the issue of the Notes. Verditek used the proceeds of the bond issue principally to repay the Crowd for Angels
Bonds (approximately £325,000 in aggregate) which were due for repayment on 18th May 2023 (£221,605) and
3rd August 2023 (£103,253) and to provide additional working capital.
65
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
27. Ultimate controlling party
There is no ultimate controlling party of the Company.
66
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
COMPANY STATEMENT OF FINANCIAL POSITION
Non-current assets
Investments in subsidiaries
Investment
Other receivable
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Loans and borrowings
Total Non-current liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Total current liabilities
Net assets
Share capital
Share premium
Share-based payment reserve
Retained losses
Total equity
31 December 2022
31 December 2021
Notes
£
£
3
4
5
6
7
8
10
9
10
11
12
8,916
-
556,783
14,227
579,926
22,709
801,642
824,351
4,018,455
990,000
-
599
5,009,054
330,333
200,260
530,593
1,404,277
5,539,647
-
-
143,039
310,306
453,345
277,080
277,080
335,517
-
335,517
950,932
4,927,050
177,417
12,205,726
332,806
(11,765,017)
950,932
136,883
10,761,055
213,134
(6,184,022)
4,927,050
The Company’s loss for the year was £(5,580,995) (2021: profit of £438,954).
These financial statements were approved and authorised for issue by the Board of Directors on 28 June 2023
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.
67
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
Share
capital
£
Share
premium
£
Share-based
payment
reserve
Retained
losses
£
Total
£
Equity as at 1 January 2021
136,470
10,733,073
99,184
(6,622,976)
4,345,752
Profit/(loss) for the year
Total comprehensive loss
Share issue (net of expenses)
Issue of warrants – corporate
bond
Share-based payments
-
-
-
-
413
27,982
-
-
-
-
-
-
-
65,903
48,047
438,954
438,954
-
-
-
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
Profit/(loss) for the year
Total comprehensive loss
-
-
-
-
Share issue (net of expenses)
40,534
1,444,671
-
-
-
Share-based payments
-
-
119,672
(5,580,995)
(5,580,995)
(5,580,995)
(5,580,995)
-
-
Equity as at 31 December 2022
177,417
12,205,726
332,806
(11,765,017)
The accompanying notes are an integral part of these financial statements.
1,485,205
119,672
950,932
68
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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;
the requirements of paragraph 134 – 136 of IAS 1 ‘Presentation of Financial Statements’ to disclose the
management of the capital of the Company;
c.
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
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.
g.
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 12-month period to
30 June 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.
69
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
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 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.
70
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
2.
Staff costs
The average number of employees (including directors) during the period was made up as follows:
Directors
Administrative
Total
2022
Number
4
-
4
2021
Number
4
-
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
2022
£
2021
£
409,890
188,589
119,672
9,235
500
12,092
11,977
3,250
539,297
215,908
71
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
3.
Investments in subsidiary undertakings
At 1 January 2021
Additions
Movement for the year
At 31 December 2021
Additions
Movement for the year
At 31 December 2022
IMPAIRMENT
At 1 January 2021
Impairment of investment in
subsidiary
At 31 December 2021
Impairment of investment in
subsidiary
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
Investment in
subsidiary
£
608,916
-
-
608,916
-
-
608,916
600,000
-
600,000
-
600,000
8,916
8,916
Amount due from
subsidiary
£
2,868,906
-
1,140,633
4,009,539
-
504,358
4,513,897
-
-
-
4,513,897
4,513,897
4,009,539
-
Total
£
3,477,822
-
1,140,633
4,618,455
-
504,358
5,122,813
600,000
-
600,000
4,513,897
5,113,897
4,018,455
8,916
The details of the subsidiaries of Verditek plc, are set out in the Note 11 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.
Full provision has been at made 31 December 2022 against amounts due from Verditek Solar Italy SRL. This
company is projected to become cash generative during the course of 2024 but until such time the directors
consider it prudent to make full provision.
72
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
4. Other investments
Cost
At 1 January 2021
Exchange difference
Revalue investment
At 31 December 2021
Disposal
At 31 December 2022
Financial assets at fair
value through profit or
loss
Total
£
23,406
23,406
966,594
990,000
(990,000)
-
966,594
990,000
(990,000)
-
The Company held a stake at 31 December 2021 in Industrial Climate Solutions (ICSI), an unlisted company
registered in Canada. This has been sold during 2022 for a total consideration comprise cash on completion of
£307,731 and earn out payments payable over 3 years (see note 5). At 31 December 2021, the financial asset
was measured at the fair value less costs of disposal.
5. Other receivables
Earn-out from ICSI investment sale
Fair Value adjustment
Other receivables
2022
£
682,268
(125,486)
556,783
2021
£
-
-
-
The estimated earn out payments are structured over several product development milestones to be achieved
through to 2025. The estimated earn out payments to be received as at year end are based on this information
and includes management assessment around the achievability of each individual milestone. This risk weighted
compensation has then been discounted at an estimated cost of equity, being 14.2%
Sensitivity analysis:
The group's exposure to changes in key assumptions affecting the carrying value are as follows:
1% change in expected cash flows amount and timing
1% change in discount rate
£
5,568
9,480
73
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
6.
Property, plant and equipment
At 1 January 2021
Additions
At 31 December 2021
Additions
Disposal
At 31 December 2022
DEPRECIATION
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
Disposal
At 31 December 2022
Net book value
At 31 December 2021
At 31 December 2022
7.
Trade and other receivables
Prepayments
Corporation tax receivable
VAT receivable
Total trade and other receivables
All amounts are due within three months.
8. Cash and cash equivalent
Plant and
machinery
£
1,873
-
1,873
12,422
-
14,295
1,873
-
1,873
643
-
2,516
-
11,779
Computer
equipment
£
2,277
-
2,277
2,708
(949)
4,036
1,059
619
1,678
358
(448)
1,588
599
2,448
Total
£
4,150
-
4,150
15,130
(949)
18,331
2,932
619
3,551
1,001
(448)
4,104
599
14,227
31 December 2022
£
10,526
-
12,183
22,709
31 December 2021
£
160,245
123,308
46,780
330,333
31 December 2022
£
31 December 2021
£
Cash at bank and in hand
801,642
200,260
9.
Trade and other payables
Trade payables
Accruals and deferred income
Social security & other taxes payable
Pension cost
Loans from related parties
Total trade and other payables
31 December 2022
£
31 December 2021
£
5,146
128,387
9,331
175
-
143,039
212,018
47,617
5,374
508
70,000
335,517
74
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
10. Loans and borrowings
Current
Convertible loans
Non-Current
Corporate bonds
Total loans and borrowings
31 December 2022
31 December 2021
£
310,306
-
310,306
£
-
277,080
277,080
See [note 20] of the consolidated financial statements for details.
11. Share capital
For details of share capital see [note 22] to the consolidated financial statements.
12. Share-based payment reserve
For details of the share-based payments see [note 23] to the consolidated financial statements.
13. 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.
14. Commitments
The Company has no lease or capital commitments at the end of the reporting period.
15. Contingent liabilities
The Company has no contingent liabilities, other than what has been disclosed already.
16. Ultimate controlling party
The Company does not have an ultimate controlling party.
17. Events after reporting date
For details of events after reporting date see [note 26] of the consolidated financial statements.
75
Verditek PLC
Annual Report and Financial Statements
For the year ended 31 December 2022
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
First Floor, Holborn Gate, 330 Holborn, London WC1V 7QT
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
76