Verditek plc (“Verditek” or the “Company” or the “Group”) Interim Report and Financial Statements for the six months to 30 June 2023 Verditek plc, (AIM:VDTK) the international green technology company that develops, manufactures and sells lightweight solar panels, is pleased to announce its interim results for the six months to 30 June 2023. This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. Enquiries: Verditek plc RH Lord David Willetts FRS (Non-Executive Chairman) Rob Richards (Chief Executive Officer) WH Ireland Limited (NOMAD and Broker) Chris Hardie Hugh Morgan Andrew de Andrade Tel: +44 (0)20 7129 7903 enquiries@verditek.com Tel: +44 (0)20 7220 1666 Verditek plc (“Verditek” or the “Company” or the “Group”) Company Registration No. 10114644 Interim Report and Financial Statements For the six month period to 30 June 2023 Verditek plc Interim Results June 2023 CEO Statement Overview Verditek has seen a growth in orders in connection with our integrated panel roofing collaborations in the six-months to 30 June 2023. Around 120 projects have been delivered in the period, a combination of commercial and trial projects. Verditek has continued to work with strategic partners to develop innovative integrated solar solutions. Strategy The Group’s focus during 2023 continues to be on refining the Group’s solar offering and working to build and convert the sales pipeline. The Group’s 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 need has been further accentuated by the ongoing war which has had an impact on energy prices across the board. We believe that 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 ultralightweight solar solution can now be embraced. Operations In May 2023, the Group’s manufacturing operations were relocated from Lainate to Tolmezzo in Udine, Italy. This move was made 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. The Tolmezzo facility is more automated and allows a higher quality product while simultaneously reducing costs. Sales and Marketing The Group has various routes to market, including commission-only sales agents, employed sales consultants, distributors and solutions partners. The Group has highly promising partnerships with roofing providers. Verditek has signed a long-term supply agreement in the period with Lindab Profil AB, a Scandinavian supplier of roof systems, and they have placed multiple orders for installations in a number of countries. Verditek 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 is expected to be recognized as revenue in the second half of 2023. Page 3 of 13 Verditek plc Interim Results June 2023 Other Opportunities We are in discussions to license our manufacturing technology to a larger scale, automated plant. In the period Verditek has agreed a Memorandum of Understanding (“MOU”) with Net Zero Valley, an Italian fully owned investment holding of SerendipEquity Group, to set up a framework for a 50:50 joint venture agreement to invest in a 1GW ultra-lightweight solar panel manufacturing plant in Southern Italy. Finance For the six-month period to 30 June 2023, the Group generated revenues of £254,958 (H1 2022: £178,502 and recorded a loss after tax of £970,989 (H1 2022: £636,798). The 2023 result includes one-off costs of £142,556 relating to the relocation of the Group’s manufacturing operations to the new facility. On 3 May 2023, the Company raised £500,000 before expenses by issue of secured convertible loan notes. The Company used the proceeds to repay outstanding Crowd for Angels bonds and to provide additional working capital. Cash balances as at 30 June 2023 were £135,357 (H1 2022: £1,492,380). On 1 September 2023 June 2022, the Company announced a capital raise of an additional £500,000 before expenses by way of a subscription for ordinary shares to provide additional working capital. Overhead spend remains tightly controlled to conserve cash as the conversion time for prospects to become customers has taken longer than expected. Outlook and conclusion Despite recent challenges, we continue to see positive opportunities develop for Verditek and believe the significant investment into the development of our flexible, lightweight solar panels will bring about meaningful financial reward. I would like to thank all members of the Verditek team, advisers and shareholders for their ongoing support. Rob Richards Chief Executive Officer 29 September 2023 Page 4 of 13 Verditek plc Interim Results June 2023 Condensed Consolidated Statement of Comprehensive Income For the six months ended 30 June 2023 Note 3 5 Continuing operations Revenue Direct costs Gross loss Administrative expenses Operating loss Other income Finance Income Finance costs Loss before tax Income Tax Loss for the period Loss for the period attributable to: - Owners of the Company Non-controlling interest Other comprehensive income Items that will or may be reclassified to profit or loss: Translation of foreign operations Total comprehensive loss for the period from continuing operations Total comprehensive loss for the period attributable to: - Owners of the Company Non-controlling interest H1 2023 Unaudited £ H1 2022 Unaudited £ FY 2022 Audited £ 254,958 (319,233) (64,275) (881,218) (945,493) - 2,895 (28,390) (970,989) - (970,989) (970,989) - (970,989) 178,502 (256,953) (78,451) (666,030) (744,481) 144,551 587 (37,455) (636,798) - (636,798) (636,798) - (636,798) 417,457 (670,547) (253,090) (1,661,935) (1,915,025) 91,933 2,084 (73,604) (1,894,612) 21,901 (1,872,711) (1,872,711) - (1,872,711) (20,454) 23,949 41,417 (991,443) (612,849) (1,831,294) (991,443) - (991,443) (612,849) - (612,849) (1,831,294) - (1,831,294) Loss per share Basic and diluted (£) 6 (0.002) (0.002) (0.005) Illustrative note to reflect impact of one-off costs from factory move: H1 result excluding one-off costs H1 one-off relocation costs H1 total including relocation costs for IFRS Direct costs Gross loss Administrative expenses Operating loss 4 4 (279,152) (24,194) (778,744) (802,938) (40,081) (40,081) (102,475) (142,556) (319,233) (64,275) (881,219) (945,493) Page 5 of 13 Verditek plc Interim Results June 2023 Condensed Consolidated Statement of Financial Position As at 30 June 2023 Note 7 8 8 9 9 Assets Non-current assets Other receivables Property, plant and equipment Right of use assets Non-current assets Current assets Inventories Trade and other receivables Cash and cash equivalents Current assets TOTAL ASSETS Equity and liabilities Non-current liabilities Loans and borrowings Lease liabilities Non-current liabilities Current liabilities Trade and other payables Loans and borrowings Lease liabilities Current liabilities TOTAL LIABILITIES Share capital Share premium account Share based payment reserve Accumulated losses Currency translation reserve Non-controlling interests Total shareholders’ equity TOTAL EQUITY AND LIABILITIES As at 30 June 2023 As at 30 June 2022 As at 31 December 2022 Unaudited £ Unaudited £ 556,783 114,400 - 671,183 696,452 183,437 135,357 1,015,246 1,686,429 500,000 - 500,000 483,191 - - 483,191 983,191 177,417 12,205,726 383,191 (11,942,000) (14,209) (106,887) 703,238 1,686,429 773,556 274,591 119,320 1,167,467 638,021 403,533 1,492,380 2,533,934 3,701,401 93,304 64,071 157,375 469,864 200,252 73,749 743,865 901,240 177,417 12,205,726 270,227 (9,735,098) (11,223) (106,887) 2,800,161 3,701,401 Audited £ 556,783 195,470 48,902 801,155 534,959 95,533 842,632 1,473,124 2,274,279 - - - 289,995 310,306 29,682 629,983 629,983 177,417 12,205,726 332,806 (10,971,011) 6,245 (106,887) 1,644,296 2,274,279 Page 6 of 13 Verditek plc Interim Results June 2023 Condensed Statement of Changes in Equity As at 30 June 2023 Issued share capital Share Premium £ £ Share based payment reserve £ Accumulated losses £ Currency translation reserve £ Non- controlling interest £ Total £ 136,883 10,761,055 213,134 (9,098,300) (35,172) (106,887) 1,870,713 - - - - - - 40,534 1,444,671 - - - - - - 57,093 (636,798) - - 23,949 (636,798) 23,949 - - - - - - - - - (636,798) 23,949 (612,849) 1,485,205 57,093 177,417 12,205,726 270,227 (9,735,098) (11,223) (106,887) 2,800,162 - - - - - - - - - - - (1,235,913) - (1,235,913) 62,579 - - 17,468 17,468 - - - - - (1,235,913) 17,468 (1,218,445) 62,579 177,417 12,205,726 332,806 (10,971,011) 6,245 (106,887) 1,644,296 As at 1 January 2022 Loss for the period Translation of subsidiary Total comprehensive loss for the period Issue of shares net of expenses Share based payment Shareholders’ equity at 30 June 2022 Loss for the period Translation of subsidiary Total comprehensive profit/(loss) for the period Share based payment Shareholders’ equity at 31 December 2022 Loss for the period Translation of subsidiary - Total comprehensive loss for the period Share based payment Shareholders’ equity at 30 June 2023 - - - - - - - - - - (970,989) - - (20,454) (970,989) (20,454) 50,385 - - - - - - (970,989) (20,454) (991,443) 50,385 177,417 12,205,726 383,191 (11,942,0001) (14,209) (106,887) 703,238 Page 7 of 13 Verditek plc Interim Results June 2023 Condensed Statement of Cash Flows For the 6 months ended 30 June 2023 Operating activities Note H1 2023 Unaudited £ H1 2022 Unaudited £ FY 2022 Audited £ Loss before tax from continuing operations (970,989) (636,798) (1,894,612) Adjustment for: Depreciation Finance costs Financial income Fair value changes through P&L - ICSI Loss on disposal of assets Share based payment expenses 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 104,722 28,390 (2,895) - 40,519 50,384 - 59,792 37,455 (587) (26,923) 501 57,093 - 195,555 73,604 (2,084) 125,486 501 119,672 (78,323) (749,869) (509,467) (1,460,201) (161,493) (85,130) 153,454 (843,038) - 19,130 (9,098) (1,019) (500,454) - Net cash outflow from operating activities (843,038) (500,454) Investing activities Sale of investment Purchase of fixed assets Net cash outflow from investing activities Financing activities Proceeds from issue of ordinary share capital, net of transaction costs Convertible loan notes issued Interest paid on loans Finance income Repayments of corporate green bonds Payment of lease liabilities Net cash inflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period - - - 307,731 (4,290) 303,441 - 500,000 (11,885) 2,895 (328,140) (30,096) 132,774 1,485,205 - (11,011) 587 - (35,372) 1,439,409 (710,264) 1,242,396 842,632 132,368 237,613 1,480,009 122,192 211,395 (97,847) (1,224,461) 145,142 (1,079,319) 307,731 (19,540) 288,191 1,485,205 - (22,210) 2,084 - (70,936) 1,394,143 603,015 237,613 840,628 Exchange gains on cash and cash equivalents 2,989 12,371 2,004 Cash and cash equivalents at the end of the period 135,357 1,492,380 842,632 Page 8 of 13 Verditek plc Interim Results June 2023 Notes to the Condensed Financial Statements 1. General Information The Interim Financial Statements are for the six months ended 30 June 2023 and are presented in British Pounds (£), which is the functional currency of the parent company. Verditek plc (“Verditek” or the “Company” or the “Group”) is a public limited company incorporated, registered and domiciled in England Wales (registration number 10114644), whose shares are quoted on the Alternative Investment Market on the London Stock Exchange. Its registered office is located at Holborn Gate, 330 High Holborn, London, WC1V 7QH. Verditek is the holding company of a group of companies engaged in the clean technology sector. The Interim Financial Statements have been approved for issue by the Board of Directors on 29 September 2023. 2. Basis of Preparation of Half-year Report The financial information presented in this condensed consolidated interim report for the half-year has been prepared in accordance with the recognition and measurement requirements of UK adopted International Accounting Standards (“UK IAS”). The principal accounting policies adopted in the preparation of the financial information in this Interim Report are unchanged from those used in the Company's financial statements for the year ended 31 December 2022. They have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’. They do not include all of the information required in annual financial statements in accordance with UK IAS and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2022. The financial information for the year ended 31 December 2022 presented in this Interim Report does not constitute the Company's statutory accounts for that period but has been derived from them. The Annual Report and Accounts for the year ended 31 December 2022 were audited and have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 December 2022 was unqualified and did not contain statements under s498(2) or (3) of the Companies Act 2006, but did contain a material uncertainty in relation to going concern. The financial information for the periods ended 30 June 2022 and 30 June 2023 is unaudited. A copy of the audited consolidated financial statements for the year ended 31 December 2022 is available on the Company's website. New Standards adopted as at 1 January 2023 Accounting pronouncements which have become effective from 1 January 2023 are: • IFRS 17 Insurance Contracts – the Group do not have any contracts that meet the definition of insurance contracts as set out in IFRS 17 • Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) • Definition of Accounting Estimates (Amendments to IAS 8) • Disclosure of Accounting Policies (Amendments to IAS 1 and Practice Statement 2) These accounting pronouncements do not have a significant impact on the Group's financial results or position and no changes to existing accounting policies were required as a result of adopting any amendments Page 9 of 13 Verditek plc Interim Results June 2023 Going concern The interim financial information has 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 1 September 2023 the Company announced a raise of an additional £0.5m by way of a subscription for ordinary shares. 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. 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. Dividends The Directors do not propose an interim dividend. Material changes in accounting estimates or judgments The preparation of unaudited interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses for the current and its corresponding financial period under review. Actual results may differ from these estimates. In preparing the unaudited interim financial information, the significant judgements made by the management in applying the Group's accounting policies and the sources of estimates uncertainty were consistent with those applied to the audited financial statements for the year ended 31 December 2022. 3. Segmental Information The chief operating decision-maker is considered to be the Board of Directors of Verditek. 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 period ended 30 June 2023, Verditek had one operating segment, the development and commercialisation of clean technologies. Revenue and segmental information Sale of Goods Total The Group had two customers that exceeded 10% of revenue in H1 2023 (H1 2022: 2 customers exceeded 10%) 6 months ended 30 June 23 Unaudited £ 254,958 254,958 6 months ended 30 June 22 Unaudited £ 178,502 178,502 For the year ended 31 December 22 Audited £ 417,457 417,457 Page 10 of 13 Verditek plc Interim Results June 2023 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 non-current assets by geographical market is given below: 6 months ended 30 June 23 6 months ended 30 June 22 For the year ended 31 December 22 Unaudited £ Unaudited £ - 254,958 254,958 (646,338) (299,155) (945,493) 568,880 102,303 671,183 - 178,502 178,502 (449,376) (295,105) (744,481) 773,555 393,912 1,167,467 Audited £ 18,661 398,796 417,457 (1,095,726) (819,299) (1,915,025) 571,010 230,145 801,155 Revenue UK Rest of Europe Operating loss UK Rest of Europe Non-current assets UK Rest of Europe 4. Relocation costs During the interim period the Milan factory was closed, and the operations moved to another premises in Tolmezzo, Italy. As a result costs were incurred totalling £40,081 within direct costs relating to staff and transport and £102,475 within administrative expenses relating to logistics, legal fees, loss on disposal of machinery and disposal costs. These are considered non-recurring costs. 5. Other income Unwind of discount on ICSI receivable Grant income Total other income 6 months ended 30 June 23 6 months ended 30 June 22 For the year ended 31 December 22 Unaudited Unaudited £ - - - £ 26,922 117,629 144,551 Audited £ (125,486) 217,419 91,933 In prior period, grant income of £117,629 was recognised in association with an Innovate UK grant awarded in 2021, in respect of a project to design solar solutions for homes, schools and farms in Zimbabwe. During the prior period there was also an unwind of discount on the receivable recognised upon disposal of the Group’s investment Industrial Climate Solutions Inc (ICSI) in February 2022, £26,922. Page 11 of 13 Verditek plc Interim Results June 2023 6. Loss Per Share The calculation of loss per share is based on the following loss and number of shares: 6 months ended 30 June 23 Unaudited 6 months ended 30 June 22 Unaudited For the year ended 31 December 22 Audited Loss for the period from continuing operations (£) (970,989) (636,798) Weighted average number of shares: Basic 443,538,306 342,764,826 Loss per share (£) (0.002) (0.002) £ £ £ (1,872,711) 393,565,703 (0.005) Basic loss per share is calculated by dividing the loss for the period from continuing operations of the Group by the weighted average number of ordinary shares in issue during the period. Due to the loss in the periods and there are no potentially dilutive ordinary shares, meaning the basic and diluted loss per share were the same. 7. Non-current receivables 6 months ended 30 June 23 Unaudited £ 6 months ended 30 June 22 Unaudited £ For the year ended 31 December 22 Audited £ Opening earn-out from ICSI investment sale FX gain Discount unwind Fair Value adjustment Total non-current receivables 556,783 - - - 556,783 682,268 64,365 26,923 - 773,556 682,268 29,339 73,437 (228,261) 556,783 On 1 February 2022 the Company completed a sale of its stake in the ICSI business. An initial payment of £307,731 was received upon completion. Further payments are expected over a 5 year earn-out period. The payments are linked to achievement of various milestones in development of carbon capture technology, but have been estimated based on management’s assessment of the likelihood of success, and discounted to present values. The valuation methodology at 30 June 2023 is consistent with the fair valuation methodology used at 31 December 2022 in measurement of the ICSI investment. During the prior period there was an unwind of discount of the earn-out receivable of £26,923 and an increase in valuation of £64,332 as a result of foreign exchange movements. During the current period it has been decided to retain the existing valuation. Page 12 of 13 Verditek plc Interim Results June 2023 8. Loans and Borrowings Current Convertible bonds issued to related party Convertible bonds Total current loans and borrowings Non-current Convertible loan notes Convertible bonds issued to related party Convertible bonds Total Non-current loans and borrowings 6 months ended 30 June 23 Unaudited £ 6 months ended 30 June 22 Unaudited £ For the year ended 31 December 22 Audited £ - - - 500,000 - - 500,000 25,000 175,252 200,252 - - 93,304 93,304 25,000 285,306 310,306 - - - - Total loans and borrowing 500,000 293,556 310,306 During the year, on 9 May 2023, the Group raised £500,000 in secured convertible loan notes and shortly thereafter repaid the convertible green bonds. The convertible loan notes carry a coupon of 7% per annum which is payable on the redemption date or earlier if converted. The convertible loan notes are redeemable 2 years from the date of issue and are convertible at the option of the noteholder into ordinary shares at the lower of 1.0625 pence per share, or the subscription price per ordinary share of any fundraising over £250,000 in the 6 months from the issue of the loan notes. As a result of the equity raise on 1 September 2023, the conversion price for the secured convertible loan notes has been adjusted to 0.45 pence per share. 9. Share capital and reserves At 30 June 2022 Issue of ordinary shares June 2022 At 31 December 2022 Issue of ordinary shares June 2023 At 30 June 2023 Number of shares Share capital Share premium 443,538,306 - 443,538,306 - 443,538,306 £ 177,417 - 177,417 - 177,417 £ 12,205,726 - 12,205,726 - 12,205,726 There have been no new options granted or exercised in the period and options over 500,000 shares lapsed. The number of shares outstanding on which options have been granted at 30 June 2023 is 19,500,000. 10. Events after the reporting date On 1 September 2023 the Group raised £500,000 of funds by way of a subscription for 111,111,111 ordinary shares at 0.45 pence per share. 11. Copies of the interim report Copies of this interim report will be made available on the Company's website at www.verditek.plc.uk and from the Company's registered office, Holborn Gate, 330 High Holborn, London, WC1V 7QH. Page 13 of 13
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