We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Verditek Plc | LSE:VDTK | London | Ordinary Share | GB00BF2C0424 | ORD GBP0.0004 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.12 | 0.11 | 0.13 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 509k | -1.87M | -0.0034 | -22.79 | 42.99M |
From Apr 2019 to Apr 2024
TIDMVDTK
RNS Number : 7434D
Verditek PLC
28 June 2019
Verditek PLC
("Verditek" or the "Company")
Final Audited Results
Verditek plc (AIM: VDTK), the clean technology company, today announces its final results for the year ended 31 December 2018. The Solar industry is transforming how we source power and Verditek is at the forefront of this revolution. Verditek's new generation of lightweight technology is ready to provide the next wave of solar application in our lives, addressing opportunities that cannot otherwise go solar. We can go off-grid and mobile and into the wild safely and responsibly, while reducing our footprint and maximizing our adventures.
Highlights
In 2018
-- Established a wholly owned manufacturing facility in Lainate, Italy, capable of producing 20MW per annum of our light weight, flexible solar modules
-- Our lightweight solar modules are part of providing the next wave of solar power as they can address opportunities that have not previously been able to use solar power e.g. roofing at pre-fabricated distribution warehouses
-- The Company did not generate revenues in 2018 -- As at 31 December 2018, the Company had cash balances totalling GBP0.7 million
Post Year-End
-- In May 2019 we signed our first distribution agreement for 4 MW, which will generate the first sales for the Company in the current financial year
-- Produced the first working Graphene Integrated Photo Voltaic (GIPV) cell in the world, together with Paragraf. This unique wafer has potential commercial applications in consumer electronics (e.g. the next generation of laptops), military and recreational devices
-- Agreed the next stage of the Joint Development Project with Paragraf to improve the performance of the cell and commence commercial discussions for manufacture and application of the new technology
-- Developed collaboration agreements with Engenera Renewables Limited and Optimeyes Energy Limited to further expand and accelerate the sales of our light weight, flexible solar modules
Commenting on the Company's final results, Geoff Nesbitt, Chief Executive Officer of Verditek, said:
"Our focus is on revolutionising the potential of solar power. Our solar modules, being 90% lighter than a conventional module, can be used on roofs which would not support conventional panels. This is a good start but only the beginning. We are also jointly developing a graphene solar cell with the potential to make electronic goods, such as laptops, self-charging. We have a clear route for developing these projects and have achieved our targets to date. 2019 will see our first revenues from our Solar modules, as well as continued investment in product development and commercialisation.
I am confident, with the tailwind of the ever increasing focus on renewable energy, that Verditek's new generation of lightweight technology will become an ever increasing presence in the solar landscape over the coming year.
I would like to take this opportunity to thank my fellow Board members, valued shareholders, advisers and employees for their support during this year. As noted, we look forward to delivering on our vision of building a cash-generative and profitable clean technology company and we will continue to update the market in the coming months on these developments."
Enquiries:
Verditek plc The Rt Hon Lord David Willetts FRS Tel: +44 (0)20 7129 1110 (Non-Executive Chairman) enquiries@verditek.plc.uk Dr Geoffrey Nesbitt (Chief Executive Officer) WH Ireland Limited (NOMAD and Broker) Tel: +44 (0)20 7220 1666 Chris Hardie Matthew Chan
About Verditek plc
Verditek plc (AIM: VDTK) is headquartered in London and holds interests in three businesses operating within the clean technology sector. This includes full control of a new manufacturing factory in Lainate Italy comprising two solar manufacturing production lines (total of 20MW p.a.) producing innovative lightweight solar modules. Additionally, the company has interests in a sustainable filtration and deodorization technology which is commercially proven to remove a wide range of odours found in wastewater and exhausts, and a unique liquid gas absorption technology which can revolutionize the global CO2-capture industry. For further information, please visit www.verditek.com
The full text of the Company's audited Financial Statements for the year ended 31 December 2018 which is reproduced below does not constitute statutory accounts but has been extracted from the Company's Financial Statements which have not yet been delivered to the Registrar. The Company's annual report will be posted to shareholders shortly and further copies will be available from the Company's registered office: 9 Farm Street, London WIJ 5RL and on the Company's website www.verditek.com.
STRATEGIC REPORT
Verditek takes early stage positions in clean-tech businesses and provides funding and management to take them through to commercial revenue and profit. Through our subsidiaries we bring new technology to emerging and fast growing sectors that reduce the environmental footprint of conventional industry. We continue to evaluate opportunities in technology businesses and partnerships where we believe our commercial discipline and network can provide a route to commercial revenue and growth.
Verditek holds interests in three businesses operating within this sector. This includes full control of Verditek Solar Italy housed in a new factory in Lainate Italy comprising two solar manufacturing lines (total of 20MWp p.a.) producing innovative lightweight solar modules. Additionally, the company has interests in a sustainable filtration and deodorization technology which is commercially proven to remove a wide range of odours found in wastewater and exhausts, and a unique liquid gas absorption technology which can revolutionize the global CO2-capture industry. At the date of approval of this report the Company has the following holdings:
100% holding in Verditek Solar Italy s.r.l - our Verditek Solar Italy subsidiary manufactures light weight solar modules which offer several innovations including: interconnectivity of individual PV cells, increased flexibility, and are particularly light weight compared to conventional PV modules. These properties open up markets that otherwise cannot consider solar energy to address their power requirements. The business will generate revenues from the sale of 'solar enhanced' PV products. Our start-up capacity comprises two solar PV production lines with a total manufacturing capacity of 20MWp of solar panels per annum.
51% holding in BBR: BBR applies patented filtration and deodorisation technology to wastewater and industrial effluents. Our technology can be adapted to address specific odour, VOC, and HAP problems, using sustainable green methods to process industrial scale volumes of effluent. For example, our technology can remove over 99% of hydrogen sulphide from wastewater streams, as well as nuisance odours arising from mercaptans and aldehydes. Our patented reactor provides a highly efficient and cost-effective solution that can be scaled from small to very large process streams.
23.64% holding in WES: Many important industrial processes are governed by the effectiveness of mixing a gas with a liquid in order to bring about a separation or reaction of chemicals. The WES gas-liquid contactor does this significantly more efficiently than conventional reactors and is particularly effective when processes are influenced by precipitation. An extremely important example is that of Carbon Capture where typical flue gas streams (e.g. electricity generation, cement manufacture) must by treated to prevent carbon dioxide from entering the atmosphere. Another huge application is the treatment of natural gas (commonly contaminated with 2-5% of H(2) S) to meet sales gas requirements (<25 ppm). WES has developed a novel multiphase contacting process using a proprietary froth generator that can dramatically enhance mass transfer in gas/liquid absorption systems. We believe the reduction in capital costs, as well as operational burden, will revolutionize these markets, making access to the technology affordable to industry and protecting our planet.
In October 2018 the shareholders of WES accepted an offer to sell the trade and assets of WES to Industrial Climate Solutions (ICSI), an unlisted company registered in Canada, for $500,000. Acceptance of the offer, together with the absence of commercial sales, means that the realisable value of Verditek's investment in WES at the reporting date was substantially impaired. The amount of such impairment is uncertain, being conditional on the final unwinding of Verditek's investment in WES which was not completed at the date of approval of this report. On finalising the unwinding of WES, the Company will have a 22.34% holding in ICSI. See note 12 to the Notes to the Consolidated Financial Statements.
In addition to these holdings, we have an exciting relationship in place with Paragraf, a start-up which has developed what we believe to be world-leading graphene technology. Together we are working to integrate the extraordinary properties of graphene into silicon PV technology to generate a new technology that can rapidly be commercialized.
This year was one of consolidation of our positions in our holdings, repositioning them geographically, and attracting new talent to the company to energize leadership aligned with our commercial goals. There is more hard work required as we move to secure sales and prove that we can execute projects efficiently with our partners.
On behalf of the Board
Dr Geoffrey Nesbitt
Chief Executive Officer
28 June 2019
2018 HIGHLIGHTS
Our focus was the delivery of first sales of our leading solar cell PV technology in 2019, continued participation in the Paragraf and Verditek joint development project (JDP) and development of the BBR commercial funnel.
In July 2018 we completed commissioning of the solar production line and moved to a larger facility in Lainate, Italy at the same time creating a new wholly owned subsidiary - Verditek Solar Italy s.r.l. Having complete control of the company and assets has allowed Verditek Solar Italy s.r.l. to move forward quickly with refurbishing the Lainate manufacturing facilities and refining the formulation of our lightweight PV modules. The result is a novel solar PV product that is significantly lighter and easier to install than conventional panels. This opens up new market opportunities with clients who could not consider a solar solution due to the weight and installation challenges of conventional panels.
At the year-end we were at an advanced stage in negotiating full control of Greenflex Energy Limited and liquidating Greenflex RSM s.r.l. At the date of approval of this report those objectives had been achieved with full consent of the minority interest owner.
In addition, in pursuit of more rapid commercialisation, at the date of approval of this report, we have announced:
-- the signing of a framework agreement with Engenera Renewables Limited - an Engineering, Procurement and Construction (EPC) company - to advance commercial opportunities and jointly provide end-to-end solar solutions to clients. Under the agreement the two firms have agreed to work together to source, tender, finance and create renewable energy generation projects.
-- confirmation of our first material distribution agreement comprising a multi-year take or pay contract that begins with a minimum of 1 MW in the first year and increases to 3 MW in the second year. Further orders are under negotiation and the directors are confident the pipeline will deliver firm commitments in the near future.
-- the signing of a framework agreement with Optimeyes Energy Limited to advance commercial opportunities jointly. Under the arrangement the two firms will collaborate on projects in which Verditek technology and expertise can be used to the advantage of Optimeyes projects which are under development in Europe. Several projects are currently being developed which will demonstrate the synergies that the two firms can offer working together.
We continued to make excellent progress with our joint solar development project with Paragraf - a spin out from Cambridge University - to develop and verify the integration of graphene into silicon solar technology which we believe could be transformational for the industry. Progress was such that at the date of approval of this report, we have announced:
-- the application of Paragraf's proprietary manufacturing process of large scale, high quality, graphene to Verditek solar technology and the successful completion of the first development project. The program has developed unique methodologies to successfully produce graphene on photovoltaic Proof of Concept (PoC) cells, to harness the superior electrical and mechanical properties that graphene can impart. The revolutionary cell works without the encumbrance of metallic busbars or backplates required in conventional PV cells
-- a second JDP between Paragraf and Verditek, building on the first project, to improve the performance of the cells, develop the opportunity to file patents and, upon attainment of additional performance targets, commence commercial discussions for industrial manufacture and application of the new material. The second JDP is underway with a fast-track schedule of objectives.
2018 HIGHLIGHTS (Continued)
Regarding BBR, at the date of approval of this report we have announced a termination notice of our Shareholder Agreement to the minority BBR Filtration shareholders. This will enable BBR Filtration to develop alternative commercial relationships in conjunction with a new company and allow management to provide better focus of on its solar business in Italy.
The Board believes that WES/ICSI is a blue-sky investment opportunity, which could revolutionise the carbon capture market for the cement industry, natural gas processing, petroleum refineries and numerous other industries. This year we have moved operations from Maui, USA to Calgary, Canada to take advantage of funding programs offered by the Canadian government in the carbon-capture and sequestration industry and with new leadership in place are pursuing projects and further investment in the company.
In December 2018, Verditek successfully closed on GBP1.17m of funding through the issuance of a 10% Convertible Loan Note for working capital purposes to support of the continued growth of the Company's solar manufacturing capacity and to further fund the Joint Development Programme with Paragraf.
During the period the businesses did not record any revenue with first commercial sales expected in 2019. The investment funds raised during the year were used to invest in additional production equipment, sales and marketing, product development and other operating expenses.
CHAIRMAN'S STATEMENT
I was delighted to take over from Geoff Nesbitt as Chairman in April 2018 and, as a strong supporter of clean technologies, I continue guide this forward-thinking business in its mission to commercialise clean technologies. I believe that Verditek's innovative range of clean energy products will help to meet the growing demand for a greener, cleaner planet.
During 2018 and into 2019 the executive team have continued to make significant progress towards achievement of the operational plans and put in place a strong foundation of governance under which the group can effectively operate.
Undoubtedly the focus during 2018 and into 2019 has been the establishment of our new wholly owned subsidiary - Verditek Solar Italy - manufacturing light weight solar modules which offer several innovations including, interconnectivity of individual PV cells, increased flexibility, and are particularly light weight compared to conventional PV modules. These properties open up markets that otherwise cannot consider solar energy to address their power requirements. The business will generate revenues from the sale of 'solar enhanced' PV modules for applications which require exceptional performance without the weight. Our start-up capacity comprises two solar PV production lines with an initial manufacturing capacity of 20 MWp of solar panels per annum.
I am excited by the significant progress that we have made in pursuing commercialisation of our light-weight solar modules, notably our collaboration agreements with Engenera Renewables Limited and Optimeyes Energy Limited with whom we are actively participating to generate end-to-end solar solutions to clients. In addition, our first material distribution agreement is a significant step towards commercialisation.
With the announcement that we have created a working proof of concept graphene integrated photovoltaic cell, we are very excited about entering the second Joint Development Project with Paragraf Ltd, a spin out from Cambridge University. This JDP will look to improve performance of the PoC cell, develop patents and commence commercial discussions for the product. We envisage the development of this technology coupled with our current solar offering, will further transform the durability and performance of conventional light-weight cells, opening up new applications of solar technology. We anticipate the new technology can be integrated into a wide range of electronic devices demanding a supremely robust, lightweight material that converts light into power.
With its modular solution to odour control BBR is ideally suited to exploit the trend for new biological based solutions and we are actively pursuing partnerships to commercialise the opportunity.
In WES/ICSI we have been active in developing access to CO(2) capture and H(2) S removal target markets through work with established partners in order to scale the business.
Altogether the outlook for the business remains positive with strongly growing addressable markets and products - particularly in the solar PV sector - that offer customers good value solutions to their environmental challenges.
The Rt Hon. Lord David Willetts FRS
Non-Executive Chairman
CHIEF EXECUTIVE'S REVIEW
Through our subsidiaries we are growing commercial opportunities fast-growing sectors of solar energy, industrial air and water deodorisation as well as CO(2) and H(2) S emissions capture technology. In the period under review we have made significant investment in the commercialisation of our solar and BBR technologies, development of operating processes and group governance. We remain confident that in our chosen markets our technologies can deliver significant value to our customers as they manage their environmental responsibilities.
Strategy
Verditek takes early stage positions in technology businesses and provides financial discipline and funding to take them through to commercial revenue and growth. Technology and market risk are managed by investing in technologies which service different markets and are at different stages of maturity. Cash generation from interests which are closest to revenue will supplement the investment needs of the businesses with longer technology development cycles. Near term strategic objectives include:
Achieving first sales: Verditek Solar Italy, our next generation solar cell technology company, is now in production and offers our nearest term revenue generation opportunity. Our current focus is to push the solar technology into market and secure sales contracts. To that end we have entered into collaboration agreements with Engenera Renewables Limited and Optimeyes Energy Limited:
-- Engenera is a premier UK EPC company specialising in renewable energy solutions for its clients and has developed a four-step process to help businesses reduce energy bills and their carbon footprint, removing up-front costs and maintenance burden as barriers to a sustainable future. Together with Verditek Solar Italy, the two organisations can offer a tailored solution that helps remove the threat of volatile utility prices and provides project owners and businesses with a ready-made solution and predictable savings.
-- Optimeyes is a project developer providing clients with integrated solutions in renewable energy generation projects in the EU and the UK. Optimeyes has developed a full range of services comprising energy compliance audits, optimization analysis for businesses, energy efficiency programs to reduce utility spending, and has a track record in creating financial instruments to ease client entry into capital purchases that reduce the long-term burden of utility costs. Several projects are currently being developed which will demonstrate the synergies that Optimeyes and Verditek Solar Italy can offer working together.
In addition, we have secured our first material distribution agreement comprising a multi-year take or pay contract that begins with a minimum of 1 MW in the first year and increases to 3 MW in the second year. Further orders are under negotiation and the directors are confident the pipeline will deliver firm commitments in the near future.
In order to provide better focus of Verditek on its solar business in Italy, the Verditek Board has issued a termination notice of their Shareholder Agreement to the minority BBR Filtration shareholders. Henceforth BBR Filtration will develop alternative commercial relationships in conjunction with a new company. The Board believes this is in the best interest of all parties and will ultimately provide better commercial delivery.
Continuing to invest in longer term development opportunities: The joint development project with Paragraf Limited has been created to harness the significant potential advantages of graphene to improve the performance of solar power generation over state of the art cells and panels.
The first development project is completed and has resulted in the realisation of working graphene integrated photovoltaic Proof of Concept (PoC) cells that successfully convert sunlight to electrical energy without the encumbrance of busbars or backplates required in conventional PV cells. A second JDP will look to improve performance of the PoC cell, develop patents and commence commercial discussions for the product.
CHIEF EXECUTIVE'S REVIEW (continued)
This is very exciting and provides an opportunity to move the Verditek solar business to the cutting edge of the solar industry.
The investment in WES with its unique liquid gas absorption technology, is set to revolutionize the global CO(2) capture market offers a longer-term blue-sky opportunity for investors.
Develop the organisation: build out a strong and reliant organisation with an emphasis on attracting and retaining excellent people supported by effective systems, processes and tools.
Markets and Products
During the period we continued to see strong growth in our addressable markets.
Solar: We estimate that the lightweight solar market is growing strongly and is going to be at least $28 billion by 2022. Greenflex can offer customers solar modules at a fraction of the weight of conventional glass panels opening up new market opportunities for customers with residential and light industrial estates.
Filtration: Our BBR fluidized biofilter offers deodorisation and filtration systems into established markets where growth is driven by increasingly strict national and local regulations. Addressable markets include food processing, wastewater treatment, industrial and chemical processing. The scale of the global market for new capital equipment expenditure on abatement technology is estimated to be in the region of GBP450m-GBP600m per annum, and BBR is ideally suited to exploit the trend for new biological based solutions.
CO(2) and H(2) S removal: The unique WES liquid gas absorption technology provides the opportunity to supply more space efficient absorption solutions to customers with lower running costs than existing solutions. Addressable market growth is driven by increased legislative pressure and growth in the underlying markets. Markets include fossil fuel power generation plants, cement production, oil refining, upstream management of sour gas, any precipitating solvent process and ultra-fine particular scrubbing. The sour gas market is growing rapidly and expected to be around $55 billion by 2022.
Financials
During the period the businesses did not record any revenue. The investment funds raised during the year were used to invest in additional production equipment, sales and marketing, product development and other operating expenses.
Outlook
We are excited about the future of Verditek and believe the outlook remains very positive.
When we set about creating Verditek we did so with the vision of building a leading clean technology company, which delivers game changing technology solutions for the sector. We believe with our initial three investments in solar, bio filtration and gas processing and carbon capture, we are well placed to do this.
Our growth strategy is centered on accelerating the Verditek Solar commercialisation and defining the commercial opportunities of the Paragraf JDP, to drive first revenues and enhance shareholder value for the Company.
All of our businesses hold the following characteristics which we believe set us apart from our peers; they are all proven proprietary products, technologies within emergent and fast growing cleantech sector and have large, lucrative and global addressable markets. We also have the ability to add investments in synergistic technologies that bring value to our core three businesses.
CHIEF EXECUTIVE'S REVIEW (continued)
Our focus continues to be delivery of first sales of our leading solar cell PV technology. We have completed commissioning of the production line and recently moved to a larger facility in Lainate, Italy under the wholly owned subsidiary Verditek Solar Italy.
We are very excited about our joint solar development project with Paragraf Limited to develop and verify the application of graphene to solar devices which we believe could be a game changer for the industry.
We are confident that the repositioning of the BBR's bio filtration products will be successful.
The Board believes that WES is a blue-sky investment opportunity, which could revolutionise the carbon capture market for the cement industry, natural gas processing, petroleum refineries and numerous other industries.
We will also continue to invest in developing the Verditek organisation building on the strong foundations that have been laid down so far.
I would like to take this opportunity to thank my fellow Board members, valued shareholders and advisers for their support during this year. As noted, we look forward to delivering on our vision of building a cash-generative and profitable clean technology company and we will continue to update the market in the coming months on these developments.
Dr Geoffrey Nesbitt
Chief Executive Officer
FINANCIAL REVIEW
Income statement
During the year 2018 the Group's loss after taxation was GBP2,663,415 (December 2017: GBP1,979,479). The administration costs incurred for the year ended 31 December 2018 of GBP1,919,700 included impairment of goodwill of GBP31,405 (December 2017: GBP1,807,184 included non-recurring costs of GBP673,012, being costs associated with AIM admission and fundraising costs, and impairment of goodwill of GBP357,236).
Loss per share
The basic and diluted loss per share was GBP0.01 (2017: GBP0.01).
Financial Position
At 31 December 2018, the Group's net liabilities were GBP112,449 (2017: net assets of GBP2,527,371). This comprised total assets of GBP1,639,106 and total liabilities of GBP1,751,555. The total assets included property, plant and equipment and goodwill of GBP498,969 (2017: GBP440,588).
Cashflow
The Group's cash balance at the period end was GBP683,885 (2017: GBP1,190,975).
During the period the net cash outflow from operating activities was GBP1,704,546 (2017: 1,613,455) with financing activities generating net proceeds of GBP1,483,328 (2017: GBP3,600,741).
Dividends
No dividend is recommended (2017: GBPnil) due to the early stage of the development of the Group.
Capital management
The Board's objective is to maintain a statement of financial position that is both efficient and delivers long term shareholder value. The Group had cash balances of GBP683,885 at 31 December 2018. The Board continues to monitor the balance sheet to ensure it has an adequate capital structure.
Key Performance Indicators
As the group is pre-revenue the main measures of performance are the level of expenditure compared to budget and forecast expectations. Going forwards the Board will work with the businesses to develop a suite of 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.
Tim Lord
Chief Financial Officer
PRINCIPAL RISKS AND UNCERTAINTIES
The Board is committed to protecting and enhancing our reputation and assets, while safeguarding the interests of our shareholders. It has overall responsibility for the Group's system of risk management and internal control.
The Board assesses the Company's principal risks and monitors the risk management process at least twice a year. Over the course of the year, the Board has also considered specific risks of intellectual property and physical asset security, fluctuations in exchange rates and liquidity.
Accepting that it is not possible to identify, anticipate or eliminate every risk that may arise and that risk is an inherent part of doing business, our risk management process aims to provide reasonable assurance that we understand, monitor and manage the main uncertainties that we face in delivering our objectives. Our principal risks are shown in the table below.
Risk Framework
Managing risk is an inherent part of any vital commercial enterprise. Verditek 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
Verditek businesses span three separate markets and industry segments, providing a natural hedge to the company. The key risks identified per business are as follows:
Hot Features
Premium
RISK MITIGATION and MANAGEMENT ASSESSMENT
Market Solar: subsidized tariffs For all three businesses The risk requires
conditions for conventional "brown" the mitigation strategy constant vigilance.
electricity and the is similar: pursue clients
application of massive who are themselves active
investment of capital in different regions,
automation similar markets, and industry
to what happened in segments.
conventional PV. In Solar we are securing
Deodorisation: established relationships with developers
players enter into in India, Australia the
a price war, destroying GCC and Europe. Our product
value proposition in can be used in light
the market or, regulatory industrial sheds, mining
bodies relax odour camps and affordable
emission laws. housing projects.
CO(2) & H(2) S Capture: In our deodorisation
major governments opt business we are pursuing
out of the Paris accord, relationships in the
encouraging industry US across many new areas
to vent CO(2) , or such as food processing
sulphur emissions legislation and horticulture (e.g.
is relaxed by the IMO cannabis).
and EU. In CO(2) and H(2) S capture
we are working with recognised
industry leaders to benchmark
our technology in CO(2)
capture and H(2) S gas
processing.
------------------------------- ----------------------------------- ---------------------
Commercial Our products are considered In our solar business The risk requires
Success too expensive or providing we are establishing procurement continued vigilance
a low return on investment. relationships and debottlenecking
Since we are ramping our WIP cycle to optimize
up production our leverage material cost. As we
on procurement costs grow, we will be able
and economies of scale to negotiate more competitive
are low. rates.
In our deodorisation
Establishing organic business we are working
sales leads is slow. with our supplier to
analyse costs and where
possible manufacture
in-country to avoid FX
burden.
Our CO(2) and H(2) S
capture investment will
remain precommercial
until 2019.
We are pursuing licensing
relationships in both
solar and deodorisation
to benefit from established
sales presence.
------------------------------- ----------------------------------- ---------------------
License Failure to meet AIM The executive benchmarked The HSE risk
to corporate governance its corporate governance, requires vigilance
Operate requirements. policies and procedures
Leadership in Verditek against the newly published
or our operating companies QCA guidelines to ensure
behave fraudulently compliance.
HSE violations in our We have published our
operating companies. Code of Conduct and rolled
out to the Board and
executive. The Board
has agreed that each
member of Verditek sign
the CoC and confirm they
have read and understand
the contents.
Regarding HSE we are
directly responsible
for installing and auditing
an HSE culture in our
solar business, auditing
our supplier in our deodorisation
business and advising
in our CO(2) & H(2) S
capture business. Implementation
of an HSE program is
underway in our solar
business, and we are
working with our supplier
in deodorisation to implement
policy in the manufacture
of the equipment.
------------------------------- ----------------------------------- ---------------------
Financial Failure to secure cashflow We are taking steps to The risk requires
and remain a going develop a differentiated constant vigilance.
concern. approach to contracting
Growth ambitions outpace to encourage lease, lease
cash reserves. to buy and sales contracts
which will build robust
line of sight on earnings.
Short to medium-term
funding is being addressed
in Q3 2019.
Early stage financing
of growth will be done
with partners, using
major anchor projects
to provide line of sight
on income and service
financing.
------------------------------- ----------------------------------- ---------------------
Legal Poorly constructed Verditek has secured This risk is
sales contracts expose Peachey as their single in control.
the company to punitive corporate counsel and
commercial conditions. have developed a suite
Partnering relationships of proforma contracts
expose Verditek to to ensure commercial
unlimited liabilities. negotiations begin soundly.
------------------------------- ----------------------------------- ---------------------
GOVERNANCE
BOARD OF DIRECTORS
Since 31 December 2017 there have been a number of Board changes. Theo Chapman resigned as Chief Executive Officer and was replaced by Geoffrey Nesbitt, who was previously Non-Executive Chairman. Jose Luis del Valle and Anthony Rawlinson, both Non-Executive Directors) and Janet Donovan, Chief Financial Officer have also stepped down from the Board to pursue other endeavours. The Rt Hon. Lord David Willetts FRS has joined the Board as Non-Executive Chairman along with Tim Lord as Chief Financial Officer. Gavin Mayhew completed additions to the Board, increasing our depth as a proven entrepreneur, company CEO and Director.
The Board as at the date of signing the report and accounts comprised:
Geoffrey Nesbitt Chief Executive Officer
Geoff was the Chairman of Verditek and in early 2018 became the Chief Executive Officer. Geoff has served over 30 years in the oil & gas and energy sectors. He was the CTO of FTSE 250 group Petrofac plc. Prior to Petrofac plc, he held a number of senior roles in Shell in the Middle East, India, the US, and Europe for 23 years. Geoff has a PhD in Chemistry from Durham University, UK.
Tim Lord (Chief Financial Officer)
Tim has held a number of CFO positions, including at JP Morgan, based in Japan, and Société Générale, based in France, USA and Japan. Most recently he was the Financial Controller at Standard Chartered in Singapore and the UK. Tim is a qualified Chartered Accountant, holds a BSc (hons) in Physics from Imperial College London and an MSc in Geophysics from Birmingham University.
The Rt Hon. Lord David Willetts FRS (Non-Executive Chairman)
The Rt Hon. Lord David Willetts is the Chairman of Verditek plc. He is also the Executive Chair 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, Member of the Board of the Biotech Growth Trust and a member of the Council of the Institute for Fiscal Studies. 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 - 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 strategic face to face meetings 4 times a year, complemented with teleconference meetings 8 times a year 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.
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 20.
The Remuneration Committee
The Remuneration Committee comprises Gavin Mayhew as chairman and George Katzaros.
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.
Details of board meetings held, and attendance of Board directors is shown below
Board Members Eligible Attended
to attend
Executive Directors
Geoffrey John Nesbitt 12 12
Tim Lord 5 5
Janet Rachel Donovan 5 5
Theodore Edward Chapman - -
Non-Executive Directors
The Rt Hon. Lord David
Willetts FRS 8 8
George Francis Katzaros 12 12
Anthony Neil Rawlinson 12 12
José Luis Del
Valle Doblado 3 3
The Directors' Remuneration Report is presented on page 21.
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
Dr Geoffrey Nesbitt
Chief Executive Officer
CORPORATE GOVERNANCE REPORT
The Directors recognise that good corporate governance is a key foundation for the long-term success of the Group. As the Company is listed on the AIM market of the London Stock Exchange and is subject to the continuing requirements of the AIM Rules. The Board has therefore adopted the principles set out in the Corporate Governance Code for small and midsized companies published by the Quoted Companies Alliance ("QCA Code").
The principles are listed below with an explanation of how the Company applies each principle, and what we do and why.
QCA Code Principle Application (as set What we do and why
out by QCA)
1. Establish a strategy The board must be Verditek's strategy is
and business model able to express a explained fully within
which promote long-term shared view of the our Strategic Report section
value for shareholders company's purpose, of our Report and Accounts
business model and for the year ended 31
strategy. It should December 2018.
go beyond the simple
description of products Our strategy is focused
and corporate structures on achieving first sales;
and set out how the investing in longer term
company intends to development opportunities
deliver shareholder and developing the
value in the medium organisation.
to long-term. It should
demonstrate that the The key challenges to
delivery of long-term the business and how these
growth is underpinned are mitigated are detailed
by a clear set of on pages 10 to 12 of our
values aimed at protecting Report and Accounts for
the company from unnecessary the year ended 31 December
risk and securing 2018.
its long-term future.
---------------------------------------------------------- ------------------------------
2. Seek to understand Directors must develop Whilst the company is
and meet shareholder a good understanding pre-revenue the Board
needs and expectations of the needs and expectations is committed to returning
of all elements of value to our shareholders
the company's shareholder through execution of our
base. strategy.
---------------------------------------------------------- ------------------------------
The board must manage Verditek plc encourages
shareholders' expectations two-way communication
and should seek to with its investors and
understand the motivations responds quickly to all
behind shareholder queries received.
voting decisions.
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)
Details of the investor
engagement and the people
responsible for shareholder
liaison can be found on
the Company website.
---------------------------------------------------------- ------------------------------
3. Take into account Long-term success The executive has created
wider stakeholder relies upon good relations a communications program
and social implications with a range of different that engages with trade
for long-term success stakeholder groups and interest groups working
responsibilities both internal (workforce) in the markets where our
and their implications and external (suppliers, products are sold and
for long-term success customers, regulators applied.
and others). The board
needs to identify
the company's stakeholders
and understand their
needs, interests and
expectations.
---------------------------------------------------------- ------------------------------
Where matters that We have prepared and
relate to the company's published
impact on society, articles on topics addressing
the communities within the ethical and social
which it operates, aspects of our products
or the environment as a renewable energy
have the potential solution alternative to
to affect the company's conventional products.
ability to deliver We attend conferences
shareholder value each year to ensure we
over the medium to remain informed.
long-term, then those
matters must be integrated
into the company's
strategy and business
model.
---------------------------------------------------------- ------------------------------
Feedback is an essential Our website maintains
part of all control a channel to receive feedback
mechanisms. Systems from all stakeholders.
need to be in place
to solicit, consider
and act on feedback
from all stakeholder
groups.
---------------------------------------------------------- ------------------------------
4. Embed effective The board needs to Risk Management on pages
risk management, ensure that the company's 10 to 12 of our Report
considering both risk management framework and Accounts for the year
opportunities and identifies and addresses ended 31 December 2018
threats, throughout all relevant risks details the risks to the
the organisation in order to execute business and how these
and deliver strategy; are mitigated.
companies need to
consider their extended
business, including
the company's supply
chain, from key suppliers
to end-customer.
---------------------------------------------------------- ------------------------------
Setting strategy includes The Board considers risk
determining the extent to the business at every
of exposure to the Board meeting. The Board
identified risks that are appraised of any changes
the company is able in the risk profile through
to bear and willing monthly Board calls and
to take (risk tolerance quarterly face to face
and Board meetings. The Company
risk appetite). formally reviews and
documents
the principal risks to
the business at least
annually.
---------------------------------------------------------- ------------------------------
5. Maintain the The board members The Company is controlled
board as a well- have a collective by the Board of Directors.
functioning, balanced responsibility and The Rt Hon. Lord David
team led by the legal obligation to Willetts FRS, the
chair promote the interests Non-executive
of the company and Chairman, is responsible
are collectively responsible for the running of the
for defining corporate Board and Geoff Nesbitt,
governance arrangements. the Chief Executive, has
Ultimate responsibility executive responsibility
for the quality of, for running the Group's
and approach to, corporate business and implementing
governance lies with Group strategy.
the chair of the board.
---------------------------------------------------------- ------------------------------
The board (and any All Directors receive
committees) should regular and timely
be provided with high information
quality information on the Group's operation
in a timely manner and financial performance.
to facilitate proper Relevant information is
assessment of the circulated to the Directors
matters requiring in advance of meetings.
a decision or insight. 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 should have The Board comprises two
an appropriate balance Executive Directors and
between executive three Non-Executive
and non-executive Directors.
directors and should The Board considers that
have at least two all Non- executive Directors
independent non- executive bring an independent
directors. Independence judgement
is a board judgement. to bear.
---------------------------------------------------------- ------------------------------
The board should be The Executive Directors
supported by committees are full time and the
(e.g. audit, remuneration, Non-Executive Directors
nomination) that have provide such time as is
the necessary skills required to fully and
and knowledge to discharge diligently perform their
their duties and responsibilities duties.
effectively.
---------------------------------------------------------- ------------------------------
Directors must commit The Board holds monthly
the time necessary Board calls and quarterly
to fulfil their roles. face to face Board meetings.
Details of the attendance
record of each director
at Board meetings is included
in Director's report of
the Annual Report.
---------------------------------------------------------- ------------------------------
6. Ensure that between The board must have Directors of the Board
them the directors an appropriate balance have attended professional
have the necessary of sector, financial NED instruction and have
up-to-date experience, and public markets proven track-records of
skills and capabilities skills and experience, serving on boards previously.
as well as an appropriate
balance of personal The Board comprises members
qualities and capabilities. with a mix of class and
The board should understand national origins and speaks
and challenge its four languages.
own diversity, including
gender balance, as
part of its composition.
---------------------------------------------------------- ------------------------------
The board should not The Board will work to
be dominated by one increase the diversity
person or a group of the Directors.
of people. Strong
personal bonds can
be important but can
also divide a board.
---------------------------------------------------------- ------------------------------
As companies evolve, Further information about
the mix of skills the Board's skillset,
and experience required including each Director's
on the board will experience and CV, is
change, and board set out on the Company
composition will need website and additional
to evolve to reflect information is shown in
this change. page 13 of the Annual
Report for the year ending
31 December 2018.
---------------------------------------------------------- ------------------------------
7. Evaluate board The board should regularly The Company was admitted
performance based review the effectiveness to trading on AIM in August
on clear and relevant of its performance 2017. Since that time
objectives, seeking as a unit, as well there has been a greater
continuous improvement as that of its committees than 50% turnover in Board
and the individual membership with the
directors. appointment
of a new Non-Executive
Chairman; a new CEO; a
new CFO and resignation
of two Non-Executive
Directors
and the appointment of
one Non-Executive Director.
Appraisals are scheduled
to be carried out each
year with all Executive
Directors.
All continuing Directors
stand for re-election
on an annual basis.
The Company has no previous
performance criteria were
in place from which the
current performance criteria
set out above have evolved.
---------------------------------------------------------- ------------------------------
The board performance The Company is pre-revenue
review may be carried and as such the new Board
out internally or, has been focussed on ensuring
ideally, externally that sufficient capital
facilitated from time is in place to execute
to time. The review its strategy: first sales;
should identify development investing in longer term
or mentoring needs development opportunities
of individual directors and developing the
or the wider senior organisation.
management team.
It is against the performance
of this strategy that
the Board is currently
assessed.
---------------------------------------------------------- ------------------------------
It is healthy for As the Board of the Company
membership of the was formed only relatively
board to be periodically recently, no formal
refreshed. Succession succession
planning is a vital plans are currently in
task for boards. No place, but the Board will
member of the board continue to review this
should become indispensable. also keeping in mind the
outcome of each performance
review.
---------------------------------------------------------- ------------------------------
8. Promote a corporate The board should embody The Corporate and Social
culture that is and promote a corporate Responsibility section
based on ethical culture that is based on page 23 of our Report
values and behaviours on sound ethical values & Accounts for the year
and behaviours and ended 31 December 2018
use it as an asset details the ethical values
and a source of competitive of the Company.
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 The Company's Policy and
guide the objectives Procedures manual is made
and strategy of the available to staff as
company. part of their induction
The culture should and anti-bribery and
be visible in every anti-corruption
aspect of the business, training is compulsory.
including recruitment, Staff are encouraged to
nominations, training ask questions and seek
and engagement. The clarifications from senior
performance and reward members of the team on
system should endorse these policies.
the desired ethical
behaviours across This year, to complement
all levels of the our existing Policies
company. and Procedures, the company
The corporate culture has implemented policies
should be recognisable around Code of Conduct,
throughout the disclosures Social Media and Share
in the annual report, Dealing.
website and any other
statements issued
by the company.
---------------------------------------------------------- ------------------------------
9. Maintain governance The company should Our Corporate Governance
structures and processes maintain governance Report on page 15 to 19
that are fit for structures and processes of our Report & Accounts
purpose and support in line with its corporate for the year ended 31
good decision- making culture and appropriate December 2018 details
by the board to its: the company's governance
-- size and complexity; structures and why they
and are appropriate and suitable
-- capacity, appetite for the company.
and tolerance for
risk.
---------------------------------------------------------- ------------------------------
The governance structures The Board has a formal
should evolve over schedule of matters reserved
time in parallel with to it and is supported
its objectives, strategy by the Audit and Remuneration
and business model Committees. Due to the
to reflect the development size of the Group, the
of the company. 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 from the
Company website.
---------------------------------------------------------- ------------------------------
10. Communicate A healthy dialogue The Company encourages
how the company should exist between two-way communication
is governed and the board and all with its investors and
is performing by of its stakeholders, responds quickly to all
maintaining a dialogue including shareholders, queries received.
with shareholders to enable all interested
and other relevant parties to come to The Board recognizes the
stakeholders. informed decisions AGM as an important
about the company. opportunity
to meet private shareholders.
The Directors are available
to listen to the views
of shareholders informally
immediately following
the AGM.
---------------------------------------------------------- ------------------------------
Appropriate communication The executive has developed
and reporting structure a mature communications
should exist between program to engage in dialogue
the board and all with our stakeholders
constituent parts through a mix of media
of its shareholder channels.
base. This will assist:
* the communication of shareholders' views to the A range of corporate
board; and information
(including all Company
announcements, historical
* the shareholders' understanding of the unique annual reports and other
circumstances and constraints faced by the company. governance related material
since the company was
admitted to AIM in August
2017) is also available
to shareholders, investors
and the public on the
Company website.
---------------------------------------------------------- ------------------------------
It should be clear The Company will disclose
where these communication outcomes of all votes
practices are described at shareholder meetings
(annual report or in a clear and transparent
website). manner by either publishing
a market announcement
or by reporting it on
the Company website. If
a considerable proportion
of votes (20%) have been
cast against a resolution
at any meeting of
shareholders,
the Company will include
an explanation of what
actions it intends to
take to understand the
reasons behind that vote
result and, where
appropriate,
any different action it
has taken, or will take,
as a result of the vote.
---------------------------------------------------------- ------------------------------
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 will include:
-- 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, 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 5.
During the financial year, the Audit Committee met twice with the auditor, Crowe U.K. LLP, to review audit planning and findings with regard to the Annual Report and the comment review of the interim financial statements.
Significant reporting issues considered during the year included the following:
1. Carrying value of investment
The Committee has reviewed the carrying values of the Group's investment, comprised of the investment in associate, WES. Based on the work performed during the audit, and through discussions with management, the committee consider that the carrying value of the investment is fairly stated.
2. Going concern
The Committee also 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
DIRECTORS' REMUNERATION REPORT
This report sets out the remuneration policy operated by the Company in respect of the Executive and Non-Executive Directors. The remuneration policy is the responsibility of the Remuneration Committee, a sub-committee of the Board. No Director is involved in discussions relating to their own remuneration.
Remuneration policy
The objective of the proposed remuneration policy is to attract, retain and motivate high calibre executives to deliver outstanding shareholder returns and at the same time maintain an appropriate compensation balance with the other employees of the Group.
Directors' remuneration
The normal remuneration arrangements for Executive Directors consists of base salary, performance bonuses and other benefits as determined by the Board. Each of the Executive Directors has a service agreement that can be terminated at any time by either party giving to the other six months' written notice. Compensation for loss of office is restricted to base salary and benefits only.
The remuneration packages for the Executive Directors are detailed below:
-- Base Salary:
Annual review of the base salaries of the Executive Directors are concluded after considering the Executive Directors' role, responsibilities and contribution to the Group performance.
-- Performance Bonus:
Bonus arrangements are discretionary and are payable depending on the performance of the Executive Directors in meeting their key performance indicators and in the wider context with the performance of the Group.
-- Benefits:
Benefits include payments for provident funds that are mandatory and statutory pension payments as required by laws of the resident countries of the Executive Directors, health insurance and other benefits.
-- Longer term incentives:
In order to further incentivise the Directors and employees, and align their interests with shareholders, the Company has granted share options in the current year, as set below. The share options will vest at various future dates as described in the Note 21 to the financial statements. There are no conditions attached to vesting other than service conditions.
Non-Executive Directors are remunerated solely in the form of Director Fees and shares determined by the Board and not entitled to pensions, annual bonuses or employee benefits.
DIRECTORS' REMUNERATION REPORT (Continued)
Performance evaluation
All Directors undergo a performance evaluation before being proposed for re- election to ensure that their performance is and continues to be effective, that where appropriate they maintain their independence and that they are demonstrating continued commitment to the role.
Appraisals are carried out each year with all Executive Directors. All continuing Directors stand for re-election on annual basis. Succession planning at the current time is limited due to the current size of the Board.
The remuneration of the directors in Verditek plc who held office during the year to 31 December 2018 was as follows:
The emoluments of the Directors were
as follows (Audited):
--------------------- --------
Year ended 31 December 2018 Year ended
31 December
2017
------------------ ----------------------------------------------------------------------------------- ------------------------
Salary Pension Share Total Total
& Directors' Contributions based
fees payment
----------------- ------------------------ --------------------- -------- ------------------------ ------------------------
GBP GBP GBP GBP GBP
----------------- ------------------------ --------------------- -------- ------------------------ ------------------------
Executive directors
--------------------------------------------------------------------------------------------------------------------------------
Geoffrey Nesbitt 141,265 269 - 141,534 42,882
------------------------ --------------------- -------- ------------------------ ------------------------
Tim Lord
(Appointed 25
August
2018) 65,256 269 - 65,525 -
------------------------ --------------------- -------- ------------------------ ------------------------
Theo Chapman
(Resigned 31
January 2018) 52,590 - - 52,590 95,000
------------------------ --------------------- -------- ------------------------ ------------------------
Janet Donovan
(Resigned
24 May 2018) 53,954 - - 53,954 33,310
------------------------ --------------------- -------- ------------------------ ------------------------
Non-executive directors
--------------------------------------------------------------------------------------------------------------------------------
The Rt Hon. Lord
David Willetts
FRS (Appointed
26 April
2018) 33,267 - 8,727 41,994 -
------------------------ --------------------- -------- ------------------------ ------------------------
George Katzaros 27,133 - - 27,133 24,740
------------------------ --------------------- -------- ------------------------ ------------------------
Gavin Mayhew - - - - -
(Appointed
4 March 2019)
------------------------ --------------------- -------- ------------------------ ------------------------
Anthony Rawlinson
(Resigned
4 March 2019) 30,894 - - 30,894 26,389
------------------------ --------------------- -------- ------------------------ ------------------------
José Luis
Del Valle
Doblado
(Resigned 9 May
2018) 12,016 - - 12,016 28,038
------------------------ --------------------- -------- ------------------------ ------------------------
-
------------------------ --------------------- -------- ------------------------ ------------------------
Total 416,375 538 8,727 425,640 250,359
------------------------ --------------------- -------- ------------------------ ------------------------
During the year, the Company granted 1,500,000 share option to The Rt Hon. Lord David Willetts FRS, details are shown in Note 21.
The directors fees for The Rt Hon. Lord David Willetts FRS, Geoffrey Nesbitt and José Luis Del Valle Doblado have all been deferred.
George Katzaros
Chairman - Remuneration committee
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 Anti-Corruption and Anti-Bribery Policy and compliance with regulations like Competition Law.
Environment
Verditek Plc is sensitive to the environment in which it operates and has established well defined operating guidelines with some of the manufacturing partners where it seeks their compliance with ISO14001 when relevant, to ensure certain environmental standards are complied with.
Human Rights
Verditek plc is committed to social 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 Company has established policies for recruitment, diversity and equal opportunities, training and development. Our 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 update sessions that value contributions from all levels regardless of 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 through our nominated Financial PR firm. The company also engages directly with investors at our Annual General Meeting or investor events.
Health and Safety
Company activities are carried out in according with its Health and Safety Policy which adheres to all applicable laws and are audited both internally and by an external organisation.
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 2018.
The preparation of financial statements is in compliance with International Financial Reporting Standards as adopted by the European Union (IFRSs). The Group financial statements comprise of the financial information of the parent Company and its subsidiaries (together with the "Group"). The parent Company 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 (2017: GBPnil).
Directors and directors' interests
The directors who held office during the year and subsequently were as follows:
Geoffrey John Nesbitt
Tim Lord (appointed 25 August
2018)
The Rt Hon. Lord David Willetts (appointed 26 April
FRS 2018)
George Francis Katzaros
Gavin Mayhew (appointed 4 March
2019)
Anthony Neil Rawlinson (resigned 4 March
2019)
Janet Rachel Donovan (resigned on 24 May
2018)
José Luis Del Valle Doblado (resigned on 9 May
2018)
Theodore Edward Chapman (resigned on 31 January
2018)
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.
DIRECTORS' REPORT (Continued)
Directors' interests
The Directors held the following beneficial interests in the shares of Verditek plc at the date of this report:
Note Ordinary Issued
shares share
capital
%
of GBP0.0004
each
George Katzaros 1.1 26,166,675 13.00%
Gavin Mayhew 1.2 3,000,000 1.50%
Geoffrey Nesbitt 4,875,000 2.40%
Notes
1.1 Shares held by George Katzaros
- through BBHISL NOMINEES LIMITED
A/c 120165 10,550,000
- through MF Limited 5,900,000
- directly 9,000,000
- family member 716,675
-------------
26,166,675
1.2 Shares held by Gavin Mayhew
- through Platform Securities Nominees
Limited 3,000,000
Directors' indemnities
The Company has made qualifying third-party indemnity provisions for the benefit of its directors which were made during the period and remain in force at the date of this report.
Post Balance Sheet Events
There are no material post balance sheet events to disclose, other than those disclosed in the 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 on application of graphene to solar devices. Research and development seeks to develop and enhance the existing product portfolio and new products that will compliment and expand the product offering and spent GBP55,486 during the year (2017: GBPnil).
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.
Going Concern
As described in note 2.4, the Directors, having made appropriate enquiries, consider that the Company and the Group as a whole have adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis in preparing the financial statements.
DIRECTORS' REPORT (Continued)
Substantial shareholdings
The Company has been advised of the following interests in more than 3% of its ordinary share capital as at 31 December 2018:
Note No. of %
Shares
HARGREAVES LANSDOWN (NOMINEES) LIMITED
A/C VRA 23,933,418 11.80%
HA AVIATION LIMITED 9,890,000 5.20%
PLATFORM SECURITIES NOMINEES LIMITED
A/C KKCLT 9,221,369 4.60%
GEORGE KATZAROS 9,000,000 4.40%
HARGREAVES LANSDOWN (NOMINEES) LIMITED
A/C HLNOM 8,167,550 4.00%
CARRICK INTERNATIONAL HOLDINGS LIMITED 7,350,000 3.60%
ROCK (NOMINEES) LIMITED A/C CSHNET 7,192,842 3.60%
PERSHING NOMINEES LIMITED A/C WRCLT 7,100,000 3.00%
Statement of Disclosure to the Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware.
Auditors appointment
On 25 June 2018 Crowe Clark Whitehill LLP changed its name to Crowe U.K. LLP.
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
Dr Geoffrey Nesbitt
Chief Executive Officer
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 International Financial Reporting Standards as adopted by the European Union (IFRSs) and elected to prepare the parent company financial statements under United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws including FRS 101 Reduced Disclosure Framework).
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing each of the Group and Company financial statements, the Directors are required to:
-- Select suitable accounting policies and then apply them consistently; -- Make judgments and estimates that are reasonable and prudent;
-- State whether they have been prepared in accordance with IFRSs or UK Accounting Standards have been followed, subject to any material departures disclosed and explained;
-- Prepare the Strategic Report and Directors' report which comply with the requirements of the Companies Act 2006; and
-- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also generally responsible for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Information published on the website is accessible in many countries and legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. Each of the directors confirms that, to the best of their knowledge:
The Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, 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.
INDEPENT 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 2018 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 2018 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
-- 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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you were:
-- the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-- the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)
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.
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 GBP97,500, based on approximately 5% of Group's normalised loss for the year (2017: GBP60,000), which is the most appropriate measure for an entity which has yet to record revenues.
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.
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 GBP4,500. 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.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)
This is not a complete list of all risks identified by our audit.
Key audit matter How our audit addressed the
key audit matter
o Carrying value of investments
The Group invested GBP750,000 We reviewed the accounting for
in WES, an associate, which the investment in WES, which
is loss making. In the period including the following:
the investment was impaired * Obtained and reviewed the asset purchase agreement;
to its net realisable amount.
There is a risk that the carrying * Discussed with Management and reviewed their
value of the investment is mis-stated assessment of impairment.
and that the investment may
be further impaired at the year
end. We also assessed the completeness
and accuracy of the matters
and the critical judgments,
as set out in note 12 and note
2.15.1 respectively.
-----------------------------------------------------------------
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.
INDEPENT 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;
-- 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 28, 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.
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.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF VERDITEK PLC (Continued)
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the 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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Stephen Bullock (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
28 June 2019
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 31 December
18 17
Notes GBP GBP
---------------------------------------- ------ ------------ ------------
Revenue - -
Administrative expenses (1,919,700) (1,807,184)
Operating loss 5 (1,919,700) (1,807,184)
Finance costs 7 (20,553) (13,208)
Impairment loss of net investment
in associate 9 (624,926) -
Share of post-tax loss of equity
accounted associate 9 (98,236) (158,729)
Loss before tax (2,663,415) (1,979,121)
Income Tax 8 - (358)
Loss for the period (2,663,415) (1,979,479)
---------------------------------------- ------ ------------ ------------
Other comprehensive income
Items that will or may be reclassified
to profit or loss:
Translation of foreign operations 14,868 (9,753)
---------------------------------------- ------ ------------ ------------
Total comprehensive loss for the
period from continuing operations (2,648,547) (1,989,232)
---------------------------------------- ------ ------------ ------------
Loss for the period attributable
to:
Owners of the Company (2,396,962) (1,793,819)
Non-controlling interest (266,453) (185,302)
---------------------------------------- ------ ------------ ------------
(2,663,415) (1,979,121)
---------------------------------------- ------ ------------ ------------
Total comprehensive loss for the
period attributable to:
Owners of the Company (2,387,424) (1,802,966)
Non-controlling interest (261,123) (186,266)
---------------------------------------- ------ ------------ ------------
(2,648,547) (1,989,232)
---------------------------------------- ------ ------------ ------------
Loss per ordinary share - basic
and diluted (GBP) 10 (0.01) (0.01)
The accompanying notes are an integral part of these financial statements.
All amounts are derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
18 17
Notes GBP GBP
--------------------------------------- ------ ------------ ------------
Assets
Non-current assets
Intangible assets - goodwill 11 - 31,405
Investment in associate 12 25,153 591,271
Property, plant and equipment 13 498,969 409,183
Total non-current assets 524,122 1,031,859
--------------------------------------- ------ ------------ ------------
Current assets
Inventories 15 - 446
Trade and other receivables 16 431,099 326,264
Unpaid share capital - 380,000
Cash and cash equivalents 17 683,885 1,190,975
--------------------------------------- ------ ------------ ------------
Total current assets 1,114,984 1,897,685
--------------------------------------- ------ ------------ ------------
TOTAL ASSETS 1,639,106 2,929,544
--------------------------------------- ------ ------------ ------------
Equity and liability
Non-current liabilities
Loans and borrowings 19 1,170,000 -
--------------------------------------- ------ ------------ ------------
Total non-current liabilities 1,170,000 -
Current liabilities
Trade and other payables 18 538,312 296,855
Loans and borrowings 19 43,243 105,318
--------------------------------------- ------ ------------ ------------
Total current liabilities 581,555 402,173
TOTAL LIABILITIES 1,751,555 402,173
--------------------------------------- ------ ------------ ------------
Equity
Share capital 20 80,847 80,847
Share premium account 3,858,691 3,858,691
Share based payment reserve 21 8,727 -
Accumulated losses (3,817,534) (1,420,572)
Foreign exchange reserve 749 (8,789)
--------------------------------------- ------ ------------ ------------
Equity attributable to equity holders
of the parent 131,480 2,510,177
Non-controlling interests 22 (243,929) 17,194
--------------------------------------- ------ ------------ ------------
Total shareholder's equity (112,449) 2,527,371
TOTAL EQUTY AND LIABILITES 1,639,106 2,929,544
--------------------------------------- ------ ------------ ------------
These financial statements were approved and authorised for issue by the Board of directors on 28 June 2019 and were signed on its behalf by:
Dr Geoffrey Nesbitt
Chief Executive Officer
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Issued based Foreign
Share Share payment Accumulated Exchange Non-Controlling
capital Premium reserve losses reserve interests Total
GBP GBP GBP GBP GBP GBP
------------------------ ---------- ---------- --------- ------------ ----------- ---------------- ------------
Balance as at 1-Jan-17 100 - - (146,142) - - (146,042)
Loss for the year - - - (1,794,177) - (185,302) (1,979,479)
Translation of
subsidiary - - - - (8,789) (964) (9,753)
------------------------ ---------- ---------- --------- ------------ ----------- ---------------- ------------
Total comprehensive
loss - - - (1,794,177) (8,789) (186,266) (1,989,232)
Issue of shares net
of expenses 72,500 3,858,691 - - - - 3,931,191
Conversion of loan
notes 8,247 519,747 - - - - 527,994
Capital reduction - (519,747) - 519,747 - - -
Non-controlling
interest
on acquisition - - - - - 203,460 203,460
Balance as at 31-Dec-17 80,847 3,858,691 - (1,420,572) (8,789) 17,194 2,527,371
Loss for the year - - - (2,396,962) - (266,453) (2,663,415)
Translation of
subsidiary - - - - 9,538 5,330 14,868
------------------------ ---------- ---------- --------- ------------ ----------- ---------------- ------------
Total comprehensive
loss - - - (2,396,962) 9,538 (261,123) (2,648,547)
Share based payment - - 8,727 - - - 8,727
Balance as at 31-Dec-18 80,847 3,858,691 8,727 (3,817,534) 749 (243,929) (112,449)
------------------------ ---------- ---------- --------- ------------ ----------- ---------------- ------------
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
--------------------------------------------- ------------ ------------
Cash flows from operating activities
Loss after tax from continuing operations (2,663,415) (1,979,121)
Adjustments for:
Finance costs 20,553 13,208
Share of post-tax profits of equity
accounted associates 98,236 158,729
Depreciation 6,081 947
Loss on disposal of assets 47,905 -
Share based payment 8,727 -
Impairment of investment in associate 467,882 -
Impairment of associate loan 157,044 -
Impairment of goodwill 31,405 357,236
Write off of assets - 42,860
(1,825,582) (1,406,141)
Working capital adjustments
Decrease / (increase) in inventory 446 (446)
Decrease / (increase) in trade and
other receivables 63,719 (79,407)
Increase / (decrease) in trade and
other payables 56,871 (127,103)
Cash used in operations (1,704,546) (1,613,097)
Taxation - (358)
--------------------------------------------- ------------ ------------
Net cash outflow from operating activities (1,704,546) (1,613,455)
---------------------------------------------- ------------ ------------
Investing activities
Acquisition of subsidiaries, net
of cash acquired - 9,096
Acquisition of associate - (750,000)
Associate Loan (157,044) -
Purchase of property, plant and
equipment (137,018) (78,634)
Net cash outflow from investing activities (294,062) (819,538)
---------------------------------------------- ------------ ------------
Financing activities
Issue of ordinary share capital
(net of expenses) 380,000 3,601,291
Issue of Convertible bonds (Refer
note 19) 1,170,000 -
Loan Interest paid (4,597) (6,412)
Proceeds from loans - 5,862
Repayments of loans (Refer note
19) (62,075) -
Net cash inflows from financing activities 1,483,328 3,600,741
---------------------------------------------- ------------ ------------
Net increase in cash and cash equivalents (515,280) 1,167,748
Cash and cash equivalents at the beginning
of the year 1,190,975 21,675
Exchange gains on cash and cash equivalents 8,190 1,552
---------------------------------------------- ------------ ------------
Cash and cash equivalents at the end
of the year 683,885 1,190,975
---------------------------------------------- ------------ ------------
The accompanying notes are an integral part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate information
Verditek plc ("Verditek", "Company") 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 29 Farm Street, London W1J 5RL.
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 2018. The parent Company financial statements present information about the Company as a separate entity and not about its Group.
The comparative financial information for the year ended 31 December 2017.
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 International Financial Reporting Standards, International Accounting Standards (IASB) and Interpretations (collectively IFRSs), as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
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 Group'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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.2. Basis of consolidation (continued)
2.2.2. Business combinations and goodwill
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the noncontrolling interest's proportionate share of the acquiree's net assets.
The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the total net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the Statement of Comprehensive Income.
Goodwill is capitalised as an intangible asset at cost less any accumulated impairment losses. Any impairment in carrying value is being charged to the consolidated statement of comprehensive income. An impairment loss recognised for goodwill is not reversed.
Goodwill is allocated to appropriate cash generating units (CGUs). Goodwill is not amortised but is tested annually for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.
2.2.3. Associates
Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. Subsequently associates are accounted for using the equity method, where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the consolidated statement of profit and loss and other comprehensive income (except for losses in excess of the Group's investment in the associate unless there is an obligation to make good those losses).
Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.
Any premium paid for an associate above the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.3. Changes in accounting policies and disclosures
2.3.1. New standards, interpretations and amendments effective from 1 January 2018
New standards impacting the Group that were adopted in the annual financial statements for the year ended 31 December 2018, and which have given rise to changes in the Group's accounting policies are:
-- IFRS 9 Financial Instruments (IFRS 9); and -- IFRS 15 Revenue from Contracts with Customers (IFRS 15)
The Group's assessment of the impact of applying IFRS 9 and IFRS 15 are discussed below:
IFRS 15 Revenue from Contracts with Customers, effective date 1 January 2018, is intended to clarify the principles of revenue recognition and establish a single framework for revenue recognition. This standard replaces the previous standard IAS 11 Construction Contracts, IAS18 Revenue and revenue related IFRICs. The core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
IFRS 9 Financial Instruments is effective for periods commencing on or after 1 January 2018. The standard is a replacement for IAS 39 'Financial Instruments'. The Group's financial assets consist of receivables, cash and cash equivalents and the liabilities consist of payables and borrowings. Under the provisions of the standard the treatment of any doubtful receivables will change to reflect an expected credit loss rather than an incurred credit loss.
The Group has yet to record any revenues and therefore impact of IFRS 9 and IFRS 15 have been minimal. There were no adjustments as a consequence of adopting the standard.
Several other amendments and interpretations apply for the first time in 2018, but do not have an impact on the consolidated financial statements of the Group.
2.3.2. New, amended standards, interpretations not yet effective and not adopted by the Group
As at date of approval of the Group financial statements, the following new and amended standards, interpretations and amendments in issue are applicable to the Group but not yet effective and thus, have not been applied by the Group:
Effective
Date*
1 January
Annual Improvements 2015--2017 Cycle 2019
1 January
IFRS 16 Leases 2019
Amendments to References to the Conceptual 1 January
Framework in IFRS Standards 2020
1 January
Amendments to IFRS 3: Business combinations 2020
* The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations. As the Group prepares its financial statements in accordance with IFRS as adopted by the European Union (EU), the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU Endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the Group's discretion to early adopt standards.]
At the date of authorisation of these financial statements, these standards and interpretation have not yet been endorsed or adopted by the EU.
The Directors do not expect the adoption of these standards, interpretations and amendments to have a material impact on the Consolidated or parent Company financial statements in the period of initial application.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.4. Going concern
The Group had not commenced generating revenues in the period and has yet to make its first commercial receipt at the date of approval of the financial statements. As such the Group must develop its business plan to commercial revenues based on its current cash resources and on expected revenues in the future based on commercial arrangements put in place to date.
The Group is likely to require additional funds and/or funding facilities in order to fully develop its business plan. Such funds are likely to come from a combination of further equity issues and the arrangement of appropriate debt and/or working capital finance facilities as production activities increase. As set out in notes 25 and 26, subsequent to the reporting date the company entered into a secured loan with Gavin Mayhew, a non-executive director of the Company. The principal amount of the loan is $600,000 initially for a term of 3 months but extendable at the Company's discretion to 6 months and since extended to 30 June 2020 with interest payable at 20% per annum at maturity and compounded quarterly.
The Directors have prepared cash flow forecasts covering a period extending beyond 12 months from the date of these financial statements. The forecast contains certain assumptions about the performance of the business including growth in future revenue, the cost model and margins; and importantly the level of cash recovery from trading. 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 Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
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 balance sheet 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.7. Employee benefits and post-employment benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.
The Group provides post-employment benefits through a defined contribution. The Group pays fixed contributions into independent entities in relation to several state plans and insurances for individual employees. The Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense in the period that related employee services are received.
2.8. Share-based payments
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 fair values the options at the grant date using the Black Scholes valuation model to establish the relevant fair values.
The total amount to be expensed is determined by reference to the fair value of the options granted including any market performance conditions (for example the Group's share price) but excluding the impact of any service or non-market performance vesting conditions (for example the requirement of the grantee to remain an employee of the Group).
Non-market vesting conditions are included in the assumptions regarding the number of options that are expected to vest. The total expense is recognised over the vesting period. At the end of each period the Group revises its estimates of the number of options expected to vest based on the non-market vesting conditions. It recognises the impact of any revision in the income statement with a corresponding adjustment to equity.
2.9. Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base, except for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
-- investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.10. 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 comes into service, and calculated at the following rates:
Property improvements - 20% straight line Plant and machinery - 10% straight line Computer equipment - 33.33% straight line
In the case of leased assets, expected useful lives are determined by reference to comparable owned assets or the term of the lease, if shorter. Material residual value estimates and estimates of useful life are updated as required, but at least annually.
The carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell the asset, then the asset is impaired and its value reduced by recognising an impairment provision.
2.11. Leased assets
Management applies judgmental in considering the substance of a lease agreement and whether it transfers substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the asset's fair value, and whether the Group obtains ownership of the asset at the end of the lease term.
For leases of land and buildings, the minimum lease payments are first allocated to each component based on the relative fair values of the respective lease interests. Each component is then evaluated separately for possible treatment as a finance lease, taking into consideration the fact that land normally has an indefinite economic life.
See Note 2.10 for the depreciation methods and useful lives for assets held under finance leases. The interest element of lease payments is charged to profit or loss, as finance costs over the period of the lease.
2.12. Financial Instruments
The Group classifies a financial instrument, or its component parts, as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, a financial asset and an equity instrument.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.12. Financial instrument (continued) 2.12.1. Financial assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and 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 derecognised, modified or impaired.
The Group's financial assets at amortised cost includes trade receivables and loan to related parties, are included under other non-current financial assets. In the periods presented the Group does not have any financial assets categorised as fair value through OCI.
2.12.2. Financial liabilities
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 derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and borrowings.
A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expires.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.12. Financial instrument (continued) 2.12.3. Impairment
The Group assess all other current receivables on a forward looking basis, with expected credit losses (ECL) associated with debt instruments measured at amortised cost. These are deemed short term (i.e., less than 12 months) and apply the Group policy for credit rating and risk management policies in place.
The impairment stages are defined as:
Stage 1 - When a receivable is recognised, ECLs resulting from default events that are possible within the next 12 months are expensed to the statement of comprehensive income (12-month ECL) and a loss allowance is established. On subsequent reporting dates, 12-month ECL also applies to existing receivables with no significant increase in credit risk since their initial recognition. In determining whether a significant increase in credit risk has occurred since initial recognition, the Company assesses the change, if any, in the risk of default over the expected life of the receivable (that is, the change in the probability of default, as opposed to the amount of ECLs).
Stage 2 - If the receivables credit risk has increased significantly since initial recognition and is not considered low, lifetime ECLs are recognised.
Stage 3 - If the receivables credit risk increases to the point where it is considered credit-impaired, lifetime ECLs are recognised, as in Stage 2.
The impairment methodology applied for the Group is stage 1, which require 12 month expected credit losses to be recognised until a change in credit risk occurs in which case stage 2 would apply.
2.13. 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.
Initial cost of inventories includes the transfer of gains and losses on qualifying cash flow hedges, recognised in OCI, in respect of the purchases of raw materials.
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.
2.14. 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2.15. 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:
2.15.1. Estimates
Useful lives of depreciable assets
Management reviews the useful lives and residual value of depreciable assets at each reporting date to ensure that the useful lives represent a reasonable estimate of likely period of benefit to the Group. Tangible fixed assets are depreciated over their useful lives taking into account the residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
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.
Impairment of investments in associates
Determining whether the company's investments in associates have been impaired requires estimations of the investments' values in use. The value in use calculations require the entity to estimate the future cash flows expected to arise from the associate and suitable discount rates in order to calculate present values. The carrying amount of associates, along with any loans advanced, at the balance sheet date shows that there is an impairment GBP467,882 in its investment value and an impairment of GBP157,044 in loans provided, note 12.
2.15.2. Judgements
Associates
Where the Group holds more than 20% but less than 50% of voting rights in an investment but the Group has the power to exercise significant influence, such an investment is treated as an associate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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:
31 December 31 December
Categories of financial assets 2018 2017
GBP GBP
--------------------------------------------- ------------ ------------
Cash and cash equivalents 683,885 1,190,975
Other receivables 148,591 247,902
Loans to related parties 62,100 47,295
Unpaid Share Capital - 380,000
Total current financial assets at amortised
cost 894,576 1,866,172
--------------------------------------------- ------------ ------------
Categories of financial liabilities
31 December 31 December
2018 2017
GBP GBP
--------------------------------------------- ------------ ------------
Trade payables 161,145 41,305
Wages payable 42,103 6,536
Pension payable 504 -
Accruals 278,259 211,906
Loans from related parties 29,403 29,403
Trade and other payables 511,414 289,150
Current 43,243 105,318
Non current 1,170,000 -
--------------------------------------------- ------------ ------------
Total Loans and borrowings 1,213,243 105,318
Total financial liabilities at amortised
cost 1,724,657 394,468
--------------------------------------------- ------------ ------------
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:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.2. General objectives, policies and processes (continued)
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. Amounts due from related parties is considered to be low risk as the large part of this amount is related to a payment in advance under a distribution rights agreement. Other receivables included a supplier advanced payment of GBP109,162, which is overdue for repayments by greater than one year, which management is actively seeking to recover, a 50% allowance is made for non recovery, other receivables of GBP94,010 related to various advanced payments to some suppliers.
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. At the end of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
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) of financial liabilities:
Up to 3 Between 3 and Between Between
Months 12 months 1 and 2 2 and 5
year years
Trade payables 161,145 - - -
Wages payable 42,103 - - -
Pension payable 504 - - -
Accruals 278,259 - - -
Loans from related parties 29,403 - - -
Current loan - 43,243 - -
Non-current loan - interest - - 1,404,000 -
bearing
------------------------------ -------- -------------- ---------- ---------
Financial liabilities
at amortised costs 511,414 43,243 1,404,000 -
------------------------------ -------- -------------- ---------- ---------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.2. General objectives, policies and processes (continued)
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 minimal as all its loans and borrowings are interest-free except for the convertible loan GBP1,170,000, which has a fixed interest rate of 10%.
3.2.4. Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.
In order to monitor the continuing effectiveness of this policy, the Board receives a monthly forecast, analysed by the major currencies held by the Group, of liabilities due for settlement and expected cash reserves. The current year shows that the Group is predominantly exposed to currency risk on purchases made in EUR and USD.
Financial assets USD GBP EUR Total
GBP GBP GBP GBP
------------------------------- ---- ---------- -------- ----------
Cash and cash equivalents 547 670,342 12,996 683,885
Other receivables - 53,871 94,720 148,591
Loans to related parties - 62,100 - 62,100
Financial assets at amortised
costs 547 786,313 107,716 894,576
------------------------------- ---- ---------- -------- ----------
Financial liabilities USD GBP EUR Total
GBP GBP GBP GBP
------------------------------- ---- ---------- -------- ----------
Trade payables - 88,385 72,760 161,145
Wages payable - 42,103 - 42,103
Pension payable - 504 - 504
Accruals - 272,415 5,844 278,259
Loans from related parties - 29,403 - 29,403
Current loans - 43,243 - 43,243
Non-current loans - 1,170,000 - 1,170,000
Financial liabilities
at amortised costs - 1,646,053 78,604 1,724,657
------------------------------- ---- ---------- -------- ----------
As of 31 December 2018 the Group's net exposure to foreign
exchange risk was as follows:
USD GBP EUR Total
GBP GBP GBP GBP
------------------------------------ ---- ---------- ------- ----------
Net Financial Assets/(Liabilities) 547 (859,740) 29,112 (830,081)
------------------------------------ ---- ---------- ------- ----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3.2. General objectives, policies and processes (continued)
3.2.4. Foreign exchange risk (continued)
As of 31 December 2017, the Group's net exposure to foreign
exchange risk was as follows:
USD GBP EUR Total
GBP GBP GBP GBP
------------------------------------ ------ ---------- -------- ----------
Net Financial Assets/(Liabilities) 1,449 1,344,527 125,728 1,471,705
------------------------------------- ------ ---------- -------- ----------
The following tables demonstrate the sensitivity to a reasonably possible change in GBP and EUR exchange rates, with all other variables held constant. The impact on the Group's profit before tax is due to changes in the fair value of monetary assets and liabilities.
Effect on Effect on
Change in Loss before Change in Change Loss before Change in
USD tax Net Assets in EUR tax Net Assets
GBP GBP GBP GBP
---------- ------------- ------------ -------- ------------- ------------
1% 991 (991) 1% 6,042 (6,042)
-1% (991) 991 -1% (6,042) 6,042
4. Segment information
The chief operating decision maker has been identified as the management team including the two main directors and two 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 end 31 December 2018 Verditek had one operating segment, the development and commercialisation of clean technologies, although it is likely that in future periods the Group's segmental reporting will be expanded as different technologies are developed and commercialised.
Geographical Segments
Apart from holding company activities in the UK the Group's had operations in San Marino in Europe and US in the period.
An analysis of non-current assets by geographical market is given below:
Year ended Year ended
31 December 2018 31 December 2017
GBP GBP
---------------- ----------------- -----------------
UK 28,416 627,310
Rest of Europe 495,706 402,937
USA - 1,612
524,122 1,031,859
---------------- ----------------- -----------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Operating loss
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
------------------------------------------- ------------ ------------
Operating loss is stated after charging:
Auditors' remuneration:
Audit fees - audit of the company and
its subsidiaries pursuant to legislation 27,650 25,000
Non-audit fees - other assurance services - 118,889
Depreciation of fixed assets 6,081 947
Goodwill Impairment 31,405 -
Disposal of asset 47,904 -
Staff costs (note 6) 709,297 317,324
AIM IPO costs - 673,012
Advertising, marketing and development 352,498 -
Re-organisation costs 133,993 -
Research costs 55,486 -
Other costs 555,386 314,776
------------------------------------------- ------------ ------------
6. Employees and directors
The average number of employees (including directors) during the period was made up as follows:
Year ended Year ended
31 December 31 December
2018 2017
Number Number
---------------- ------------- -------------
Directors 6 8
Administrative 2 2
---------------- ------------- -------------
Total 8 10
---------------- ------------- -------------
The cost of employees (including directors) during the period was made up as follows:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
----------------------- ------------- -------------
Salaries 676,211 296,055
Share based payments 8,727 -
Social security costs 23,553 21,269
Pension costs 806 -
709,297 317,324
----------------------- ------------- -------------
Key management personnel compensation
The compensation of key management personnel, the directors of Verditek plc, are disclosed in the Directors' Remuneration Report.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Finance costs
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
------------------------------ ------------ ------------
Finance expenses
Interest on loans (note 19) 19,766 13,206
Finance charge 781 2
Interest on Overdue Taxation 6 -
Total finance expense 20,553 13,208
------------------------------ ------------ ------------
Details of the interest rate on the loans are shown in note 19.
8. Income tax
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
------------------------------------ -------------- -------------
UK Corporation tax
Tax expense- current year - 358
Total current tax 358
---------------------------------------------------- -------------
Deferred tax
Origination and reversal of timing
differences - -
Total tax expense - 358
------------------------------------ -------------- -------------
The current corporation tax expense for year ended 31 December 2018 relates to a foreign withholding tax expense.
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:
Year ended Year ended
31 December 2018 31 December 2017
GBP GBP
-------------------------------------------------------------------- ------------------ ------------------
Loss on ordinary activities before income tax (2,663,415) (1,979,121)
Standard rate of corporation tax 19.00% 19.25%
Loss before tax multiplied by the standard rate of corporation tax (506,049) (380,981)
Effects of:
Adjustment in respect of the previous year
Non-deductible expenses 132,843 203,359
Difference in overseas tax rates 32,135 64,713
Deferred tax not recognised 341,071 112,909
Withholding tax - 358
Tax credit - 358
-------------------------------------------------------------------- ------------------ ------------------
The Group has not recognised deferred tax assets arising from the accumulated tax losses due to uncertainty of their future recovery. The deferred tax asset not recognised is GBP480,281 at 31 December 2018 (2017: GBP139,210).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Share of post-tax loss of equity accounted associate
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
--------------------------------------------- ------------ ------------
Share of post tax loss of equity associated
for the year 98,236 158,729
Impairment of investment (note 12) 467,882 -
Impairment of loan provided to associate
(note 12) 157,044 -
Total share of post tax loss of equity
associate 723,162 158,729
--------------------------------------------- ------------ ------------
10. Earnings per share
Year ended Year ended
31 December 31 December
2018 2017
---------------------------------------
Basic and diluted
Loss for the period and earnings used
in basic & diluted EPS (GBP) (2,396,962) (1,793,819)
Weighted average number of shares
used in basic and diluted EPS 202,117,265 142,487,079
Loss per share:
--------------------------------------- ------------- ------------
Basic and diluted 1.2p 1.3p
--------------------------------------- ------------- ------------
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. Due to the loss in the periods and there are no potentially dilutive ordinary shares, there is no difference between the basic and diluted loss per share.
11. Intangible assets
Goodwill
GBP
-------------------------------------------- ---------
COST
At 1 January 2017 -
Acquisitions through business combinations 388,641
-------------------------------------------- ---------
At 31 December 2017 and 31 December 2018 388,641
-------------------------------------------- ---------
IMPAIRMENT
At 1 January 2017 -
Impairment losses 357,236
-------------------------------------------- ---------
At 31 December 2017 357,236
Impairment losses 31,405
-------------------------------------------- ---------
At 31 December 2018 388,641
-------------------------------------------- ---------
NET BOOK VALUE
At 31December 2017 31,405
At 31 December 2018 -
-------------------------------------------- ---------
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The carrying value of the goodwill, arose from the acquisition of Greenflex UK, and following the decision to migrate the assets from Greenflex RSM S.r.l to Verditek Solar Italy S.r.l, and the liquidation of Greenflex RSM S.r.l the carrying value of the Goodwill has been fully impaired.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. Investments
Investment Loans Total
in associates to associates
GBP GBP GBP
----------------------------- --------------- --------------- ----------
Cost
At 1 January 2017 1 - 1
Additions 750,000 - 750,000
Share of post-tax loss of
equity accounted associate
for the period (158,729) - (158,729)
Transfer associate becoming
a subsidiary (1) - (1)
------------------------------ --------------- --------------- ----------
At 31 December 2017 591,271 - 591,271
------------------------------ --------------- --------------- ----------
Additions 157,044 157,044
Share of post-tax loss of
equity accounted associate
for the period (98,236) - (98,236)
Impairment of loan(1) - (157,044) (157,044)
Impairment of investment(2) (467,882) - (467,882)
At 31 December 2018 25,153 - 25,153
------------------------------ --------------- --------------- ----------
On 10 August 2017, on admission to AIM, the Company's subsidiary, Verditek acquired 23.64 percent. Of the membership interest of Westec Environmental Solutions, LLC ("Westec") for cash consideration of GBP750,000 pursuant to an agreement dated 7 June 2017, as further amended on 27 July 2017.
Westec had granted Verditek an option to purchase up to that number of additional membership units that would result in Verditek increasing its interest to 51% of the fully diluted equity of Westec for consideration of GBP1.25 million. The option was exercisable for a period of 12 months from the 7 June 2017.
(1) During the year Verditek made an interest free working capital loan of $225,000 to WES. As a consequence of the lapse of the option agreement, the sale of the trade and assets (referred to below) and the absence of commercial sales the loan is considered fully impaired.
(2) Following the lapse of Verditek's option agreement, in October 2018 the shareholders in WES accepted an offer to sell the trade and assets of WES to Industrial Climate Solutions (ICSI), an unlisted company registered in Canada for $500,000. Acceptance of the offer, together with the absence of commercial sales, means that the realisable value of Verditek's investment in WES at the reporting date was substantially impaired. The amount of such impairment is uncertain, being conditional on the final unwinding of Verditek's investment in WES. The directors have estimated the recoverable amount of Verditek's investment in WES at the reporting date to be GBP25,153 resulting in an impairment in the carrying value of Verditek's investment of GBP467,882 at that date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Property, plant and equipment
Plant & Machinery Computer Leasehold Total
equipment Improvements
GBP GBP GBP
---------------------------------- ------------------ ----------- -------------- ----------
Cost
At 1 January 2017 2,228 - - 2,228
Additions 73,315 5,319 - 78,634
Acquired through business
combination 462,093 - - 462,093
Impaired assets (42,860) - - (42,860)
Reclassified to other receivable (107,726) - - (107,726)
Exchange adjustments 17,761 - - 17,761
---------------------------------- ------------------ ----------- -------------- ----------
At 31 December 2017 404,811 5,319 - 410,130
---------------------------------- ------------------ ----------- -------------- ----------
Additions 109,705 - 27,313 137,018
Disposal of assets (48,009) - - (48,009)
Exchange adjustments 6,647 84 - 6,731
---------------------------------- ------------------ ----------- -------------- ----------
At 31 December 2018 473,154 5,403 27,313 505,870
---------------------------------- ------------------ ----------- -------------- ----------
Depreciation
At 1 January 2017 - - - -
Charge for the year 624 323 - 947
---------------------------------- ------------------ ----------- -------------- ----------
At 31 December 2017 624 323 - 947
---------------------------------- ------------------ ----------- -------------- ----------
Charge for the year 889 2,939 2,253 6,081
Disposal of assets (105) - - (105)
Exchange adjustments (20) (8) 6 (22)
---------------------------------- ------------------ ----------- -------------- ----------
At 31 December 2018 1,388 3,254 2,259 6,901
---------------------------------- ------------------ ----------- -------------- ----------
Net book value
At 31 December 2017 404,187 4,996 - 409,183
At 31 December 2018 471,766 2,149 25,054 498,969
---------------------------------- ------------------ ----------- -------------- ----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Subsidiary undertakings
As at 31(st) December 2018, the subsidiaries of Verditek plc, all of which have been included in these consolidated
financial statements, are as follows:
Proportion
of ownership
interest
Country at 31 December
Name of incorporation Parent 2018 Nature of business
Greenflex Energy
Limited(1) UK Verditek plc 51% Dormant
------------------ ----------------- ---------------- ----------------------
Greenflex RSM S.r.l Greenflex Energy Solar technology
(2) San Marino Limited 51% services
------------------ ----------------- ---------------- ----------------------
Verditek Solar Solar technology
S.r.l Italy Verdiek plc 100% services
------------------ ----------------- ---------------- ----------------------
BBR Filtration Filtration technology
Limited UK Verditek plc 51% services
------------------ ----------------- ---------------- ----------------------
BBR Filtration BBR Filtration
USA, LLC (3) USA Limited 50.49% Dormant
------------------ ----------------- ---------------- ----------------------
Verditek USA, Limited USA Verditek plc 100% Dormant
------------------ ----------------- ---------------- ----------------------
Greenflex Trading
Limited (3) UK Verditek plc 50% Dormant
------------------ ----------------- ---------------- ----------------------
(1) On 17(th) April 2019 the Minority shareholder in Greenflex UK Limited transferred his 49% shareholding to Greenflex UK Limited, resulting in Verditek shareholding being increased to 100%.
(2) - Greenflex RSM S.r.l ceased to trade in July 2018, and an application to liquidate the company was made in Feb 2019;
(3 -) BBR Filtration USA LLC ceased to trade from July 2018.
(4) Greenflex Trading Limited was dissolved on 4(th) June 2019.
Name Registered address
Greenflex Energy
Limited 29 Farm Street, London, England, W1J 5RL
----------------------------------------------
Greenflex RSM S.r.l Via L. Cibrario, 25, 47893 Cailungo, San
(1) (100%) Marino
----------------------------------------------
Verditek Solar
S.r.l Via Pogliano, 26, 20020 Lainate, Italy
----------------------------------------------
BBR Filtration
Limited 29 Farm Street, London, England, W1J 5RL
----------------------------------------------
BBR Filtration C/o 2605, Ponce De Leon, Boulevard, Coral
USA, LLC (99%)(2) Gables, Florida 33134
----------------------------------------------
Corporation Trust Center, 1209 Orange Street,
Verditek USA, Limited Wilmington, Delaware 19801
----------------------------------------------
Greenflex Trading
Limited(3) 29 Farm Street, London, England, W1J 5RL
----------------------------------------------
15. Inventories
2018 2017
GBP GBP
---------------- ------ -----
Finished goods - 446
---------------- ------ -----
- 446
----------------------- -----
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Trade and other receivables
2018 2017
GBP GBP
---------------------------------- -------- --------
Other receivables 148,591 247,902
Amounts due from related parties 62,100 47,295
VAT receivable 196,842 28,289
Prepayments 23,566 2,778
---------------------------------- -------- --------
431,099 326,264
---------------------------------- -------- --------
17. Cash and cash equivalents
2018 2017
GBP GBP
-------------------------- -------- ----------
Cash at bank and in hand 683,885 1,190,975
-------------------------- -------- ----------
The fair value of the cash & cash equivalent is as disclosed above.
For the purpose of the cash flow statement, cash and cash equivalents comprise of the amounts shown above.
18. Trade and other payables
2018 2017
GBP GBP
-------------------------------------------------------------------------- -------- -------------------------------
Trade payables 161,145 41,305
Accruals 278,259 211,906
Wages payable 42,103 6,536
Pension payable 504 -
Amounts due to related parties 29,403 29,403
-------------------------------------------------------------------------- -------- -------------------------------
Financial liabilities at amortised costs other than loans and borrowings 511,414 289,150
Social security & other taxes payables 26,898 7,705
Total trade and other payables 538,312 296,855
-------------------------------------------------------------------------- -------- -------------------------------
19. Loans and borrowings
2018 2017
GBP GBP
------------------------------------ ------- --------
Current
Investor loans - 62,075
Related party loan 43,243 43,243
Total Current loans and borrowings 43,243 105,318
-------------------------------------- ------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
19. Loans and borrowings (continued)
The 2017 investors loans were repaid during the year, the other related party loans are interest-free and repayable on demand.
2018 2017
GBP GBP
------------------------------ ---------- -----
Non - current
Convertible loans 1,170,000 -
Total non - current loans and 1,170,000 -
borrowings
------------------------------ ---------- -----
On the 17(th) December 2018 Verditek issued unsecured convertible loan notes with a total value of GBP1,170,000 with a conversion price of GBP0.10 per ordinary share. The loan notes carry a 10% fixed rate redeemable on the earliest of
-- 17(th) December 2020; or -- Date of change of control; or -- If the investor majority determines following a material breach.
At the dates of issue of the convertible loan notes the company's share price was at a substantial discount to the conversion price of 10p. The quantum of any possible equity component relating to conversion rights is therefore considered to be immaterial to the fair value of the convertible loans, equity in the statement of financial position and potential consequent impact on the finance charge on the instruments and therefore no equity component has been recognised.
Cashflow - net debt analysis
01-Jan-18 Cash flow 31-Dec-18
GBP GBP GBP
-------------------- ---------- ------------ ----------
Investor loans 62,075 62,075 -
Related party loan 43,243 - 43,243
Convertible bonds - (1,170,000) 1,170,000
105,318 (1,107,925) 1,213,243
-------------------- ---------- ------------ ----------
20. Share capital and reserves
Number
of Shares Share capital Share premium
Par Value
GBP0.0004 GBP GBP
----------------------------------- ------------ -------------- --------------
At 31 Dec 2016 100 100 -
Sub-division 28 February 2017 249,900 - -
Conversion of loan notes 20,617,265 8,247 519,747
Capital reduction - - (519,747)
Shares issued 28 Feb 2017 136,250,000 54,500 -
Share issued (net of expenses) 10
Aug 2017 30,555,556 12,222 2,737,778
Share issued 21 December 2017 14,444,444 5,778 1,294,222
Share issue cost relating to the
IPO - - (173,309)
At 31 December 2017 202,117,265 80,847 3,858,691
----------------------------------- ------------ -------------- --------------
At 31 December 2018 202,117,265 80,847 3,858,691
----------------------------------- ------------ -------------- --------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
21. 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.
-- There are no vesting conditions remaining which apply to the share options other than that they vest at the earlier of 3 years' continued service with the Group.
-- No variables change during the life of the option (e.g. dividend yield remains zero).
The following options were granted during the period:
Date: 30-Apr-18 No. of Shares 1,500,000 Stock Price (p) 6.5p Exercise Price (p) 9.0p Fair Value per share (p) 2.6p Vesting Period - Years 3 Staff Retention Factor 100% Volatility 40% Time to maturity 112 months Risk Free Rate 0.7103% Annual expense 13,000
The expense recognised during the period was GBP8,727. The weighted average remaining life of the options outstanding at the end of the period was 10 years. No options were exercised during the period.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
22. Non-controlling interests
Following the acquisition of Greenflex Energy Ltd and BBR Filtration Limited, both 51% owned subsidiaries of the Company, have material non-controlling interests (NCI).
Summarised financial information in relation to Greenflex and BBR Filtration Limited, before intra-group eliminations, is presented below together with amounts attributable to NCI:
Greenflex BBR Filtration Total
GBP GBP GBP
---------------------------------- ---------- --------------- ----------
For the period ended 31 December
Revenue - - -
Loss after tax 162,854 380,929 543,783
Total comprehensive income
allocated to NCI 79,798 186,655 266,453
---------------------------------- ---------- --------------- ----------
Cash flows from operating
activities (298,712) (291,385) (590,097)
Cash flows from investing
activities 400,277 (84) 400,193
Cash flows from financing
activities (95,318) (5) (95,323)
---------------------------------- ---------- --------------- ----------
Net cash inflows 6,247 (291,474) (285,227)
---------------------------------- ---------- --------------- ----------
Total assets 22,314 93,752 116,066
Total liabilities (448,343) (165,539) (613,882)
---------------------------------- ---------- --------------- ----------
Net Assets/(Liabilities) (426,029) (71,787) (497,816)
Accumulated non-controlling
interests (208,754) (35,175) (243,929)
---------------------------------- ---------- --------------- ----------
23. Capital commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follow:
31 December 2018 31 December 2017
GBP GBP
--------------------- ------------------ -----------------
Plant and Machinery - 106,045
Total - 106,045
--------------------- ------------------ -----------------
24. Reserves
The following describes the nature and purpose of each reserve within equity:
Share premium - Amount subscribed for share capital in excess of nominal value.
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.
Retained earnings - All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
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 Amounts owed Amounts owed
the year by related parties to related parties/loans
2018 2017 2018 2017 2018 2017
GBP GBP GBP GBP GBP GBP
--------------------------------- --------- ----------- -------- ------------ ------------------------ -------
Geoffrey John Nesbitt(1) 141,265 4,102 - - - -
Timothy Lord(2) 65,256 - - - - -
The Rt Hon. Lord David
Willetts FRS(3) 33,267 - - - - -
George Katzaros(4) 27,133 58,616 - - 33,243 32,697
Gavin Mayhew(5) - - - - 1,000,000 -
Carrick International
Holdings Limited(6) 30,894 25,082 - - - -
Krino Partners Limited(7) 53,954 29,666 - - - -
C2E Holdings Limited(8) 57 (46,034) - - 10,403 10,403
Envolution (Project
Management) Limited(9) 70,944 11,793 - 100 - -
Jeremy Evans(10) - 10,000 - - 10,000 10,000
BBR Enviro Systems
Pvt Ltd(11) 33,508 (38,133) 62,195 47,195 - -
Claudio Marati(12) 17,570 47,878 - - - -
James Buchan(13) - (20,000) - - 19,000 19,000
Summit Trust International(14) - 62,621 - - - 62,621
Paul Harrison(15) - 30,000 - - - 13,852
José Luis Del
Valle Doblado(16) 12,016 - - - - - Theodore Edward Chapman(17) 52,590 - - - - -
Notes:
(1) Geoffrey Mr. Geoffrey John Nesbitt, Director of Verditek
John Nesbitt plc, was entitled to Directors fee and salaries
of GBP141,265 during the year. At the year end,
Geoff Nesbitt was owed GBP68,384 in relation to
his Directors fees and salary.
(2) Timothy During the year Timothy Lord, and executive director
Lord of Verditek plc, was paid GBP65,256 for his services
as a Director.
---------------------------------------------------------
(3) The Rt David Willetts was appointed Chairman during the
Hon. Lord David year and was entitled to fees and services of GBP33,267
Willetts FRS during the period, all of which remains outstanding
at the end of the year. David Willetts was also
issued some share options, details of which are
disclosed in the note 21.
---------------------------------------------------------
(4) George Mr. George Katzaros, a non-executive director of
Katzaros Verditek plc, provided an interest free loan of
GBP15,000 during the year which was repaid during
the year. Mr. George Katzaros was entitled to Directors
fees of GBP27,132 during the year. At the year-end
George Katzaros was owed a Directors fee of GBP22,603
and an interest free loan from the prior year of
GBP33,403.
---------------------------------------------------------
(5) Gavin Mayhew Gavin Mayhew was appointed a Director after the
year end, but who holds 3 million shares in the
Company and provided a GBP1,000,000 in nominal amount
of the Company's Convertible Loan Note, the terms
are disclosed in note 19. After the reporting date
the company entered into a secured loan with Gavin
Mayhew. The principal amount of the loan is $600,000
initially for a term of 3 months but extendable
at the Company's discretion to 6 months and since
extended to 30 June 2020 with interest payable at
20% per annum at maturity and compounded quarterly.
---------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
26. Related Party Transactions (continued)
27.
(6) Carrick Mr. Anthony Neil Rawlinson, a non-executive director
International of Verditek plc has an interest in Carrick International
Holdings Limited Holdings Limited. His Directors fees were paid to
Carrick International Holdings Limited.
(7) Krino Partners Ms. Janet Rachel Donovan, who resigned during the
limited year as a director of Verditek plc has an interest
in Krino Partners Limited, which has provided financial
management services during the year to the Group.
Janet Donovan was paid a Directors fee of GBP15,816
and GBP38,138 to Krino Partners during the year
in relation to services that she provided.
-----------------------------------------------------------
(8) C2E Holdings C2E Holdings Limited("C2E") is a shareholder of
Limited BBR Filtration Limited. Theo Chapman and James Buchan
have an interest in C2E. During the year, expenses
of GBP57 were charged by the company.
-----------------------------------------------------------
(9) Envolution Mr. John Norris, who resigned as a director of BBR
(Project Management) Filtration("BBR"), is also a Director of Envolution
Limited (Project Management) Limited, which charged GBP70,000
for his services during the year. Some fixed assets
were sold to Mr Norris when he left, the assets
were sold at market value. There is GBP10,886 outstanding
due in relation to these fees at the end of the
year.
-----------------------------------------------------------
A shareholder of Verditek plc provided an interest-free
(10) Jeremy loan of GBP10,000 which remains outstanding at the
Evans year end.
-----------------------------------------------------------
(11) BBR Enviro BBR Enviro Systems Pvt Ltd who have a 10% stake
Systems Pvt in BBR Filtration, were paid GBP18,508 for royalty
Ltd fees and a further GBP15,000 advance of future royalty
fees during the period.
-----------------------------------------------------------
(12) Claudio Claudio Marriott who owns 49% of Greenflex Energy
Marati Ltd was paid GBP15,582 during the year for services
provided during the year and reimbursement of business
expenses of GBP32,296.
-----------------------------------------------------------
(13) James
Buchan James Buchan, a shareholder of Verditek plc.
-----------------------------------------------------------
(14) Summit A shareholder of Verditek plc provided an interest-bearing
Trust International loan in 2017 and were repaid during the year.
-----------------------------------------------------------
A shareholder of Verditek plc assisted in the fund
raising in Dec 2017 and was paid a commission of
(15) Paul Harrison GBP30,000 during the year.
-----------------------------------------------------------
(16) José During the year José Luis Del Valle Doblado,
Luis Del Valle and non-executive director of Verditek plc, was
Doblado paid GBP12,016 for his services as a Director.
-----------------------------------------------------------
During the year Theodore Edward Chapman, and director
(17) Theodore of Verditek plc, was paid GBP52,590 for his services
Edward Chapman as a Director.
-----------------------------------------------------------
Details of the directors' emoluments, together with the other related information, are set out in the Directors Report of the Remuneration Committee.
28. Events subsequent to the reporting date
In February 2019, Greenflex UK Limited applied to the Courts in San Marino to dissolve Greenflex RSM S.r.l.
On 17(th) April 2019 the Minority shareholder in Greenflex UK Limited transferred his 49% shareholding to Greenflex UK Limited, resulting in Verditek shareholding being increased to 100%.
On 3(rd) May 2019 the company entered into a secured loan with Gavin Mayhew, a non-executive director of the Company. The principal amount of the loan is $600,000 initially for a term of 3 months but extendable at the Company's discretion to 6 months and since extended to 30(th) June 2020 with interest payable at 20% per annum at maturity and compounded quarterly.
On 4(th) June 2019 Greenflex Trading Limited was dissolved.
29. Ultimate controlling party
There is no ultimate controlling party of the Company.
COMPANY STATEMENT OF FINANCIAL POSITION
31 December 2018 31 December 2017
Notes GBP GBP
----------------------------------- ------ ----------------- -----------------
Non-current assets
Investments in subsidiaries 3 169,454 160,539
Other investments 4 25,153 591,270
Property, plant and equipment 5 1,114 1,249
Total non-current assets 195,721 753,058
----------------------------------- ------ ----------------- -----------------
Current assets
Trade and other receivables 6 199,060 15,182
Net amounts due from subsidiaries 7 949,133 807,120
Unpaid Share Capital 6 - 380,000
Cash and cash equivalents 8 670,343 892,266
----------------------------------- ------ ----------------- -----------------
Total current assets 1,818,536 2,094,568
----------------------------------- ------ ----------------- -----------------
Total assets 2,014,257 2,847,626
----------------------------------- ------ ----------------- -----------------
Liabilities
Non-current liabilities
Loans and borrowings 10 1,170,000 -
----------------------------------- ------ ----------------- -----------------
Total non-current liabilities 1,170,000 -
Current liabilities
Trade and other payables 9 461,476 208,020
Loans and borrowings 10 43,243 10,000 Total current liabilities 504,719 218,020 ----------------------------------- ------ ----------------- ----------------- Net assets 339,538 2,629,606 ----------------------------------- ------ ----------------- ----------------- Share capital 11 80,847 80,847 Share premium 3,858,691 3,858,691 Share based payment reserve 12 8,727 - Retained losses (3,608,727) (1,309,932) ----------------------------------- ------ ----------------- ----------------- Total equity 339,538 2,629,606 ----------------------------------- ------ ----------------- -----------------
The Company's loss for the year was GBP2,298,795 (2017: GBP1,683,537) and is included within the consolidated statement of comprehensive income.
These financial statements were approved and authorised for issue by the Board of Directors on 28 June 2019 and were signed on its behalf by:
Dr Geoffrey Nesbitt
Chief Executive Officer
Company Registration Number: 10114644
The accompanying notes are an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Share based Retained
capital premium payment reserve losses Total
GBP GBP GBP GBP
-------------------------- ---------- ---------- ----------------- ------------ ------------
Equity as at 1 January
2017 100 - - (146,142) (146,042)
Loss for the year - - - (1,683,537) (1,683,537)
Total comprehensive
loss - - - (1,683,537) (1,683,537)
Issue of shares (net
of expenses) 80,747 4,378,438 - - 4,459,185
Capital reduction - (519,747) - 519,747 -
Equity as at 31 December
2017 80,847 3,858,691 - (1,309,932) 2,629,606
Loss for the year - - - (2,298,795) (2,298,795)
-------------------------- ---------- ---------- ----------------- ------------ ------------
Total comprehensive
loss - - - (2,298,795) (2,298,795)
Share based payments - - 8,727 - 8,727
-------------------------- ---------- ---------- ----------------- ------------ ------------
Equity as at 31 December
2018 80,847 3,858,691 8,727 (3,608,727) 339,538
-------------------------- ---------- ---------- ----------------- ------------ ------------
The accompanying notes are an integral part of these financial statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1. Accounting policies
The accounting policies that are applicable, as set out in note 2 to the consolidated financial statements have been applied together with the following accounting policies that have been consistently applied in the preparation of these Verditek PLC ("the Company") financial statements.
Basis of preparation
The financial statements of Verditek PLC have been prepared in accordance with Financial Reporting Standard 101, 'Reduced Disclosure Framework' (FRS 101). The financial statements have been prepared under the historical cost convention, as modified and in accordance with the Companies Act 2006.
The Company has taken advantage of Section 408 of the Companies Act 2006 in not presenting its own statement of comprehensive income.
The Company has taken advantage of the following disclosure exemptions under FRS 101, on the basis that equivalent disclosures are, where required, are given in the consolidated financial statements of Verditek plc:
a. a Cash Flow Statement and related notes as required by IAS 7 - 'Statement of Cashflows';
b. the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of paragraph 79(a)(IV) of IAS 1 - a reconciliation of the share capital at beginning and end of the period;
c. the requirements of paragraphs 134 - 136 of IAS 1 'Presentation of Financial Statements' to disclose the management of the capital of the Company;
d. the requirements of paragraphs 30 and 31 of IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors' to disclose the new or revised standards that have not been adopted and information about their likely impact;
e. all of the disclosure requirements of IFRS 9 'Financial Instruments: Disclosures';
f. the requirements of paragraph 17 of IAS 24, 'Related Party Disclosures' to disclose key management personnel; and
g. the requirements in IAS 24 'Related Party Disclosures' to disclose related party transactions entered into between two or more members of a group, provided that any subsidiaries which is a party to the transaction is wholly owned by such a member.
Investments in subsidiaries and associates
The Company's investment in its subsidiaries and associates are carried at cost less provision for any impairment. 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.
Financial Instruments
The Company has implemented IFRS 9, which has resulted in the following accounting policy changes, there has
been no impact on the classification of Financial Instruments it is purely a change in terminology.
Financial assets
Debt instruments at amortised cost - loans and receivables
The Company's other receivables comprise of loans and other receivables in the statement of financial position.
These are measured at amortised cost.
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
Impairment
The Company assess all other current receivables on a forward looking basis, with expected credit losses associated with debt instruments measured at amortised cost. These are deemed short term (i.e., less than 12 months) and apply the Group policy for credit rating and risk management policies in place.
The impairment stages are defined as:
Stage 1 - When a receivable is recognised, ECLs resulting from default events that are possible within the next 12 months are expensed to the statement of comprehensive income (12-month ECL) and a loss allowance is established. On subsequent reporting dates, 12-month ECL also applies to existing receivables with no significant increase in credit risk since their initial recognition. In determining whether a significant increase in credit risk has occurred since initial recognition, the Company assesses the change, if any, in the risk of default over the expected life of the receivable (that is, the change in the probability of default, as opposed to the amount of ECLs).
Stage 2 - If the receivables credit risk has increased significantly since initial recognition and is not considered low, lifetime ECLs are recognised.
Stage 3 - If the receivables credit risk increases to the point where it is considered credit-impaired, lifetime ECLs are recognised, as in Stage 2.
The impairment methodology applied for the Company is stage 1, which require 12 month expected credit losses to be recognised until a change in credit risk occurs in which case stage 2 would apply.
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 estimates and assumptions 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 subsidiaries. This is detailed in the accounting policy Investment in subsidiaries above.
2. Staff costs
The average number of employees (including directors) during the period was made up as follows:
2018 2017
Number Number
---------------- ------- -------
Directors 5 5
Administrative 1 -
---------------- ------- -------
Total 6 5
---------------- ------- -------
The cost of employees (including directors) during the period was made up as follows:
2018 2017
GBP GBP
-------------------------------- -------- --------
Salaries (including directors) 564,617 220,693
Share based payment 8,727 -
Social security costs 19,612 15,751
Pension cost 806 -
Total staff costs 593,762 236,444
-------------------------------- -------- --------
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
3. Investments in subsidiary undertakings
Investment in subsidiary
GBP
----------------------------------------- -------------------------
At 1 January 2017 -
Transfer from investments in associates 1
Additions 600,000
Write off of investments -
----------------------------------------- -------------------------
At 31 December 2017 600,001
----------------------------------------- -------------------------
Transfer from investments in associates -
Additions 8,915
Write off of investments -
----------------------------------------- -------------------------
At 31 December 2018 608,916
----------------------------------------- -------------------------
IMPAIRMENT
At 1 January 2016 -
Impairment of investment in subsidiary 439,462
At 31 December 2017 439,462
Impairment of investment in subsidiary -
----------------------------------------- -------------------------
At 31 December 2018 439,462
----------------------------------------- -------------------------
Net book value
At 31 December 2017 160,539
At 31 December 2018 169,454
----------------------------------------- -------------------------
On 11 July 2018 the Verditek incorporated Verditek Solar S.r.l, registered number MI - 2529932, in Italy with a share capital of 10,000 EUR1 Euro's ordinary shares, (GBP8,916). The details of the subsidiaries of Verditek plc, are set out in the Note 14 to the consolidated financial statements.
4. Other investments
Investment Loans to Total
in associates associates
GBP GBP GBP
----------------------------- --------------- ------------ ----------
Cost
At 1 January 2017 1 - 1
Additions 750,000 - 750,000
Impairment of investment
in associates (158,729) - (158,729)
Transfer associate becoming
a subsidiary (1) - (1)
------------------------------ --------------- ------------ ----------
At 31 December 2017 591,271 - 591,271
------------------------------ --------------- ------------ ----------
Additions 157,044 157,044
Impairment of loan (157,044) (157,044)
Impairment of investment (566,118) - (566,118)
------------------------------ --------------- ------------ ----------
At 31 December 2018 25,153 - 25,153
------------------------------ --------------- ------------ ----------
The associate in which the company's interest at the year-end is as follows:
Proportion
Country of ownership
Name of incorporation Parent interest Nature of business
Verditek USA,
Westec Environmental USA Limited 23.64% Clean technology
------------------ -------------- -------------- -------------------
For further details of the associates, are set out in the Note 12 to the consolidated financial statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
5. Property, plant and equipment
Plant and
machinery
GBP
--------------------- -----------
At 1 January 2017 2,228
Additions -
Amount derecognised (355)
----------------------- -----------
At 31 December 2017 1,873
Additions 1,889
Disposal of asset (1,260)
----------------------- -----------
At 31 December 2018 2,502
----------------------- -----------
DEPRECIATION
At 1 January 2017 -
Charge for the year 624
At 31 December 2017 624
Charge for the year 869
Disposal of asset (105)
----------------------- -----------
At 31 December 2018 1,388
----------------------- -----------
Net book value
At 31 December 2017 1,249
At 31 December 2018 1,114
----------------------- -----------
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
6. Trade and other receivables
31 December 31 December
2018 2017
GBP GBP
Prepayments 5,011 2,778
Other receivables 54,582 -
VAT receivables 139,467 12,404
----------------------------------- ------------ ------------
Total trade and other receivables 199,060 15,182
Unpaid share Capital - 380,000
----------------------------------- ------------ ------------
Total 199,060 395,182
----------------------------------- ------------ ------------
All amounts are due within three months. No amounts are past due.
7. Amounts due from subsidiaries
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. The provision of allowance for the year of GBP401,000 was recognised in these financial statements.
8. Cash and cash equivalent
31 December 31 December
2018 2017
GBP GBP
-------------------------- ------------ ------------
Cash at bank and in hand 670,343 892,266
9. Trade and other payables
31 December 2018 31 December 2017
GBP GBP
--------------------------------------- ----------------- -----------------
Trade payables 135,368 13,405
Accruals and deferred income 263,224 191,139
Social security & other taxes payable 62,379 3,476
Pension cost 504 -
Total trade and other payables 461,475 208,020
--------------------------------------- ----------------- -----------------
NOTES TO THE COMPANY FINANCIAL STATEMENTS (Continued)
10. Loans and borrowings
31 December 31 December
2018 2017
GBP GBP
---------------------------- ------------ ------------
Current
Related party loans 43,243 10,000
---------------------------- ------------ ------------
Non current liabilities
Convertible Loans 1,170,000 -
Total loans and borrowings 1,213,243 10,000
---------------------------- ------------ ------------
The related party loan is interest free and repayable on demand.
On the 17(th) December 2018 Verditek issued unsecured convertible loan notes with a total value of GBP1,170,000 at a 10% fixed rate redeemable on the earliest of
-- 17(th) December 2020; or -- Date of change of control; or -- If the investor majority determines following a material breach.
11. Share capital
For details of share capital see note 20 to the consolidated financial statements.
12. Share based payment reserve
For details of the share based payments see note 21 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR SEMEEWFUSEEM
(END) Dow Jones Newswires
June 28, 2019 02:01 ET (06:01 GMT)
1 Year Verditek Chart |
1 Month Verditek Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
