Interim Report for the six months to 30 June 2021

RNS Number : 7898J
Verditek PLC
26 August 2021
 

Verditek plc

 

("Verditek" or the "Company" or the "Group")

 

Interim Report and Financial Statements for the six months to 30 June 2021

 

Verditek plc, (AIM:VDTK) the clean technology company is pleased to announce its interim results for the six months to 30 June 2021.

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

 

Enquiries:

 

Verditek plc   

RH Lord David Willetts FRS (Non-Executive Chairman)

Rob Richards (Chief Executive Officer)

 

 

Tel: +44 (0)20 7129 1110
enquiries@verditek.com

WH Ireland Limited (NOMAD and Broker)

Chris Hardie (Corporate Finance)

Ben Good (Corporate Finance)

 

Tel: +44 (0)20 7220 1666

Chris.Hardie@whirelandcb.com

Ben.Good@whirelandcb.com

 

 

CEO Statement

 

Overview

 

The six-month period to 30 June was both a challenging time for Verditek as well as a period when several fresh seeds were sown. Having hit high levels of production at the Group's factory in Lainate, Milan towards the end of 2020, production was scaled back at the start of 2021 as further projects in the pipeline were either postponed or withdrawn due to the uncertainty brought about by the global pandemic. With the economic uncertainty of the last 18-months starting to recede, we believe that the outlook for the second half of the year is improving.

 

Strategy

 

The Group continues to focus all its efforts on becoming a leader in the manufacture and supply of flexible, lightweight solar panels. We continue to believe Verditek's product offering is very well placed to take advantage of the shift away from hydrocarbon-based energy production. In particular, the recent publication of the IPPC report on global climate change continues to drive the focus towards green energy solutions.

 

Operations

 

During the period under review, the Company designed its second-generation solar panel which from a standard size panel of 60 cells now has a power output of 350W. This new version is now undergoing rigorous testing as part of the certification process. This process is expected to conclude in the second half of 2021 and covers testing to International Standards for temperature, fire, wind, and hail damage as well as durability under normal conditions. Successful certification should allow our second-generation panels to be sold in most countries.

 

Verditek also fulfilled its first PowerMat order during the period to Intergroup Mining of Australia. The PowerMat is a portable energy solution that houses up to 700 solar panels offering up to 250kWp of power which are connected together on a hinged system for easy roll out and reuse in rural locations. A second PowerMat solution has been manufactured for demonstration purposes in the Middle East.

 

Sales and Marketing

 

The Group continues to adjust its sales model which combines a number of commission only sales agents, employed sales consultants and distributor agents.

 

During the period, a number of smaller orders were received from the UK roofing industry, distributors of boat power solutions, as well as from clients in the Netherlands, Kenya, Italy, Belgium. It is envisaged that these initial orders will lead to far larger volumes in the second half of 2021.

 

We are delighted to report that we have delivered our first integrated solar/roof panel system through our partnership with Bradclad. We believe that this could become an important market for the Company as pressure increases to legislate for minimum amounts of solar to be incorporated at point of build.

 

We continue to work with a number of other partners to develop innovative off-grid solutions which require lightweight solar panels to be mobile and are optimistic that the volume of sales will soon increase, given that we now have our panels incorporated into integrated products.

 

Other Opportunities

 

We continue to discuss licencing our manufacturing technology to a partner in building new plants and have two opportunities under consideration at the moment, both in the Eastern Hemisphere.

 

In the 2020 Annual Report, we detailed the goals and outcomes of the first and second joint development projects (JDP) with Paragraf, the Cambridge based start-up which has developed world leading graphene technology.

 

I am pleased to report that Verditek has now entered into an MOU for a third JDP with Paragraf which will build on the foundation block learnings from JDP 1 and 2 and will continue to develop graphene solutions for the solar market.  The first two projects were solely based around Research and Development, whereas JDP 3 includes more Research and Development in a particular area plus a commercialisation focus.

 

Finance

 

For the six-month period to 30 June 2021, the Group had revenues of £105,000 and recorded a loss after tax of £1.2m. As announced in June, the Group suffered a theft of stock at its plant in Lainate, Italy. Whilst we remain hopeful that the stock might still be recovered, a charge of approximately £300,000 has been included in the interim accounts.

 

Cash balances as at 30 June were £919,000 which included £250,000 raised from a two year bond issue via Crowd for Angels. A further £103,253 was raised via this platform after the balance sheet date.

 

Overhead spend remains tightly controlled to conserve cash as the conversion time for prospects to become customers has taken longer than expected.

 

Staff

 

During the period, a new UK sales manager was recruited as well as a new operations manager at the plant in Lainate, Italy. Both persons have extensive knowledge of the flexible solar panel marketplace.

 

At the end of August 2021, Tim Bowen (CFO) will be moving on to new ventures and he will be replaced by Vicki Johnson with effect from 1 September. Vicki has a masters in Chemistry from University of Oxford and qualified as a chartered accountant with Ernst and Young in 2010. Vicki has worked for the last two years as Finance Manager for the advisory firm CFPro and has knowledge of Verditek already as CFPro deliver tax and accounting services to the Company. 

 

The Board would like to thank Tim for his significant input over the past year. He has made a valuable contribution to the Company and we wish him well in the future.

 

Outlook and conclusion

 

Despite recent headwinds, we continue to see positive opportunities for Verditek and believe the significant investment into the development of our flexible, lightweight solar panels will soon bring about meaningful financial reward.

 

I would like to thank all members of the Verditek team, advisers and shareholders for their ongoing support.

 

Rob Richards

Chief Executive Officer

25 August 2021

 

 

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

 

 

 

H1 2021

H1 2020

FY 20120

 

 

Unaudited

Unaudited

Audited

 

Note

£

£

£

Continuing operations   

 

 

 

 

Revenue 

 

105,097

-

21,521

Direct costs

 

(565,312)

-

(320,473)

Gross loss

 

(460,215)

-

(298,952)

Administrative expenses 

 

(678,260)

(843,354)

(1,971,662)

Operating loss   

 

(1,138,475)

(843,354)

(2,270,614)

Finance Income

 

360

52

70

Finance costs 

 

(15,985)

(74,875)

(152,025)

Loss before tax   

 

(1,154,100)

(918,177)

(2,422,569)

Income Tax 

 

45

-

98,448

Loss for the period   

 

(1,154,055)

(918,177)

(2,324,121)

 

 

 

 

 

Loss for the period attributable to: -

 

 

 

 

Owners of the Company 

 

(1,169,834)

(916,377)

(2,231,105)

Non-controlling interest 

 

15,779

(1,800)

(93,016)

 

 

( 1,154,055 )

(918,177)

(2,324,121)

 

 

 

 

 

Other comprehensive income 

 

 

 

 

Items that will or may be reclassified to profit or loss: 

 

 

 

 

Translation of foreign operations 

 

(60,669)

75,194

38,656

Total comprehensive loss for the period from continuing operations

 

(1,214,724)

(842,983)

(2,285,465)

 

 

 

 

 

Total comprehensive loss for the period attributable to: - 

 

 

 

 

Owners of the Company 

 

(1,230,503)

(837,898)

(2,194,053)

Non-controlling interest 

 

15,779

(5,086)

(91,412)

 

 

(1,214,724)

(842,983)

(2,285,465)

 

 

 

 

 

Loss per share  

 

 

 

 

Basic and diluted (£)

4

(0.003)

(0.004)

(0.008)

Condensed Consolidated Statement of Financial Position

As at 30 June 2021

 

 

 

 

As at 30 June 2021

 

As at 30 June 2020

 

 As at 31 December 2020

 

Note

Unaudited

Unaudited

Audited

 

£

£

£

Assets

 

 

 

Non-current assets

 

 

 

Investments

 

23,091

25,917

23,405

Property, plant and equipment

 

471,892

663,208

586,612

Right of use assets

 

171,438

239,277

207,104

Non-current assets

 

666,421

928,402

817,121

 

 

 

 

Current assets

 

 

 

Inventories

555,729

37,525

636,041

Trade and other receivables

296,195

492,497

423,853

Cash and cash equivalents 

 

919,179

588,858

1,711,761

Current assets

 

1,771,103

1,118,880

2,771,655

TOTAL ASSETS

 

2,437,524

2,047,282

3,588,776

 

 

 

 

Equity and liabilities

 

 

 

Non-current liabilities

 

 

 

Loans and borrowings

250,000

-

-

Lease liabilities

117,941

177,260

149,051

Non-current liabilities

 

367,941

177,260

149,051

Current liabilities

 

 

 

Trade and other payables

 

471,286

763,485

585,359

Loans and borrowings

5

-

700,017

70,000

Lease liabilities

 

64,643

43,601

45,883

Current liabilities

 

535,929

1,507,103

701,242

TOTAL LIABILITIES

 

903,870

1,684,363

850,293

 

 

 

 

 

Share capital

6

136,470

116,758

136,470

Share premium account

6

10,733,073

6,945,074

10,733,073

Share based payment reserve

 

109,079

88,850

99,184

Accumulated losses 

(9,279,655)

(6,795,093)

(8,109,821)

Translation reserve 

(59,805)

42,291

864

Non-controlling interests

 

(105,508)

(34,960)

(121,287)

Total shareholders' equity

 

1,533,654

362,919

2,738,483

TOTAL EQUITY AND LIABILITIES

 

2,437,524

2,047,282

3,588,776

 

 

 

 

Condensed Statement of Changes in Equity  

As at 30 June 2021

 

 

 

 

Issued share capital

Share Premium

Share based payment reserve

Accumulated losses

Translation reserve

Non-controlling interest

Total

 

 

 

£

 

 

 

 

As at 1 January 2020

91,666

5,466,376

21,703

(5,878,717)

(36,189)

(29,874)

(365,035)

Loss for the period

-

-

-

(916,377)

-

(1,800)

(918,177)

Translation of subsidiary

-

-

-

-

78,480

(3,286)

75,194

Total comprehensive loss for the period

-

-

-

(916,377)

78,480

(5,086)

(842,982)

Issue of shares net of expenses

25,092

1,478,698

-

-

-

-

1,503,790

Share based payment

-

-

67,147

-

-

-

67,147

Shareholders' equity at 30 June 2020

116,758

6,945,074

88,850

(6,795,093)

42,291

(34,960)

362,920

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

(1,314,728)

-

(91,216)

(1,405,944)

Translation of subsidiary

-

-

-

-

(41,427)

4,889

(36,538)

Total comprehensive loss for the period

-

-

-

(1,314,728)

(41,427)

(86,327)

(1,442,482)

Issue of shares net of expenses

19,712

3,787,999

-

-

-

-

3,807,711

Share based payment

-

-

10,334

-

-

-

10,334

Shareholders' equity at 31 December 2020

136,470

10,733,073

99,184

(8,109,821)

864

(121,287)

2,738,483

 

 

 

 

 

 

 

 

Loss for the period

-

-

-

(1,169,834)

-

15,779

(1,154,055)

Translation of subsidiary

-

-

-

-

(60,669)

-

(60,669)

Total comprehensive loss for the period

-

-

-

(1,169,834)

(60,669)

15,779

(1,214,724)

Share based payment

-

-

9,895

-

-

-

9,895

Shareholders' equity at 30 June 2021

136,470

10,733,073

109,079

(9,279,655)

(59,805)

(105,508)

1,533,654

 

 

 

 

Condensed Statement of Cash Flows

For the 6 months ended 30 June 2021

 

 

 

 

 

 

 

 

H1 2021

H1 2020

FY 2020

 

Unaudited

Unaudited

Audited

 

£

£

£

Operating activities

 

 

 

Loss before tax from continuing operations

(1,154,055)

(918,177)

(2,422,569)

Adjustment for:

 

 

 

Depreciation

 

120,115

43,208

164,566

Finance costs

 

15,985

74,875

152,025

Financial income

 

(360)

(52)

(70)

Share based payment expenses

 

9,895

67,147

77,481

 

 

(1,008,420)

(732,999)

(2,028,567)

Working capital adjustments

 

 

 

 

(Increase) / decrease in inventory

 

80,312

(2,487)

(601,003)

(Increase) / decrease in trade and other receivables

 

129,811

(55,422)

638,595

Increase / (decrease) in trade and other payables

 

(117,124)

(147,837)

(761,385)

Net cash outflow from operating activities

 

(915,421)

(938,745)

(2,752,360)

 

 

 

 

Investing activities

 

 

 

Purchase of fixed assets

 

(5,808)

(2,568)

(33,215)

Net cash outflow from investing activities

 

(5,808)

(2,568)

(33,215)

 

 

 

 

Financing activities

 

 

 

Issue of ordinary share capital

 

-

1,456,791

5,076,047

Loans issued

 

250,000

-

-

Interest paid on loans

 

(18,429)

-

(162,894)

Finance income

 

360

51

62

Repayments of loans

 

(70,000)

-

(455,076)

Payment of lease liabilities

 

(17,622)

(36,409)

(69,920)

Net cash inflow from financing activities

 

144,309

1,420,433

4,388,219

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(776,920)

479,120

1,602,644

Cash and cash equivalents at the beginning of the period

 

1,711,754

107,279

107,243

 

 

934,834

586,399

1,709,887

 

 

 

 

 

Exchange gains on cash and cash equivalents

 

(15,655)

2,459

1,874

 

 

 

 

 

Cash and cash equivalents at the end of the period

 

919,179

588,858

1,711,761

       
 

 

Notes to the Condensed Financial Statements

 

1.  General Information

 

The Interim Financial Statements are for the six months ended 30 June 2021 and are presented in British Pounds (£), which is the functional currency of the parent company. They have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2020.

 

Verditek plc ("Verditek" or the "Company" or the "Group") is a public limited company incorporated, registered and domiciled in England Wales (registration number 10114644), whose shares are quoted on the Alternative Investment Market on the London Stock Exchange. Its registered office is located at 29 Farm Street, London W1J 5RL.

 

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

 

The Interim Financial Statements have been approved for issue by the Board of Directors on 25 August 2021.

 

2.  Basis of Preparation

 

The financial information presented in this condensed consolidated interim report for the half-year has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board, as adopted by the European Union.  The principal accounting policies adopted in the preparation of the financial information in this Interim Report are unchanged from those used in the Company's financial statements for the year ended 31 December 2020.

 

The financial information for the year ended 31 December 2020 presented in this Interim Report does not constitute the Company's statutory accounts for that period but has been derived from them.  The Annual Report and Accounts for the year ended 31 December 2020 were audited and have been filed with the Registrar of Companies.  The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 December 2020 was unqualified and did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of the Companies Act 2006.  The financial information for the periods ended 30 June 2020 and 30 June 2021 is unaudited.

 

A copy of the audited consolidated financial statements for the year ended 31 December 2020 is available on the Company's website.

 

New Standards adopted as at 1 January 2021

 

Accounting pronouncements which have become effective from 1 January 2021 are:

 

·IFRS 3 Business Combinations - definition of a business

·IAS 1 and IAS 8 - definition of material

·IFRS 9, IFRS 7 and IAS 39 - interest rate benchmark

·IFRS 7 - Insurance contracts

 

These accounting pronouncements do not have a significant impact on the Group's financial results or position.

 

Going concern

 

The interim financial statements have been prepared under the going concern basis as the Directors are satisfied that sufficient funds are or will become available to the Group to meet its on-going working capital requirements. The Group's assessment takes account of current cash resources, expected costs and expected revenues. The Group has a substantial pipeline of commercial opportunities, and is focussed on converting these into sales in the next year. The Group has also secured £353,253 in funding from an issue of corporate bonds, of which £250,000 was received in the period, with the remainder received in August 2021.

 

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

 

Dividends

 

  The Directors do not propose an interim dividend.

 

Material changes in accounting estimates or judgments

 

The preparation of unaudited interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses for the current and its corresponding financial period under review. Actual results may differ from these estimates.

 

In preparing the unaudited interim financial information, the significant judgements made by the management in applying the Group's accounting policies and the sources of estimates uncertainty were consistent with those applied to the audited financial statements for the year ended 31 December 2020.

 

3.  Segmental Information

 

The chief operating decision-maker is considered to be the Board of Directors of Verditek. The chief operating decision-maker allocates resources and assesses performance of the business and other activities at the operating segment level.

 

The chief operating decision maker has determined that in the period ended 30 June 2021, Verditek had one operating segment, the development and commercialisation of clean technologies, although it is likely that in future periods the Group's segmental reporting will be expanded as different technologies are developed and commercialised. 

 

Revenue and segmental information

 

 

6 months ended 30 June 21

6 months ended 30 June 20

For the year ended 31 December 20

 

Unaudited

Unaudited

Audited

 

£

£

£

Sale of Goods

105,097

-

21,521

Total

105,097

-

21,521

The Group had one customer that exceeded 10% of revenue in 2021.

 

Geographical Segments

 

Apart from holding company activities in the UK, the Group had operations in Milan, Italy, in the period.  An analysis of revenue, operating loss and non-current assets by geographical market is given below:

 

 

6 months ended 30 June 21

6 months ended 30 June 20

For the year ended 31 December 20

 

Unaudited

Unaudited

Audited

 

£

£

£

Revenue

 

 

 

UK

-

-

-

Rest of Europe

105,097

-

21,521

 

105,097

-

21,521

Operating loss

 

 

 

UK

(412,202)

(641,734)

(1,336,955)

Rest of Europe

(726,273)

(201,620)

(933,659)

 

(1,138,475)

(843,354)

(2,270,614)

Non-current assets

 

 

 

UK

23,964

26,460

24,623

Rest of Europe

642,457

901,942

792,498

 

666,421

928,402

817,121

During the period there was a theft of inventory from the factory in Milan, resulting in a charge to direct costs of approximately £300,000.

 

4.  Loss Per Share 

 

The calculation of loss per share is based on the following loss and number of shares:

 

 

6 months ended 30 June 21

6 months ended 30 June 20

For the year ended 31 December 20

 

Unaudited

Unaudited

Audited

 

£

£

£

Loss for the period from continuing operations (£)

(1,169,834)

(916,377)

(2,231,105)

Weighted average number of shares:  Basic

341,172,443

249,774,633

280,609,258

Loss per share (£)

(0.003)

(0.004)

(0.008)

 

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.

For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive options and warrants over ordinary shares. Potential ordinary shares resulting from the exercise of share options and warrants have an anti-dilutive effect due to the Group being in a loss position. As a result, diluted loss per share is disclosed as the same value as basic loss per share.

 

5.  Loans and Borrowings

 

6 months ended 30 June 21

6 months ended 30 June 20

For the year ended 31 December 20

 

Unaudited

Unaudited

Audited

 

£

£

£

Current

 

 

 

Interest free related party loan

-

43,243

-

Interest bearing related party secured loan

-

486,774

-

Convertible loans

-

170,000

70,000

Total Current loans and borrowings

 

700,017

70,000

 

 

6 months ended 30 June 21

6 months ended 30 June 20

For the year ended 31 December 20

 

Unaudited

Unaudited

Audited

 

£

£

£

Non - current

 

 

 

Convertible bonds issued to related party

25,000

-

-

Convertible bonds

225,000

-

-

Total Non-current loans and borrowings

250,000

-

-

 

On 1 June 2021, Verditek issued a corporate "green" bond to raise up to £500,000.

 

The bond, yielding 7%, is being issued through crowdfunding platform Crowd for Angels, which has underwritten the first £225,000. The bond term is two years and interest will be paid quarterly. Security will be by way of a floating charge on the assets of the Company. The Company also issued to Crowd for Angels 10 warrants for each £1 invested for a term of 36 months to subscribe for new ordinary shares at the closing bid price immediately prior to the date of the Loan Note agreement, which was 3.1p. In addition, one of Verditek's non-executive Directors has entered into a bond with similar terms for £25,000 directly with the Company.

 

 

Cashflow - net debt analysis

 

01-Jan-21

Debt Funding

Other cash outflows

Foreign Exchange

Other non-cash movement

30-Jun-21

 

£

£

£

£

£

£

Cash and cash equivalents

1,711,754

162,378

(939,298)

(15,655)

-

919,179

Convertible bonds

(70,000)

70,000

-

-

-

-

Secured bonds

-

(225,000)

-

-

-

(225,000)

Secured bonds issued to related party

-

(25,000)

-

-

-

(25,000)

Lease liability

(194,934)

17,622

-

8,916

(14,188)

(182,584)

 

1,446,820

-

(939,298)

(6,739)

(14,188)

486,595

 

6.  Events after the reporting date

 

Following the close of the corporate bond offer in July 2021, a further £103,253 has been raised through crowdfunding platform Crowd for Angels.

 

7.  Copies of the interim report

 

Copies of this interim report are available on the Company's website at www.verditek.com and from the Company's registered office, 29 Farm Street, London W1J 5RL.

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