3 June 2024
EARNZ plc
("EARNZ" or the "Company")
Final
Results
and
Notice of
AGM
EARNZ plc (AIM:EARN), an AIM Rule
15 cash shell which is seeking acquisitions in the energy services
sector, is pleased to announce its audited results for the year
ended 31 December 2023 (the "Full Year").
On 29 February 2024, the Company
disposed of Verditek Italy srl and all related business assets of
Verditek plc (the "Solar Business"), after receiving shareholder
approval.
Following the disposal of the
Solar Business, the existing Board of Directors resigned with
immediate effect, and a new Board of Directors was shortly
thereafter appointed being John Charlton, Elizabeth Lake and Bob
Holt as well as the Company being renamed EARNZ plc on 6 March
2024.
As a result of this disposal, from
1 March 2024, the Company is regarded as an AIM Rule 15 cash shell,
having ceased to own, control or conduct all, or substantially all,
of its existing trading business, activities or assets. Under the
AIM Rules for Companies, the Company has six months (31 August
2024) to make an acquisition or acquisitions which constitute a
reverse takeover under AIM Rule 14.
The Report & Accounts for the
Full Year, the contents of which are set out below, together with
the Notice of Annual General Meeting ("AGM"), will be posted to
shareholders and will be made available later today on the
Company's website at
www.earnzplc.com. The AGM will
be held at 11:00 a.m. on 27 June 2024 at Shore Capital's offices,
Cassini House, 57 St James' Street, London, SW1A 1LD.
For further information, please contact:
EARNZ
plc
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+44 (0) 7778 798 816
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Bob Holt
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Elizabeth Lake
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John Charlton
|
|
|
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Shore Capital (Nominated
Adviser and Joint Broker)
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+44 (0) 20 7408 4090
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Tom Griffiths / Tom Knibbs / Lucy
Bowden
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WH Ireland (Joint Broker)
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Hugh Morgan / Antonio Bossi / Andrew de Andrade
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+44 (0) 20 7220 1666
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This announcement contains inside information for the
purposes of Article 7 of the UK version of Regulation (EU) No
596/2014 which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
CHAIR'S REVIEW
Verditek plc was renamed EARNZ plc
with effect from 6 March 2024. References to "Verditek", "EARNZ"
and "Company" throughout this report relate to EARNZ plc.
References to "Verditek Group" or "Group" relate to the
consolidated results and operations of the Company and its
subsidiaries in the year.
The year to 31 December 2023 was
operationally and commercially challenging for the Verditek Group.
There had been growth in sales of Verditek's lightweight solar
panel products, and previously reported collaborations to design
and manufacture integrated roofing solutions were progressing.
During the year, measures were taken, in the form of the factory
move to Udine, Italy, to lower the cost base and take advantage of
more flexible working arrangements. However, ultimately, sales did
not increase at a rate sufficient to sustain the business, and
despite a bond issue and share placing each of which raised
£500,000 (before expenses) during the year, cash reserves were low
at the end of the year and the operational business could not
continue in its existing form without additional external
fundraising.
On 28 February 2024, at a Company
shareholder general meeting, the disposal of Verditek Italy srl and
all related business assets of Verditek plc ("Solar Business") was
approved, in return for satisfaction of the outstanding bonds and
accrued interest. The Solar Business was disposed of on 29 February
2024. This disposal was necessary in order to satisfy outstanding
creditor obligations of the Company, and to avoid putting the
Company into administration. As a result of this disposal, from 1
March 2024, the Company is now regarded as an AIM Rule 15 cash
shell, having ceased to own, control or conduct all, or
substantially all, of its existing trading business, activities or
assets.
Following the disposal of the
Solar Business, the existing Board of Directors of the Company
resigned with immediate effect, and a new Board of Directors was
shortly thereafter appointed being John Charlton, Elizabeth Lake
and myself. The Company was renamed EARNZ plc.
The Company's historic strategy
had been to identify early-stage business opportunities in the
clean technology sector, invest in them and see them through to
commercial success. The focus following disposal of the Solar
Business, is now to seek acquisition targets in the energy services
sector. The Board of Directors believes that this sector presents
some exciting commercial opportunities that will ultimately deliver
positive shareholder value.
Under the AIM Rules for Companies
("AIM Rules"), the Company will need to make an acquisition or
acquisitions which constitute a reverse takeover under AIM Rule 14
("Reverse Takeover") within 6 months (by 31 August 2024) of
becoming an AIM Rule 15 cash shell.
To enable acquisitions and to fund
ongoing working capital requirements of the Company, there have
been equity placements post year end in 2024. On 5 March 2024,
shares were issued in the Company to raise £300,000. On 8 April
2024 the Company raised a further £3.7 million (before expenses)
from the issue of 9,333,333 shares at 7.5 pence per share.
Additionally, the Board of Directors has taken steps to amend the
capital structure of the Company in order to reduce market
volatility and increase liquidity in the Company's shares. Existing
shares in the Company were consolidated, following approval at a
shareholder general meeting on 4 April 2024, by exchanging each 100
existing shares for 1 new share.
OUTLOOK AND AIM RULE 15
On 1 March 2024, the Company had
disposed of its operating business and became an AIM Rule 15 cash
shell pursuant to the AIM Rules. As such, the Company is required
to make an acquisition or acquisitions which constitute a reverse
takeover under AIM Rule 14 or be re-admitted to trading on AIM as
an investing company (which requires, inter alia, the raising of at
least £6.0 million) under the AIM Rules, within six months
from 1 March 2024.
The Company's strategy is to
acquire businesses in the energy services sector via a reverse
takeover, and it has identified certain opportunities which would
constitute a reverse takeover pursuant to AIM Rule 14.
Any reverse takeover transaction
will require the publication by the Company of an AIM Rules
compliant admission document and will be subject to shareholder
approval at a general meeting of the Company, to be convened at the
appropriate time.
If the Company does not complete a
reverse takeover in accordance with AIM Rule 14, or otherwise if
re-admitted to trading on AIM as an investing company fails to
implement its investing policy to the satisfaction of the London
Stock Exchange within six months of becoming an investing company,
the London Stock Exchange will suspend trading in the Company's AIM
securities pursuant to AIM Rule 40.
Bob Holt,
Executive Chair
31 May 2024
STRATEGIC
REPORT
The directors present their
strategic report on the Group for the year ended 31 December
2023.
EARNZ plc disposed of its
interests in its Solar Business on 29 February 2024. The Company's
principal business going forward is targeting acquisitions in the
energy services sector, with the aim of completing one or more
acquisitions before 31 August 2024 in compliance with AIM Rule
15.
For a review of the business
during the year, please refer to the Chair's Review on page 1-2.
For an analysis of financial performance indicators, please refer
to the Financial Review on page 4.
Principal risks and uncertainties facing the
business
A full review of principal risks
and uncertainties facing the business during the year and going
forward is given on pages 5 to 7.
S172 Statement
As required by Section 172 of the
Companies Act, a director of a company must act in the way he or
she considers, in good faith, would likely promote the success of
the company for the benefit of the shareholders. In doing so, the
director must have regard, amongst other matters, to the following
issues:
• the likely consequences of any
decisions in the long term (see Corporate Governance Report, pages
10 to 17);
• the interests of the company's
employees (see Corporate Social Responsibility report on page
22)
• the need to foster the company's
business relationships with suppliers/customers and others (see
Corporate Governance Report, pages 10 to 17);
• the impact of the company's
operations on the community and environment (see Corporate Social
Responsibility report on page 22);
• the company's reputation for
high standards of business conduct (see Corporate Governance
Report, pages 10 to 22); and
• the need to act fairly between
members of the company (see Corporate Governance Report, pages 10
to 22).
On behalf of the Board
John Charlton
Executive Director
31 May 2024
FINANCIAL REVIEW
Income statement
During 2023, the Group's loss
after taxation was £2,088,979 (2022: £1,821,567). The
administrative expenses incurred for the year ended 31 December
2023 were £1,216,529 (2022: £1,610,791).
Loss per share
The basic and diluted loss per
share was 0.5p (2022: 0.5p).
Financial Position
At 31 December 2023, the Group's
net liabilities were £97,770 (2022: net assets of £1,697,356). This
comprised total assets of £1,046,994 and total liabilities of
£1,144,764. The total assets included property, plant and equipment
of £97,513 (2022: £195,470).
Cashflow
The Group's cash balance at the
period end was £53,918 (2022: £842,632). During the period the net
cash outflow from operating activities was £1,255,697 (2022:
1,079,319) with financing activities generating net proceeds of
£465,418 (2022: £1,394,143).
Dividends
No dividend is recommended (2022:
£nil).
Capital management
The Board's objective is to
maintain a financial position that is both efficient and delivers
long term shareholder value. The Group had cash balances of
£53,918 as at 31 December 2023 (2022: £842,632). The Board
continues to monitor the balance sheet to ensure it has an adequate
capital structure.
Key Performance Indicators
As the Group's revenues were still
at an early stage during the period, the main measures of
performance were the level of expenditure compared to budget and
forecast expectations. Cash balances were also monitored against
budget and forecast. Going forward, revenue, gross margin, EBITDA
and cash will be key performance indicators for the Group and will
be measured against previous performance, budget and
forecasts.
Events after the reporting period
Events after the reporting period
are described in Note 28
to the financial statements. Following receipt of
the proceeds of share issues, the Group had cash of approximately
£3.4 million on 31 May
2024.
John Charlton
Executive Director
31 May 2024
RISK REPORT
Risk Management Framework
The Group has a risk register
which includes all principal risks critical to the business both
now as a cash shell and following completion of a potential reverse
take over (RTO).
The Board retains responsibility
and accountability for the effectiveness of the risk management
framework and internal control systems. As the business grows the
risks will continue to evolve and grow in complexity and so will
the risk management processes. This will ensure continuous
improvement in the organisation's risk maturity.
Approach to Risk Management
The Audit Committee, under
delegated authority from the Board, is accountable for overseeing
the effectiveness of the risk management process, including
identification of the principal and emerging risks facing the
Group. The Audit Committee has particular focus on those
risks that affect accounting in general and safeguarding the
Group's assets.
Principal Risks and Uncertainties
The current Board has identified
the Group risks in relation to the status as a cash
shell.
In addition, below this are the
risks that were identified as relevant to the business throughout
the reporting period.
DETAIL OF RISK
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MITIGATION and MANAGEMENT
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ASSESSMENT
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Transaction risk
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Under the AIM Rules, the Company
will need to make an acquisition or acquisitions which constitute a
reverse takeover within 6 months of becoming an AIM Rule 15 cash
shell. There is a risk of failure to secure appropriate
acquisitions within the regulatory timeframe. Certain opportunities
have been identified and a timetable is in place with contingency
included.
|
High risk
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Underperformance of target
businesses
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Full legal and financial due
diligence is being completed on each target business, including
historical financial information. External advisors and Reporting
Accountants are appointed for this work.
In addition, the Directors are
also completing their own due diligence.
Strong management teams are in
place within the target businesses.
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Medium risk
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Insufficient working
capital
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Recent fundraise exceeded
expectations and full working capital model is in place which has
been considered as part of the Board's going concern
assessment.
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Low risk
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RISKS RELEVANT TO THE
BUSINESS THROUGHOUT THE REPORTING PERIOD
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Failure to secure cashflow and
remain a going concern, also growth ambitions might outpace cash
reserves.
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The Board reviewed medium to long
term cashflow forecasts (including sales forecast), and aims to
ensure sufficient funding was in place to meet
requirements.
|
High risk (unchanged from prior
year)
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Operational failings in
manufacturing process.
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Technical and operational support
for the factory manager was in place with an operational/quality
control structure and process and a programme of regular audits of
the process.
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High risk (unchanged from prior
year)
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Products are designed for a
specific segment of the market and accessing that segment needs to
be done through distribution partners who typically have greater
negotiating power.
Poorly constructed sales contracts
expose the company to punitive commercial conditions. Partnering
relationships expose the Company to unlimited
liabilities.
|
Build network of distribution
partners and ensure review, challenge and understanding of standard
terms and conditions of the partnerships especially payment terms
and enforceability.
The Company secured a single
corporate counsel and has developed a suite of proforma contracts
to ensure commercial negotiations begin soundly.
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High risk (unchanged from prior
year)
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Products are not competitive on
cost as the Company cannot scale up manufacturing with the existing
manufacturing facilities.
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Manufacturing has been moved to a
larger automated modern factory unit which will allow increased
productivity, improved quality and reduce costs per
unit.
The Group was considering
collaborations to scale up manufacturing or direct investments in
new manufacturing sites.
|
High risk (unchanged from prior
year)
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Factory output levels reduce, poor
quality, other operational issues.
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The Group had systems in place for
testing of each panel, and daily production levels are monitored
and reported on regularly by local management.
The Group moved to a new larger
factory unit with the aim of allowing increased productivity,
improved quality and reduce costs per unit.
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Medium risk (unchanged from prior
year)
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HSE violations in Group operating
companies.
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The Group is directly responsible
for installing and auditing an HSE culture. Documented operating
procedures were in place at the manufacturing facility, which have
been reviewed by an external body.
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Medium risk (unchanged from prior
year)
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Non-compliance with the UK's
anti-bribery and corruption legislation given the Company's
potential operations in high-risk countries.
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The Company has an Ethics policy
which is referenced in third party contracts and there is annual
mandatory training for directors, employees and
contractors.
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Medium risk (unchanged from prior
year)
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The solar marketplace continues to
have increased efficiency (power output) and increased
competition.
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Operational management monitored
the efficiency of cells used in production of its solar panels, and
seeks to remain at the forefront of technical advancements at all
times.
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Medium risk (unchanged from prior
year)
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Failure to meet AIM corporate
governance requirements.
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The executive benchmarked its
corporate governance, policies and procedures against published QCA
guidelines to ensure compliance. The Company has regular
discussions with its nominated adviser and external
counsel.
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Low risk (unchanged from prior
year)
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Adverse global trading conditions
with companies and countries reducing their spend on capital
projects.
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Contingency plans to control
costs, through flex of production staff and supply chain
streamlining.
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Low risk (unchanged from prior
year)
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GOVERNANCE
BOARD OF DIRECTORS
The Board of Directors of
EARNZ plc as at the date of signing the
report and accounts comprised:
Bob Holt OBE (Executive Chair) - appointed 29 February
2024
Bob Holt is a highly accomplished
executive with over 35 years' experience in senior leadership roles
across various sectors, most recently serving as CEO of Revolution
Beauty Plc after joining its board as interim COO. Prior to that,
he successfully led Sureserve Group Plc as Chair, overseeing its
successful turnaround that resulted in over a fivefold increase in
the company's share price. He is perhaps most widely known for his
role in the rise of Mears Group PLC. Since being appointed as Chair
in 1996, he guided the company through its successful IPO on AIM
and played a pivotal role in building its order book value to £3
billion, establishing Mears as a market leader in its sector. Bob
has been awarded the OBE for his services to philanthropic
causes.
John Charlton (Executive Director) - appointed 29 February
2024
John Charlton spent 28 years in
various senior corporate banking and risk management roles within
Barclays plc, specialising latterly in listed business service
companies. He joined Sureserve Group plc as Group Company Secretary
in 2017 and assisted with the successful turnaround of that
business. In addition, John is Trustee and Chair of The Sureserve
Foundation.
Elizabeth Lake (Non-Executive Director) - appointed 13 March
2024
Elizabeth is an accomplished
executive with more than 25 years' finance and commercial
experience. Previously, Elizabeth joined the board of Revolution
Beauty Group as CFO in May 2022 and was instrumental in turning
around the business following the suspension of its shares from
trading on AIM. Prior to Revolution Beauty, she was CFO of AIM
quoted, Everyman Media Group. During her time at Everyman,
Elizabeth successfully led the company through the challenges
presented by the Covid 19 pandemic, demonstrating her ability to
navigate uncertainty with strong financial and operational
acumen. Prior to Everyman, Elizabeth was Chief Financial
Officer at AIM quoted, Science in Sport, and before that finance
director at Hugo Boss UK and Ireland. She brings extensive UK plc
experience to EARNZ having also worked in finance roles at Marks
& Spencer, Pearson and Thomson Reuters. Elizabeth is ACA
qualified having trained at Coopers and Lybrand (now
PwC).
Linda Main (Senior Independent Non-Executive Director) -
appointed 1 May 2024
Linda is a chartered accountant
who retired from KPMG LLP in September 2023 after a long career
leading its Capital Markets Advisory Group. Linda has advised on
well over 100 IPOs and significant transactions by listed companies
of all sizes ranging from start ups to members of the FTSE 100. She
was also a member of the UK board of KPMG where she chaired the
Risk Committee and sat on the Audit Committee. Until December 2023,
Linda was a member of the London Stock Exchange's AIM Advisory
Group and earlier in her career sat on a number of the Quoted
Companies Alliance ("QCA")'s technical committees. She has recently
joined the QCA board. Linda is a Trustee of Carers Trust, a leading
charity working to transform the lives of unpaid carers. Linda will
chair the Company's audit and remuneration committees.
Directors in post during the year
included:
Rob Richards (Chief Executive
Officer) - resigned 29 February 2024
The Rt Hon. Lord David Willetts
FRS (Non-Executive Chair) - resigned 29 February 2024
George Katzaros (Non-Executive
Director) - resigned 29 February 2024
Gavin Mayhew (Non-Executive
Director) - resigned 2 January 2024
The Board and responsibilities
The Board holds monthly meetings
to review, formulate and approve the Group's strategy, budgets,
corporate actions and oversee the Group's progress towards its
goals. There is an Audit Committee and a Remuneration Committee in
place with formally delegated duties and responsibilities and with
specific terms of reference. From time-to-time separate committees
may be set up by the Board to consider specific issues when the
need arises. Due to the size of the Group, the Directors have
decided that issues concerning the nomination of directors will be
dealt with by the Board rather than a committee but will regularly
reconsider whether a nominations committee is required.
Details of board meetings held in
the reporting period, and attendance of Board directors is shown
below:
Board Members
|
Eligible to
attend
|
Attended
|
Executive Directors
|
|
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Rob Richards
|
20
|
20
|
|
|
|
Non-Executive Directors
|
|
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The Rt Hon. Lord David Willetts FRS
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20
|
20
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George Francis Katzaros
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19
|
16
|
Gavin
Mayhew
|
19
|
17
|
The Audit Committee
The Audit Committee
comprised The Rt Hon. Lord
David Willetts FRS (resigned 29 February
2024) as Chair and Gavin Mayhew (resigned
2 January 2024) during the period. Following the resignations of
these directors, the Audit Committee comprises Linda Main as Chair
and Elizabeth Lake.
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 17.
The Remuneration Committee
The Remuneration Committee
comprised George Katzaros (resigned 29 February 2024) as Chair and
Gavin Mayhew resigned 2 January 2024) during the period. Following
the resignations of these directors, the Remuneration Committee
comprises Linda Main as Chair and Elizabeth Lake.
The Remuneration Committee reviews
the scale and structure of the executive Directors' and senior
employees' remuneration and the terms of their service or
employment contracts, including share option schemes and other
bonus arrangements. The remuneration and terms and conditions of
the non-executive Directors are set by the entire Board.
The Directors' Remuneration Report
is presented on pages 19 - 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
John Charlton
Executive Director
31 May 2024
CORPORATE GOVERNANCE REPORT
The Chair has overall
responsibility for corporate governance and is fully committed to
good corporate governance being central to the Group's approach to
creating sustainable growth and enhancing long-term shareholder
value. Directors are expected to always act ethically and
responsibly, reflecting our core values.
The Directors recognise that good
corporate governance is a key foundation for the long-term success
of the Group. As the Company is listed on the AIM market of the
London Stock Exchange it is subject to the continuing requirements
of the AIM Rules. The Board has therefore voluntarily adopted the
principles set out in the Corporate Governance Code for small and
midsized companies published by the Quoted Companies Alliance ("QCA
Code").
The principles are listed below
with an explanation of how the Company applies each principle, and
what we do and why.
QCA Code Principle
|
Application (as set out by
QCA)
|
What we do and why
|
1. Establish a strategy and business model which promote
long-term value for shareholders
|
The board must be able to express
a shared view of the company's purpose, business model and
strategy. It should go beyond the simple description of products
and corporate structures and set out how the company intends to
deliver shareholder value in the medium to long term. It
should have specific long-term objectives against which it can
assess whether the Company is delivering on its purpose. It should
demonstrate that the delivery of long-term growth is underpinned by
a clear set of values aimed at protecting the company from
unnecessary risk and securing its long-term
future.
|
The Company's strategy is
explained fully within the Chair's Review section of the Report and
Accounts for the year ended 31 December 2023.
Our strategy is identifying
potential acquisitions in the energy services sector, to create a
consolidated Group with scale and breadth of offering in the energy
services sector, growing revenues and profitability.
The key challenges to the business
and how these are mitigated are detailed on pages 5 to 7 of the
Report and Accounts for the year ended 31 December
2023.
|
2. Promote a corporate culture
that is based on ethical values and behaviours
|
The Board should embody and
promote a corporate culture that is based on sound ethical values
and which is supportive of the delivery of the Company's
established purpose, strategy and business model.
The desired culture should be
reflected in the actions and decisions of the Board and executive
management team. Corporate values should guide the objectives and
the strategy of the Company.
|
The Corporate and Social
Responsibility section on page 22 of the Report & Accounts for
the year ended 31 December 2023 details the ethical values of the
Company.
|
The culture should be visible in
every aspect of the business, including recruitment, nominations,
training and engagement. The performance and reward system
throughout the Company should reflect and reinforce the maintenance
of this culture.
The corporate culture should be
recognisable throughout the disclosures in the annual report,
website and any other communications by the Company, both internal
and external.
|
The Company's policies and
procedures on Data Protection;
Disciplinary, Dismissal and Grievance; Ethics; Share Dealing;
Social Media; and Speak-Up were reviewed and updated as required
and amended policies were approved by the Board during the
year. The new Board is reviewing those
policies and will amend as required.
These policies and procedures are
made available to staff and consultants and anti-bribery and
anti-corruption training and data protection training will be
mandatory.
Staff and consultants are
encouraged to ask questions and seek clarifications from senior
members of the team on these policies and procedures.
|
3.
Seek to understand and meet
shareholder expectations
|
Directors must develop a good
understanding of the needs and expectations of all elements of the
Company's shareholder base.
|
Whilst the Company is early stage,
the Board is committed to returning value to shareholders through
execution of our strategy
|
The Board should ensure proactive
engagement with shareholders on governance matters. This should be
led by the Chair or, where appropriate by the Senior Independent
Director. Other Directors such as the chairs of the Boards
sub-committees, should make themselves available for engagement
with shareholders.
|
The Board recognises the AGM as an
important opportunity to meet shareholders. All the Directors are
available to listen to the views of shareholders informally
immediately after the AGM
The people responsible for
shareholder liaison are:
The Chair
The Executive Directors
NOMAD (Shore Capital)
|
The Board must manage
shareholders' expectations and should seek to understand the
motivations behind shareholder voting decisions
|
The Company's website maintains a
channel to provide information and receive feedback from all
stakeholders.
In addition the Company will
present results directly to Investors and provide opportunities for
questions at the AGM
|
4. Take
into account wider stakeholder interests, including social and
environmental responsibilities, and their implications for long
term success.
|
Long-term success relies upon good
relations with a range of different stakeholder groups.
The board should periodically
identify the company's key stakeholders - for example suppliers,
customers, employees, communities, regulators, or others. The Board
should understand their needs, interests and
expectations.
|
The executive maintained
communications with trade and interest groups working in the
markets where its products are sold and applied.
A number of mechanisms are in
place to solicit feedback from shareholders including the website
and face to face meetings as well as the AGM
|
Feedback is an essential part of
all control mechanisms. Systems need to be in place to solicit,
consider and act on feedback from all shareholders.
The Company should devote
particular attention to its workforce and ensure that its practices
towards it's employees (direct and indirect) are consistent with
the Company's values. Arrangements should be in place to enable
employees to raise concerns in confidence and processes to ensure
that such matters are considered and where appropriate actions are
taken.
|
Going forward, much of the Group's
business will be involved in decarbonisation of public, commercial
and private buildings.
The Company has a whistleblowing
policy in place which is given to all new employees. This provides
a confidential mechanism for employees to raise
concerns.
|
|
The governance and appropriate
oversight of a Company's approach towards relevant environmental
and social issues is a responsibility of the Board. Matters that
relate to the Company's impact on society, the communities within
which it operates, or the environment - including those relating to
or stemming from climate change - have potential to affect the
Company's ability to deliver shareholder value over the medium to
long term. These matters must be integrated into the Company's
strategy, risk management and business model.
|
The business model is focussed on
decarbonisation of buildings in the public, commercial and private
sector, together with energy efficiency.
The culture of the business
reinforces social and environmental responsibility.
|
5. Embed effective risk management, internal controls and
assurance activities, considering both opportunities and threats,
throughout the organisation.
|
The board needs to ensure that the
company's risk management framework identifies and addresses all
relevant risks in order to execute and deliver on its stated
purpose and strategy. Companies need to consider not only the
enterprise view but also their extended business, including the
company's entire supply chain, other material third parties
(including suppliers of outsourced services) and any reliance on
strategic partners.
|
Risk management on pages 5 to 7 of
our Annual Report and Accounts details the risks to the business
and how these are mitigated.
|
Setting strategy includes
determining the extent of exposure to the identified principal
risks that the Company is able to bear and willing to take (risk
tolerance and
risk appetite). The Company should
ensure that a balanced view of risk is achieve, and, as well as
threats should consider opportunities and the potential for value
creation.
|
The Board considers risks to the
business at its monthly meetings and reviews the principal risks to
the business and the risk register quarterly.
|
The Board should ensure that all
potential risks are considered, on a proportionate and material
basis, including those relating to climate change.
|
Risks are reviewed in the business
monthly and quarterly by the Board.
|
The Board should review and
consider whether the Company's enterprise wide controls are
sufficiently robust to manage the identified risks
adequately.
|
The enterprise-wide controls have
been reviewed post the balance sheet date and a new FPPP (Financial
Position and Prospects Procedures) is in place.
|
To achieve effective risk
management, the Board, and in particular the audit committee, must
ensure that there are appropriate assurance activities in
operation. This may be based on access to internal resources, or
particularly in specialist or technical areas, the utilisation of
external experts.
|
All Board members are entitled to
engage external experts as part of their roles where they see
fit.
|
|
It is important to ensure that the
Company auditor is and is seen to be sufficiently independent of
management.
|
The Company's auditor
Haysmacintyre is independent of management.
|
6. Establish and maintain the Board as a well-functioning,
balanced team, led by the Chair.
|
The board members have a
collective responsibility and legal obligation to promote the
interests of the Company and are collectively responsible for
defining corporate governance arrangements. The Board should not be
dominated by one person or a group of people, and each Director
must be able to commit the time necessary to fulfil their role.
Ultimate responsibility for the quality and effectiveness of the
Board lies with the Chair.
|
All members of the Board are
experts in their fields with no one individual dominating. All
Directors are seasoned Board members and understand the
responsibilities of being a company Director.
|
Shareholders should be given the
opportunity to vote annually on the (re-) election of all
individual Directors to the Board.
|
The shareholders have the
opportunity annually at the AGM to vote for the (re-)election of
all the Directors
|
In order to uphold the quality of
Board independence, the Board should be comprised of an appropriate
balance between executive and non-executive Directors. The
independent non-executive Directors should comprise at lease half
of the Board. The Chair, if independent upon appointment and still
considered independent can be included in this calculation.
However, as a minimum there should be at least two non-executive
Directors whom the Board considers to be independent.
|
The new Board comprises 2
executive Directors and 2 non-executive Directors.
|
|
Key committees, in particular the
audit committee, should comprise at least a majority of independent
NEDs and ideally aim for full independence. The Company should
consider whether it is appropriate to have a senior independent
Director.
|
Both the audit and remuneration
committees comprise non-executive Directors only, with Linda Main
being the Senior Independent Director.
|
|
Boards should be sensitive to both
real and perceived impediments to independence. Consideration
should be given to those factors which may impede independence
which include length of Board tenure, size of shareholding, prior
and/or current commercial or contractual relationships with the
Company; prior and/or current commercial or contractual
relationships with executive Directors; and significant pay
arrangements beyond a Director's fee.
|
The Board is relatively newly
constituted.
Any related parties are excluded
from Board discussions concerning their interests to maintain
independence.
Directors' remuneration is set by
the remuneration committee which comprises 2 independent
non-executive Directors.
|
7. Maintain
appropriate governance structures and ensure that individually and
collectively the Directors have the necessary up-to-date
experience, skills and capabilities.
|
The Company should maintain
governance structures and processes in line with its corporate
culture and appropriate to its:
• size and complexity;
and
• capacity, appetite and
tolerance for risk.
|
The Corporate Governance report on
pages 10 to 16 details the Company's governance structures and why
they are appropriate and suitable for the Company.
|
The governance structures
processes and policies should evolve in parallel with its size,
strategy and business model to reflect its maturity and stage of
development.
The Board should be supported by
committees - typically at least an audit, remuneration and
nominations committee - that also have the necessary skills and
knowledge to discharge their duties and responsibilities
effectively.
|
The Board has a formal schedule of
matters reserved for the Board and is supported by the audit and
remuneration committees. Due to the size of the Company, the Board
has decided that issues concerning the nomination of Directors will
be dealt with directly by the Board but will reconsider on a
regular basis whether a nominations committee is needed.
The audit and remuneration
committees have specific terms of reference under which they
operate.
|
The Board should ensure it has the
necessary skills and experience to fulfil its governance
responsibilities, including among other things with respect to
cyber security, emerging technologies, and relevant sustainability
matters such as climate change. The Board should consider any need
to establish further dedicated sub-committees and, where
appropriate, seek input from external advisors on such
matters.
|
The Directors have a proven track
record of previously serving on Boards. Where an expert view is
needed the Board will seek input from external advisors
|
|
All Directors should continually
update their skills and knowledge. As the Company and the external
environment evolves, the mix of skills and experience required on
the Board will change. The Board should consider its training and
development needs in this context, plan ahead and structure such
provision accordingly
|
Further information about the
Board's skillset, including each Director's biography is set out on
the Company website and additional information is set out on page 8
in this report.
|
|
The Board (and any committees)
should be provided with high quality information in a timely manner
to facilitate the proper assessment of the matter requiring
decision or insight. The Board should consider this and the design
and implementation of its decision making processes to ensure they
are effective.
|
Through the FPPP process a new
Board pack has been developed and this will continue to evolve as
the business grows.
|
8. Evaluate board performance based on clear and relevant
objectives, seeking continuous
improvement.
|
The Board should regularly review
its performance as a unit, as well as that of its committees and
the individual Directors.
|
The Board is new, a performance
evaluation process will be developed.
|
The Board performance review
should be carried out on an annual basis and include opportunities
for improvement with respect to the performance of the Chair, and
the operation of the Board and its committees. The review should
identify development or mentoring needs of individual Directors
and/or the senior management team.
The annual review can be carried
out internally and should, ideally, be supplemented periodically by
an external independent third-party review.
It is healthy for membership of
the Board to be periodically refreshed. No member of the Board
should become indispensable.
Succession planning for both
executives and non-executives is a vital task for Boards. This
should extend to contingency planning for the absence of key staff.
There should be a robust process for the orderly appointment of new
Directors to the Board and senior management positions.
Consideration should be given to establishing a nominations
committee to help with the process and ensure a diverse pipeline -
both internally and externally - for succession. The skills,
experience, capabilities and background required for Directors and
senior management to support the next stage of the Company's
development should be identified and factored into succession
planning.
|
The annual review process will be
implemented post RTO, together with succession planning.
|
9.
Establish a remuneration policy
which is supportive of long-term value creation and the Company's
purpose and culture
|
It is the Boards responsibility to
establish an effective remuneration policy which is aligned with
the Company's purpose, strategy and culture, as well as its stage
of development.
|
A remuneration committee has been
established comprising 2 independent non-executive Directors. One
of the first objectives is to design and implement a remuneration
policy for the Board.
|
A remuneration policy should
motivate management and promote the long-term growth of shareholder
value. Remuneration practices across the Company, in particular for
senior management, should support and reinforce the desired
corporate culture and promote the right behaviours and
decisions.
|
The remuneration policy will
include long term incentive schemes to promote long term growth of
shareholder value.
|
|
Pay structures for senior
management should be simple and easy for participants to understand
and foster alignment with shareholders through the building and the
holding of a meaningful shareholding in the Company
|
The remuneration policy will
include share options and a Save-As-You-Earn scheme for wider
participation in shareholding across the Group.
|
|
The remuneration committee should,
as necessary, consult with other Board committees in order to set
appropriate incentive targets and to appraise performance in
respect of those targets.
|
The remuneration committee will
consult with the audit committee and the Board, as appropriate,
when developing the remuneration policy.
|
|
The annual remuneration report
should be put to an advisory shareholder vote. Where not mandated
to be put to a binding vote, remuneration policies should at least
be put to an advisory vote. Given the significance and dilutive
impact of such plans, new (or significant amendments to existing)
share schemes or long term incentive plans should be put to
shareholder vote.
|
The Chair of the remuneration
committee will consult with major shareholders on the design of
incentives.
Whilst this will not be binding,
it will give shareholders the opportunity for input.
|
10. Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders.
|
A healthy dialogue should exist
between the Board and all of its stakeholders, including
shareholders, to enable all interested parties to come to informed
decisions about the company.
|
The Company encourages two-way
communication with its investors and responds quickly to all
queries received.
The Board recognises the AGM as an
important opportunity to meet private shareholders. The Directors
are available to listen to the views of shareholders informally
immediately following the AGM.
|
Appropriate communication and
reporting structure should exist between the Board and all
constituent parts of its shareholder base. This will assist:
the communication of shareholders'
views to the board; and
the shareholders' understanding of
the unique circumstances and constraints faced by the
company.
|
The Chair is responsible for
ensuring appropriate communication and reporting to
shareholders.
A range of corporate information
(including Company announcements, historical annual reports and
other governance related material) is also available on the
Company's website.
|
It should be clear where these
communication practices are described (annual report or
website).
|
The Company will disclose outcomes
of all votes at shareholder meetings in a clear and transparent
manner by releasing a market announcement and by including it on
the Company website.
|
AUDIT COMMITTEE REPORT
The Audit Committee helps the
Board discharge its responsibilities regarding financial reporting,
external and internal audits and controls as well as reviewing the
Group's annual and half-year financial statements, other financial
information and internal Group reporting.
This includes:
•
considering whether the Company has followed appropriate accounting
standards and, where necessary, made appropriate estimates and
judgments taking into account the views of the external
auditors;
•
reviewing the clarity of disclosures in the financial statements
and considering whether the disclosures made are set properly in
context;
•
where the audit committee is not satisfied with any aspect of the
proposed financial reporting of the Company, reporting its view to
the Board of Directors;
•
reviewing material information presented with the financial
statements and corporate governance statements relating to the
audit and to risk management; and
•
reviewing the adequacy and effectiveness of the Company's internal
financial controls and, review the Company's internal control and
risk management systems and, except where dealt with by the Board,
review and approve the statements included in the annual report in
relation to internal control and the management of risk.
The Audit Committee assists by
reviewing and monitoring the extent of non-audit work undertaken by
external auditors, advising on the appointment of external auditors
and reviewing the effectiveness of the Group's internal audit
activities, internal controls and risk management systems. The
ultimate responsibility for reviewing and approving the Annual
Report and financial statements and the half-yearly reports remains
with the Board.
For the year under review, there
were no non-audit services rendered to the Group and the Company.
The audit committee considered the nature and scope of engagement
and remuneration paid were such that the independence and
objectivity of the auditors were not impaired. Fees paid for audit
services are provided in Note 6.
Significant reporting issues
considered during the year included the following:
Going concern
The Committee considered the Going
Concern basis on which the accounts have been prepared and can
refer shareholders to the Group's accounting policy set out in
Note 2.4. The directors
are satisfied that the going concern basis is appropriate for the
preparation of the financial statements, albeit that
the directors have concluded that a material
uncertainty exists as to the Company's ability to continue as a
going concern beyond the AIM Rule 15 timetable, as the successful
completion of any Reverse Takeover target cannot be assured at this
time.
Linda Main
Chair - Audit committee
31 May 2024
DIRECTORS' REMUNERATION REPORT
This report sets out the
remuneration policy operated by the Company in respect of the
Chair, 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 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. There is no formal requirement for
Directors to own shares in the Group.
The Remuneration Committee is
comprised of independent Non-Executive Directors, and is appointed
by the Board. The Remuneration Committee has terms of reference
approved by the Board, which sets out a framework for determining
the remuneration of the Company's Executive Chairman, Executive
Directors including pension rights and compensation payments. The
remuneration of Non-Executive Directors is a matter reserved for
the Board. No Director or senior manager shall be involved in any
decisions as to their own remuneration. The Remuneration Committee
recommends and monitors the level and structure of remuneration for
senior management.
The Remuneration Committee has
regard to the following factors when determining
remuneration:
· The
pay and employment conditions across the Company and/or the Group
when setting remuneration policy for Directors, especially when
determining salary increases.
· The
Company's appetite for risk and long term strategic
goals.
· Remuneration in other companies of comparable
scale
The Remuneration Committee sets
appropriate Directors' compensation to reward long term
success:
· A
significant proportion of Executive Directors' remuneration should
be structured to link rewards to corporate and individual
performance and be designed to promote the long-term success of the
Company. The Remuneration Committee approves the design of, and
determines targets for, any performance related pay schemes
operated by the Company and approves any payments made under such
schemes.
The Remuneration Committee has
regard to the following factors when reviewing
remuneration:
· The
Remuneration Committee reviews the performance of share incentive
plans and discretionary bonus schemes. Each year the Remuneration
Committee determines whether awards will be made, and if so, the
overall amount of such awards, the individual awards to Executive
Directors and other senior management and the performance targets
to be used.
· The
Remuneration Committee periodically reviews the ongoing
appropriateness and relevance of the remuneration
policy.
Directors' remuneration
The normal remuneration
arrangements for Executive Directors consist of base salary,
performance bonuses and other benefits as determined by the
Board. The Company currently has two
Executive Directors, who have service agreements that can be
terminated at any time by either party giving to the other six
months' written notice.
The remuneration package for an
Executive Director is detailed below:
•
Base Salary:
Annual review of the base salary
of the Executive Director considering the Executive Director's
role, responsibilities and contribution to the Group
performance.
•
Performance
Bonus:
During FY23, bonus arrangements
were discretionary and payable depending on the performance of the
Executive Director in meeting key performance indicators and
in the wider context with the performance of the Group.
As part of the Executive
Director's service agreement, there was a formula for discretionary
bonus based on sales contracts. Any bonus payment to the Executive
was discretionary and did not form part of the Executive's
contractual remuneration. The bonus formula was as
follows:
a) a 5% commission on sales of
solar panels to customers introduced by the Executive at a sales
price of €1.05/watt or above, once the Executive has introduced
sales that would, but for this provision, have generated a
commission equal to the Executive's annual salary
(£150,000),
b) a 1% commission on sales of
solar panels of 10-20MW that are realised by the Group in any year
(not limited to those introduced by the Executive) at a sales price
of €1.05/watt or above; and
c) a 2% commission on sales of
solar panels of in excess of 20MW that are realised by the Group in
any year (not limited to those introduced by the Executive) at a
sales price of €1.05/watt or above.
No bonuses were paid in relation
to the reporting period Going forward the new remuneration
committee will be establishing a performance bonus scheme with
relevant targets.
•
Benefits:
Benefits include Company pension
contributions of 5%, health insurance, and life
insurance
•
Longer term
incentives:
In order to incentivise the
Directors and employees, and align their interests with
shareholders, the Company granted share options in previous years
though no further share options were granted in the current year.
The share options will vest at various future dates as described in
Note 24 to the financial statements. In addition to service
conditions, the vesting of the share options granted to the
previous Executive Director and the Chair were subject to an
earnings before interest, tax, depreciation and amortisation
(EBITDA) performance condition. Following a review at the period
end, it has been determined that it is not likely that any of the
performance related conditions will be met.
Going forward, the Remuneration
Committee are working on a new Long Term Incentive Plan.
Non-Executive Directors are
remunerated solely in the form of Directors' fees and pension
contributions.
At the last Annual General Meeting
held on 25th July 2023, there was an ordinary resolution for
shareholders to cast an advisory vote on the directors'
remuneration for the year ended December 2022, as set out in the
Directors' Remuneration Report included in the 2022 Annual Report
and Accounts. There were 73,972,137 votes cast in favour, and
2,122,433 against. The resolution was duly passed with 97.21% in
favour.
Re-election of Directors
All Directors stand for
re-election on an annual basis and all Directors are aware of the
need to maintain their independence and to demonstrate their
continued commitment to the role. Succession planning is limited
due to the current size of the Board.
The remuneration of the Directors
in EARNZ plc who held office during the years to 31 December 2023
and 2022 were as follows:
The emoluments of the Directors
were as follows (Audited):
|
|
|
|
|
|
Year
ended 31 December 2023
|
Year
ended 31 December 2022
|
Salary
& Directors' fees
|
Pension
Contributions
|
Share-based payment
|
Total
|
Total
|
£
|
£
|
£
|
£
|
£
|
|
Executive directors
|
Robert Richards
|
150,000
|
-
|
-
|
150,000
|
236,715
|
|
Non-executive directors
|
The Rt Hon. Lord David Willetts FRS
|
25,000
|
-
|
-
|
25,000
|
73,330
|
George Katzaros
|
12,500
|
-
|
-
|
12,500
|
25,000
|
Gavin Mayhew
|
-
|
-
|
-
|
-
|
30,000
|
|
|
|
|
|
|
Total
|
187,500
|
-
|
-
|
187,500
|
365,045
|
|
|
|
|
|
| |
In previous years, between 2018
and 2021, 4,500,000 share options had been issued to Lord Willetts,
and 14,000,000 share options had been issued to Robert Richards.
15,800,000 of these options had performance conditions attached to
them. At the year end, following a review of these performance
conditions, it was assessed that none of these options would vest.
There is a credit to the income statement in the year of £154,001
in respect of amounts previously recognized for these options.
Therefore at the period end, there are 1,500,000 vested share
options held by The Rt Hon. Lord David
Willetts FRS and 1,200,000 vested share options held by Robert
Richards: details are shown in Note 24. No options were
exercised in the year. At 31 December 2023 the directors held
2,700,000 options, all of which had vested.
Linda Main
Chair - Remuneration committee
31 May 2024
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.
Environment
EARNZ Plc
is sensitive to the environment in which it operates. Previously
the Group established well defined operating guidelines with some
of the manufacturing partners where it sought their compliance with
ISO14001 (a recognized standard for Environmental Management
Systems) when relevant, to ensure certain environmental standards
are complied with. Going forward the Company will be operating in
the energy services sector, and as such will be instrumental in
assisting with the delivery of de-carbonisation across the public
and private sector.
Human Rights
EARNZ plc is committed to socially and morally responsible research,
development and manufacturing processes for the benefit of all
stakeholders. The activities of the Company are in line with
applicable laws on human rights.
Employees
Employees are key to achieving the
business objectives of the Company. The Board's priority is
to provide a working environment in which our employees can develop
to achieve their full potential and have opportunities for both
professional and personal development. We aim to invest time and
resource to support, engage and motivate our employees to feel
valued, to be able to develop rewarding careers and want to stay
with us. The Company embraces employee participation in issue
raising and resolution through regular meetings with managers and
values contributions from all levels regardless of their position
in the business.
Shareholders
The Board of Directors actively
encourages communication and they seek to protect the interest of
shareholders at all times. The Company updates shareholders
regularly through regulatory news, financial reports and research
notes. The Company also engages directly with investors at our
General Meetings or investor events.
Health and Safety
Company and Group activities are
carried out in accordance with its health and safety policy which
adheres to all applicable laws. Health and
Safety procedures were reviewed by an external organization in
Italy during the year.
DIRECTORS' REPORT
The Directors present their report
and the audited financial statements for EARNZ plc ("EARNZ" or the
"Company") for the year ended 31 December 2023.
The preparation of financial
statements is in compliance with UK adopted International
Accounting Standards and the Companies Act 2006. The Group
financial statements comprise of the financial information of the
parent Company and its subsidiaries (together the "Group"). The
parent Company's financial statements present information about the
Company as a separate entity and not about its Group.
Principal activities
EARNZ 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 the payment of a
final dividend for the year (2022: £nil).
Directors and directors' interests
The directors who held office
during the year or subsequently were as follows:
The Rt Hon. Lord David Willetts
FRS
|
Resigned 29 February
2024
|
George Francis Katzaros
|
Resigned 29 February
2024
|
Gavin Mayhew
|
Resigned 2 January 2024
|
Robert Richards
|
Resigned 29 February
2024
|
Bob Holt
|
Appointed 29 February
2024
|
John Charlton
|
Appointed 29 February
2024
|
Elizabeth Lake
|
Appointed 13 March 2024
|
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' interests
The Directors held the following
beneficial interests in the shares of Verditek plc at
31st December 2023:
|
Note
|
Ordinary
shares
|
Issued
share capital %
|
of
£0.0004 each
|
George Katzaros
|
1.1
|
26,166,675
|
5.90%
|
Gavin Mayhew
|
1.2
|
47,157,381
|
10.63%
|
Robert Richards
|
|
2,437,833
|
0.55%
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
1.1 Shares held by George
Katzaros
|
|
|
|
- Direct
|
|
9,000,000
|
|
- through Blueview Business Ltd
|
|
10,550,000
|
|
- through MF Ltd
|
|
5,900,000
|
|
- Subtotal
|
|
25,450,000
|
|
- Family member
|
|
26,166,675
|
|
1.2 Shares held by Gavin
Mayhew
|
|
|
|
- through Vidacos Nominees
Limited
- through Platform Securities
Nominees Limited
|
|
46,457,381
700,000
|
|
|
|
47,157,381
|
|
At the reporting date, the new
Board of Directors have bought ordinary shares in the Company as
follows:
|
Note
|
Ordinary
shares
|
Issued
share capital %
|
of £0.04
each
|
Robert Holt
|
|
4,666,666
|
7.42%
|
John Charlton
|
|
333,333
|
0.53%
|
Elizabeth Lake
|
|
1,333,333
|
2.12%
|
|
|
|
|
Through family holdings, Bob Holt
has interest in a further 133,333 shares bringing his total
interest to 7.63%, and John Charlton has interest in a further
1,333 shares with his total interest remaining at 0.53%.
Directors' indemnities
The Company has taken out
Directors' and Officers' indemnity insurance for the benefit of its
Directors.
Events after the reporting date
See Note 28 of the
accounts.
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
Following the Disposal, the
Company has ceased to own, control, or conduct all or substantially
all its previous trading business, activities and assets and, on 1
March 2024, became an AIM Rule 15 cash shell.
As such, the Company is required
to make an acquisition or acquisitions which constitute a reverse
takeover under AIM Rule 14 ("Reverse Takeover") or
be re-admitted to trading on AIM as an investing company
(which requires, inter alia, the raising of at least £6.0
million) under the AIM Rules, within the date falling six months
from 1 March 2024.
If the Company does not complete a
Reverse Takeover in accordance with AIM Rule 14, or otherwise if
re-admitted to trading on AIM as an investing company fails to
implement its investing policy to the satisfaction of the London
Stock Exchange within twelve months of becoming an investing
company, the London Stock Exchange will suspend trading in the
Company's AIM securities pursuant to AIM Rule 40.
Accordingly, the Company will
evaluate opportunities in the energy services sector, seeking to
identify one or more companies, which would constitute a Reverse
Takeover under AIM Rule 14.
Following the Board changes in
March and May 2024, the monthly cost of maintaining the Company has
reduced.
The Directors have a clear
strategy to identify Reverse Takeover targets and have a number of
opportunities in the pipeline. The Directors believe that the cash
resources of the Company are sufficient to cover the costs of a
Reverse Takeover.
As the successful completion of
any Reverse Takeover target cannot be assured at this time, the
directors have concluded that a material uncertainty exists as to
the Company's ability to continue as a going concern beyond the AIM
Rule 15 timetable. This uncertainty arises primarily because should
the Company's shares be suspended from trading on AIM on 1
September 2024 or its listing is subsequently cancelled, the
Directors believe that the Company's ability to raise finance for
the longer term would be significantly impaired.
Notwithstanding the above, as at
the date of approval of the financial statements, the base case
cash flow forecast indicated that no additional cash resources will
be required over the course of the next 12 months. The directors
therefore consider the Group and the Company to be a going concern
and have therefore prepared these financial statements on the going
concern basis.
Substantial shareholdings:
The Company has been advised of
the following interests in more than 3% of its ordinary share
capital as at 31 December 2023:
Shareholder
|
|
No. of Shares (nominal value
£0.0004)
|
%
|
Hargreaves Lansdown (Nominees)
Limited
|
|
119,002,785
|
21.5%
|
Peel Hunt Partnership
Limited
|
|
90,587,529
|
16.3%
|
Vidacos Nominees
Limited
|
|
69,982,734
|
12.6%
|
Pershing Nominees
Limited
|
|
49,305,888
|
8.9%
|
Interactive Investor Services
Nominees Limited
|
|
31,781,855
|
5.7%
|
HSDL Nominees Limited
|
|
23,629,821
|
4.3%
|
The Bank Of New York (Nominees)
Limited
|
|
20,470,495
|
3.7%
|
Platform Securities Nominees
Limited
|
|
18,331,941
|
3.3%
|
At the signing date the Company
had been advised of the following interests in more than 3% of its
ordinary share capital:
Shareholder
|
|
No. of Shares (nominal value
£0.004)
|
%
|
Gresham House
|
|
6,287,982
|
10.00%
|
G Force Capital
|
|
5,700,000
|
9.06%
|
Bob Holt (Executive
Chair)
|
|
4,799,999
|
7.63%
|
Oakglen Wealth Limited
|
|
3,666,666
|
5.83%
|
Pentwater Capital Management
Europe LLP
|
|
2,466,666
|
3.93%
|
Trium Capital
|
|
2,000,000
|
3.18%
|
First Equity Limited
|
|
2,000,000
|
3.18%
|
Statement of Disclosure to the Auditors
The Directors of the Company at
the date of approval of this report confirm that:
· As
far as each director is aware, there is no relevant audit
information of which the Company's and the Group's auditor is
unaware; and
· each
Director has taken all reasonable steps that they ought to have
taken as a Director to make themselves aware of any relevant
information and to establish that the Company's and the Group's
auditor is aware of that information.
Auditors appointment
Haysmacintyre LLP has been
appointed as auditor, and a resolution to re-appoint them will be
proposed at the annual general meeting.
By order of the Board
John Charlton
Executive Director
31 May 2024
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for
preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors
to prepare Group and Company financial statements for each
financial year. Under that law the Directors have elected to
prepare the Group consolidated financial statements in accordance
with UK adopted International Accounting Standards (UK IAS) and
elected to prepare the parent company financial statements under
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable laws including FRS 101
Reduced Disclosure Framework).
Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and the Company and of the profit or loss of the Group for
that period.
In preparing each of the Group and
Company financial statements, the Directors are required
to:
•
Select suitable accounting policies and then
apply them consistently;
•
Make judgments and estimates that are reasonable
and prudent;
•
State whether they have been prepared in
accordance with UK-adopted International Accounting Standards
(IASs) and International Financial Reporting Standards (IFRSs) have
been followed, subject to any material departures disclosed and
explained;
•
Prepare the Strategic Report and Directors'
report which comply with the requirements of the Companies Act
2006; and
•
Prepare the financial statements on the going
concern basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The Directors are responsible for
keeping adequate accounting records that are sufficient to show and
explain the Group and the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group
and the Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also
generally responsible for taking such steps as are reasonably open
to them to safeguard the assets of the group and to prevent and
detect fraud and other irregularities.
The Directors are responsible for
the maintenance and integrity of the corporate and financial
information included on the Company's website. Information
published on the website is accessible in many countries and
legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
The Directors consider that the
annual report and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's position and performance,
business model and strategy. Each of the directors confirms that,
to the best of their knowledge:
The Group financial statements,
which have been prepared in accordance with UK IAS and Companies
Act 2006, give a true and fair view of the assets, liabilities,
financial position and profit of the Group; and the Annual Report
includes a fair review of the development and performance of the
business and the position of the Group, together with a description
of the principal risks and uncertainties that it faces.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EARNZ
PLC
Qualified opinion
We have audited the financial
statements of EARNZ plc (the 'parent company') and its subsidiaries
(the 'Group') for the year ended 31 December 2023 which comprise
the Consolidated Statement of Comprehensive Income, the
Consolidated and Company Statement of Financial Position, the
Consolidated and 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 their preparation is applicable law and UK adopted
international accounting standards. 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, except for the
possible effects of the matter described in the basis for qualified
opinion section of our report, 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 2023 and of the group's loss for the period then
ended;
• the Group financial statements
and Parent Company financial statements have been properly prepared
in accordance with UK adopted international accounting standards
and United Kingdom Accounting Standards FRS 101 respectively;
and
• have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for qualified opinion
We were not appointed as auditor
of the parent company until after 31 December 2023 and thus did not
observe the counting of physical inventories at the end of the
year. We were unable to satisfy ourselves by alternative means
concerning the inventory quantities held at 31 December 2023, which
are included in the balance sheet at £560,038, by using other audit
procedures. Consequently, we were unable to determine whether any
adjustment to this amount was necessary. In addition, were any
material adjustment to the inventory balance to be required, the
strategic report would also need to be amended.
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 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 qualified
opinion.
Material uncertainty related to going
concern
We draw attention to Note 2.4 in
the financial statements, which indicates that following the post
balance sheet disposal of the trading subsidiary, a material
uncertainty exists regarding the successful completion of any
reverse takeover within the AIM Rule 15 timetable required for
going concern. As stated in Note 2.4, these events or conditions,
along with other matters as set forth in Note 2.4, indicate that a
material uncertainty exists that may cast significant doubt on the
company's ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors'
assessment of the Group and Parent Company's ability to continue to
adopt the going concern basis of accounting included the following
procedures:
· Obtaining and reviewing the directors' going concern
assessment which included a working capital forecast for a period
spanning at least 12 months from the date of approval of the
financial statements;
· We
reviewed the cash balance as at the date of approval to ensure this
was sufficiently in line with the working capital forecast prepared
for the going concern assessment;
· We
ensured that the working capital forecast prepared was
arithmetically correct;
· We
evaluated judgements made by the directors in determining that a
material uncertainty existed to ensure that these were reasonable,
this included engaging in discussions with the directors regarding
their assessment;
· We
agreed significant expected cash outflows in the working capital
forecast to supporting documentation to ensure these were based on
accurate information;
· We
ensured that reasonable sensitivity analysis applied to the working
capital forecast did not results in a reasonably plausible
alternative scenario whereby the Group would not be considered a
going concern.
Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
An overview of the scope of our audit
The Group comprises a parent
holding company, one trading subsidiary and a number of dormant
entities. The scope of our work was the audit of the financial
statements of the Group and its trading subsidiary being the only
material components of the Group with the Parent company being
audited for statutory purposes. The trading subsidiary Verditek
Solar S.r.l. was not subject to statutory audit however, in forming
an opinion on the Group we have performed audit procedures on
Verditek Solar S.r.l. that are comparable to that of a full
statutory audit.
As the subsidiary was based in
Italy, we have engaged with local component auditors to complete
our planned audit procedures and we have subsequently reviewed
these and engaged in discussions with the component auditors to
ensure we have sufficient audit evidence to be able to form an
opinion on the Group.
The scope of the audit and our
audit strategy was developed by using our audit planning process to
obtain and update our understanding of the Group and its
environment, including the Group's system of internal control, and
assessing the risks of material misstatement at the group level.
Audit work to respond to the assessed risks was performed directly
by the audit engagement team who performed full scope audit
procedures on the parent company and the Group as a
whole.
Key audit matters
Key audit matters are those
matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the
current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
In addition to the matter
described in the basis for qualified opinion section and in
addition to the material uncertainty in relation to going concern
section above, we have determined the matters described below to be
the key audit matters to be communicated in our report.
Key Audit Matter
|
How our scope addressed this matter
|
Fraud in revenue recognition
The Group has one revenue stream.
Details of the accounting policies applied are given in note
2.15.
We consider there to be a
significant risk of misstatement of the financial statements
related to transactions occurring close to the year end, as
transactions could be recorded in the incorrect financial period
(cut off), and also in relation to the occurrence of the revenue
recognised.
Management make judgements in
relation to revenue recognition for the sale of solar panels under
IFRS 15. These include determining EARNZ's performance obligations
in its contracts with customers and whether as at the reporting
date, the group has completed its performance
obligations.
|
In order to address the risks
associated with the revenue our audit procedures consisted of but
were not limited to:
· assessing whether revenue had been recognised in accordance
with the Group's accounting policy and IFRS 15
requirements;
· considering if revenue was recognised appropriately based on
whether the Group had completed its performance obligations under
the contract prior to the reporting date by reference to its
obligations stated in the customer contracts; and
· reviewing any other terms within the contracts had
considering any material accounting or disclosure
implications.
We also performed a cash to
revenue reconciliation, tested a sample of sales orders raised one
month either side of the year-end and obtained and critically
evaluated management's revenue recognition policy and whether this
was in line with IFRS 15.
|
Inventory
There is a risk in relation to
inventory existence, valuation and cut off. Inventory is a material
component of the balance sheet and by its nature is susceptible to
misstatement. The inventory obsolescence provision is a key area of
judgement and there is a risk that the inventory provision is not
sufficient to cover any obsolete stock held at the
year-end.
|
In order to address the risks
associated with inventory our audit procedures consisted of but
were not limited to:
· We
selected a sample of inventory to ensure they are valued at the
lower of cost and NRV. We also reviewed estimation techniques used
in the valuation, including review of overhead
absorption.
· We
obtained a list of obsolete/slow-moving stock and considered if a
provision is required.
· For
cut off we obtained support for a sample of December 23 and January
24 warehouse movements and agreed to support, including delivery
notes and invoices, to verify if the Company recorded them
correctly based on applicable incoterms.
· We
confirmed that there were no credit notes issued post year-end
relating to the stock sold.
· We
reviewed the capitalisation of employee time for internal staff and
external contractors. We agreed a sample of capitalised time back
to timesheet data and independently assessed whether sufficient
economic benefits were likely to flow from the projects to support
the values capitalised.
· We
were unable to attend the year end inventory count as mentioned in
the basis for qualified opinion section of our audit
report
|
Our application of materiality
The scope and focus of our audit
were influenced by our risk assessment and application of
materiality. We define materiality as the magnitude of misstatement
that could reasonably be expected to influence the economic
decisions of the users of the financial statements. We use
materiality to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and on the financial
statements as a whole.
Materiality for the financial
statements as a whole was set at £66,000, determined by reference
to 5% of normalised loss before tax (loss before tax excluding
impairment of an asset relating to an earn out). We have reported
to the audit committee any corrected or uncorrected misstatements
arising exceeding £3,000. Performance materiality was set at
£43,000, being 65% of materiality.
Component materiality for the
parent company and subsidiaries was set at £49,000, with reference
to a benchmark of Group materiality.
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.
As described in the basis for
qualified opinion section of our report, we were unable to satisfy
ourselves concerning the inventory quantities of £560,038 held at
31 December 2023. We have concluded that where the other
information refers to the inventory balance or related balances
such as cost of sales, it may be materially misstated for the same
reason.
Opinions on other matters prescribed by the Companies Act
2006
Except for the possible effects of
the matter described in the basis for qualified opinion section of
our report, 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.
Matters on which we are required to report by
exception
In the light of the knowledge and
understanding of the Group and the 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.
Arising solely from the limitation
on the scope of our work relating to inventory, referred to
above:
• we have not obtained all the
information and explanations that we considered necessary for the
purpose of our audit; and
• we were unable to determine
whether adequate accounting records have been kept.
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:
• or returns adequate for our
audit have not been received from branches not visited by us;
or
• the parent company financial
statements are not in agreement with the accounting records and
returns; or
• certain disclosures of
directors' remuneration specified by law are not made
Responsibilities of directors
As explained more fully in the
directors' responsibilities statement set out on page 27, the
directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial
statements, the directors are responsible for assessing the group's
and the parent company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud,
are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities,
including fraud is detailed below:
Explanation as to what extent the audit was considered
capable of detecting irregularities, including
fraud.
Based on our understanding of the
company and industry, we identified that the principal risks of
non-compliance with laws and regulations related to regulatory
requirements for the business and trade regulations, and we
considered the extent to which non-compliance might have a material
effect on the financial statements. We also considered those laws
and regulations that have a direct impact on the preparation of the
financial statements such as the Companies Act 2006, income tax,
payroll tax and sales tax.
We evaluated management's
incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls)
and determined that the principal risks were related to
posting inappropriate journal entries to revenue and management
bias in accounting estimates. Audit procedures performed by the
engagement team included:
− Inspecting correspondence with
regulators and tax authorities;
− Discussions with management
including consideration of known or suspected instances of
non-compliance with laws and regulation and
fraud;
− Evaluating management's controls
designed to prevent and detect
irregularities;
− Identifying and testing
journals, in particular journal entries which shared key
risk characteristics; and
- Challenging assumptions and
judgements made by management in their critical accounting
estimates
Because of the inherent
limitations of an audit, there is a risk that we will not detect
all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law
or regulation is removed from the events and transactions reflected
in the financial statements, as we will be less likely to become
aware of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our
responsibilities for the audit of the financial statements is
located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Use of our report
This report is made solely to the
company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the 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.
Jonathan Maddison
(Senior Statutory
Auditor)
10
Queen Street Place
For and on behalf of Haysmacintyre
LLP
London
Statutory
Auditors
EC4R 1AG
31 May 2024
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
|
|
Year
ended
|
Year
ended
|
|
|
31 December
2023
|
31 December
2022
|
|
|
|
Restated*
|
|
Notes
|
£
|
£
|
|
|
|
|
Revenue
|
4
|
606,260
|
417,457
|
Direct costs
|
|
(864,071)
|
(670,547)
|
Administrative expenses
|
|
(1,216,529)
|
(1,610,791)
|
Operating loss
|
6
|
(1,474,340)
|
(1,863,881)
|
Other (expense) /
income
|
5
|
(556,783)
|
91,933
|
Finance income
|
|
3,722
|
2,084
|
Finance costs
|
8
|
(61,578)
|
(73,604)
|
Loss before tax
|
|
(2,088,979)
|
(1,843,468)
|
|
|
|
|
Income Tax
|
9
|
-
|
21,901
|
|
|
|
|
Loss for the period
|
|
(2,088,979)
|
(1,821,567)
|
|
|
|
|
Other comprehensive income
|
|
|
|
Items that will or may be
reclassified to profit or loss:
|
|
|
|
Translation of foreign
operations
|
|
(17,137)
|
43,333
|
Total comprehensive loss for the period
|
|
(2,106,116)
|
(1,778,234)
|
|
|
|
|
Loss for the period attributable to:
|
|
|
|
Owners of the parent
Company
|
|
(2,088,979)
|
(1,821,567)
|
|
|
|
|
|
|
(2,088,979)
|
(1,821,567)
|
|
|
|
|
Total comprehensive loss for the period attributable
to:
|
|
|
|
Owners of the parent
Company
|
|
(2,106,116)
|
(1,778,234)
|
|
|
|
|
|
|
(2,106,116)
|
(1,778,234)
|
|
|
|
|
Loss per ordinary share - basic
and diluted (p)
|
10
|
(0.5)
|
(0.5)
|
*See Note 27 for details of the
restatement.
The accompanying notes are an
integral part of these financial statements.
All amounts are derived from
continuing operations.
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
|
|
At 31 December
2023
|
At 31 December
2022
|
At 1 January
2022
|
|
|
|
Restated*
|
Restated*
|
|
Notes
|
£
|
£
|
£
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Investments
|
|
-
|
-
|
990,000
|
Other receivables
|
12
|
-
|
556,783
|
-
|
Property, plant and
equipment
|
13
|
97,513
|
195,470
|
300,082
|
Right of use asset
|
15
|
306,085
|
48,902
|
142,391
|
Total non-current assets
|
|
403,598
|
801,155
|
1,432,473
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
16
|
419,020
|
534,959
|
657,151
|
Trade and other
receivables
|
17
|
170,458
|
148,593
|
392,193
|
Cash and cash
equivalents
|
18
|
53,918
|
842,632
|
237,613
|
Total current assets
|
|
643,396
|
1,526,184
|
1,286,957
|
|
|
|
|
|
TOTAL ASSETS
|
|
1,046,994
|
2,327,339
|
2,719,430
|
|
|
|
|
|
Equity and liability
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Loans and borrowings
|
20
|
522,587
|
-
|
277,080
|
Lease liabilities
|
22
|
93,756
|
-
|
90,687
|
Total non-current liabilities
|
|
616,343
|
-
|
367,767
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other
payables
|
19
|
283,742
|
289,995
|
411,213
|
Loans and borrowings
|
20
|
-
|
310,306
|
-
|
Provisions
|
21
|
30,212
|
-
|
-
|
Lease liabilities
|
22
|
214,467
|
29,682
|
69,737
|
Total current liabilities
|
|
528,421
|
629,983
|
480,950
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
1,144,764
|
629,983
|
848,717
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
23
|
221,860
|
177,417
|
136,883
|
Share premium
|
23
|
12,626,283
|
12,205,726
|
10,761,055
|
Share-based payment
reserve
|
24
|
178,796
|
332,806
|
213,134
|
Accumulated losses
|
|
(13,115,733)
|
(11,026,754)
|
(9,205,187)
|
Foreign exchange
reserve
|
25
|
(8,976)
|
8,161
|
(35,172)
|
Equity attributable to equity holders of the
parent
|
|
(97,770)
|
1,697,356
|
1,870,713
|
Non-controlling
interests*
|
27
|
-
|
-
|
-
|
Total shareholder's equity
|
|
(97,770)
|
1,697,356
|
1,870,713
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES
|
|
1,046,994
|
2,327,339
|
2,719,430
|
*See Note 27 for details of the
restatement.
These financial statements were
approved and authorised for issue by the Board of directors
on 31 May 2024 and were signed on its behalf by:
John Charlton
Executive Director
Company Registration Number: 10114644
The accompanying notes are an
integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Issued Share
capital
|
Share
Premium
|
Share-based payment
reserve
|
Accumulated
losses
|
Foreign Exchange
reserve
|
Non-Controlling
interests
|
Total
|
|
£
|
£
|
|
£
|
£
|
£
|
£
|
Balance as previously stated as at 1-Jan-22
|
136,883
|
10,761,055
|
213,134
|
(9,098,300)
|
(35,172)
|
(106,887)
|
1,870,713
|
Prior year adjustment*
|
-
|
-
|
-
|
(106,887)
|
-
|
106,887
|
-
|
Balance as at 1-Jan-22 Restated*
|
136,883
|
10,761,055
|
213,134
|
(9,205,187)
|
(35,172)
|
-
|
1,870,713
|
Loss for the year
|
-
|
-
|
-
|
(1,821,567)
|
-
|
-
|
(1,821,567)
|
Translation of foreign
subsidiary
|
-
|
-
|
-
|
-
|
43,333
|
-
|
43,333
|
Total comprehensive loss
|
-
|
-
|
-
|
(1,821,567)
|
43,333
|
-
|
(1,778,234)
|
Issue of shares net of
expenses
|
40,534
|
1,444,671
|
-
|
-
|
-
|
-
|
1,485,205
|
Share-based payment
|
-
|
-
|
119,672
|
-
|
-
|
-
|
119,672
|
Balance as previously stated as at
31-Dec-22
|
177,417
|
12,205,726
|
332,806
|
(10,971,011)
|
6,245
|
(106,887)
|
1,644,296
|
Net prior year adjustment impact
on retained earnings for 2022
|
-
|
-
|
-
|
(55,743)
|
1,916
|
106,887
|
53,060
|
Balance as at 31-Dec-22
Restated*
|
177,417
|
12,205,726
|
332,806
|
(11,026,754)
|
8,161
|
-
|
1,697,356
|
Loss for the year
|
-
|
-
|
-
|
(2,088,979)
|
-
|
-
|
(2,088,979)
|
Translation of foreign
subsidiary
|
-
|
-
|
-
|
-
|
(17,137)
|
-
|
(17,137)
|
Total comprehensive loss
|
-
|
-
|
-
|
(2,088,979)
|
(17,137)
|
-
|
(2,106,116)
|
Issue of shares net of
expenses
|
44,443
|
420,557
|
-
|
-
|
-
|
-
|
465,000
|
Share-based payment
|
|
|
(154,010)
|
-
|
-
|
-
|
(154,010)
|
Balance as at 31-Dec-23
|
221,860
|
12,626,283
|
178,796
|
(13,115,733)
|
(8,976)
|
-
|
(97,770)
|
*See Note 27 for details of the
restatement.
The accompanying notes are an
integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH
FLOWS
|
|
Year ended
|
Year ended
|
|
|
31 December
2023
|
31 December
2022
|
|
|
|
Restated*
|
|
|
£
|
£
|
Cash flows from operating activities
|
|
|
|
Loss before tax
|
(2,088,979)
|
(1,843,468)
|
Adjustments for:
|
|
|
|
Finance costs
|
61,578
|
73,604
|
|
Finance income
|
(3,722)
|
(2,084)
|
|
Impairment of ICSI
receivable
|
556,783
|
125,486
|
|
Depreciation and
amortisation
|
223,340
|
195,555
|
|
Loss on disposal of
assets
|
50,167
|
501
|
|
Share-based payment
|
(154,010)
|
119,672
|
|
Remeasurement of assets
|
-
|
(78,323)
|
|
(1,354,843)
|
(1,409,057)
|
Working capital adjustments
|
|
|
|
(Increase) / Decrease in
inventory
|
115,939
|
122,192
|
|
(Increase) / Decrease in trade and
other receivables
|
(24,884)
|
160,251
|
|
Increase / (Decrease) in trade and
other payables
|
8,091
|
(97,847)
|
Cash used in operations
|
(1,255,697)
|
(1,224,461)
|
|
Taxation
|
-
|
145,142
|
Net cash outflow from operating activities
|
(1,255,697)
|
(1,079,319)
|
Investing activities
|
|
|
|
Sale consideration received
(ICSI)
|
-
|
307,731
|
|
Purchase of property, plant and
equipment
|
(2,039)
|
(19,540)
|
Net cash outflow from investing activities
|
(2,039)
|
288,191
|
Financing activities
|
|
|
|
Proceeds from issue of ordinary
share capital (net of expenses)
|
-
|
1,485,205
|
|
Issue of new shares (net of
expenses)
|
465,000
|
-
|
|
Loan interest paid
|
(15,229)
|
(22,210)
|
|
Interest received
|
3,722
|
2,084
|
|
Proceeds from loans
|
500,000
|
-
|
|
Repayments of loans [(Refer note
20)]
|
(324,858)
|
-
|
|
Payments of lease
liabilities
|
(163,217)
|
(70,936)
|
Net cash inflows from financing activities
|
465,418
|
1,394,143
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents
|
(792,318)
|
603,015
|
Cash and cash equivalents at the
beginning of the year
|
842,056
|
237,613
|
Exchange gains/(losses) on cash
and cash equivalents
|
4,180
|
2,004
|
Cash and cash equivalents at the end of the
year
|
53,918
|
842,632
|
The accompanying notes are an
integral part of these financial statements.
*See Note 27 for details of the
restatement.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. Corporate information
EARNZ Plc ("EARNZ", "Company") is
a public limited company incorporated, registered and domiciled in
England and Wales (registration number 10114644), whose shares are
quoted on the AIM on the London Stock Exchange. Its registered
office is located at First Floor, Holborn
Gate, 330 Holborn, London WC1V 7QT.
EARNZ is the holding company of a
group of companies that were engaged in the clean technology sector
during this reporting period. On 1 March 2024,
the Company had disposed of its operating business and became an
AIM Rule 15 cash shell pursuant to the AIM Rules.
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
2023. The parent Company financial statements present information
about the Company as a separate entity and not about its
Group.
The comparative financial
information is for the year ended 31 December 2022.
2. Accounting policies
The principal accounting policies
applied in the preparation of the consolidated financial statements
are set out below. These policies have been consistently applied to
all periods presented, unless otherwise stated.
2.1. Basis of
preparation
The financial statements have been
prepared in accordance with UK adopted International Financial
Reporting Standards (UK IFRS) and those part of the Companies Act
2006 applicable to companies reporting under IFRS. IFRS consists of
standards issued by the International Accounting Standards Board
(IASB) and the interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC) as adopted by
the UK.
The financial statements have been
prepared on the historical cost basis except for certain assets
which are stated at their fair value.
The consolidated financial
statements are presented in GBP, which is also the Company's
functional currency.
2.2. Basis of
consolidation
The financial information
consolidates the financial statements of EARNZ 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.
2.3. Changes in accounting policies
and disclosures:
2.3.1. New standards, interpretations and amendments
adopted in these financial statements:
The Group has applied the
following standards and amendments for the first time for its
annual reporting period commencing 1 January 2023:
· Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2);
· Definition of Accounting Estimates (Amendments to IAS 8);
and
· Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
· IAS
1 Presentation of Financial Statements (Amendment - Classification
of Liabilities as Current or Non-current)
The amendments listed above did
not have any impact on the amounts recognised in prior periods and
do not significantly affect the current or future
periods.
2.3.2 Standards, amendments and interpretations to
existing standards that are not yet effective and have not been
early adopted by the Company in the 31 December 2023 financial
statements:
Certain new accounting standards
and interpretations have been published that are not mandatory for
31 December 2023 reporting periods and have not been early adopted
by the Group.
Effective from 1 January
2024:
· IFRS
16 Leases (Amendment - Liability in a Sale and Leaseback). In
September 2022, the IASB finalised narrow-scope amendments to the
requirements for sale and leaseback transactions in IFRS 16 Leases
which explain how an entity accounts for a sale and leaseback after
the date of the transaction.
· IAS
1 Presentation of Financial Statements (Amendment - Non-current
Liabilities with Covenants) Amendments made to IAS 1 Presentation
of Financial Statements in 2020 and 2022 clarified that liabilities
are classified as either current or non-current, depending on the
rights that exist at the end of the reporting period.
Classification is unaffected by the entity's expectations or events
after the reporting date.
In June 2023, the International
Sustainability Standards Board (ISSB) issued its first two
standards which are effective from 1 January 2024.
· IFRS
S1 General requirements for disclosure of sustainability-related
financial information. This standard includes the core framework
for the disclosure of material information about
sustainability-related risks and opportunities across an entity's
value chain.
· IFRS
S2: Climate-related disclosures. This is the first thematic
standard issued that sets out requirements for entities to disclose
information about climate-related risks and
opportunities.
Effective from 1 January
2025:
· Amendments to IAS 21 to clarify the accounting when there is
a lack of exchangeability on foreign currency.
The Group will continue to assess
any impact on the Group from the adoption of these amendments. It
is not anticipated that any of these will have a material impact on
the Group's financial statements.
2.4. Going concern
Following the Disposal, the
Company has ceased to own, control, or conduct all or substantially
all its previous trading business, activities and assets and, on 1
March 2024, became an AIM Rule 15 cash shell.
As such, the Company is required
to make an acquisition or acquisitions which constitute a reverse
takeover under AIM Rule 14 ("Reverse Takeover") or
be re-admitted to trading on AIM as an investing company
(which requires, inter alia, the raising of at least £6.0
million) under the AIM Rules, on or before the date falling six
months from 1 March 2024.
If the Company does not complete a
Reverse Takeover in accordance with AIM Rule 14, or otherwise if
re-admitted to trading on AIM as an investing company fails to
implement its investing policy to the satisfaction of the London
Stock Exchange within twelve months of becoming an investing
company, the London Stock Exchange will suspend trading in the
Company's AIM securities pursuant to AIM Rule 40.
Accordingly, the Company will
evaluate opportunities in the energy services sector, seeking to
identify one or more companies which the Company can acquire, which
would constitute a Reverse Takeover under AIM Rule 14.
Following the Board changes in
March and May 2024, the monthly cost of maintaining the Company has
reduced.
The directors have a clear
strategy to identify Reverse Takeover targets and have a number of
opportunities in the pipeline. The cash resources of the Company
are sufficient to cover the costs of a Reverse Takeover.
As the successful completion of
any Reverse Takeover target cannot be assured at this time, the
directors have concluded that a material uncertainty exists as to
the Company's ability to continue as a going concern beyond the AIM
Rule 15 timetable. This uncertainty arises primarily because should
the Company's shares be suspended from trading on AIM or its
listing is cancelled, the Company's ability to raise finance for
the longer term would be significantly impaired.
Notwithstanding the above, as at
the date of approval of the financial statements, the base case
cash flow forecast indicated that no additional cash resources will
be required over the course of the next 12 months. The directors
therefore consider the Group and the Company to be a going concern
and have therefore prepared these financial statements on the going
concern basis.
Management has successfully raised
money in the past, but there is no guarantee that adequate funds
will be available when needed in the future.
2.5. Foreign currency
The Group's consolidated financial
statements are presented in Sterling. The functional currencies of
the Group's subsidiaries include the Euro and the US dollar. For
each entity, the Group determines the functional currency and items
included in the financial statements of each entity are measured
using that functional currency.
The assets and liabilities of
foreign operations are translated into sterling at the rate of
exchange ruling at the reporting date. Income and expenses are
translated at weighted average exchange rates for the period. The
exchange differences arising on translation for consolidation are
recognized in Other Comprehensive Income.
2.6. Operating
segments
Operating segments are reported in
a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision maker
has been identified as the management team including the two main
directors and two non-executive directors.
The Board considers that the
Group's activity constitutes one operating and one reporting
segment, as defined under IFRS 8. Management reviews the
performance of the Company by reference to total results against
budget.
The total profit measures are
operating profit and profit for the period, both disclosed on the
face of the income statement. No differences exist between the
basis of preparation of the performance measures used by management
and the figures in the Group's financial information.
2.7. Share-based
payments
The Group has issued share options
to one Non-Executive Director and one Executive Director, in return
for which the Group receives services from the Non-Executive
Director. The fair value of the services received in exchange for
the grant of the options is recognised as an expense. The Group
valued the options at the grant date using the Black Scholes
valuation model to establish the relevant fair values.
The total amount to be expensed is
determined by reference to the fair value of the options granted
but excluding the impact of any service or non-market performance
vesting conditions (for example the requirement of the grantee to
remain an employee of the Group).
Non-market vesting conditions are
included in the assumptions regarding the number of options that
are expected to vest. The total expense is recognised over the
vesting period. At the end of each period the Group revises its
estimates of the number of options expected to vest based on the
non-market vesting conditions. It recognises the impact of any
revision in the income statement with a corresponding adjustment to
equity.
2.8
Deferred
taxation
Deferred tax assets and
liabilities are recognised where the carrying amount of an asset or
liability in the statement of financial position differs from its
tax base, except for differences arising on:
· the
initial recognition of goodwill;
· the
initial recognition of an asset or liability in a transaction which
is not a business combination and at the time of the transaction
affects neither accounting or taxable profit; and
· investments in subsidiaries where the Group is able to
control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets
is restricted to those instances where it is probable that taxable
profit will be available against which the difference can be
utilised.
The amount of the asset or
liability is determined using tax rates that have been enacted or
substantially enacted by the balance sheet date and are expected to
apply when the deferred tax liabilities or assets are settled or
recovered. Deferred tax balances are not discounted.
Deferred tax assets and
liabilities are offset when the Group has a legally enforceable
right to offset current tax assets and liabilities.
2.8. Property, plant and
equipment
Property, plant and equipment is
stated at historic cost, including expenditure that is directly
attributable to the acquired item, less accumulated depreciation
and impairment losses.
Depreciation is provided to write
off cost, less estimated residual values, of all property, plant
and equipment, evenly over their expected useful lives, when the
asset is available for use, and calculated at the following
rates:
Leasehold
improvements
- straight line over 5
years
Plant and
machinery
- straight line over 7-10
years
Computer
equipment
- straight line over 3
years
The carrying value of the
property, plant and equipment is compared to the higher of value in
use and the fair value less costs to sell. If the carrying value
exceeds the higher of the value in use and fair value less the
costs to sell the asset, then the asset is impaired, and its value
reduced by recognising an impairment provision.
2.9. Leased asset
At the lease commencement date,
the Group recognises a right-of-use asset and a lease liability,
which comprises of the building, except for short-term leases that
have a lease term of 12 months or less and leases of low-value
assets, which are expensed to the profit & loss over the
expense term.
The right-of-use asset is
initially recognised at cost, which comprises the initial amount of
the lease liability plus any lease payments made at or before the
commencement date, plus any initial direct costs incurred, plus any
costs associated with restoring the asset to its original
condition, less any lease incentive received. The right-of-use
asset is subsequently stated at cost less accumulated depreciation
and impairment losses.
Lease payments included in the
measurement of the lease liability comprise the
following:
· fixed payments, including in-substance fixed
payments;
· variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date.
The lease liability is measured at
amortised cost using the effective interest method. The liability
recognised at inception of the lease comprises the present value of
future payments payable under the lease contract, discounted at the
rate implicit in the lease. If there is no discount rate implicit
in the lease, then the incremental rate of borrowing is used. The
liability is remeasured when there is a change in future lease
payments arising from a change in an index or rate, or there is a
change in the Group's estimate of the amount expected to be payable
under a residual value guarantee, or there is a change arising from
the reassessment of whether the Group will be reasonably certain to
exercise a purchase, extension or termination option. When the
lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset
or is recorded in profit or loss if the carrying amount has been
reduced to zero.
2.10. Financial Instruments
The Group classifies a financial
instrument, or its component parts, as a financial asset, a
financial liability, or an equity instrument in accordance with the
substance of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity
instrument.
A financial instrument is any
contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another
entity.
2.10.1. Financial
assets
Financial assets are classified,
at initial recognition, as subsequently measured at amortised cost,
fair value through other comprehensive income ("FVOCI"), and
investments in particular at fair value through profit or loss
("FVTPL"),
The classification of financial
assets at initial recognition depends on the financial asset's
contractual cash flow characteristics and the Group's business
model for managing them, with the exception of trade receivables
that do not contain a significant financing component or for which
the Group has applied the practical expedient, the Group initially
measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss,
transaction costs. Trade receivables that do not contain a
significant financing component or for which the Group has applied
the practical expedient are measured at the transaction price
determined under IFRS 15.
The Group's business model for
managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model
determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets, or
both.
Financial assets at amortised cost
are subsequently measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses are recognised in
profit or loss when the asset is de-recognised, modified, or
impaired.
The Group's financial assets at
amortised cost includes trade receivables and loans to related
parties, are included under other current financial assets. In the
periods presented the Group does not have any financial assets
categorised as FVOCI.
Financial assets are de-recognised
when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the
risks and rewards are transferred.
2.10.2. 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 instruments are assessed at inception to identify
and any component equity features, such as embedded derivatives,
that need to be separated.
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. Equity instruments are
recognized at inception at fair value, with a corresponding
reduction in the associated liability. The Group has not designated
any financial liability as at fair value through profit or loss.
The Group has identified an embedded derivative in its convertible
loan note instrument, but has determined that the value is not
material enough to require separation. The judgement of this is
described in more detail in Note 2.18.2.
Loans after initial recognition,
interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are de-recognised
as well as through the EIR amortisation process.
Amortised cost is calculated by
considering any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortisation is
included as finance costs in the statement of profit or loss. This
category generally applies to interest-bearing loans and
borrowings.
A financial liability is
de-recognised when the obligation under the liability is
discharged, cancelled, or expires.
2.10.3.
Impairment
The Group assesses all other
current receivables on a forward-looking basis, with expected
credit losses (ECL) associated with debt instruments measured at
amortised cost. These are deemed short term (i.e., less than 12
months) and apply the Group policy for credit rating and risk
management policies in place.
The impairment stages are defined
as:
Stage 1 - When a receivable is
recognised, ECLs resulting from default events that are possible
within the next 12 months are expensed to the statement of
comprehensive income (12-month ECL) and a loss allowance is
established. On subsequent reporting dates, the 12-month ECL also
applies to existing receivables with no significant increase in
credit risk since their initial recognition. In determining whether
a significant increase in credit risk has occurred since initial
recognition, the Company assesses the change, if any, in the risk
of default over the expected life of the receivable (that is, the
change in the probability of default, as opposed to the amount of
ECLs).
Stage 2 - If the receivables
credit risk has increased significantly since initial recognition
and is not considered low, lifetime ECLs are recognised.
Stage 3 - If the receivables
credit risk increases to the point where it is considered
credit-impaired, lifetime ECLs are recognised, as in Stage
2.
The impairment methodology applied
for the Group is stage 1, which requires 12-month expected credit
losses to be recognised until a change in credit risk occurs, in
which case stage 2 would apply.
2.11. Inventories
Inventories are valued at the
lower of cost and net realisable value.
Costs incurred in bringing each
product to its present location and condition are accounted for, as
follows:
· Raw
materials: purchase cost on a first-in/first-out basis;
· Finished goods and work in progress: cost of direct materials
and labour and a proportion of manufacturing overheads based on the
normal operating capacity but excluding borrowing costs.
Net realisable value is the
estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to
make the sale
2.12. Cash and cash equivalents
Cash and cash equivalents include
cash in hand and deposits held on call, together with other short
term highly liquid investments which are not subject to significant
changes in value and have original maturities of less than three
months.
2.13. Fair Value measurement
Where financial and non-financial
assets and liabilities are measured at fair value, the Group use
appropriate valuation techniques for which sufficient data are
available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Fair value is categorised into
different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follow:
· Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1
that are observable for the assets or liability, either directly
(eg; as prices) or indirectly (eg; derived from prices);
· Level 3: input for the assets or liability that are based on
observable market data (unobservable input).
The Group recognise transfer
between level of fair value hierarchy at the end of the reporting
period during which the changes have occurred.
The carrying amount of cash and
cash equivalents, receivables, trade payable, accruals and other
current liabilities in the Group consolidated statement of
financial position approximates their fair value because of short
maturities of these instruments.
2.14. Warranty provision
A warranty provision is recognised
where there is a probable obligation to rectify problems with goods
sold. The calculation of the warranty provision is based on
historical warranty claim data. Provisions for cash outflows in
excess of one year are determined by discounting expected future
cashflows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to
the liability. The unwinding of discount is recognised as a finance
cost. Warranty provisions are a management estimate, please see
note 2.18.1. for information about how the provision was calculated
in the year.
2.15.
Revenue
recognition
Revenue is generated from the
manufacture and supply of lightweight solar panels. The Group
recognises revenue when (or as) a performance obligation in the
customer contract is satisfied. Performance obligations relevant to the customer contract are
to manufacture goods in accordance with the specification in the
customer order form and any other regulatory or statutory
requirements. The performance obligations are satisfied at the
point in time when the goods are deemed to be delivered. Under the
customer contract, goods are determined to be delivered Ex Works
(at the factory address) under International Chamber of Commerce
Incoterms. This means that once the customer is provided a shipping
document which indicates that the goods are ready and available for
collection from the factory, obligations of the contract have been
performed and risk transfers to the customer. Revenue is
measured as the fair value of the consideration received or
receivable and represents amounts receivable for services provided
in the normal course of business, net of discounts and
sales-related taxes.
Customers are billed in advance of
the delivery of goods, with 30 days terms. Upon receipt of an
advanced payment a contract liability is recognized. The contract
liability is released at the point in time goods are
delivered. Under the Group's standard terms and conditions
there is a product warranty for ongoing acceptable function of the
goods for a period of 10 years, effective from the point of
installation, or 3 months after delivery, whichever is
earlier. This warranty is not sold as a separate component.
This length of warranty is standard in the industry. This is not a
separate service and is deemed an "assurance" type warranty under
IFRS 15 guidance; and is therefore accounted for separately under
IAS 37 instead. See note 2.14 for information about how a warranty
provision is recognized and measured.
2.16. Research and Development
costs
Expenditure on research activities
is recognised in profit or loss as incurred. Development
expenditure is capitalised only if the expenditure can be measured
reliably, the product or process is technically and commercially
feasible, future economic benefits are probable, and the Group
intends to and has sufficient resources to complete development and
to use or sell the asset. Otherwise, it is recognised in profit or
loss as incurred. Amortisation on development costs commences once
the asset under development is available for use or sale.
Subsequent to initial recognition, development expenditure is
measured at cost less accumulated amortisation and any accumulated
impairment losses.
2.17. Grant income
Government grants that are
receivable as compensation for expenses or losses already incurred
or for the purpose of giving immediate financial support to the
Group with no future related costs are recognised in profit or loss
in the period in which they become receivable. Grants are
recognised in the statement of comprehensive income as other
income.
2.18. 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:
2.18.1. Estimates
Share-based payments
Share options are recognised as an
expense based on their fair value at date of grant. The fair value
of the options is estimated through the use of a valuation model -
which require inputs such as the risk-free interest
rate,
expected dividends, expected
volatility and the expected option life - and is expensed over the
vesting period. Some of the inputs used to calculate the fair value
are not market observable and are based on estimates derived from
available data, such as employee exercise behaviour and employee
turnover (note 24).
Warranty provision
The provision for warranty claims
has been estimated for the year 2023 based on historical data for
warranty replacements since production began in 2020. The majority
of the liability is expected to be settled in the next year, based
on the same data.
Stock valuation
The cost calculation for finished
stock panels includes some absorbed costs for factory staff and
utilities. The calculation of staff cost per panel is a fixed
amount based on what the cost absorption rate is when the factory
is running at full capacity. Stock provisions are recognised where
there is evidence that the cost initially recognised is no longer
recoverable; for finished panels this is either where there the
panel is classed as less than grade A standard following testing,
or where there is a sale of a similar age or specification product
which is lower than the cost value.
2.18.2. Judgements
Other receivables
Other receivables comprise
estimated earn out payments receivable from the sale of the
investment in ICSI - note 12. The estimated earn out payments
are structured over several product development milestones to be
achieved through to 2025. The estimated earn out payments to be
received as at year end are based on this information and includes
management assessment around the achievability of each individual
milestone. At the year end it has been judged that any further earn
out payments are unlikely, and therefore the value of the
receivable has been written down to nil.
Revenue recognition
Revenue is recognised at the point
that the performance obligations are satisfied. This is judged to
be the point when the goods are delivered under the customer
contract. The customer contract specifies that all goods are
delivered "Ex Works" under International
Chamber of Commerce Incoterms, meaning that they are delivered when
available for collection from the factory.
Share-based payments
Management performs an assessment
to determine whether non-market performance conditions of
non-vested share options are likely to be met. As a result, the
calculation of the share-based payment charge is adjusted where it
is deemed that the number of options likely to vest has
changed.
Convertible loan note
Management has assessed that the
convertible loan note instrument, issued during the year, is
classified wholly as a financial liability, although it includes a
conversion feature that qualifies as an embedded derivative.
Management has determined the value of the embedded derivative to
be immaterial, and therefore it has not been separated from the
host contract liability. The reason for this assessment is that the
probability of the conversion feature being exercised was judged to
be very low. The conversion element of the instrument had
been designed as a protection feature for the debt holders, rather
than as a mechanism to gain short-term gains through equity
conversion. The debt holders were long-term investors in the
company, one of which was a director. The loan notes were also
secured against the assets of the Group. The debt holders were
unlikely to exercise in the short term as the share price was
expected to reduce due to liquidity issues. Together this gave a
strong indication that the debt holders were unlikely to convert
their holdings before the term, and therefore the value of the
derivative was assessed to be low.
3. Financial Risk
Management
The Group is exposed to risks that
arise from its use of financial instruments. This note describes
the Group's objectives, policies and processes for managing those
risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these
financial statements.
3.1. Principal financial instruments
and their categories
The principal financial
instruments used by the Group, from which financial instrument risk
arises, are as follows:
Categories of financial assets
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Other receivables
(ICSI)
|
-
|
556,783
|
Cash and cash
equivalents
|
53,918
|
842,632
|
Trade receivables - net of
provision
|
29,999
|
50,911
|
Total current financial assets at amortised
cost
|
83,917
|
1,450,326
|
Categories of financial liabilities
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Trade payables
|
173,040
|
62,976
|
Wages payable
|
19,072
|
29,586
|
Pension payable
|
-
|
175
|
Accruals
|
72,049
|
139,851
|
Trade and other
payables
|
264,161
|
232,588
|
Current loans and
borrowings
|
-
|
310,306
|
Non-current loans and
borrowings
|
522,587
|
-
|
Loans and borrowings
|
522,587
|
310,306
|
Current lease
liabilities
|
214,467
|
29,682
|
Non-current lease
liabilities
|
93,756
|
-
|
Lease liabilities
|
308,223
|
29,682
|
|
|
|
Total financial liabilities at amortised
cost
|
1,094,971
|
572,576
|
3.2. General objectives, policies and
processes
The Board has overall
responsibility for the determination of the Group's risk management
objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group's
finance function. The Board receives monthly reports from the CFO
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The overall objective of the Board
is to set policies that seek to reduce risk as far as possible
without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out
below:
3.2.1. Credit risk
Credit risk refers to the risk
that a counterparty will default on its contractual obligations
resulting in financial loss to the Group. In order to minimise this
risk, the Group endeavours only to deal with companies which are
demonstrably creditworthy.
The aggregate financial exposure
is continuously monitored. The maximum exposure to credit risk is
the value of the outstanding amount of bank balances. The Group's
exposure to credit risk on cash and cash equivalents is considered
low as the bank accounts are with banks with high credit
ratings. The analysis of trade receivables and expected
credit loss allocation is detailed in (note 17).
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 cash
flow projections on a monthly basis as well as information
regarding cash balances.
The following table sets out the
contractual maturities (representing undiscounted contractual
cash-flows, including contractual interest) of financial
liabilities:
31 December 2023
|
Up to 3
Months
|
Between 3 and 12
months
|
Between 1 and 2
years
|
Between 2 and 5
years
|
|
|
|
|
|
Trade payables
|
173,040
|
-
|
-
|
-
|
Wages payable
|
19,072
|
-
|
-
|
-
|
Pension payable
|
-
|
-
|
-
|
-
|
Accruals
|
72,049
|
-
|
-
|
-
|
Lease liability
|
57,209
|
171,626
|
95,348
|
-
|
Non-current loan - interest
bearing
|
-
|
-
|
522,587
|
-
|
Undiscounted financial liabilities at amortised
cost
|
321,370
|
171,626
|
617,935
|
-
|
31 December 2022
|
Up to 3
Months
|
Between 3 and 12
months
|
Between 1 and 2
years
|
Between 2 and 5
years
|
|
|
|
|
|
Trade payables
|
62,976
|
-
|
-
|
-
|
Wages payable
|
29,586
|
-
|
-
|
-
|
Pension payable
|
175
|
-
|
-
|
-
|
Accruals
|
139,851
|
-
|
-
|
-
|
Lease liability
|
19,369
|
11,037
|
-
|
-
|
Current loan - interest
bearing
|
310,306
|
-
|
-
|
-
|
Undiscounted financial liabilities at amortised
cost
|
562,263
|
11,037
|
-
|
-
|
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 interest
rate risk is limited, as its loans and borrowings are a fixed rate
loan. There are no overdraft facilities. At the reporting date
there were corporate bonds with principal of £500,000 which had a
fixed interest rate of 7% (2022: corporate bonds with principal of
£310,306 which had a fixed interest rate of 7%).
3.2.4. Foreign exchange risk
Foreign exchange risk arises when
individual Group entities enter into transactions denominated in a
currency other than their functional currency. The Group's policy
is, where possible, to allow group entities to settle liabilities
denominated in their functional currency with the cash generated
from their own operations in that currency. Where group entities
have liabilities denominated in a currency other than their
functional currency (and have insufficient reserves of that
currency to settle them), cash already denominated in that currency
will, where possible, be transferred from elsewhere within the
Group.
In the current year the Group is
predominantly exposed to currency risk on purchases made in EUR and
USD.
The following table details the
Group's exposure at the end of the year to currency risk arising
from recognised assets or liabilities denominated in a currency
other than the functional currency of the entity to which they
relate. Differences resulting from the translation of the financial
statements of the entity within the Group into the Group's
presentation currency are excluded:
As of 31 December 2023 the Group's
exposure to changes in foreign exchange rate was as
follows:
Forex sensitivity
calculation
|
Effect on net
assets
|
|
Effect on loss before
tax
|
|
USD
|
GBP
|
EUR
|
CAD
|
USD
|
GBP
|
EUR
|
CAD
|
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
1%
|
7
|
2
|
(41)
|
-
|
(7)
|
(2)
|
41
|
-
|
-1%
|
(7)
|
(2)
|
41
|
-
|
7
|
2
|
(41)
|
-
|
As of 31 December 2022, the
Group's exposure to changes in foreign exchange rate was as
follows:
Forex sensitivity
calculation
|
Effect on net
assets
|
|
Effect on loss before
tax
|
|
USD
|
GBP
|
EUR
|
CAD
|
USD
|
GBP
|
EUR
|
CAD
|
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
£
|
1%
|
79
|
(1)
|
(53)
|
-
|
(79)
|
1
|
53
|
-
|
-1%
|
(79)
|
1
|
53
|
-
|
79
|
(1)
|
(53)
|
-
|
4. Revenue and segmental
information
Revenues
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Sale of Goods
|
606,260
|
417,457
|
Total
|
606,260
|
417,457
|
The Group had revenues from
customers in the following countries that were determined to be
material:
Revenues
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Belgium
|
175,856
|
20,661
|
Sweden
|
104,068
|
3,479
|
Czechia
|
79,271
|
610
|
Denmark
|
72,994
|
7,533
|
Germany
|
36,734
|
64,294
|
UK
|
16,876
|
109,467
|
Thailand
|
-
|
101,263
|
Rest of the world
|
120,462
|
110,149
|
|
606,260
|
417,457
|
The Group had 3 customers that
exceeded 10% of revenue in 2023 (2022: 2 customers). All sales
related to the development and commercialisation of clean
technologies operating segment:
Revenues
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Customer 1
|
175,856
|
10,957
|
Customer 2
|
104,068
|
3,479
|
Customer 3
|
78,271
|
610
|
Customer 4
|
-
|
78,107
|
Customer 5
|
-
|
41,018
|
|
359,194
|
134,171
|
Segment information
The chief operating decision maker
has been identified as the management team including the executive
and non-executive directors. The chief operating decision-maker
allocates resources and assesses performance of the business and
other activities at the operating segment level.
The chief operating decision maker
has determined that EARNZ had one operating segment, the
development and commercialisation of clean technologies.
Geographical Segments
Apart from holding company
activities in the UK the Group had operations in Italy in the
period. An analysis of revenue, operating loss and non-current
assets by geographical market is given below:
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
|
Restated*
|
|
£
|
£
|
Revenue
|
|
|
UK
|
-
|
18,661
|
Italy
|
606,260
|
398,796
|
Total revenue
|
606,260
|
417,457
|
|
|
|
Operating loss
|
|
|
UK
|
(729,155)
|
(1,042,666)
|
Italy
|
(745,185)
|
(821,215)
|
Total operating loss
|
(1,474,340)
|
(1,863,881)
|
|
|
|
Non-current assets
|
|
|
UK
|
10,741
|
571,010
|
Italy
|
392,857
|
230,145
|
Total non-current assets
|
403,598
|
801,155
|
*See Note 27 for details of the
restatement.
5. Other (expense)/income
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Fair value decrease through
P&L - ICSI
|
(556,783)
|
(125,486)
|
Grant income
|
-
|
217,419
|
Total other (expense)/income
|
(556,783)
|
91,933
|
Refer to Investments and Other
Receivables Notes 11-12 for further information on the ICSI
revaluation.
6.
Operating
loss
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
|
Restated*
|
|
£
|
£
|
Operating loss is stated after
charging:
|
|
|
|
|
|
Auditors' remuneration:
|
|
|
Audit fees - audit of the company
and its subsidiaries pursuant to legislation
|
73,090
|
48,584
|
Non-audit fees - other assurance
services
|
-
|
800
|
Direct costs - inventory cost of
goods expense
|
582,830
|
253,102
|
Direct costs - inventory write
(back)/down
|
(47,051)
|
167,417
|
Direct costs - other
|
328,293
|
246,213
|
Warranty provision
|
30,313
|
-
|
Depreciation of Property Plant and
Equipment
|
50,207
|
134,692
|
Depreciation of Right of Use
asset
|
173,133
|
60,863
|
Remeasurement of Right of Use
asset
|
-
|
(25,537)
|
Provision against other
receivables
|
70,444
|
(51,144)
|
Short term leases
|
4,824
|
5,688
|
Disposal of assets
|
50,167
|
-
|
Directors' fee and staff costs
(note 7)
|
(35,188)
|
407,901
|
Bad debt
|
16,506
|
70,202
|
Research costs
|
-
|
142,555
|
*See Note 27 for details of the
restatement.
7. Employees and
directors
The average number of employees
(including directors) during the period was made up as
follows:
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
Number
|
Number
|
Directors
|
4
|
4
|
Production
|
6
|
6
|
Administrative
|
1
|
1
|
Total
|
11
|
11
|
The cost of staff and directors
during the period was made up as follows:
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
£
|
£
|
Salaries
|
193,496
|
299,108
|
Directors' fees
|
111,250
|
257,037
|
Share-based payments
|
(154,010)
|
119,672
|
Social security costs
|
11,685
|
41,079
|
Pension costs
|
32,034
|
1,932
|
Total staff cost in the statement of comprehensive
income
|
194,455
|
718,828
|
|
|
|
Consisting of:
|
|
|
Employee costs included in direct
costs
|
233,783
|
179,531
|
Employee costs included in
administrative expenses
|
(39,327)
|
539,297
|
Key management personnel include
both board and non-board members. Key management personnel
compensation is as follows:
Key management personnel compensation
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
£
|
£
|
Salaries
|
23,750
|
102,500
|
Fees
|
183,727
|
288,323
|
Share-based payments
|
(154,010)
|
119,672
|
Social security costs
|
3,446
|
6,964
|
|
56,913
|
517,459
|
Please refer to the Directors'
Remuneration report on pages 19-21.
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Finance expenses
|
|
|
Interest on loans (note
20)
|
31,061
|
23,056
|
Amortisation of bond issue costs
(note 20)
|
16,045
|
34,446
|
Lease interest
|
14,472
|
16,102
|
Total finance expense
|
61,578
|
73,604
|
8. Finance costs
Details of the interest rate on
the loans are shown in note 20.
9. Income
tax
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
£
|
£
|
UK Corporation tax
|
|
|
Tax credit/ (expense)- current
year
|
-
|
-
|
Tax credit/ (expense)- prior
year
|
-
|
21,901
|
Total current tax
|
-
|
21,901
|
|
|
|
Deferred tax
|
|
|
Origination and reversal of timing
differences
|
-
|
-
|
Total tax
credit/(expense)
|
-
|
21,901
|
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
31 December
2023
|
Year ended
31 December
2022
|
|
|
Restated*
|
|
£
|
£
|
Loss on ordinary activities before
income tax
|
(2,088,980)
|
(1,843,468)
|
Standard rate of corporation
tax
|
19.00%
|
19.00%
|
Loss before tax multiplied by the
standard rate of corporation tax
|
(396,906)
|
(350,259)
|
Effects of:
|
|
|
Research and Development tax
credit
|
-
|
21,901
|
Losses utilised against chargeable
gains
|
-
|
-
|
Non-deductible expenses
|
58,989
|
20,183
|
Difference in overseas tax
rates
|
(5,338)
|
(6,768)
|
Capital allowances
|
(171)
|
(3,642)
|
Deferred tax not
recognised
|
343,426
|
340,486
|
Withholding tax
|
-
|
-
|
Tax credit
|
-
|
21,901
|
*See Note 27 for details of the
restatement of prior year result.
The Group has not recognized
deferred tax assets arising from the accumulated tax losses due to
uncertainty of their future recovery. The deferred tax asset not
recognized is £1,864,738 at 31 December 2023 (2022:
£1,515,764).
10.
Loss per share
|
Year ended
|
Year ended
|
|
31 December
2023
|
31 December
2022
|
|
|
Restated*
|
Basic and diluted
|
|
|
Loss for the period and earnings
used in basic & diluted EPS (£)
|
(2,088,979)
|
(1,821,567)
|
Weighted average number of shares
used in basic and diluted EPS
|
428,877,728
|
393,565,703
|
Loss per share:
|
|
|
Basic and diluted
|
(0.5p)
|
(0.5p)
|
*See Note 27 for details of the
restatement of prior year result.
Basic loss per share is calculated
by dividing the loss for the period from continuing operations of
the Group by the weighted average number of ordinary shares in
issue during the period. There were no potentially dilutive
ordinary shares in either period, therefore was no difference
between the basic and diluted loss per share.
11.
Investments
|
Financial assets at fair
value through profit or loss
|
Total
|
|
£
|
£
|
Cost
|
|
|
At 1 January 2022
|
990,000
|
990,000
|
Disposal
|
(990,000)
|
(990,000)
|
At 31 December 2022
|
-
|
-
|
Disposal
|
-
|
-
|
At 31 December 2023
|
-
|
-
|
The Company previously held a
stake in Industrial Climate Solutions
(ICSI), an unlisted company registered in Canada. This was sold
during 2022 for a total consideration comprising cash on completion
of £307,731 and earn out payments payable over 3 years (see note
12).
12. Other
receivables
|
2023
|
2022
|
|
£
|
£
|
Fair value of earn-out from ICSI
sale
|
-
|
556,783
|
Other receivables
|
-
|
556,783
|
The estimated earn out payments
from the ICSI sale are structured over several product development
milestones to be achieved through to 2025. The estimated earn out payments to be received as at year end
are based on management assessment of the achievability of each
individual milestone. At recognition of the receivable this risk
weighted compensation was discounted at an estimated cost of
equity, being 14.2%.
In 2023 management received
information from the ICSI Sellers' Committee that future milestones
are unlikely to be met, so a full impairment of the receivable was
recognized in the period.
13. Property, plant and equipment
|
Plant &
Machinery
|
Computer
equipment
|
Leasehold
Improvements
|
Total
|
|
£
|
£
|
£
|
£
|
Cost
|
|
|
|
|
At 1 January 2022
|
601,933
|
3,972
|
74,923
|
680,828
|
Additions
|
14,312
|
2,708
|
2,520
|
19,540
|
Disposals
|
-
|
(948)
|
-
|
(948)
|
Exchange adjustments
|
32,155
|
-
|
4,015
|
36,170
|
At 31 December 2022
|
648,400
|
5,732
|
81,458
|
735,590
|
Additions
|
1,140
|
899
|
-
|
2,039
|
Disposals
|
(334,886)
|
(1,705)
|
(79,842)
|
(416,433)
|
Exchange adjustments
|
(12,577)
|
10
|
(1,616)
|
(14,183)
|
At 31 December 2023
|
302,077
|
4,936
|
-
|
307,013
|
|
|
|
|
|
Depreciation
|
|
|
|
|
At 1 January 2022
|
359,034
|
3,373
|
18,340
|
380,747
|
Charge for the year
|
104,737
|
358
|
29,596
|
134,691
|
Disposals
|
-
|
(449)
|
-
|
(449)
|
Exchange adjustments
|
23,039
|
-
|
2,092
|
25,131
|
At 31 December 2022
|
486,810
|
3,282
|
50,028
|
540,120
|
Charge for the year
|
46,454
|
1,028
|
2,725
|
50,207
|
Disposals
|
(291,343)
|
(1,704)
|
(76,069)
|
(369,116)
|
Exchange adjustments
|
(35,038)
|
11
|
23,316
|
(11,711)
|
At 31 December 2023
|
206,883
|
2,617
|
-
|
209,500
|
|
|
|
|
|
Net book value
|
|
|
|
|
At 31 December 2022
|
161,590
|
2,450
|
31,430
|
195,470
|
At 31 December 2023
|
95,194
|
2,319
|
-
|
97,513
|
14. Subsidiary undertakings
As at 31 December 2023 the
subsidiaries of the Company, all of which have been included in
these consolidated
financial statements, are as
follows:
Name
|
Country of incorporation
|
Parent
|
Direct or indirect holding
|
Proportion of ownership interest at 31 December
2023
|
Nature of business
|
Verditek Solar S.r.l
|
Italy
|
Verditek plc
|
Direct
|
100%
|
Solar technology
services
|
Verditek USA, Limited
|
USA
|
Verditek plc
|
Direct
|
100%
|
Dormant
|
Verditek Solar Solutions
Limited
|
UK
|
Verditek plc
|
Direct
|
100%
|
Dormant
|
Name
|
Registered address
|
Verditek Solar S.r.l
|
Via dei Martinitt, 3, 20146,
Milan, Italy
|
Verditek USA, Limited
|
Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware 19801
|
Verditek Solar Solutions
Limited
|
First Floor, Holborn Gate,
330 Holborn, London, WC1V 7QT
|
15. Right of use asset
|
Building
|
|
£
|
Cost
|
|
At 1 January 2022
|
323,617
|
Additions
|
-
|
Remeasurement of asset
|
(262,655)
|
Foreign Exchange
|
7,500
|
At 31 December 2022
|
68,462
|
Additions
|
432,120
|
Disposal of asset
|
(67,104)
|
Exchange
|
(1,358)
|
At 31 December 2023
|
432,120
|
|
|
Depreciation
|
|
At 1 January 2022
|
181,226
|
Charge for the year
|
60,863
|
Unwind of discount of lease
deposit (trade and other receivables)
|
7,306
|
Remeasurement of asset
|
(233,356)
|
Foreign Exchange
|
3,521
|
At 31 December 2022
|
19,560
|
Charge for the year
|
173,133
|
Unwind of discount of lease
deposit* (trade and other receivables)
|
1,414
|
Disposal of asset
|
(67,328)
|
Exchange
|
(744)
|
At 31 December 2023
|
126,035
|
|
|
Net book value
|
|
At 31 December 2022
|
48,902
|
At 31 December 2023
|
306,085
|
The right-of-use asset as at 31 December 2023 is the present
value of a lease asset on a factory in Tolmezzo, Italy signed in
May 2023 for 2 years. The rental amount is fixed for the term of
the lease.
*Included within the lease asset
is a deposit of £38,139 payable at inception of the lease. This has
been discounted to reflect the time value of money, and that this
will be repaid at the term of the lease. The discount rate applied
is 7%, being the rate of borrowing of the Company during the year.
The unwind of this discount reduces the right of use asset, and
increases the deposit (held in Trade and other receivables, Note
17).
16. Inventories
|
2023
|
2022
|
|
£
|
£
|
|
|
|
Finished goods (cost)
|
75,849
|
345,032
|
Finished goods (fair value less
costs to sell)
|
207,962
|
-
|
Raw materials
|
135,209
|
189,927
|
Total Inventories
|
419,020
|
534,959
|
During the period
£582,830 inventories relating to revenue were recognized as a cost in
the P&L (2022: £253,102). There was also a release of a
provision against inventories to write-back defective and
slow-moving stock, £47,051 (2022: £167,417), upon sale of old stock
panels.
17. Trade and other receivables
|
2023
|
2022
|
|
|
Restated*
|
|
£
|
£
|
Trade receivables -
gross
|
73,569
|
123,744
|
Less: provision for expected
credit losses
|
(43,570)
|
(72,833)
|
Trade receivables - net
|
29,999
|
50,911
|
Advance to suppliers and
deposits
|
67,094
|
19,503
|
Amounts due from related
parties
|
-
|
100
|
VAT and other taxes
receivable
|
39,449
|
65,543
|
Prepayments
|
33,916
|
12,536
|
Total trade and other receivables
|
170,458
|
148,593
|
*See Note 27 for details of the
restatement of prior year other receivables.
The ageing of trade receivables
and ECL allocation is as follows:
31 December 2023
|
Gross
|
ECL
|
Net
|
|
£
|
£
|
£
|
Not past due and not
impaired
|
-
|
-
|
-
|
Up to 30 days past due
|
14,676
|
-
|
14,676
|
31 to 60 days past due
|
13,176
|
-
|
13,176
|
61 to 90 days past due
|
176
|
-
|
176
|
Over 90 days past due
|
45,541
|
(43,570)
|
1,971
|
Total
|
73,569
|
(43,570)
|
29,999
|
31 December 2022
|
Gross
|
ECL
|
Net
|
|
£
|
£
|
£
|
Not past due and not
impaired
|
829
|
-
|
829
|
Up to 30 days past due
|
-
|
-
|
-
|
31 to 60 days past due
|
3,155
|
-
|
3,155
|
61 to 90 days past due
|
9,829
|
-
|
9,829
|
Over 90 days past due
|
109,931
|
(72,833)
|
37,098
|
Total
|
123,744
|
(72,833)
|
50,911
|
The movement in ECL in the year
was as follows:
|
ECL
|
|
£
|
Cost
|
|
At 1 January 2023
|
72,833
|
Utilised provision
|
(45,534)
|
Additional provision
|
16,506
|
Foreign exchange
|
(55)
|
At 31 December 2023
|
43,750
|
18. Cash and cash equivalents
|
2023
|
2022
|
|
£
|
£
|
Cash at bank and in
hand
|
53,918
|
842,632
|
The fair value of the cash &
cash equivalents is as disclosed above. For the purpose of the cash
flow statement, cash and cash equivalents comprise of the amounts
shown above.
19. Trade and other
payables
|
2023
|
2022
|
|
£
|
£
|
Trade payables
|
173,040
|
62,976
|
Accruals
|
72,049
|
139,851
|
Deferred revenue
|
9,922
|
43,955
|
Wages payable
|
19,072
|
29,586
|
Pension payable
|
-
|
175
|
Other payable
|
166
|
173
|
Financial liabilities at amortised
costs other than loans and borrowings
|
274,249
|
276,716
|
Social security & other taxes
payables
|
9,493
|
13,279
|
Total trade and other payables
|
283,742
|
289,995
|
20. Loans and
borrowings
|
2023
|
2022
|
|
£
|
£
|
Current
|
|
|
Corporate bonds issued to related
party
|
-
|
25,000
|
Corporate bonds (net of bond issue
costs)
|
-
|
285,306
|
Non - current
|
|
|
Convertible loans
|
522,587
|
-
|
Total current and non - current loans and
borrowings
|
522,587
|
310,306
|
On 9 May 2023, the Group raised
£500,000 in secured convertible loan notes and shortly thereafter
repaid the convertible bonds. The convertible loan notes carry a
coupon of 7% per annum which is payable on the redemption date or
earlier if converted. The convertible loan notes are redeemable 2
years from the date of issue and are convertible at the option of
the noteholder into ordinary shares at the lower of 1.0625 pence
per share, or the subscription price per ordinary share of any
fundraising over £250,000 in the 6 months from the issue of the
loan notes. As a result of the equity raise on 1 September 2023,
the conversion price for the secured convertible loan notes has
been adjusted to 0.45 pence per share. At inception an embedded
derivative was identified, although this has not been separated
from the loan liability as it has been determined to be immaterial.
The convertible loans were redeemed post year end as part of the
disposal of Verditek Solar Italy srl.
Alongside the corporate bonds in
prior year, warrants were also issued to Crowd For Angels,
including
- 2,250,000 warrants on 28 May 2021, with a term 36 months
and exercise price 3.1p
- 1,032,530 warrants on 30 July 2021, with a term 36 months
and exercise price 2.75p
The 1,032,530 warrants were
exercised in 2021 and the proceeds repaid part of the Corporate
bond.
The warrants were fair valued
using the Black Scholes model, see note 24 for details, and
recognised as a cost of issue. During the year there was an issue
cost amortisation charge of £16,045 (2022: £33,226) recorded within
finance costs.
Reconciliation of liabilities to cashflows arising from
financing activities
|
01-Jan-23
|
Cash inflow
|
Cash outflow
|
Non-cash
|
Non-cash
|
31-Dec-23
|
|
|
|
|
New lease liability
|
Interest and discount unwind
|
|
|
£
|
£
|
£
|
£
|
£
|
£
|
|
|
|
|
|
|
|
Corporate bonds
|
285,306
|
-
|
(299,858)
|
-
|
14,552
|
-
|
Corporate bonds - related
party
|
25,000
|
-
|
(25,000)
|
-
|
-
|
-
|
Lease liability
|
29,682
|
-
|
(163,217)
|
427,286
|
14,472
|
308,223
|
Convertible loan notes
|
-
|
500,000
|
-
|
-
|
22,587
|
522,587
|
|
339,988
|
500,000
|
(488,075)
|
427,286
|
51,611
|
830,810
|
21. Provisions
|
2023
|
2022
|
|
£
|
£
|
Warranty provision
|
30,212
|
-
|
Total provisions
|
30,212
|
-
|
A warranty provision has been
recognised in the year based on historical panel warranty claim
rates, at 5% of revenue. It is assumed that all of the provision
will be utilized within the next year.
22. Lease
liability
|
2023
|
2022
|
|
£
|
£
|
Current Lease liability
|
214,467
|
29,682
|
Non-Current Lease
liability
|
93,756
|
-
|
Total Current loans and borrowings
|
308,223
|
29,682
|
Maturity analysis of Group's
discounted lease liability:
|
Future minimum lease
payments
|
Interest
|
Discounted lease
liability
|
|
£
|
£
|
£
|
Less than one year
|
228,835
|
(14,368)
|
214,467
|
Between one and five
years
|
95,348
|
(1,592)
|
93,756
|
|
324,183
|
(15,960)
|
308,223
|
The cash outflow on lease
liability payments in the year was £163,217(2022: £70,936). The
interest expense on lease liabilities recognised in the year was
£14,472 (2022: £16,102).
23. Share capital and reserves
|
Number of Shares Par Value
£0.0004
|
Share
capital
|
Share
premium
|
|
|
£
|
£
|
At 1 January 2022
|
342,204,973
|
136,883
|
10,761,055
|
Exercise of shares for cash
|
|
|
|
Shares issued June 2022 at 1.5p per share
|
101,333,333
|
40,534
|
1,479,466
|
Share issue costs
|
|
|
(34,795)
|
|
|
|
|
At 31 December 2022
|
443,538,306
|
177,417
|
12,205,726
|
Exercise of shares for cash
|
|
|
|
Shares issued September 2023 at 0.45p per share
|
111,111,111
|
44,443
|
455,557
|
Share issue costs
|
|
|
(35,000)
|
|
|
|
|
At 31 December 2023
|
554,649,417
|
221,860
|
12,626,283
|
24. Share-based payment reserve
The Company operates an
equity-settled share-based remuneration schemes for Senior
Executives, under the terms of the Company's EMI and Non-Qualifying
Share Option Plan (the "Option Plan"). The options are valid for 10
years from the date of grant. After satisfaction of any performance
condition included in the award the options will become exercisable
in equal tranches on each anniversary of the Grant Date during the
first three years.
The fair value of the employee
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted
including any market performance conditions (for example the
Company's share price) but excluding the impact of any service or
non-market performance vesting conditions (for example the
requirement of the grantee to remain an employee of the
Group).
Non-market vesting conditions are
included in the assumptions regarding the number of options that
are expected to vest. The total expense is recognised over the
vesting period. At the end of each period the Group revises its
estimates of the number of options expected to vest based on the
non-market vesting conditions. It recognises the impact of any
revision in the income statement with a corresponding adjustment to
equity.
The Company uses a Black Scholes
model to estimate the cost of share options. The following
information is relevant in the determination of the fair value of
options granted. The assumptions inherent in the use of this model
are as follows:
• The option life is the estimated
average period over which the options will be exercised.
• For options issued to Rob
Richards and David Willetts in 2021, there is a vesting condition
linked to performance of the company.
• For other options issued in 2021
and earlier, the vesting conditions are 3 years' continued service
with the Group.
• No variables change during the
life of the option (e.g. dividend yield remains zero).
During 2021 there were also
warrants issued to Crowd For Angels, please see note 20 for
details.
The key assumptions used in the
fair value calculation for issues is as follows
Issue date
|
28/05/2021
|
30/07/2021
|
17/09/2021
|
06/04/2020
|
Stock price at grant
date
|
3.1p
|
2.75p
|
3.8p
|
2.0p
|
Volatility
|
107%
|
99%
|
100%
|
73%
|
Time to maturity
(months)
|
36
|
36
|
36
|
60
|
Risk free rate
|
0.08125%
|
0.07400%
|
0.07088%
|
0.6528%
|
The movement in outstanding share
options and warrants are as follows:
|
Number of share
options
|
Number of
warrants
|
Weighted average strike
price
|
Weighted average
term
|
|
|
|
(pence)
|
(years)
|
Opening at 1 January 2023
|
20,000,000
|
2,250,000
|
3.9
|
8.2
|
|
|
|
|
|
Forfeit
|
(16,300,000)
|
-
|
(3.7)
|
(7.4)
|
Exercised
|
-
|
-
|
-
|
-
|
At 31 December 2023
|
3,700,000
|
2,250,000
|
0.2
|
0.8
|
1,500,000 options were granted
under the scheme in April 2018 to Chair, Lord David Willetts, with
an exercise price of 9.0p. During 2020 there were 4,000,000 options
issued to CEO, Rob Richards at an exercise price of 3.0p. During
2021 there were 3,000,000 options issued to Lord David Willetts and
10,000,000 options were issued to Rob Richards at an exercise price
of 3.8p.
At the period end, following an
assessment that it was unlikely that performance conditions would
be met for a portion of the 2020 options and 2021 options issued to
Lord Willetts and Rob Richards, a reversal of previously recognized
share-based payment expense was required, as a credit to the income
statement. At the period end, Rob Richards held 1,200,000 share
options with an exercise price of 3.0p, and David Willetts held
1,500,000 share options with an exercise price of 9.0p.
The share-based payment credit
recognized in the income statement during the period was £154,010
(2022: cost of £119,672).
25. Reserves
The following describes the nature
and purpose of each reserve within equity:
Issued share capital - Amount
subscribed for share capital at nominal value. The company has one
class of shares being Ordinary Shares. Holders of these shares are
entitled to one vote per share at general meetings of the Company,
and are entitled to dividends as declared from time to
time.
Share premium - Amount
subscribed for share capital in excess of nominal value. This
includes share issue costs, which are deducted from share
premium.
Share-based payment reserve -
The share-based payment reserve represents equity settled
share-based employee remuneration until such share options are
exercised.
Foreign exchange reserves - Foreign exchange translation gains and losses on the
translation of the financial statements of subsidiary from the
functional to the presentation currency, and also foreign exchange
on intra-group funding balances.
Accumulated losses - All
other net gains and losses and transactions with owners (e.g.
dividends) not recognised elsewhere.
Non-controlling interests - Represents accumulated profits or losses from subsidiaries
where there is less than a 100% holding.
26. Related Party Transactions
The Group has related party
transactions with related parties who are not members of the
Group.
|
Transactions during the
year
|
Amounts owed by related
parties
|
Amounts owed to related
parties/loans
|
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|
£
|
£
|
£
|
£
|
£
|
£
|
The Rt Hon. Lord David Willetts
FRS1
|
25,000
|
50,000
|
-
|
-
|
-
|
29,167
|
George
Katzaros2
|
12,500
|
25,000
|
-
|
-
|
-
|
14,583
|
Gavin
Mayhew3
|
-
|
31,774
|
-
|
-
|
-
|
60,327
|
Rob
Richards4
|
150,000
|
152,037
|
24,934
|
-
|
-
|
-
|
Fly SolarTech Solutions SRL
sales5
|
41,978
|
32,940
|
2,115
|
43,276
|
-
|
-
|
Fly SolarTech Solutions SRL
purchases5
|
246,574
|
41,867
|
-
|
-
|
29,220
|
25,410
|
Notes:
1 The Rt Hon. Lord David
Willetts FRS
|
Lord David Willetts, Chair of the
Company, was entitled to fees and services of £50,000 during the
period but he waived his fees from July 2023 onwards.
|
2George Katzaros
|
Mr. George Katzaros, a
non-executive director of the Company, was entitled to Directors
fees of £25,000 during the year, but he waived his fees from July
2023 onwards. At the year-end George Katzaros was owed a Directors
fee of £nil. In February 2024 he waived any right to
fees.
|
3Gavin Mayhew
|
Gavin Mayhew, a former director of
the Company, was owed £165,000 corporate bonds with an expiry date
of 28/04/2025 accruing 7% interest, at the year end this amounted
to £172,468.
|
4Rob Richards (appointed
1 June 2020)
|
Robert James Richards, director
during the year was entitled to Directors fees of £150,000. At year
end, he was owed £24,934 of which £22,038 was fees and £2,896
related to expenses.
|
5 Fly SolarTech Solutions SRL
|
Fly SolarTech Solutions SRL is a
company of which a director of Verditek Solar SRL is also a
director and shareholder. Transactions are conducted on an arms
length basis and subject to authorisation by Rob Richards, CEO of
Verditek plc. During the year Verditek entered into a service
agreement with FlySolarTech Solutions resulting in rental payment
and receipt of rental income. At year end, in other debtors a
deposit is recognised of £34,831 (€40,050).
|
Details of the directors'
emoluments, together with the other related information, are set
out in the Directors' Remuneration Report. The Company's
executive and non-executive directors are considered to be key
management personnel for the purposes of this
disclosure.
27. Prior period restatement
During 2023, the Group determined
that the Non-Controlling Interest Reserve recognized at prior
balance sheet dates in connection with BBR Filtration should have
been released to Accumulated losses at 31/12/2021.
On admission to AIM in 2017, the
Company acquired 51% of BBR Filtration Limited (which in turn had a
50.49% holding in BBR Filtration USA LLC), a bio-filtration company
developing a system to remove odours (e.g. hydrogen sulphide) from
wastewater. BBR Filtration Limited remained a 51% owned subsidiary
of the Company but ceased trading during 2019. BBR Filtration
Limited was dissolved in June 2021. Therefore the residual
Non-Controlling Interest Reserve, £106,887, should have been
released to Accumulated losses during the year 2021.
During 2023 it was determined that
a provision against VAT recognized in prior years should have been
partially reversed in the prior year, as there was information
available at the time which suggested that it could be recoverable.
A prior year adjustment has been made as a result of there being an
error identified in the estimate made as at 31 December
2022.
The errors described have been
corrected by restating each of the affected line items for prior
periods. The impact on shareholders' equity and assets is
summarized as follows:
Consolidated statement of financial
position
|
Impact of correction
error
|
|
As previously
reported
|
Adjustment
|
As restated
|
1 January 2022
|
£
|
£
|
£
|
SHAREHOLDERS' EQUITY
|
|
|
|
Accumulated losses
|
(9,098,300)
|
(106,887)
|
(9,205,187)
|
Non-controlling
interests
|
(106,887)
|
106,887
|
-
|
31 December 2022
|
|
|
|
ASSETS
|
|
|
|
Trade and other
receivables
|
95,533
|
53,060
|
148,593
|
SHAREHOLDERS' EQUITY
|
|
|
|
Accumulated losses
|
(10,971,011)
|
(55,743)
|
(11,026,754)
|
Foreign exchange
reserve
|
6,245
|
1,916
|
8,161
|
Non-controlling
interests
|
(106,887)
|
106,887
|
-
|
Consolidated statement of comprehensive
income
|
Impact of correction
error
|
|
As previously
reported
|
Adjustment
|
As restated
|
For the year ended 31 December 2022
|
£
|
£
|
£
|
Administrative expenses
|
(1,661,935)
|
51,144
|
(1,610,791)
|
Loss for the period
|
(1,894,612)
|
51,144
|
(1,843,468)
|
Translation of foreign
operations
|
41,417
|
1,916
|
43,333
|
Comprehensive income
|
(1,831,294)
|
53,060
|
(1,778,234)
|
28. Events after the reporting date
On 27 February 2024 the Company
entered into a loan agreement with Bob Holt, prior to his
appointment as a director of the Company, for up to £300,000, of
which £250,000 was drawn down on 28 February 2024 prior to the
disposal of the Solar Business described below to settle
outstanding liabilities of the Group. The remaining £50k has
subsequently been drawn down. The loan was unsecured and interest
free, convertible in part or in whole at any equity fundraising
undertaken by the Company after the date of the drawdown. The loan
was converted into 4,000,000 ordinary shares on 8 April
2024.
On 28 February 2024, at a general
meeting of the Company, the disposal of Verditek Italy srl and all
related business assets of the Company (collectively, "Solar
Business") to newly incorporated private company, Verditek
Solar
Limited, was approved, in return
for satisfaction of the outstanding secured convertible loan notes
(see Note 20) and accrued interest, £528,340. Verditek Solar
Limited is a company owned by the convertible loan note holders.
The disposal of the Solar Business included:
- All issued share capital in Verditek Solar Italy
srl
- All intellectual property rights associated with the Group's
solar operations
- The Company's interest in an agreement with Net Zero Valley
to develop a solar panel manufacturing plant in Southern
Italy
- The Company's interest in the joint development project with
Paragraf Limited
- Any monies receivable from the earn-out agreement from the
sale of ICSI
The disposal of the Solar Business
completed on 29 February 2024. The Company has been regarded since
1 March 2024 as an AIM Rule 15 cash shell, having ceased to own,
control or conduct all, or substantially all, of its existing
trading business, activities or assets.
Following the disposal of the
Solar Business, the existing Board of Directors of the Company
resigned with immediate effect. The Chair, Lord Willetts, and
Non-Executive Director, George Katzaros, waived any fees that they
would have been contractually entitled to up until 29 February
2024. Rob Richards, the former Chief Executive of the
Company, agreed to vary the terms of his service contract to
receive a settlement amount of £50,000 (less payments on account
made in February) in respect of fees owed under his existing
contract.
A new Board of Directors was
shortly thereafter appointed, being Bob Holt, John Charlton and
Elizabeth Lake. The Company was renamed EARNZ plc effective from
6th March 2024. The new board intends to seek suitable
acquisition targets within the energy services sector, which will
constitute a reverse takeover under AIM Rule 14.
On 5 March 2024 400,000,000 shares
were issued in the Company, at 0.075 pence per share, giving total
proceeds of £300,000.
On 4 April 2024 there was a
general meeting to approve a share consolidation, so that every 100
shares in the Company would be consolidated to 1 share. This
increased the nominal value of each share from £0.0004 to £0.04,
and reduced the number of shares from 954,649,497 to 9,546,495
shares.
On 8 April 2024 the Company raised
a further £3.7 million (before expenses) from the issue of
39,954,644 shares at 7.5 pence per share. The loan from Bob Holt
was also converted to shares at this time, at the same
price.
29. Ultimate controlling party
There is no ultimate controlling
party of the Company.
COMPANY STATEMENT OF FINANCIAL
POSITION
|
|
31 December
2023
|
31 December
2022
|
|
Notes
|
£
|
£
|
Non-current assets
|
|
|
|
Investments in
subsidiaries
|
3
|
8,916
|
8,916
|
Other receivables
|
5
|
-
|
556,783
|
Property, plant and
equipment
|
6
|
10,741
|
14,227
|
Total non-current assets
|
|
19,657
|
579,926
|
|
|
|
|
Current assets
|
|
|
|
Trade and other
receivables
|
7
|
27,373
|
22,709
|
Net amounts due from
subsidiaries
|
3
|
489,572
|
|
Cash and cash
equivalents
|
8
|
46,654
|
801,642
|
Total current assets
|
|
563,599
|
824,351
|
Total assets
|
|
583,256
|
1,404,277
|
|
|
|
|
Non-current liabilities
|
|
|
|
Loans and borrowings
|
10
|
522,587
|
-
|
Total Non-current liabilities
|
|
522,587
|
-
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other
payables
|
9
|
142,363
|
143,039
|
Loans and borrowings
|
10
|
-
|
310,306
|
Total current liabilities
|
|
142,363
|
453,345
|
|
|
|
|
Net assets
|
|
(81,694)
|
950,932
|
|
|
|
|
Share capital
|
11
|
221,860
|
177,417
|
Share premium
|
|
12,626,283
|
12,205,726
|
Share-based payment
reserve
|
12
|
178,797
|
332,806
|
Retained losses
|
|
(13,108,634)
|
(11,765,017)
|
Total equity
|
|
(81,694)
|
950,932
|
|
|
|
|
|
|
|
|
The Company's loss for the year
was £1,343,617 (2022: loss of £5,580,995).
As permitted by s408 Companies Act
2006, the Company has not presented its own statement of
comprehensive income.
These financial statements were
approved and authorised for issue by the Board of Directors on 31
May 2024 and were signed on its behalf by:
John Charlton
Executive Director
Company Registration Number: 10114644
The accompanying notes are an
integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN
EQUITY
|
Share
capital
|
Share
premium
|
Share-based payment
reserve
|
Retained
losses
|
Total
|
|
£
|
£
|
|
£
|
£
|
Equity as at 1 January 2022
|
136,883
|
10,761,055
|
213,134
|
(6,184,022)
|
4,927,050
|
Profit/(loss) for the
year
|
-
|
-
|
-
|
(5,580,995)
|
(5,580,995)
|
Total comprehensive loss
|
-
|
-
|
-
|
(5,580,995)
|
(5,580,995)
|
Share issue (net of
expenses)
|
40,534
|
1,444,671
|
-
|
-
|
1,485,205
|
Share-based payments
|
-
|
-
|
119,672
|
-
|
119,672
|
Equity as at 31 December 2022
|
177,417
|
12,205,726
|
332,806
|
(11,765,017)
|
950,932
|
Profit/(loss) for the
year
|
-
|
-
|
-
|
(1,343,617)
|
(1,343,617)
|
Total comprehensive loss
|
-
|
-
|
-
|
(1,343,617)
|
(1,343,617)
|
Share issue (net of
expenses)
|
44,443
|
420,557
|
-
|
-
|
465,000
|
Share-based payments
|
-
|
-
|
(154,009)
|
-
|
(154,009)
|
Equity as at 31 December 2023
|
221,860
|
12,626,283
|
178,797
|
(13,108,634)
|
(81,694)
|
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 1 to the consolidated financial
statements have been applied together with the following accounting
policies that have been consistently applied in the preparation of
these EARNZ PLC ("the Company") financial statements.
Basis of preparation
The financial statements of EARNZ
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, given in the
consolidated financial statements of EARNZ PLC:
a. a Cash Flow
Statement and related notes as required by IAS 7 - 'Statement of
Cashflows';
b. the requirement in
paragraph 38 of IAS 1 'Presentation of Financial Statements' to
present comparative information in respect of paragraph 79(a)(IV)
of IAS 1 - a reconciliation of the share capital at beginning and
end of the period;
c. the requirements of
paragraph 134 - 136 of IAS 1 'Presentation of Financial Statements'
to disclose the management of the capital of the
Company;
d. the requirements of
paragraphs 30 and 31 of IAS 8, 'Accounting Policies, Changes in
Accounting Estimates and Errors' to disclose the new or revised
standards that have not been adopted and information about their
likely impact;
e. all of the
disclosure requirements of IFRS 7 'Financial Instruments:
Disclosures';
f. the
requirements of paragraph 17 of IAS 24, 'Related Party Disclosures'
to disclose key management personnel; and
g. the requirements in
IAS 24 'Related Party Disclosures' to disclose related party
transactions entered into between two or more members of a group,
provided that any subsidiaries which is a party to the transaction
is wholly owned by such a member.
Going concern
Following the Disposal, the
Company has ceased to own, control, or conduct all or substantially
all its previous trading business, activities and assets and, on 1
March 2024, became an AIM Rule 15 cash shell.
As such, the Company is required
to make an acquisition or acquisitions which constitute a reverse
takeover under AIM Rule 14 ("Reverse Takeover") or
be re-admitted to trading on AIM as an investing company
(which requires, inter alia, the raising of at least £6.0
million) under the AIM Rules, on or before the date falling six
months from 1 March 2024.
If the Company does not complete a
Reverse Takeover in accordance with AIM Rule 14, or otherwise if
re-admitted to trading on AIM as an investing company fails to
implement its investing policy to the satisfaction of the London
Stock Exchange within twelve months of becoming an investing
company, the London Stock Exchange will suspend trading in the
Company's AIM securities pursuant to AIM Rule 40.
Accordingly, the Company will
evaluate opportunities in the sectors the directors consider
appropriate, seeking to identify one or more projects or assets
which the Company can acquire, which would constitute a Reverse
Takeover under AIM Rule 14.
Following the Board changes in
March and May 2024, the monthly cost of maintaining the Company has
reduced.
The directors have a clear
strategy to identify Reverse Takeover targets and have a number of
opportunities in the pipeline. The cash resources of the Company
are sufficient to cover the costs of a Reverse Takeover.
As the successful completion of
any Reverse Takeover target cannot be assured at this time, the
directors have concluded that a material uncertainty exists as to
the Company's ability to continue as a going concern beyond the AIM
Rule 15 timetable. This uncertainty arises primarily because should
the Company's shares be suspended from trading on AIM or its
listing is cancelled, the Company's ability to raise finance for
the longer term would be significantly impaired.
Notwithstanding the above, as at
the date of approval of the financial statements, the base case
cash flow forecast indicated that no additional cash resources will
be required over the course of the next 12 months. The directors
therefore consider the Group and the Company to be a going concern
and have therefore prepared these financial statements on the going
concern basis.
Investments in subsidiaries
The Company's investment in its
subsidiaries are carried at cost less provision for any impairment.
Investments include shareholder loans. Investments denominated in
foreign currency are recorded using the rate of exchange at the
date of acquisition. The carrying value is tested for impairment
when there is an indication that the value of the investment might
be impaired. When carrying out impairment
tests, the recoverable amount is based upon future cash flow
forecasts and these forecasts would be based upon management
judgement. Where the carrying value is more than the recoverable
amount, no impairment provision is made.
Trade and other receivables
The Company assesses on a
forward-looking basis the expected credit loss associated with its
receivables carried at amortised cost. The impairment methodology
applied depends on whether there has been a significant increase in
credit risk. For trade receivables, the Company applies the
simplified approach permitted by IFRS 9, resulting in trade
receivables recognised and carried at original invoice amount less
an allowance for any uncollectible amounts based on expected credit
losses.
Critical accounting estimates and judgments
The preparation of financial
information in conformity with FRS 101 requires the use of certain
critical accounting estimates. It also requires the Directors to
exercise their judgement in the process of applying the accounting
policies which are detailed above. These judgements are continually
evaluated by the Directors and management and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. The judgements that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are as follow:
Impairment of investments in and amount due from
subsidiaries
In determining
whether there are indicators of impairment of the Company's
investments in, and amounts receivable from, its subsidiary
undertakings, the directors take into consideration various factors
including the economic viability and expected future financial
performance of the business of the subsidiary undertakings. Future
cashflows from solar operations requires significant management
judgement, as the solar production business is still in its early
stages.
Classification of investments in and amount due from
subsidiaries
Investments in
subsidiaries are classified as non-current assets. Funding provided
to subsidiaries is long-term in nature and not intended to be
repaid on demand, and therefore it is appropriate to present the
assets as non-current.
2. Staff costs
The average number of employees
(including directors) during the period was made up as
follows:
|
2023
|
2022
|
|
Number
|
Number
|
Directors
|
4
|
4
|
Administrative
|
-
|
-
|
Total
|
4
|
4
|
The cost of employees (including
directors) during the period was made up as follows:
|
2023
|
2022
|
|
£
|
£
|
Salaries (including
directors)
|
111,250
|
409,890
|
Share-based payment
|
(154,010)
|
119,672
|
Social security costs
|
3,445
|
9,235
|
Pension cost
|
-
|
500
|
Total staff costs
|
(39,315)
|
539,297
|
Investments in subsidiary undertakings
|
Investment in subsidiary
|
Amount
due from subsidiary
|
Total
|
COST
|
£
|
£
|
£
|
At 1 January 2022
|
608,916
|
4,009,539
|
4,618,455
|
Additions
|
-
|
-
|
-
|
Movement for the year
|
-
|
504,358
|
504,358
|
At 31 December 2022
|
608,916
|
4,513,897
|
5,122,813
|
Additions
|
-
|
-
|
-
|
Movement for the year
|
-
|
489,572
|
489,572
|
At 31 December 2023
|
608,916
|
5,003,469
|
5,612,385
|
|
|
|
|
IMPAIRMENT
|
|
|
|
At 1 January 2022
|
600,000
|
-
|
600,000
|
Impairment of investment in
subsidiary
|
-
|
4,513,897
|
4,513,897
|
At 31 December 2022
|
600,000
|
4,513,897
|
5,113,897
|
Impairment of investment in
subsidiary
|
|
-
|
-
|
At 31 December 2023
|
600,000
|
4,513,897
|
5,113,897
|
|
|
|
|
Net book value
|
|
|
|
At 31 December 2022
|
8,916
|
-
|
8,916
|
At 31 December 2023
|
8,916
|
489,572
|
498,488
|
The details of the subsidiaries of
the Company, are set out in the Note 11 to the consolidated
financial statements.
The directors consider that the
carrying amounts owed by and to group undertakings approximates
their fair value. The amounts reported under current assets have no
fixed repayment terms and repayment on demand.
3. Other
investments
|
Financial assets at fair
value through profit or loss
|
Total
|
|
|
£
|
Cost
|
|
|
At 1 January 2022
|
990,000
|
990,000
|
Disposal
|
(990,000)
|
(990,000)
|
At 31 December 2022
|
-
|
-
|
Addition
|
|
|
Disposal
|
|
|
At 31 December 2023
|
-
|
-
|
The Company previously held a
stake in Industrial Climate Solutions
(ICSI), an unlisted company registered in Canada. This was sold
during 2022 for a total consideration comprising cash on completion
of £307,731 and earn out payments payable over 3 years (see note
5).
4. Other
receivables
|
2023
|
2022
|
|
£
|
£
|
Fair value of earn-out from ICSI
sale
|
-
|
556,783
|
Other receivables
|
-
|
556,783
|
The estimated earn out payments
from the ICSI sale are structured over several product development
milestones to be achieved through to 2025. The estimated earn out payments to be received as at year end
are based on management assessment of the achievability of each
individual milestone. At recognition of the receivable this risk
weighted compensation was discounted at an estimated cost of
equity, being 14.2%.
In 2023 management received
information from the ICSI Sellers' Committee that future milestones
are unlikely to be met, as so a full impairment of the receivable
was recognized in the period.
5. Property, plant and
equipment
|
Plant and
machinery
|
Computer
equipment
|
Total
|
|
£
|
£
|
£
|
At 1 January 2022
|
1,873
|
2,277
|
4,150
|
Additions
|
12,422
|
2,708
|
15,130
|
Disposal
|
-
|
(949)
|
(949)
|
At 31 December 2022
|
14,295
|
4,036
|
18,331
|
Additions
|
-
|
899
|
899
|
Disposal
|
-
|
-
|
-
|
At 31 December 2023
|
14,295
|
4,935
|
19,230
|
|
|
|
|
DEPRECIATION
|
|
|
|
At 1 January 2022
|
1,873
|
1,678
|
3,551
|
Charge for the year
|
643
|
358
|
1,001
|
Disposal
|
-
|
(448)
|
(448)
|
At 31 December 2022
|
2,516
|
1,588
|
4,104
|
Charge for the year
|
3,358
|
1,027
|
4,385
|
Disposal
|
|
|
|
At 31 December 2023
|
5,874
|
2,615
|
8,489
|
|
|
|
|
Net book value
|
|
|
|
At 31 December 2022
|
11,779
|
2,448
|
14,227
|
At 31 December 2023
|
8,421
|
2,320
|
10,741
|
6. Trade and other
receivables
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Prepayments
|
12,193
|
10,526
|
Corporation tax
receivable
|
-
|
-
|
VAT receivable
|
15,179
|
12,183
|
Total trade and other receivables
|
27,372
|
22,709
|
All amounts are due within three
months.
7. Cash and cash
equivalents
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
|
|
|
Cash at bank and in
hand
|
46,654
|
801,642
|
|
|
|
8. Trade and other
payables
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Trade payables
|
93,679
|
5,146
|
Accruals and deferred
income
|
46,294
|
128,387
|
Social security & other taxes
payable
|
2,390
|
9,331
|
Pension cost
|
-
|
175
|
Total trade and other payables
|
142,363
|
143,039
|
9. Loans and borrowings
|
31 December
2023
|
31 December
2022
|
|
£
|
£
|
Current
|
|
|
Convertible loans
|
-
|
310,306
|
Non-Current
|
|
|
Corporate bonds
|
522,587
|
-
|
Total loans and borrowings
|
522,587
|
310,306
|
See note 20 of the consolidated
financial statements for details.
10. Share capital
For details of share capital see
note 23 to the consolidated financial statements.
11. Share-based payment reserve
For details of the share-based
payments see note 24 to the consolidated financial
statements.
12. Related party transactions
The Group has related party
transactions with entities in which directors have significant
financial interests. For details of the related party transactions
see note 26 to the consolidated financial statements.
Details of the directors'
emoluments, together with the other related information, are set
out in the Report of the Directors. There are no other
related party transactions.
13. Commitments
The Company has no lease or
capital commitments at the end of the reporting period.
14. Contingent liabilities
The Company has no contingent
liabilities, other than what has been disclosed already.
15. Ultimate controlling party
The Company does not have an
ultimate controlling party.
16. Events after reporting date
For details of events after
reporting date see note 28 of the consolidated financial
statements.
OFFICERS AND ADVISERS
Directors:
|
Robert Holt (appointed 29 February
2024)
John Charlton (appointed 29 February 2024)
Elizabeth Lake (appointed 13 March 2024)
Linda Main (appointed 1 May
2024)
The Rt Hon. Lord David Willetts FRS (resigned 29
February 2024)
George Francis Katzaros
(resigned 29 February 2024)
Gavin Mayhew (resigned 2 January 2024)
Robert Richards
(resigned 29 February 2024)
|
Company secretary and registered office:
|
CFPro Cosec Limited
First Floor, Holborn Gate, 330
Holborn, London WC1V 7QT
|
Nominated Adviser and Joint Broker:
|
Shore Capital
57 St. James's Street
London SW1A 1LD
|
Joint Broker:
|
W H Ireland Limited
24 Martin Lane,
London EC4R 0DR
|
Bankers:
|
Natwest Bank plc
|
Auditors:
|
Haysmacintyre LLP
10 Queen Street Place
London, EC4R 1AG
|
Solicitors:
|
BPE Solicitors LLP
St. James' House
St. James' Square
Cheltenham GL50 3PR
|
Registrars:
|
Neville Registrars
Neville House
18 Laurel Lane
Halesowen B63 3DA
|
Company Number:
|
10114644
|
Website:
|
www.earnzplc.com
|