Verditek : Annual Report and Financial Statements Year Ended 31 December 2020

Registered in England and Wales number 10114644

Verditek PLC

Group Annual Report and Financial Statements

Year Ended 31 December 2020

CONTENTS
2020 HIGHLIGHTS................................................................................................................................	1
CHAIRMAN'S STATEMENT...........................................................................................................................	1
CHIEF EXECUTIVE'S REVIEW........................................................................................................................	3
STRATEGIC REPORT.....................................................................................................................................	6
FINANCIAL REVIEW .....................................................................................................................................	8
PRINCIPAL RISKS AND UNCERTAINTIES.......................................................................................................	9
GOVERNANCE....................................................................................................................................	12
BOARD OF DIRECTORS ..............................................................................................................................	12
CORPORATE GOVERNANCE REPORT.........................................................................................................	14
AUDIT COMMITTEE REPORT .....................................................................................................................	19
DIRECTORS' REMUNERATION REPORT .....................................................................................................	20
CORPORATE AND SOCIAL RESPONSIBILITY ...............................................................................................	22
DIRECTORS' REPORT .................................................................................................................................	23
STATEMENT OF DIRECTORS' RESPONSIBILITIES........................................................................................	26
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VERDITEK PLC .............................................	27
FINANCIAL STATEMENTS ....................................................................................................................	32
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME...................................................................	32
CONSOLIDATED STATEMENT OF FINANCIAL POSITION............................................................................	33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY.............................................................................	34
CONSOLIDATED STATEMENT OF CASH FLOWS.........................................................................................	35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .......................................................................	36
COMPANY STATEMENT OF FINANCIAL POSITION ....................................................................................	62
COMPANY STATEMENT OF CHANGES IN EQUITY .....................................................................................	63
NOTES TO THE COMPANY FINANCIAL STATEMENTS................................................................................	64
OFFICERS AND ADVISERS ..........................................................................................................................	70

Verditek PLC

Annual Report and Financial Statements

For the year ended 31 December 2020

2020 HIGHLIGHTS

• During 2020 Verditek moved from development phase to commercialization of its lightweight, flexible solar panels
• In the fourth quarter of the year, Verditek ramped up its operations at its plant in Lainate, Italy
• The plant has an operational capacity of over 80MW per annum
• Progress was made with Verditek's partnership with Paragraf
• Revenues for the year were £21,521 with a loss after tax of £2,324,121
• Fundraisings during the year contributed £5.1m cash after expenses

CHAIRMAN'S STATEMENT

The year to 31 December 2020 was an important period for Verditek's development with the focus being primarily on the development of its lightweight solar panels which are manufactured at the Group's factory on the outskirts of Milan, Italy.

Following a lengthy period of research and development the Group moved into regular production during the fourth quarter of the year against the background of a significant pipeline of projects located around the world. Unfortunately, due to the pandemic, many of these projects have been delayed, but in recent weeks activity has increased again and we have received commitments to a number of smaller orders.

Verditek's solar modules offer several innovations including interconnectivity of individual PV cells and increased flexibility. They are particularly light weight compared to conventional PV modules. This opens markets (both on grid and off grid) that otherwise cannot consider solar energy to address their power requirements.

Our factory now has proven production capability and has a potential capacity of producing over 80MW of panels per annum. Due primarily to operating efficiencies this is far higher than previously envisaged. Cell technology continues to advance and Verditek will soon be launching its second-generation panel with a power output of circa 350 watts per panel. New certification will be required for this product and this process is underway.

During the year our executive team was changed with Rob Richards becoming CEO and Geoff Nesbitt taking on the vital role of CTO. Tim Bowen joined as CFO to replace Tim Lord. We would like to thank Geoff and Tim for their significant input into the Group. Geoff has a strong technical mastery of our products and in his new role as CTO he is focussing on our pioneering work with Paragraf exploring ways of using graphene in the production of solar panels.

In the first half of 2020 the group raised fresh equity totalling £1.5m and in October £3.5m was raised from new and existing investors. As recently announced, the Group has also entered into a debt facility with Crowd for Angels. This platform is set to initially raise up to £500,000 from interested individuals and has already a commitment of £250,000. The Group also has a significant stock of solar panels that are being sold as new projects convert from pipeline opportunities to sales.

1

Verditek PLC

Annual Report and Financial Statements

For the year ended 31 December 2020

Whilst 2020 proved to be a year of global uncertainty, Verditek has proved itself from an operational point of view. We have a strong focus on sales, cutting edge R&D, and growing addressable markets. COP26 this year is bringing home the urgent need to go green. Verditek can contribute to many organisations' green energy strategy with good value solutions. We should be well placed to deliver significant growth once normal trading conditions resume.

The Rt Hon. Lord David Willetts FRS

Non-Executive Chairman

2

Verditek PLC

Annual Report and Financial Statements

For the year ended 31 December 2020

CHIEF EXECUTIVE'S REVIEW

Overview

The year to December 2020 was an important one for Verditek and saw the Group focus on commercializing its flexible, lightweight solar panels. In the fourth quarter of the year production was ramped up at the Group's factory in Lainate, Italy in anticipation of Verditek's significant pipeline converting into orders.

The year was not without its setbacks and whilst we were able to manage the impact of the pandemic from an operational point of view, the effects have been felt commercially as potential customers delay their transition to green energy.

None the less, Verditek emerged from 2020 as a stronger company with a significant opportunity to play a major role in the flexible, lightweight solar panel marketplace.

Strategy

The Group's historic strategy has been to identify early-stage business opportunities in the clean technology sector, invest in them and see them through to commercial success. Whilst this remains the Group's objective most of 2020 was spent moving from the research and development phase into pipeline building for the Group's solar opportunity. This is likely to be the case for the rest of 2021 and into 2022.

As the world continues to evolve from its dependency on hydrocarbon-based energy sources to cleaner, more environmentally friendly energy, we believe the Verditek Solar product is extremely well positioned to become a market leader in the ultra-lightweight, flexible solar market. The Company's TUV approved product has numerous potential applications that are not available to the traditional, heavy and fragile solar panel technology. We believe major new market opportunities for our lightweight product will open up in areas such as military, transportation, cellular telecoms masts, new build homes (as part of an integrated roof tile system), and warehousing (where roofing structures are less rigid). Here the advantages of a highly durable, efficient ultra-lightweight solar solution can now be embraced.

We believe the trend in the world moving from burning hydrocarbons as a primary energy source towards utilising solar solutions will accelerate.

Operations

The Group's solar operations are based in a modern 2,000 square meter factory located in Lainate on the outskirts of Milan, Italy. From here a core staff together with a further flexible contract labour team manufacture Verditek's flexible light weight solar panels using the latest components sourced from around the world. During the fourth quarter of 2020 production was significantly increased in anticipation of several pipeline orders closing. At this time, it became evident that working on a three-shift basis the plant could have potential production capacity in excess of 80MW per annum, far higher than previously thought.

The technology used in cells continues to evolve and the Group is currently in the process of developing its second- generation panel. In a standard sized panel (with 60 cells) the power output will now increase to 350W. Whilst the Group has significant stock of its first-generation panel with a power output of 288W per panel, these are still suitable for most applications as solar solutions are sold by power output and not per panel.

The certification process for the second-generation panels has commenced and is expected to conclude in the second half of 2021. This certification will cover the panels in a broad range of applications and will be tested for temperature, fire, hail damage and wind as well as durability.

3