REG - Earnz PLC - Final Results & Notice of AGM
27/06/2025 07:00
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RNS Number : 6486O Earnz PLC 27 June 2025
27 June 2025
EARNZ plc
("EARNZ", the "Company" or the "Group")
Final Results
and
Notice of AGM
EARNZ plc ("EARNZ" or the "Company") (AIM:EARN), an energy services company
whose objective is to capitalise on the drive for global decarbonisation,
announces its audited final results for the year ended 31 December 2024 (the
"Full Year").
The Group has made a successful start to its journey to build a significant
group in the energy services sector focusing on the decarbonisation of public
and private sector building fabric. The UK Government continues to provide
investment in the Net Zero transition and UK clean energy industries.
The results herein include two months of the legacy Verditek business; a
clean cash shell for a six-month period during which we negotiated the
acquisitions of two businesses in order to enact our strategy, followed then
by four months of trading of the two acquired businesses. They therefore do
not truly reflect the underlying business that has been built and the future
aspirations and opportunities.
We have an active list of potential acquisition targets across the
decarbonisation agenda. Due to the difficulties of the capital restrictions to
date, our acquisition strategy has been highly selective as we work within our
financial constraints. As we have established a profitable platform for
growth, the Board is looking at more significant opportunities for acquired
growth which will enhance service offerings and provide a more stable base.
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 available later today on the Company's
website at www.earnzplc.com (http://www.earnzplc.com) . The AGM will be held
at 10:00 a.m. on 28 July 2024 at Shore Capital's offices, Cassini House, 57 St
James' Street, London SW1A 1LD.
Bob Holt, Executive Chairman of EARNZ, said: "I am delighted with the progress
to date in what has been an extremely difficult period for all companies
listed on the Alternative Investment Market of the London Stock Exchange.
Raising capital and liquidity are at record low levels in the 30 years since
that market was created.
Despite those stock market conditions, the Group is performing well with
business trading ahead of target."
For further information, please contact:
EARNZ +44 (0) 7778 798 816
plc
Bob Holt OBE - Executive Chair
Elizabeth Lake - Chief Financial Officer
John Charlton - Executive Director & Company Secretary
Shore Capital (Nominated Adviser and Joint Broker) +44 (0) 20 7408 4090
Tom Griffiths / Tom Knibbs / Lucy Bowden
Zeus Capital (Joint Broker)
Antonio Bossi / Andrew de Andrade +44 (0) 203 829 5000
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.
EXECUTIVE CHAIR'S REVIEW
I am pleased to report a successful period at the start of our journey to
build a significant group in the energy services sector focusing on the
decarbonisation of public and private sector building fabric. The UK
Government continues to provide investment in the Net Zero transition and UK
clean energy industries.
The results herein include two months of the legacy Verditek business; a clean
cash shell for a six-month period during which we negotiated the acquisitions
of two businesses in order to enact our strategy, followed then by four months
of trading of the acquired businesses.
Therefore, I feel that these results do not truly reflect our future
aspirations and opportunities.
I was most conscious of putting in place a Board of Directors which had the
correct mix of skills to ensure that we build on a solid foundation. I am
pleased to welcome Peter Smith as CEO following completion of our recent
acquisition of A&D Carbon Solutions LTD ("A&D"). At the same time, I
will become Non-Executive Chair and John Charlton will resign as a director of
the Company but remain as Company Secretary.
I am delighted with the progress to date in what has been an extremely
difficult period for all companies listed on the Alternative Investment Market
of the London Stock Exchange. Raising capital and liquidity are at record low
levels in the 30 years since that market was created.
Despite those stock market conditions the Group is performing well with all
businesses trading ahead of target.
We have an active list of potential acquisition targets across the
decarbonisation agenda. Due to the difficulties of the capital restrictions to
date, our acquisition strategy has been highly selective as we work within our
financial constraints. As we have established a profitable platform for
growth, the Board is looking at more significant opportunities for acquired
growth which will enhance service offerings and provide a more stable base.
I would like to congratulate all employees and partners in the Group and look
forward to bringing news of further growth in earnings in the coming months.
Bob Holt OBE,
Executive Chair
26 June 2025
STRATEGIC REPORT
The Directors present their strategic report on the Group for the year ended
31 December 2024.
EARNZ plc disposed of its interests in its Solar Business on 29 February 2024.
The Company's principal business is targeting acquisitions in the energy
services sector. Going forward the Company will build a leading business in
the energy services sector focusing on decarbonisation of public and private
sector building fabric, leveraging UK Government investment in Net Zero
transition and UK clean energy industries.
The sector is hugely fragmented, providing significant growth opportunities,
by acquisition and organically.
The Group's buy and build strategy is designed to create shareholder value
through bringing together businesses in the energy services sector, providing
consolidation in a fragmented sector, and extensive industry experience gained
over many years. This creates improved service experience for customers and a
virtuous circle of value creation. The foundations have been set through the
addition of three businesses to the Group and the opportunity for organic
growth and further acquisitions set.
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 in this report.
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);
• the interests of the company's employees (see Corporate Social
Responsibility report)
• the need to foster the company's business relationships with
suppliers/customers and others (see Corporate Governance Report);
• the impact of the company's operations on the community and
environment (see Corporate Social Responsibility report);
• the company's reputation for high standards of business conduct
(see Corporate Governance Report); and
• the need to act fairly between members of the company (see
Corporate Governance Report
On behalf of the Board
John Charlton
Executive Director
26 June 2025
FINANCIAL REVIEW
The continuing activities of EARNZ plc started when the Company disposed of
the Solar Business and became an AIM Rule 15 cash shell on 1 March 2024,
having ceased to own, control or conduct all, or substantially all of its
existing trading business, activities or assets.
The disposal of the legacy solar business and all related business assets of
Verditek Plc (the "Solar Business") was approved on 28 February 2024 in return
for the satisfaction of the outstanding bonds and accrued interest. The Solar
Business was disposed of on 29 February 2024 and completed on 1 March 2024.
The disposal was required in order to satisfy the outstanding creditor
obligations of Verditek Plc, and avoid having to put the Company into
administration.
Under the AIM Rules the Company was required to make an acquisition or
acquisitions which constitute a reverse takeover within 6 months to avoid the
suspension of trading in the Company's shares on AIM.
The Company raised £0.3m gross on 5 March 2024 at 0.075 pence per share to
provide initial funding for EARNZ plc. Following a share consolidation on 4
April 2024 whereby 100 existing shares were exchanged for 1 new share,
changing the nominal value of the Company's ordinary shares to 4 pence per
share, a further £3.7m gross was raised through a placing of new shares on 8
April 2024 at 7.5 pence per share to embark on the Group's buy and build
strategy. To enable the acquisition of two businesses, South West Heating
Services Limited ("SWH") on 28 August 2024 and Cosgrove & Drew Limited
("C&D") on 29 August 2024 a further fund raise of £2.05m gross was
completed on 29 August 2024 through the placing of new shares at 7.5 pence per
share.
On 12 June 2025, the Company announced that it had entered into an agreement
with the shareholders of A&D Carbon Solutions LTD ("A&D") to acquire
the entire issued share capital for a maximum consideration of £2.8m. On the
same day the Company raised £1.02m through a share placing, to fund the
acquisition and provide additional working capital for the Group. The sale is
expected to complete on 1 July 2025 subject to obtaining shareholder approval
to authorise the directors to issue the consideration shares.
Further details are set out in the post balance sheet event section of the
Directors' report.
For the period between 1 March 2024 and 29 August 2024, the business remained
a cash shell, generating no income and incurring costs of a listed plc and
professional fees incurred in completing the acquisitions of C&D and SWH.
From 1 September 2024, the results of C&D and SWH have been incorporated
into the Group's results.
Income statement
Revenue
In the year ended 31 December 2024, the Group's loss after taxation was
£2,819k (2023: £2,089k), the loss after taxation from continuing operations
was £2,684k (2023: £1,344k).
In the four months from 1 September 2024 to 31 December 2024, Group revenue
from continuing operations was £2,637k. Of this, revenue from C&D for the
four months from 1 September 2024 to 31 December 2024 was £2,169k. C&D
focuses on the provision of mechanical and engineering services across the
commercial and industrial sectors. Revenue from SWH for the four months from 1
September 2024 to 31 December 2024 was £468k. SWH focuses on the provision of
domestic maintenance services and heating installations.
Profits
£'000 31 December 2024 31 December 2023
Gross Profit 348 -
Administration expenses - continuing (1,532) (743)
Acquisition costs (1,622) -
Operating Loss (2,806) (743)
Net finance cost (74) (44)
Other income/(losses) 1 (557)
Loss before tax (2,879) (1,344)
Gross profit margin 13.2% -
Gross profit in the four months from 1 September 2024 to 31 December 2024 was
£348k, which was lower than expected due to unexpected costs in C&D. The
margin achieved in C&D was 9% as a result of significant unexpected costs.
Since its acquisition, a significant amount of work has been undertaken to
rebase the cost base, and the ongoing business is currently achieving margins
at the expected rate of c.25-30% in 2025. The margin achieved in SWH was 32%
in line with expectations.
The administrative expenses incurred for the year ended 31 December 2024 were
£1,532k (2023: £743k). The majority of the costs incurred being £940k
relating to Group overheads from 1 March 2024 to 31 December 2024. The monthly
run rate for Group overheads is c.£100k, which covers staff costs, and the
costs associated with being quoted on AIM. The remaining administrative fees
sit within the subsidiaries, C&D and SWH, approximately half of which
relate to employee-related overheads.
The acquisition costs include fees associated with the reverse takeover of
C&D and SWH ("RTO") of £1,460k and aborted fees of £162k from another
transaction that did not complete.
Taxation
Loss after tax from continuing operations was £2,684k (2023: £1,344k)
Loss per share
The basic and diluted loss per share was 0.046p (2023: 0.436p).
Adjusted Profits
The Group uses a number of Alternative Performance Measures ("APMs") in
addition to those measures reported in accordance with IFRS. Such APMs are not
defined terms under IFRS and are not intended to be a substitute for any IFRS
measure. The Directors believe that APMs are important when assessing the
underlying financial and operating performance of the Group.
The exceptional items identified as non-recurring in nature are set out below
and were considered in calculating the adjusted profits.
Adjusted EBITDA from continuing operations £'000 Year ended 31 December 2024
Operating Loss (2,806)
Depreciation & amortization 73
Share based payment 23
Exceptional items:
Acquisition costs 1,622
Non-recurring audit fee 68
Total exceptional items added back 1,690
Adjusted EBITDA (1,020)
Financial Position
£'000 Year ended 31 December 2024 Year ended 31 December 2023
Goodwill 3,577 -
Intangible assets 1,003
Property, plant & equipment 310 98
Right of use assets 220 306
Deferred tax asset 130 -
Non-current assets 5,240 404
Current assets excluding cash 1,733 589
Liabilities excluding borrowings (3,591) (622)
Cash and cash equivalents 1,965 54
Borrowings (1,371) (523)
Net cash/(debt) 594 (469)
Net assets/(liabilities) 3,976 (98)
As at 31 December 2024, the Group's net assets were £3,976k (2023: net
liabilities of £98k).
Non-current assets
Goodwill of £3,577k has arisen on the acquisitions of C&D and SWH and has
been recognised at cost, representing the excess of the consideration paid
over the net assets acquired. The details relating to the acquisitions are set
out in Note 12. As required by IAS 36, an impairment review has been carried
out and concluded that no impairment was necessary.
The intangible assets are the value of the customer relationships acquired,
and these are amortised each year.
Current assets excluding cash
Current assets excluding cash comprise trade and other receivables of £1,125k
(2023: £30k), contract assets of £266k (2023: nil), stock balances of £145k
(2023: £419k), and other current assets of £197k (2023: £140k). See Note 16
for further details.
Liabilities excluding borrowings
The largest balance is trade and other payables at £1,947k (2023: £284k).
Also included is the contingent deferred consideration arising from the
acquisitions of C&D and SWH. The total balance of contingent consideration
is £1,335k of which £180k is due within 12 months of the FY24 year end.
Lease liabilities amount to £245k (2023: £308k).
See Note 16 for further details.
Liquidity
The Group cash balance as at 31 December 2024 was £1,965k (2023: £54k).
Details of borrowings are shown in Note 16(vii)
Cashflow
£'000 Year ended 31 December 2024 Year ended 31 December 2023
Net cash (used in)/generated from operating activities (3,083) (1,256)
Payment for acquisitions, net of cash acquired (747) -
Purchase of property, plant & equipment (64) (2)
Other 36 4
Net cash (used in)/from investing activities (775) 2
Net proceeds from issue of shares 5,663 465
Proceeds from borrowing 500
Proceeds from related parties 339 -
Net proceeds from factoring of trade receivables 100
Repayment of borrowing, HP and lease liabilities (162) (503)
Other (8)
Net cash generated from financing activities 5,932 462
Net cash outflow from discontinued operations (162)
Net increase/(decrease) in cash during the year 1,912 (792)
Net cash used in operations includes £1,690k of exceptional costs relating to
the RTO and the acquisitions of C&D and SWH.
Issue of New Shares
On 5 March 2024, 400,000,000 new shares were issued at 0.075 pence per share
with a total value net of fees of £278k. A further 83 ordinary shares were
allotted on 4 April 2024 solely to facilitate the share consolidation on a
1-for-10 basis and then subsequently there was a share consolidation of every
100 ordinary shares of 0.04 pence each into one new ordinary share of 4 pence
each. On 8 April 2024, 4,000,000 shares were issued at 7.5 pence per share on
conversion of a £300k loan, made to the Company by Bob Holt, prior to his
appointment as a director of the Company. On the same day there was a placing
of 39,554,644 new ordinary shares at a price of 7.5 pence per share raising
£2,749k net of costs.
On 8 April 2024, 9,778,666 shares were issued at 7.5 pence per share with a
total value net of fees of £712k. On 28 August 2024, 20,798,491 shares were
issued at 7.5 pence per share on a VCT placing with a total value net of fees
of £1,457k. On 29 August 2024, 6,552,959 shares were issued at 7.5 pence per
share with a total value net of fees of £467k. On 29 August 2024, 3,000,000
shares were issued at 7.5 pence per share on conversion of a £225k loan
originally made to C&D by Bob Holt.
A further 8,975,119 consideration shares were issued on the acquisition of
C&D and SWH.
Dividends
No dividend is recommended (2023: £nil).
Events after the reporting period
On 12 June 2025, the Group signed a sale and purchase agreement to acquire all
the share capital of A&D at a cost of £2.8m with initial consideration
of £1.3m, £1.04m in cash, to be adjusted for net debt and normalised working
capital and £0.2m of which is contingent on meeting targets by 31 December
2025. The remaining initial consideration of £260k is payable in new ordinary
shares in EARNZ plc. The remaining consideration is deferred and contingent
upon reaching EBITDA targets for up to 3 years post completion and is payable
60% in cash and 40% in new ordinary shares in EARNZ plc. On 12 June 2025 the
Company raised £1.02m through a share placing, to fund the acquisition and
provide additional working capital for the Group. The sale is expected to
complete on 1 July 2025 conditional on shareholders' approval at a general
meeting to authorise the directors to issue the consideration shares.
Events after the reporting period are described in Note 25 to the financial
statements.
Elizabeth Lake
Chief Financial Officer
26 June 2025
RISK REPORT
Risk Management Framework
The Group has a risk register which includes all principal risks critical to
the business.
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.
DETAIL OF RISK MITIGATION and MANAGEMENT ASSESSMENT
Insufficient working capital to fund growth opportunities in delivery of the The Board has reviewed medium-to-long-term cashflow forecasts (including sales High risk
Group's buy and build strategy. forecast), and aims to ensure sufficient funding is in place to meet
requirements. The Board is continually engaged with its investors and
potential investors.
Underperformance of target businesses Full legal and financial due diligence was completed on each target business, Medium risk
including historical financial information. External advisors and Reporting
Accountants were appointed for this work during the reporting period.
Focusing on the decarbonisation agenda which is funded by government and a key
policy area. Maintain good trading relationship with all key customers and
continue to monitor. Build in contingencies in budgets and forecasts.
Strong management teams are in place within the target businesses.
HSE violations in Group operating companies. The Group is directly responsible for installing and auditing an HSE culture. Medium risk
Documented operating procedures are in place in the operating businesses.
Health & Safety is reviewed at each Board meeting
Failure of business systems or loss of data, potentially causing issues such The Group uses external IT support to carry out regular penetration testing Medium risk
as delay in sales, reduced financial performance, reputational damage. and auditing security and processes. Robust insurance policy in place in case
the event of ransom, including obtaining cyber essentials and training.
Attracting and retaining key employees. There is a general shortage of labour Founders are incentivised with earn outs and bonuses. Executives have an LTIP Medium risk
across the construction industry. in place, and senior management have bonus schemes. The Group is committed to
improving working conditions, work life balance, progression, and training.
Each operating company has a key management team, including the founders. The
loss of any of these staff would have a detrimental impact on the growth of
the business.
Failure to meet AIM corporate governance requirements. The executive benchmarked its corporate governance, policies and procedures Low risk
against published QCA guidelines to ensure compliance. The Company has regular
discussions with its nominated adviser and external counsel.
GOVERNANCE
BOARD OF DIRECTORS
The Directors of EARNZ plc as at the date of signing the report and accounts
comprised:
Bob Holt OBE (Executive Chair)((1)) - 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.
(1) On completion of the acquisition of A&D Bob Holt will be appointed
as Non-Executive Chair for the Company
John Charlton (Executive Director and Company Secretary)((2)) - 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.
(2) On completion of the acquisition of C&D John Charlton will resign as
director of the Company and will remain as Company Secretary
Elizabeth Lake FCA (Chief Financial Officer) - appointed 3 June 2024
(appointed non-executive director from 13 March 2024 - 3 June 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 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 also sits
on the QCA board. Linda is a Trustee of Carers Trust, a leading charity
working to transform the lives of unpaid carers. Linda chairs the Company's
Audit and Remuneration committees.
Sandra Skeete (Independent Non-Executive Director) - appointed 3 June 2024
Sandra has over 25 years' experience working in social housing, holding senior
roles in organisations such as the Peabody Trust and Refugee Housing
Association Limited, and was previously a director of One Housing Group and
the Duke of Lancaster Housing Trust. She was the Chief Executive of Octavia
Housing Association Group, a not-for-profit organisation offering social
housing and care services for vulnerable members of the community in central
and west London. She was previously a non-executive board associate of
Principality Building Society. Sandra sits on 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 by 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
Lord David Willetts (resigned 29 February 2024) 2 2
Rob Richards (resigned 29 February 2024) 2 2
George Katzros (resigned 29 February 2024 2 2
Bob Holt OBE (appointed 29 February 2024) 17 16
Elizabeth Lake FCA (appointed Non-Executive Director 13 March 2024 and as 16 16
Chief Financial Director 3 June 2024)
John Charlton (appointed 29 February 2024) 17 17
Non-Executive Directors
Linda Main (appointed 3 June 2024) 14 14
Sandra Skeete (appointed 1 May 2024) 12 8
The Audit Committee
The Audit Committee comprises Linda Main (appointed 1 May 2024) as Chair and
Sandra Skeete (appointed 3 June 2024). At the beginning of the year, the Audit
Committee comprised The Rt Hon. Lord David Willetts FRS (resigned 29 February
2024) as Chair and Gavin Mayhew (resigned 2 January 2024). Elizabeth Lake
(appointed 13 March 2024) joined the Audit Committee temporarily on 1 May 2024
whilst she was a non-executive director, and was replaced by Sandra Skeete on
3 June 2024.
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 in this report.
The Remuneration Committee
The Remuneration Committee comprises Linda Main (appointed 1 May 2024) as
Chair and Sandra Skeete (appointed 3 June 2024). At the beginning of 2024, the
Remuneration Committee comprised George Katzaros (resigned 29 February 2024)
as Chair and Gavin Mayhew (resigned 2 January 2024).
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 in this report.
Investor relations
The Annual 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
Bob Holt OBE
Executive Chair
26 June 2025
CORPORATE GOVERNANCE REPORT
The Chair has overall responsibility for corporate governance and good
corporate governance is central to the Group's approach to creating
sustainable growth and enhancing long-term shareholder value. The Directors
are expected to always act ethically and responsibly, reflecting the Group's
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 obligation of the
AIM Rules. The Board has therefore adopted the principles set out in the
Corporate Governance Code for small and midsized companies published by the
Quoted Companies Alliance (the "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 The Board must be able to express a shared view of the company's purpose, The Company's strategy is explained fully within the Chair's Review section of
for shareholders business model and strategy. It should go beyond the simple description of the Report and Accounts for the year ended 31 December 2024.
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 Our strategy is identifying potential acquisitions in the energy services
long-term growth is underpinned by a clear set of values aimed at protecting sector, to create a consolidated Group with scale and breadth of offering in
the company from unnecessary risk and securing its long-term future. the energy services sector, growing revenues and profitability.
The key challenges to the business and how these are mitigated are detailed in
the Report and Accounts for the year ended 31 December 2024.
2. Promote a corporate culture that is based on ethical values and The Board should embody and promote a corporate culture that is based on sound The Corporate and Social Responsibility section in the Report & Accounts
behaviours ethical values and which is supportive of the delivery of the Company's for the year ended 31 December 2024 details the ethical values of the
established purpose, strategy and business model. Company.
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 culture should be visible in every aspect of the business, including The Company's policies and procedures on Data Protection; Disciplinary,
recruitment, nominations, training and engagement. The performance and reward Dismissal and Grievance; Ethics; Share Dealing; Social Media; and Speak-Up
system throughout the Company should reflect and reinforce the maintenance of were reviewed and updated as required and amended policies were approved by
this culture. the Board during the year. The Board continues to review policies and will
amend as required. These policies and procedures are made available to staff
The corporate culture should be recognisable throughout the disclosures in the and consultants and anti-bribery and anti-corruption training and data
annual report, website and any other communications by the Company, both protection training is mandatory.
internal and external.
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 Whilst the Company is early stage, the Board is committed to returning value
all elements of the Company's shareholder base. to shareholders through execution of our strategy
The Board should ensure proactive engagement with shareholders on governance The Board recognises the AGM as an important opportunity to meet shareholders.
matters. This should be led by the Chair or, where appropriate by the Senior All the Directors are available to listen to the views of shareholders
Independent Director. Other Directors such as the chairs of the Boards informally immediately after the AGM
sub-committees, should make themselves available for engagement with
shareholders. 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 Company's website maintains a channel to provide information and receive
the motivations behind shareholder voting decisions 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 Long-term success relies upon good relations with a range of different The executive maintained communications with trade and interest groups working
environmental responsibilities, and their implications for long-term success. stakeholder groups. in the markets where its products are sold and applied.
The Board should periodically identify the company's key stakeholders - for A number of mechanisms are in place to solicit feedback from shareholders
example suppliers, customers, employees, communities, regulators, or others. including the Company's website and face to face meetings as well as the AGM
The Board should understand their needs, interests and expectations.
Feedback is an essential part of all control mechanisms. Systems need to be in Going forward, much of the Group's business will be involved in
place to solicit, consider and act on feedback from all shareholders. decarbonisation of public, commercial and private buildings.
The Company should devote particular attention to its workforce and ensure
that its practices towards its 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. 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 The business model is focussed on decarbonisation of buildings in the public,
relevant environmental and social issues is a responsibility of the Board. commercial and private sector, together with energy efficiency.
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 The culture of the business reinforces social and environmental
be integrated into the Company's strategy, risk management and business model. responsibility.
5. Embed effective risk management, internal controls and assurance The Board needs to ensure that the company's risk management framework Risk management in our Annual Report and Accounts details the risks to the
activities, considering both opportunities and threats, throughout the identifies and addresses all relevant risks in order to execute and deliver on business and how these are mitigated.
organisation. 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.
Setting strategy includes determining the extent of exposure to the identified The Board considers risks to the business at its monthly meetings and reviews
principal risks that the Company is able to bear and willing to take (risk the principal risks to the business and the risk register quarterly.
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 should ensure that all potential risks are considered, on a Risks are reviewed in the business monthly and quarterly by the Board.
proportionate and material basis, including those relating to climate
change.
The Board should review and consider whether the Company's enterprise wide The enterprise-wide controls are continually reviewed and the FPPP
controls are sufficiently robust to manage the identified risks adequately. (Financial Position and Prospects Procedures) manual updated if required.
To achieve effective risk management, the Board, and in particular the audit All Board members are entitled to engage external experts as part of their
committee, must ensure that there are appropriate assurance activities in roles where they see fit.
operation. This may be based on access to internal resources, or particularly
in specialist or technical areas, the utilisation of external experts.
It is important to ensure that the Company auditor is and is seen to be The Company's auditor HaysMac is independent of management.
sufficiently independent of management.
6. Establish and maintain the Board as a well-functioning, balanced team, The Board members have a collective responsibility and legal obligation to All members of the Board are experts in their fields with no one individual
led by the Chair. promote the interests of the Company and are collectively responsible for dominating. All Directors are seasoned Board members and understand the
defining corporate governance arrangements. The Board should not be dominated responsibilities of being a company Director.
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.
Shareholders should be given the opportunity to vote annually on the (re-) The shareholders have the opportunity annually at the AGM to vote for the
election of all individual Directors to the Board. (re-)election of all the Directors
In order to uphold the quality of Board independence, the Board should be The new Board comprises 3 executive Directors and 2 non-executive Directors.
comprised of an appropriate balance between executive and non-executive The 2 non-executive Directors are independent.
Directors. The independent non-executive Directors should comprise at least
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.
Key committees, in particular the audit committee, should comprise at least a Both the audit and remuneration committees comprise non-executive Directors
majority of independent NEDs and ideally aim for full independence. The only, with Linda Main being the Senior Independent Director.
Company should consider whether it is appropriate to have a senior independent
Director.
Boards should be sensitive to both real and perceived impediments to The Board is relatively newly constituted.
independence. Consideration should be given to those factors which may impede
independence which include length of Board tenure, size of shareholding, prior Any related parties are excluded from Board discussions concerning their
and/or current commercial or contractual relationships with the Company; prior interests to maintain independence.
and/or current commercial or contractual relationships with executive
Directors; and significant pay arrangements beyond a Director's fee. Directors' remuneration is set by the Remuneration Committee which comprises
the non-executive Directors.
7. Maintain appropriate governance structures and ensure that individually The Company should maintain governance structures and processes in line with The Corporate Governance report details the Company's governance structures
and collectively the Directors have the necessary up-to-date experience, its corporate culture and appropriate to its: and why they are appropriate and suitable for the Company.
skills and capabilities.
• size and complexity; and
• capacity, appetite and tolerance for risk.
The governance structures processes and policies should evolve in parallel The Board has a formal schedule of matters reserved for the Board and is
with its size, strategy and business model to reflect its maturity and stage supported by the Audit and Remuneration committees. Due to the size of the
of development. 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
The Board should be supported by committees - typically at least an audit, regular basis whether a Nominations committee is needed.
remuneration and nominations committee - that also have the necessary skills
and knowledge to discharge their duties and responsibilities effectively. 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 The Directors have a proven track record of previously serving on Boards.
its governance responsibilities, including among other things with respect to Where an expert view is needed the Board will seek input from external
cyber security, emerging technologies, and relevant sustainability matters advisers
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.
All Directors should continually update their skills and knowledge. As the Further information about the Board's skillset, including each Director's
Company and the external environment evolves, the mix of skills and experience biography is set out on the Company website and additional information is set
required on the Board will change. The Board should consider its training and out in this report.
development needs in this context, plan ahead and structure such provision
accordingly Each director attends industry events and seminars to continually update their
skills and knowledge.
The Board (and any committees) should be provided with high quality Through the FPPP process a new Board pack has been developed and this will
information in a timely manner to facilitate the proper assessment of the continue to evolve as the business grows.
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.
8. Evaluate board performance based on clear and relevant objectives, The Board should regularly review its performance as a unit, as well as that The Board is relatively new, a performance evaluation process will be
seeking continuous improvement. of its committees and the individual Directors. developed.
The Board performance review should be carried out on an annual basis and The annual review process will be implemented following the appointment of the
include opportunities for improvement with respect to the performance of the CEO, together with succession planning.
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.
9. Establish a remuneration policy which is supportive of long-term value It is the Boards responsibility to establish an effective remuneration policy The Remuneration Committee has been established comprising 2 independent
creation and the Company's purpose and culture which is aligned with the Company's purpose, strategy and culture, as well as non-executive Directors. The Committee are reviewing the remuneration strategy
its stage of development. on a regular basis.
A remuneration policy should motivate management and promote the long-term The remuneration policy includes long term incentive schemes to promote long
growth of shareholder value. Remuneration practices across the Company, in term growth of shareholder value.
particular for senior management, should support and reinforce the desired
corporate culture and promote the right behaviours and decisions.
Pay structures for senior management should be simple and easy for The remuneration policy includes share options and plans to include a
participants to understand and foster alignment with shareholders through the Save-As-You-Earn scheme for wider participation in shareholding across the
building and the holding of a meaningful shareholding in the Company Group.
The remuneration committee should, as necessary, consult with other Board The Remuneration Committee will consult with the Audit Committee and the
committees in order to set appropriate incentive targets and to appraise Board, as appropriate, when developing the remuneration policy.
performance in respect of those targets.
The annual remuneration report should be put to an advisory shareholder vote. The Chair of the Remuneration Committee will consult with major shareholders
Where not mandated to be put to a binding vote, remuneration policies should on the design of incentives.
at least be put to an advisory vote. Given the significance and dilutive
impact of such plans, new (or significant amendments to existing) share Whilst this will not be binding, it will give shareholders the opportunity for
schemes or long-term incentive plans should be put to shareholder vote. input.
10. Communicate how the company is governed and is performing by maintaining a A healthy dialogue should exist between the Board and all of its stakeholders, The Company encourages two-way communication with its investors and responds
dialogue with shareholders and other relevant stakeholders. including shareholders, to enable all interested parties to come to informed quickly to all queries received.
decisions about the company.
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 The Chair is responsible for ensuring appropriate communication and reporting
Board and all constituent parts of its shareholder base. This will assist: to shareholders.
the communication of shareholders' views to the board; and
the shareholders' understanding of the unique circumstances and constraints A range of corporate information (including Company announcements, historical
faced by the company. 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 The Company will disclose outcomes of all votes at shareholder meetings in a
report or website). 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 non-audit services rendered to the Group
and the Company, in the form reporting accountants on the RTO and providing
financial due diligence. 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 5a
Significant reporting issues considered during the year included the
following:
· Revenue recognition under IFRS 15 and the application within the
Group.
· Application of IFRS 3 and calculations to allocate the purchase price
of acquisitions made in the period.
· Impairment reviews of acquired subsidiaries.
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
Linda Main
Audit Committee Chair
26 June 2025
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 comprises 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 emoluments of the Directors were as follows (Audited):
Year ended 31 December 2024 Year ended 31 December 2023
Salary & Directors' fees Pension contributions Share-based payments Total Total
£ £ £ £ £
Executive Directors
Bob Holt OBE (appointed 1 March 2024) 41,667 1,875 13,580 57,122 -
Elizabeth Lake (appointed 13 March 2024) 78,250 3,913 4,527 86,690 -
John Charlton (appointed 1 March 2024) 31,667 1,146 4,527 37,340 -
Robert Richards (resigned 1 March 2024) 28,272 - - 28,272 150,000
Non-Executive Directors
Linda Main (appointed 1 May 2024) 16,667 833 - 17,500 -
Sandra Skeete (appointed 3 June 2024) 15,000 750 15,750 -
Lord David Willetts (resigned 29 February 2025) - - - - 25,000
George Katzaros (resigned 29 February 2024) - - - - 12,500
Gavin Mayhew (resigned 2 January 2025) - - - - -
Total 211,523 8,517 22,634 242,674 187,500
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 three 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:
No bonuses were paid in relation to the reporting period. Going forward the
remuneration committee will be establishing a performance bonus scheme with
relevant targets.
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.
• Benefits:
Benefits include Company pension contributions of 5%. The Company intends to
include health insurance, and life insurance going forward.
• Longer term incentives:
To incentivise the Directors, and align their interests with shareholders, the
Company granted share options in the period. The share options will vest at
a future date as described in Note 24 in the financial statements. The
vesting conditions are exclusively share price related.
Non-Executive Directors are currently remunerated solely in the form of
Directors' fees and pension contributions.
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 2024 and 2023 were as follows:
Linda Main
Chair - Remuneration Committee Chair
26 June 2025
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 business practices
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 in
supporting, engaging and motivating 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 policies which adhere to all applicable laws.
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 2024.
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 build a leading business in the energy services sector focusing on
decarbonisation of public and private sector building fabric, leveraging UK
Government investment in Net Zero transition and UK clean energy industries.
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' 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 (2023: £nil).
Directors and directors' interests
The directors who held office during the year or subsequently were as follows:
Bob Holt Appointed 29 February 2024
John Charlton Appointed 29 February 2024
Elizabeth Lake Appointed 13 March 2024
Linda Main Appointed 1 May 2024
Sandra Skeete Appointed 3 June 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
Regarding 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 resolutions of
the shareholders.
Directors' interests
The Directors held the following beneficial interests in the shares of EARNZ
plc at 31(st) December 2024:
Ordinary shares Issued share capital %
of £0.04 each
Bob Holt 11,300,000 11.06%
Elizabeth Lake 1,666,666 1.63%
John Charlton 1,100,000 1.08%
Linda Main 200,000 0.20%
Sandra Skeete 13,333 0.01%
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 25 of the accounts.
Financial Risk management
Details of financial risk management are provided in Note 21 to the accounts.
Political and charitable contributions
The Group made no charitable or political contributions during the year.
Going Concern
As at the date of approval of these financial statements, the base case cash
flow forecast based on the Board-approved budget and cashflows to 30 June
2026, indicated that no additional cash resources will be required over the
course of the next 12 months. This base case assumed that no further
acquisitions took place in the period to 30 June 2026. A further forecast was
prepared and reviewed assuming that the Group acquired the entire issued share
capital of A&D from 1 July 2025, in line with the Group's stated buy and
build strategy. This scenario also indicated that no additional cash resources
will be required over the course of the next 12 months.
The Group's cash reserves have been boosted by the fundraise which took place
on 12 June 2025, £1.02m was raised for the purchase of A&D and to provide
additional working capital for the Group to continue on its buy and build
growth strategy.
The Group stress tested two scenarios, using the Board-approved budget and
cash flows to 30 June 2026 both with and without the acquisition of A&D.
Scenario 1 The impact of a 10% reduction of revenue across the Group with a
corresponding reduction in cost of sales whilst taking no mitigating actions.
Scenario 2 The impact of subcontractor and direct labour costs increasing by
10% but including reasonable mitigating factors that would be implemented as a
matter of course.
Under both forecasts and scenarios, the Group is able to generate profits and
cash and has positive net cash available at the end of the period considered.
Should the actual scenarios be worse than those modelled, the Board have other
mitigants such as reviewing and reducing variable cost, that could be employed
to ensure that there was sufficient cash in the Group.
Further to this, the Group has a credit approved offer for a bank loan of
£500k, which has not been included in the forecasts or scenarios but if drawn
upon, would provide further liquidity to support the going concern basis.
Based on this assessment, the Directors consider that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis of accounting in
preparing the financial statements.
Substantial shareholdings:
The Company has been advised of the following interests in more than 3% of its
ordinary share capital as at 31 December 2024:
No. of Shares (nominal value £0.04) %
Shareholder
Gresham House Asset Management 25,019,808 24.5%
Bob Holt 11,300,000 11.1%
UBS Group AG 5,802,146 6.9%
Andrew Custer 4,666,666 4.6%
Oakglen Wealth Management 3,709,666 3.6%
Canaccord Genuity Group 3,600,000 3.5%
G Force 3,390,034 3.3%
At the signing date the Company had been advised of the following interests in
more than 3% of its ordinary share capital:
No. of Shares (nominal value £0.004) %
Shareholder
Gresham House 28,492,808 24.28%
Pentwater Capital Management Europe LLP 12,744,443 10.95
Bob Holt 12,395,444 10.62%
Andrew Custer 4,666,666 4.00%
Oakglen Wealth Limited 3,709,666 3.19%
Canaccord Genuity Group 3,600,000 3.01%
Statement of Disclosure to the Auditors
The Directors 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
HaysMac LLP were appointed as auditors to the Company during the year. In
accordance with section 485 of the Companies Act 2006, a resolution proposing
that they be re-appointed will be put to the vote at the AGM.
By order of the Board
Bob Holt OBE
Executive Chair
26 June 2025
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 Auditors' Report to the members of Earnz Plc
Qualified opinion
We have audited the financial statements of EARNZ plc (the 'Company')) and its
subsidiaries (the 'Group') for the year ended 31 December 2024 which comprise
the Consolidated Statement of Comprehensive Income, the Consolidated and
Company Statement of Financial Position, the Consolidated Cash Flow Statement,
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, expect for the possible effects of matters 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 Company's affairs as at 31 December 2024 and of the Group's
loss for the year then ended;
• 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 - Limitation of Scope
Following the disposal of Verditek Solar Italy SRL during the year, the
appropriate audit evidence required to verify the carrying value of the assets
and liabilities transferred was not available to us nor the Company. As such,
we were unable to obtain sufficient appropriate audit evidence to verify and
substantiate the details captured in the trade receivables, trade payables and
inventory subledger schedules of Verditek Solar Italy SRL at the disposal
date. Accordingly, we could not verify those balances or the final net asset
figure included within the completion balance sheet of the disposed subsidiary
that was used to calculate the loss on disposal or the loss from discontinued
operations. Consequently, we were unable to determine whether any adjustments
to these amounts were required. Should an adjustment be necessary leading to a
change in the discontinued operations profit, the impact on the overall profit
for the year would be nil, as there would be an equal and opposite impact on
the loss on disposal figure.
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.
An overview of the scope of our audit
The Group comprises a parent holding company, one subsidiary that was disposed
of during the year, two newly acquired subsidiaries and a number of dormant
entities. The material components of the Group for which we performed full
scope audit procedures following an assessment at the audit planning phase
were Earnz Plc, Southwest Heating Services Limited ("SWH") and Cosgrove &
Drew Limited ("C&D") with analytical review or specific scope procedures
completed on other group entities that were determined to be less significant
to the Group based on our assessment of materiality.
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.
We communicated with both the Directors and the Audit Committee our planned
audit work via our audit planning report and relevant discussion. We
communicated audit progress with the Audit Committee through interim audit
progress meetings and communicated any issues to the Audit Committee and
Directors in our final audit findings report.
Conclusions relating to going concern
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's ability to continue
to adopt the going concern basis of accounting included consideration of the
inherent risks to the Group's business model and analysed how those risks
might affect the Group's financial resources or ability to continue operations
over the period 12 months from the date of the signing of the financial
statements.
The risks that we considered most likely to affect the Group's financial
resources or ability to continue operations over this period were adverse
circumstances impacting the underlying profitability of the trading
subsidiaries as well as access to sufficient cash facilities to undertake
acquisitions.
We considered these risks through a review of the application of reasonably
foreseeable downside scenarios that could arise with reference to the level of
available financial resources indicated by the Group's financial forecasts and
management's assessment of these risks, including potential mitigations
available.
Our audit procedures to evaluate the Director's assessment of the Group and
the Company's ability to continue to adopt the going concern basis of
accounting included:
- Undertaking an initial assessment at the planning stage of the
audit to identify events or conditions that may cast significant doubt on the
Group and the Company's ability to continue as a going concern;
- Evaluating the methodology used by the Directors to assess the
Group and the Company's ability to continue as a going concern;
- Reviewing the Directors' going concern assessment and evaluating
the key assumptions used and judgements applied;
- Reviewing the sensitivities performed by management to understand
any going concern implications;
- Performing our own review of the liquidity headroom and applying
sensitivities to the base trading and cashflow forecast assessments of the
Directors to ensure there was sufficient headroom to adopt the going concern
basis of accounting;
- Reviewing and confirming the receipt of post year end cash amounts
for the issue of shares to the Group bank statements;
- Reviewing the availability of the Group's existing cash balances
for use in the day to day running of the business;
- Considering various scenarios, including a scenario with an
acquisition of A&D Carbon Solutions Limited and a scenario where this
acquisition did not take place;
- A review of post year end actuals compared to forecasts prepared
by the directors to note whether there was any adverse trading or change in
underlying performance of the trading subsidiaries within the group that would
impact the going concern assessment;
- Assessing the reasonableness of growth assumptions included within
the going concern assessment prepared by the directors by comparing actual
performance to forecasts to assist us in determining whether these growth
assumptions are reasonable; and
- Reviewing and assessing the appropriateness of the Directors'
disclosures regarding going concern in the financial statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue;
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
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.
We have determined the matters described below to be the key audit matters to
be communicated within our report.
Key Audit Matter How our scope addressed this matter
Fraud in Revenue Recognition To address the risks associated with revenue, our audit procedures consisted
of but were not limited to:
· We assessed the Group's accounting policy for each material
revenue stream and performed walkthrough procedures to assess the design and
implementation of controls.
The risk of incorrect treatment of revenue under IFRS 15.
· We performed substantive tests of detail for a sample of revenue
items recorded during the year to ensure that revenue had not been materially
misstated.
We consider there to be a significant risk of misstatement in the financial
statements arising as a result of incorrect application of IFRS 15 and · We performed specific targeted testing around the year-end, with
recording revenue when the performance obligations have not been met, thus sales in December 2024 and January 2025 selected for testing to supporting
resulting in a material overstatement of revenue. documentation to ensure that revenue had been included within the correct
period.
· We performed substantive analytical review procedures to gain
The Group recognised revenue at a point in time and had revenue recognised sufficient coverage of revenue recognised in the year to ensure that it had
over time. There is a risk that revenue is materially overstated if revenue been recorded appropriately.
has been recorded prior to the relevant performance obligations being
satisfied. · We obtained and critically evaluated management's revenue
recognition policy and whether the application of IFRS 15 was reasonable and
appropriate.
Specifically, there is a risk in relation to the cut-off of revenue around the · For revenue recorded over time, we performed relevant testing on
year-end and occurrence of revenue. Specific testing was planned to ensure accrued and deferred income to ensure that revenue was being appropriately
this risk had been appropriately tested for. recognised during the year ended 31 December 2024.
Acquisition accounting and valuation of intangible assets To address the risks associated with acquisition accounting and the valuation
of intangible assets, our audit procedures consisted of but were not limited
to:
There is a risk that the acquisition accounting in relation to the acquisition • We reviewed the assessment prepared by management regarding
of two trading subsidiaries during the year have been accounted for whether the transaction constituted a business combination in accordance with
incorrectly with reference to IFRS 3 'Business Combinations'. IFRS 3
• We reviewed the work of managements expert used to complete the
purchase price allocation assessment to assess whether the intangible assets
The risks we identified were as follows: considered to meet the relevant criteria as per IFRS 3 were appropriate.
· The accounting entries of the newly acquired entities in the • We reviewed and challenged the valuation exercise undertaken by
Group accounts management and their expert for the purposes of valuing separately
identifiable assets arising from the acquisition to ensure these were
· Over/understatement of the fair value of the net assets acquired reasonable.
and the resulting goodwill being recorded
• We reviewed the consideration payable in accordance with the share
· Identification and accounting of separately identifiable purchase agreements in place to ensure that the calculation of goodwill was
intangible assets arising on acquisition in accordance with IFRS 3 appropriate.
· Cut-off of the income and expenses from the point of acquisition • We performed substantive audit testing on the opening balance
to be recognised in the consolidated accounts sheet at acquisition date for both C&D Ltd and SWH Ltd to ensure that the
net asset values acquired that were incorporated in the acquisition accounting
· Completeness and cut-off of balance sheet of the entities being journals were appropriate.
acquired at the date of acquisition
• We assessed whether any impairment indicators existed for the
· Appropriateness of the disclosures in the financial statements intangible assets at the end of the year, as well as reviewed the goodwill
relating to the acquisition of the new businesses. impairment review prepared by management to ascertain whether any impairment
was appropriate or not.
· Any impairment of the intangible assets including goodwill
recognised as part of the acquisition may be materially overstated.
Accounting for disposal of a group subsidiary (Verditek Solar Italy SRL) and We performed targeted audit procedures over the Group's disposal of its
discontinued operations subsidiary Verditek Solar srl (VSI) and the related presentation of
discontinued operations.
The risk of material misstatement relating to the disposal of Verditek Solar
Italy SRL ("VSI") is that there is a misstatement in the profit/loss from Our procedures consisted of but were not limited to:
discontinued operations that would materially impact the calculation of the
profit/loss on disposal.
· We obtained the disposal reconciliation, management's working
calculations and supporting evidence for both the consideration received and
the carrying value of net assets transferred.
· We set out to audit to an appropriate level of materiality the
veracity of the balances held within the disposal date statement of financial
position.
Following the sale, management were not able to provide us with the relevant
supporting documentation in order to satisfy our planned audit procedures. As
a result of this, we have identified a limitation of scope and accordingly
issued a qualified audit opinion in relation to this area of the financial
statements. This is covered in further detail in the basis for qualified
opinion section of our audit report.
Due to this, this has been considered a Key Audit Matter by nature.
Our application of materiality
The scope and focus of our audit were influenced by our risk 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 £199,000,
determined by reference to 2.5% of gross assets. We have reported to the audit
committee any corrected or uncorrected misstatements arising exceeding
£9,900. Performance materiality was set at £129,000, being 65% of
materiality.
Materiality for the parent holding company and the two newly acquired
subsidiaries (Cosgrove & Drew Ltd and South West Heating Services Limited)
was set by reference to a percentage of component materiality based on each
entity's contribution to the Group gross assets. Materiality for Earnz Plc
parent company was set at £83,600.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors' report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
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.
We have nothing to report in respect of the following matters in relation to
which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements are not in agreement with
the accounting records and returns; or
• certain disclosures of directors' remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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 Group and industry, we identified that the
principal risks of non-compliance with laws and regulations related to
regulatory requirements for the Group 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 accounting journal entries, in particular those
journal entries which exhibited the characteristics we had identified as
possible indicators of irregularities; 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
(http://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)
For and on behalf of HaysMac LLP
Statutory Auditors
26 June 2025
Consolidated statement of profit or loss
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Continuing operations
Revenue 3,4 2,637 -
Cost of sales 5 (2,289) -
Gross profit 348
Administrative expenses 5 (3,154) (743)
Operating loss (2,806) (743)
Net finance costs 6 (74) (44)
Other income / (losses) 1 (557)
Loss before tax (2,879) (1,344)
Taxation 7 195 -
Loss for the period from continuing operations (2,684) (1,344)
Loss from discontinued operations 13 (77) (745)
Loss on disposal of discontinued operations 13 (58) -
Loss for the period (2,819) (2,089)
Loss attributable to owners of Earnz Plc arises from:
Continuing operations (2,684) (1,344)
Discontinued operations 13 (135) (745)
(2,819) (2,089)
Earnings per Share
Basic and diluted (£) 8 (0.046) (0.436)
Consolidated statement of comprehensive loss
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Loss for the year (2,819) (2,089)
Other comprehensive income/(loss), net of tax:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of discontinued operations. 9 (17)
Other comprehensive income / (loss) 9 (17)
Total comprehensive loss for the year (2,810) (2,106)
Total comprehensive loss for the period attributable to owners of Earnz Plc
arises from:
Continuing operations (2,684) (1,344)
Discontinued operations 13 (126) (762)
(2,810) (2,106)
The accompanying notes are an integral part of these financial statements.
*Comparative information has been re-presented due to discontinued operations
Consolidated statement of financial position
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Non-current assets
Property, plant and equipment 9 310 98
Right-of-use assets 10 220 306
Goodwill 11 3,577 -
Intangible assets 11 1,003 -
Deferred tax asset 7 130 -
Total non-current assets 5,240 404
Current assets
Cash and cash equivalents 16(i) 1,965 54
Trade and other receivables 16(ii) 1,125 30
Contract assets 16(iii) 266 -
Inventories 15 145 419
Other current assets 16(iv) 197 140
Total current assets 3,698 643
Current liabilities
Trade and other payables 16(v) (1,947) (284)
Contingent consideration 16(vi) (180) -
Loans and borrowings 16(vii),16(viii) (1,110) -
Lease liabilities 16(ix) (92) (214)
Tax liabilities 16(x) (64) -
Provisions 17 - (30)
Total current liabilities (3,393) (528)
Net current assets 305 115
Non-current liabilities
Contingent consideration 16(vi) (1,155) -
Loans and borrowings 16(vii) (261) (523)
Lease liabilities 16(ix) (153) (94)
Total non-current liabilities (1,569) (617)
Net assets 3,976 (98)
Capital and reserves
Share capital 18 4,088 222
Share premium 18 15,621 12,626
Share-based payment reserve 19 39 179
Currency translation reserve - (9)
Retained earnings (15,772) (13,116)
Total equity 3,976 (98)
The accompanying notes are an integral part of these financial statements.
These financial statements were approved and authorised for issue by the board
on 26 June 2025 and signed on its behalf by:
Bob Holt
Chief Executive Officer
Consolidated statement of changes in equity
for the year ended 31 December 2024
Share capital Share Premium Share-based payment reserve Currency translation reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
177 12,206 333 8 (11,027) 1,697
Balance at 1 January 2023
Loss for the year - - - - (2,089) (2,089)
Other comprehensive loss - - - (17) - (17)
Total comprehensive loss - - - (17) (2,089) (2,106)
Transactions with owners:
Shares issued, net of costs 45 420 - - - 465
Equity settled share-based payments - - (154) - - (154)
Total transactions with owners 45 420 (154) - - 311
Balance at 31 December 2023 222 12,626 179 (9) (13,116) (98)
Loss for the year - - - - (2,819) (2,819)
Other comprehensive loss - - - 9 - 9
Total comprehensive loss - - - 9 (2,819) (2,810)
Transactions with owners:
Shares issued, net of costs 3,227 2,436 - - - 5,663
Consideration shares issued on acquisitions 639 559 - - - 1,198
Transfer of lapsed share-based payments - - (163) - 163 -
Equity-settled share-based payments - - 23 - - 23
Total transactions with owners 3,866 2,995 (140) - 163 6,884
Balance at 31 December 2024 4,088 15,621 39 - (15,772) 3,976
The accompanying notes are an integral part of these financial statements.
Nature and purpose of reserves:
Share capital
This reserve represents the nominal value of shares issued by the company. It
arises from the issue of ordinary shares and reflects the legal capital that
is not distributable to shareholders.
Share premium
This reserve represents the excess of proceeds received over the nominal value
of shares issued by the company, in addition to any costs incurred on the
issuance of shares. It is a non-distributable reserve.
Share-based payment reserve
This reserve represents the cumulative fair value of equity-settled
share-based payments recognised as an expense in the profit or loss account in
accordance with IFRS2. This reserve is not distributable and is transferred to
retained earnings upon exercise or lapse of the related share-based payment
arrangement.
Currency translation reserve
This reserve represents the currency translation differences arising from the
consolidation of foreign operations. This reserve is not distributable and is
reclassified to profit or loss on disposal of the relevant foreign operation.
Retained Earnings
This reserve represents the cumulative net profits or losses of the group
after dividends and other appropriations. It includes all undistributed
earnings since incorporation and reflects the portion of profits that is
available for distribution to shareholders, subject to any legal or
contractual obligations.
It also includes adjustments relating to changes in accounting policies or the
corrections of prior period errors, where applicable, in accordance with IAS
8.
Consolidated cash flow statement
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Cash flows from operating activities
Loss before taxation (2,879) (2,089)
Adjustments to cash flows from non-cash items:
Depreciation 9,10 81 223
Amortisation 11 33 -
Impairment of ICSI receivable - 557
Share based payment expense 19 23 (154)
Loss on disposal of subsidiary 13 (77) 50
Less utilisation of onerous contract provision 17 (240) -
Bad debt expense 16(ii) 40 -
Less finance income 6 (39) (4)
Add back finance costs 6 113 62
(2,945) (1,355)
Working capital adjustments:
(Increase) in inventories 15 8 116
(Increase) in trade and other receivables 162 (25)
Increase in trade and other payables (308) 8
Net cash (outflows) from operating activities (3,083) (1,256)
Cash flows from investing activities
Interest received 6 39 4
Payment for acquisition of subsidiaries net of cash acquired 12 (747) -
Purchase of property, plant and equipment 9 (64) (2)
Proceeds from sale of property, plant and equipment 9 1 -
Staff loans issued (4) -
Net cash (outflows)/inflows from investing activities (775) 2
Cash flows from financing activities
Proceeds from issue of shares, net of share issue costs 18 5,663 465
Proceeds from unauthorised overdraft 2 -
Net proceeds from factoring of trade receivables 16(viii) 139 -
Factoring fees and interest paid (39) -
Proceeds from related parties 339 -
Proceeds from borrowings - 500
Repayment of borrowings (89) (325)
Repayment of lease liabilities (73) (163)
Interest paid 6 (10) (15)
Net cash inflows from financing activities 5,932 462
Net cash outflow from discontinued operations 13 (162) -
Net increase/(decrease) in cash and cash equivalents 1,912 (792)
Cash and Cash Equivalents at the start of the period 54 842
Net foreign exchange differences on cash and cash equivalents (1) 4
Cash and Cash Equivalents at the end of the period 1,965* 54
The accompanying notes are an integral part of these financial statements.
*Includes restricted cash of £583k, see note 16(i) for further details.
Notes to the financial statements
for the year ended 31 December 2024
1.0 Corporate Information
Energy Advisory Regeneration Net Zero, EARNZ Plc ("EARNZ", "the Company"),
previously Verditek Plc, is a public company limited by share capital,
incorporated in the UK, registered in England and Wales (Company number:
10114644) and domiciled in the UK.
The address of its registered office is:
St James House First Floor,
St James House,
St James' Square
Cheltenham,
Gloucestershire,
United Kingdom,
GL50 3PR
The Company's ordinary shares are traded on the Alternative Investment Market
(AIM) of the London Stock Exchange under the ticker symbol EARN.
On 1 March 2024, the Company completed the disposal of its only operating
business, Verditek Solar Italy srl, which formed a significant part of its
historical activities. Following its disposal, the Company became an AIM Rule
15 cash shell pursuant to the AIM Rules. On the same date, the existing board
of directors resigned with immediate effect and a new executive board was
appointed.
On 6 March 2024, the Company changed its name from Verditek Plc to EARNZ Plc
and, under the new board of directors, has undergone a strategic shift,
reflecting a change in its core operations and future direction.
The Company's strategy is to buy and build leading businesses, with a focus on
decarbonisation and net zero.
1.1 Statement of compliance
These consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards in conformity with the
requirements of the Companies Act 2006 as applicable to companies reporting
under IFRS.
These financial statements also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB) and interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) as adopted by the UK.
2.1 Basis of preparation
These consolidated financial statements present the results of the Earnz Plc
and its subsidiaries ('the Group'), for the year ended 31 December 2024. The
Parent Company's financial statements present information about the Company as
a separate stand-alone entity.
During the year, the Group disposed of Verditek Solar Italy srl, which has
been classified as a discontinued operation in accordance with IFRS 5 -
Non-current Assets Held for Sale and Discontinued Operations. The results of
the discontinued operation have been presented separately from continuing
operations in the consolidated statement of profit or loss in the current
period. This reclassification has no impact on the total loss for the year,
net assets, or the total comprehensive income in the prior year.
Comparative information for the profit or loss has been restated but the
statement of financial position has not, as the operation did not meet the
criteria to be classified as held for sale or discontinued at the end of the
prior reporting period.
The material accounting policy information adopted in the preparation of the
consolidated financial statements is set out below. The policies have been
consistently applied to all years presented, unless otherwise stated.
The preparation of financial statements, in compliance with the UK adopted
IFRS Accounting Standards, requires the use of certain judgements, estimates
and assumptions that affect the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is
made and in any future periods affected. Significant areas where the Group has
applied critical accounting judgements and key sources of estimation
uncertainty are disclosed in Note 2.
The Group and Parent Company financial statements of Earnz Plc for the year
ended 31 December 2024 (and the comparatives for the year ended 31 December
2023) were authorised for issue in accordance with a resolution of the
Directors on 26 June 2025.
2.2 Going concern
The consolidated financial statements have been prepared on a going concern
basis, under the historical cost convention as modified by financial assets
and financial liabilities.
The Directors have made an assessment of the Group's ability to continue as a
going concern for a period of at least 12 months from the date of approval of
these financial statements. In making this assessment the Directors have
considered:
· The Group's current financial position and cash flow forecasts;
· The availability of existing banking and financing facilities;
· The expected performance of the businesses in light of the current
and forecasted market conditions and;
· Any significant risks and uncertainties, including revenue reductions
and cost inflations.
As at the date of approval of these financial statements, the base case cash
flow forecast based on the Board-approved budget and cashflows to 30 June
2026, indicated that no additional cash resources will be required over the
course of the next 12 months. This base case assumed that no further
acquisitions took place in the period to 30 June 2026. A further forecast was
prepared and reviewed assuming that the Group acquired the entire issued share
capital of A&D Carbon Solutions LTD from 1 July 2025, in line with the
Group's stated buy and build strategy.
This scenario also indicated that no additional cash resources will be
required over the course of the next 12 months.
The Group's cash reserves have been boosted by the fundraise which took place
on 12 June 2025, £1.02m was raised for the purchase of A&D Carbon
Solutions LTD and to provide additional working capital for the Group to
continue on its buy and build growth strategy.
The Group stress tested two scenarios, using the Board-approved budget and
cash flows to 30 June 26 both with and without the acquisition of A&D
Carbon Solutions LTD.
Scenario 1 The impact of a 10% reduction of revenue across the Group with a
corresponding reduction in cost of sales whilst taking no mitigating actions.
Scenario 2 The impact of subcontractor and direct labour costs increasing by
10% but including reasonable mitigating factors that would be implemented as a
matter of course.
Under both forecasts and scenarios, the Group is able to generate profits and
cash, and has positive net cash available at the end of the period considered.
Should the actual scenarios be worse than those modelled, the Board have other
mitigants such as reviewing and reducing variable cost, that could be employed
to ensure that there was sufficient cash in the Group.
Further to this, the Group has a credit approved offer for a bank loan of
£500k, which has not been included in the forecasts or scenarios but if drawn
upon would provide even further liquidity to support the going concern basis.
Based on this assessment, the Directors consider that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis of accounting in
preparing the financial statements.
2.3 Basis of measurement
The financial statements are prepared on the basis of the following
measurement categories:
Non-current assets including property, plant and equipment are measured at
historical cost, less accumulated depreciation and accumulated impairment
losses.
Inventory is measured at the lower of cost or net realizable value.
Financial instruments are classified into categories based on their nature and
are measured as follows:
· Financial assets at amortised cost using the effective interest rate
method
· Financial assets at fair value through profit or loss (FVTPL) with
any gains or losses on the remeasurement of the fair value being recognised in
profit or loss
Impairment of non-financial assets is measured using the value-in-use method,
whereby the recoverable amount of an asset or cash-generating unit is
determined based on the present value of future cash flows expected to be
derived from the asset.
Liabilities are generally measured at amortised cost, except liabilities
related to leases.
Leases are measured at the present value of future lease payments, discounted
using the appropriate discount rate (see Note 16(ix) for further details on
leases).
2.4 Changes in accounting policies, disclosures, standards and
interpretations
New and amended standards adopted by the Group
The following accounting standards have been issued and were effective 1
January 2024 but have limited impact on the company's financial statements.
· Liability in a Sales and Leaseback (Amendments to IFRS 16
Leases);
· Classification of Liabilities as Current or Non-current
(Amendments to IAS 1 Presentation of Financial Statements);
· Non-current Liabilities with Covenants (Amendments to IAS
1 Presentation of Financial Statements); and
· Supplier Finance Arrangements (Amendments to IAS 7
Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures)
The amendments listed above did not have any impact on the amounts recognised
in current or prior periods and are not expected to significantly affect
future periods.
New standards, interpretations, and amendments not yet effective
There are a number of standards, amendments to the standards and
interpretations which have been issued by the IASB that are effective in
future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2025:
· Lack of exchangeability (Amendments to IAS 21 The Effects
of Changes in Foreign Exchange Rates)
The following amendments are effective for the period beginning 1 January
2026:
· Amendments to the Classification and Measurement of
Financial Instruments (Amendments to IFRS 9 Financial Instruments)
The following amendments are effective for the period beginning 1 January
2027:
· IFRS 18 Presentation and Disclosure in Financial
Statements
· IFRS 19 Subsidiaries without Public Accountability:
Disclosures
The Group is currently assessing the impact of these new accounting standards
and amendments but does not expect these or any other standards issued by the
IASB that are yet to be effective, to have a material impact on the group.
2.5 Accounting policies
Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The acquisition method of accounting is used to account for business
combinations by the Group.
All intra-group transactions, balances, income and expenses, and gains and
losses are eliminated on consolidation.
Accounting policies of subsidiaries are changed where necessary to ensure
consistency with the policies adopted by the Group.
See Note 20 for full details on subsidiaries.
On 29 February 2024, the Group disposed of Verditek Solar Italy srl. The
subsidiary's results have been included in the consolidated financial
statements up to the date of disposal and have been
accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations. Further disclosure is provided in Note 13.
The Group acquired Cosgrove & Drew Ltd and South West Heating Services
Limited on 29 August 2024.
The acquisitions were assessed and determined to meet the definition of a
business combination in accordance with IFRS 3 - Business Combinations.
Accordingly, the Group has applied the acquisition method to account for these
transactions, recognising identifiable assets acquired and liabilities assumed
at their fair values, at the acquisition date. The results of the acquired
entities have been consolidated from the date control was obtained. Further
disclosure is provided in Note 12.
Foreign currency transactions and balances
Functional and presentation currency
The financial statements are presented in pounds sterling which is the
presentational currency of the Group, and all values are rounded to the
nearest thousand pounds (£'000) unless otherwise stated.
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency').
Transactions and balances
Foreign currency transactions are translated into the entity's functional
currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such
transactions, and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates, are generally
recognised in profit and loss. Non-monetary items that are measured at
historical cost are not retranslated at year end.
Foreign exchange gains and losses that relate to borrowings are presented in
the statement of profit and loss, within finance costs. Other exchange gains
and losses are included in the line items to which they relate.
Group companies
The results and financial position of foreign operations that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
· Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet.
· Income and expenses for each statement of profit or loss and
statement of comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
· All resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the translation of any net
investment in foreign entities, and of borrowings and other financial
instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings
forming part of the net investment are repaid, the associated exchange
differences are reclassified to profit & loss, as part of the gain or loss
on sale.
Revenue Recognition
Revenue is recognised when the Group satisfies a performance obligation by
transferring control of a good or service to the customer, in an amount that
reflects the consideration to which the Group expects to be entitled in
exchange for those goods or services. Revenue is measured net of VAT, trade
discounts and other similar deductions.
The Group earns revenue from multiple income streams and revenue recognition
can vary depending on the type of contract and the specific terms and
conditions outlined within it. Different types of contracts may involve
varying performance obligations, timing of revenue recognition and methods for
measuring the transaction price but currently the Group has two broad
categories for revenue recognition:
· Major projects and small works
Revenue is recognised over time for services in project contracts and small
works. Progress towards complete satisfaction of the overall performance
obligation is measured using the output method of certification of work
completed, agreed with the customer in advance of a month end.
Revenue is recognised at a point in time for materials in project contracts,
on delivery to site, which represents the transfer of control of the goods.
· Repairs, maintenance and reactive works
Revenue is recognised at a point in time when the entity satisfies the
performance obligation by transferring a promised service to a customer.
In addition, the follow criteria must be met in order to recognise revenue:
- A contract, with a customer exists, either written,
verbal or implied;
- The company has identified performance obligations in
the contract or contract milestones;
- The transaction price can be reliably estimated; and
- It is probable that the company will collect the
consideration to which it is entitled in exchange for the goods or services.
Performance obligations and milestones
Performance obligations define the goods or services that the entity promises
to transfer to the customer, where milestones represent significant points in
the fulfilment of those obligations. At the start of the contract the Group
establishes the most appropriate basis to determine the timing and pattern of
revenue recognition relating to that contract.
Performance obligations: Performance obligations are promises in a contract
with a customer to transfer distinct goods or services. They represent the
obligations of the entity to the customer and are the basis for revenue
recognition. Performance obligations can be explicit or implicit and each
distinct performance obligation must be separately identified and evaluated
for revenue recognition.
Milestones: Milestones are significant events or stages of completion that
trigger revenue recognition. They represent key points in the fulfilment of
performance obligations or the achievement of contractual objectives. Revenue
can be recognised upon the achievement of contract milestones if they
represent progress towards satisfying a performance obligation.
Transaction price
At the start of the contract, the total transaction price is estimated as the
amount of consideration to which the Group expects to be entitled in exchange
for transferring the promised goods and services to the customer, excluding
sales taxes. Variable consideration, such as price escalation, is included
based on the expected value, or most likely amount, only to the extent that it
is highly probable that there will not be a material reversal of the
cumulative revenue recognised. The transaction price does not include
estimates of consideration resulting from contract modification, such as
change orders, until they have been approved by parties to the contract.
The total transaction price is allocated to the performance obligations or
milestones identified in the contract in proportion to their relative,
stand-alone selling prices. Given the nature of the Group's services, which
are carried out under contract to customers individual specifications, there
are typically no observable stand-alone selling prices. Instead, stand-alone
selling prices are typically estimated based on expected costs plus contract
margin consistent with the Group's pricing principles.
Payment terms vary from contract to contract, and an element of the
transaction price may be received in advance of the delivery. The Group may
therefore have contract liabilities depending on the contract's status at a
period end.
The Group's contracts are not considered to include significant financing
components on the basis that there is no difference between the consideration
and the cash selling price.
Timing
At the start of the contract the Group defines the timing of revenue
recognition having considered the nature of the of the goods or services
provided, the terms of the contract, and the transfer of control.
Sale of goods: Revenue from the sale of goods is typically recognised at a
point in time when control of the goods is transferred to the customer. This
may occur upon delivery, shipment or when the customer takes possession of the
goods depending on the terms of the contract.
Rendering of services: Revenue from services may be recognised over time as
the services are performed, if the customer simultaneously receives and
consumes the benefits provided by the services. Alternatively, revenue may be
recognised at a point in time when the service is completed or when control of
the service is transferred to the customer.
Long-Term contracts: Revenue from long-term contracts may be recognised over
time using a percentage-of-completion method or based on milestones achieved,
if certain criteria are met. Alternatively, revenue may be recognised at a
point in time, if the performance obligation is satisfied at a single point in
time.
Variable consideration: Revenue recognition may be impacted by variable
consideration, such as performance bonuses, discounts or rebates, which may
require estimation and adjustment of the transaction price over time as
uncertainties are resolved.
If it is expected that the total contract costs will exceed total contract
revenue, the expected loss is recognised immediately as an expense.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker ("CODM") as required
by IFRS 8 Operating Segments. The chief operating decision-maker, who is
responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
Detailed information is provided in Note 4 of the financial statements.
Government grants
Government grants are recognised only when there is a reasonable assurance
that the Group will comply with the conditions attaching to the grant and that
the grants will be received. The amounts received are reported under other
income in the financial statements. The income is reported in the period
necessary to match the related costs that they are intended to compensate.
Employee benefits
Short-term employee benefits
Short-term employee benefits include wages and salaries, paid annual sick
leave, bonuses and non-monetary benefits (such as healthcare). These are
recognised as an expense in the period in which the employee provides the
service. Any unpaid amounts at the reporting date are recorded as current
liabilities in the statement of financial position.
Post-employment benefits - Defined contribution schemes
The Group operates defined contribution pension schemes for its employees,
including participation in the Nation Employment Savings Trust (NEST).
Contributions are recognised as an expense in the profit or loss statement in
the periods in which the related employee services are rendered. The Group has
no further payment obligation once the contributions have been paid. Unpaid
contributions at the reporting date are recognised within current liabilities.
Share based payment transactions
Employees (including senior executives) of the Group may receive remuneration
in the form of share-based payment transactions, whereby consideration is
received in the form of equity instruments for services rendered
(equity-settled transactions). The Group has two equity-settled share-based
payments schemes in place at the year end, one that pre-dates the Company
becoming an AIM Rule 15 cash shell (the 'Option plan') and one that became
effective on 28 August 2024 at the point of the Company's readmission to AIM
(the Long Term Incentive Plan, 'LTIP').
The cost of equity-settled transactions with employees is measured by
reference to the fair value at the date on which they were granted. The
valuation models chosen to value the Option plan
and the LTIP were the Black-Scholes model and the Monte Carlo model
respectively. The choice of model is determined by features of the awards. The
Black-Scholes model is used for awards with fixed exercise prices,
service-based vesting conditions, and no market-based performance conditions.
Conversely the Monte Carlo simulation model is applied when awards include
market-based conditions as it enables the modelling of multiple potential
future outcomes and incorporates the probability of meeting those conditions
over the performance period.
The cost of equity-settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance or
service conditions are fulfilled and ending on the date on which the relevant
employee becomes fully entitled to the award (the vesting date).
The cumulative expense recognised for equity settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The profit or loss charge for a period
represents the movement in cumulative expense recognised at the beginning and
end of that period. No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is conditional upon a market condition,
which are treated as vesting irrespective of whether or not the market
condition is satisfied provided that all other performance conditions are
satisfied.
Where an equity-settled award is cancelled, it is treated as if it had vested
on the date of cancellation, and any expense not yet recognised for the award
is recognised immediately. However, if a new award is substituted for the
cancelled award, and designated as a replacement award on the date that it is
granted, the cancelled and new awards are treated as if they were a
modification for the original award, as described in the previous paragraph.
Leases
The Group assesses whether a contract is, or contains, a lease at the
inception of the contract in accordance with IFRS 16 - Leases.
For all contracts in which the Group is a lessee, and which convey the right
to control the use of an identified asset for a period of time in exchange for
consideration as defined by IFRS 16 - Leases, the Group recognizes a
right-of-use-asset and a corresponding lease liability at the lease
commencement, except for:
· Short-term leases (12 months or less), and
· Leases of low-value assets (such as laptops or small office
equipment).
These are recognised on a straight-line basis over the lease term in operating
expenses.
Right-of -Use Asset
Initially the right-of-use asset is measured at cost, comprising:
· The initial lease liability amount
· Any lease payments made at or before the commencement date
· Any initial direct costs
· Estimated costs of dismantling or restoring the asset (if applicable)
Subsequently, the right-of-use asset is depreciated over the shorter of the
asset's useful life or the lease term, adjusted for any remeasurement of the
lease liability.
Lease Liability
Initially the lease liability is measured at the present value of future lease
payments, discounted using the interest rate implicit in the lease, or the
lessee's incremental borrowing rate if the implicit rate cannot be readily
determined.
Lease payments include:
· Fixed payments (including in-substance fixed payments)
· Variable payments that depend on an index or rate
· Amounts expected to be payable under residual value guarantees
· Purchase or termination option payments if reasonably certain to be
exercised
The liability is subsequently measured at amortised cost using the effective
interest method and remeasured upon certain events (e.g. lease modification,
change in lease term, or change in future payments).
Financial instruments
Financial assets and liabilities are recognised in the Group's statement of
financial position when the Group becomes a party to the contractual
provisions of the instrument. The Group currently does not use derivative
financial instruments to manage or hedge financial exposures or liabilities.
Financial assets
The financial assets held by the Group are classified as financial assets held
at amortised cost. These assets are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market. They are
initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue, and are subsequently carried at
amortised cost using the effective interest rate method.
Trade receivables
Trade receivables are recognised when the Group has an unconditional
contractual right to receive consideration from customers in the ordinary
course of business. These are initially measured at the transaction price
determined in accordance with IFRS 15 Revenue from Contracts with Customers as
they typically do not contain a significant financing component.
Subsequently, trade receivables are measured at amortised cost which, due to
their short-term nature, generally approximates their nominal (invoiced)
value.
The Group applies the simplified approach to measuring expected credit losses
as permitted by IFRS 9 for trade receivables. Under this approach, a lifetime
expected credit loss is recognised for all trade receivables, regardless of
whether they are past due or not.
Trade receivables are written off when there is no reasonable expectation of
recovery, such as in the case of customer insolvency, liquidation, or
prolonged non-payment. Any subsequent recoveries are recognised in profit or
loss.
The Group and Company derecognise a financial asset when the contractual
rights to the cash flows from the asset expire, or they transfer the asset,
and substantially all the risk and rewards of ownership of the asset, to
another party.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with
financial institutions and other short-term, highly liquid investments with
original maturities of three months of less, that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of change
in value.
Bank overdrafts are included within borrowings in current liabilities in the
balance sheet.
Financial liabilities
The Group classifies their financial liabilities into one category, being
other financial liabilities measure at amortised cost.
The Group initially recognises trade payables and other short-term monetary
liabilities at fair value and subsequently at amortised cost using the
effective interest method. All interest and other borrowing costs incurred in
connection with the above are expensed as incurred and reported as part of
financing costs in profit and loss. The Group derecognises financial
liabilities when, and only when, the obligations are discharged, cancelled or
they expire.
Trade payables
Trade payables are recognised initially at the transaction price and
subsequently measured at amortised cost using the effective interest method.
Accounts payable are classified as current liabilities if payment is due
within one year or less (or in the normal operating cycle of the business if
longer). If not, they are presented as non-current liabilities.
Borrowings
Borrowings are initially recorded at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost, with the
difference between the proceeds, net of transaction costs, and the amount due
on redemption being recognised as a charge to the income statement over the
period of the relevant borrowing.
Interest expenditure is recognised on the basis of the effective interest
method and is included in finance costs.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement for at least 12 months after the
reporting date.
The Group assesses any change in the terms and conditions of borrowing by
reference to the original debt agreement and accounts for the non-substantial
or substantial modification in accordance with IFRS 9 'Financial
Instruments'.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the weighted average cost method.
Inventories acquired on acquisition are initially recognised at fair value.
The cost of finished goods and work in progress comprises direct materials
and, where applicable, direct labour costs and those overheads that have been
incurred in bringing the inventories to their present location and condition.
At each reporting date, inventories and work in progress are assessed for
impairment. If inventory or work in progress is impaired, the carrying amount
is reduced to its selling price less costs to complete and sell. The
impairment loss is recognised immediately in profit or loss.
Income tax
Income tax expenditure comprises current tax and deferred tax. It is
recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity, in which case
the tax is also recognised in other comprehensive income or equity
respectively.
Current tax
Current tax is the expected tax payable or receivable on the taxable profit or
loss for the year, using tax rates enacted, or substantively enacted, at the
reporting date. It also includes any adjustment to tax payable in respect of
previous years.
Current tax assets and liabilities are offset only if the Group:
· Has a legally enforceable right to set off the recognised amounts;
and
· Intends to settle on a net basis or to realize the asset and settle
the liability simultaneously.
Deferred tax
Deferred tax is recognised using the balance sheet liability method on all
temporary differences between the carrying amounts of assets and liabilities
in the financial statements and their corresponding tax bases.
Deferred tax is not recognised for:
· Temporary differences arising from the initial recognition of goodwill;
· The initial recognition of assets or liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable
profit.
Deferred tax is measured at tax rates that are expected to apply when the
temporary differences reverse, based on laws that have been enacted, or
substantively enacted, at the reporting date.
Deferred tax assets
Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences or unused tax losses can be utilised. The carrying amount of
deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be
available.
Uncertain tax position
Where there is uncertainty over the tax treatment of a transaction, the Group
evaluates whether it is probable that the tax authority will accept the
position. If it is not probable, the Group reflects the effect of the
uncertainty in its accounting for current and deferred tax using either the
most likely amount or expected value method.
Tax consolidation and Group relief
The Group applies group relief where available under UK tax law. Tax losses
are surrendered or claimed between group companies to minimize the overall tax
liability. Current tax is calculated on a standalone basis for each legal
entity, and adjustments for group relief received or surrendered are reflected
in the current tax expenditure of the respective entities.
When compensation is paid between entities for tax losses surrendered or
received, this is treated as an intercompany transaction and eliminated on
consolidation.
R&D tax credits
R&D tax credits are accounted for under IAS 12 - Income Taxes, as they are
considered a form of income tax relief. These credits are recognised as a
reduction in current tax payable in the period in which the qualifying
expenditure is incurred, provided there is reasonable assurance that the
credits will be received and the Group is compliant with the relevant
conditions.
Where R&D credits exceed the current tax liability and are repayable by
the tax authority, the excess is recognised as a current tax asset.
The benefit of R&D tax credits is presented within the income tax line in
the consolidated statement of profit or loss.
Goodwill
Goodwill arises on the acquisition of subsidiaries and is recognised at cost,
representing the excess of the consideration transferred over the net
identifiable assets acquired and liabilities assumed at the acquisition date.
Goodwill is not amortised as it is deemed to have an indefinite useful life,
but is tested for impairment at least annually, or immediately if there are
indicators of impairment in accordance with IAS 36 - Impairment of Assets.
The impairment review compares the carrying amount of the cash-generating unit
('CGU') including goodwill, to its recoverable amount, being the higher of
fair value less costs of disposal, and value-in-use. If the recoverable amount
is less than the carrying amount, an impairment loss is recognised immediately
in profit or loss. As goodwill impairment is irreversible under IFRS, any
impairment loss recognised is permanent and will not be reversed in future
periods.
Intangibles
The Group has intangible assets acquired in business combinations which are
recognised at fair value at the date of acquisition.
Intangible assets are subsequently carried at fair value less amortisation and
any impairment losses.
Amortisation
Amortisation is charged on a systematic basis over the finite useful life of
the intangible asset. The method of amortisation and the estimated useful life
are reviewed at least annually. If there is any change in the expected pattern
of consumption of future economic benefits, the amortisation method or useful
life is adjusted prospectively.
Asset Class Amortisation method and rate
Customer relationships Over 10 years straight line basis
Tangible assets
Property, plant and equipment
Property, plant and equipment is stated in the statement of financial position
at cost, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses.
The cost of property, plant and equipment includes directly attributable
incremental costs incurred in their acquisition and installation.
Tangible assets acquired on a business combination are recognised at fair
value at the acquisition date.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land
and properties under construction, over their estimated useful lives.
The depreciation method, useful life and residual value are reviewed at least
annually and adjusted if necessary.
The following are the typical estimated useful lives for the various
categories of tangible assets:
Asset Class Depreciation method and rate
Freehold land Not depreciated
ROU Assets Shorter of lease term or useful life
Motor vehicles Over 6 years straight line basis
Machinery & equipment Over 8 years straight line basis
Tools & small equipment Over 8 years straight line basis
Furniture & fittings Over 8 years straight line basis
Office equipment Over 5 years straight line basis
Computers and electronics Over 5 years straight line basis
Provisions and contingent liabilities
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of
economic resources will be required to settle the obligation, and the amount
can be reliably estimated. Provisions are measured at the best estimate of the
expenditure required to settle the obligation and are reviewed at each
reporting date.
A provision for an onerous contract is recognised when the unavoidable costs
of fulfilling the contract exceed the expected economic benefits to be
received under it. The provision is measured at the lower of the cost to
fulfil the contract and any compensation of penalties arising from failure to
fulfil it. Prior to recognising a provision, any impairment losses on assets
related to the contract are recognised,
Contingent liabilities are not recognised but are disclosed unless the
possibility of outflow of resources is remote.
2.6 Critical accounting judgements and estimation uncertainty
Preparation of the Group's financial statements requires judgements, estimates
and assumptions that affect the reported amounts of assets, liabilities,
income and expenditure.
These judgements and estimates are based on historical experience, external
information and any other factors believed to be relevant and reasonable under
the circumstances. Despite being under continuous review and being updated as
necessary, actual results may differ from these estimates.
The estimates and assumptions that have the most significant risk of
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Revenue recognition
Judgement
The Group is required to make judgements that will determine how and when
revenue is recognised in accordance with IFRS 15 - Revenue from Contract with
Customers.
Significant judgements in applying the revenue recognition policy include, but
are not limited to, the following:
· Identifying distinct performance obligations that should be accounted
for separately in contracts
· Determining if the Group is acting as a principal or agent in the
provision of any goods or services
· Determining if revenue should be recognised over time or at a point
in time, based on when control of the goods or services is transferred to the
customer
· Identifying appropriate revenue recognition methods for revenue to be
recognised over time.
These judgements are evaluated based on the nature of the Group's business and
the specific terms and conditions of each customer contract.
Estimation uncertainty
Significant estimates are required in:
· Determining transaction prices, especially in contracts with variable
consideration
· Estimating contract progress, particularly for revenue recognised
over time based
· Allocating the transaction price to performance obligations and
estimating standalone selling prices or bundled goods or services.
Business combinations
Judgement
The Group is required to make judgements in the following areas for potential
business combination transactions:
· Identifying the accounting acquiror under IFRS 3 - Business
Combinations based on the relative size of combining entities, composition
of board and senior management post-transaction and control over
decision-making and voting rights
· Identifying and distinguishing intangible assets acquired from
goodwill.
· Judging whether contingent consideration arrangements meet the
definition of a liability or equity.
Estimation uncertainty
Significant estimation uncertainty arises in the following areas during a
business combination:
· Measuring the fair value of identifiable assets acquired and
liabilities assumed, particularly intangible assets such as customer
relationships.
· The calculation of Goodwill which is based on the accuracy of other
fair value estimates of assets acquired and liabilities assumed.
· Valuation techniques used for fair value estimation, which often
require assumptions about future cash flows, discount rates, and useful lives.
· The probability of achievement of performance targets triggering
contingent consideration in addition to timing and discounting of amounts to
be recognised.
Goodwill and other intangible assets impairment
Judgement
There are two main areas of judgement relating to impairment assessments under
IAS 36 - Impairment of Assets:
· Determining if indicators of impairment exist which would require an
immediate impairment test for goodwill or other intangible assets
· The allocation of goodwill to cash-generating units (CGU) that will
affect whether impairment is identified and to what extent.
Estimation uncertainty
Impairment assessments involve significant estimation uncertainty. Assets
are tested by comparing their carrying amount with their recoverable amount,
which is the higher of fair value less costs of disposal and value in use.
The value in use is based on discounted cash flow models that require key
assumptions and estimates, including:
· Revenue growth, operating margin and capital expenditure assumptions
· Terminal growth rates used to extrapolate cash flows based on
expected inflation and economic outlook.
· Discount rates and the Group's weighted average cost of capital,
adjusted for the specific risks associated with each cash-generating unit
These estimates are inherently uncertain and sensitive to changes in
assumptions. A reasonably possible change in one or more key inputs could lead
to a materially different outcome in the impairment test. Where applicable,
management performs and discloses sensitivity analysis to assess the impact of
changes in key assumptions on the recoverable amount.
Leases (IFRS 16)
Judgement
The Group exercises significant judgment in applying the principles of IFRS 16
- Leases to determine the appropriate accounting treatment for leases. The key
judgments made include the following:
· Determining whether a contract is, or contains, a lease in accordance
with IFRS 16.
· Determining the lease term, particularly regarding the likelihood of
exercising renewal or termination option, based on operational plans and
market conditions.
· Determining the incremental borrowing rate when the rate implicit in
the lease is not readily available. (This is specific to the entity with the
lease agreement).
Estimation uncertainty
· Business environment or economic conditions that influence decisions
such as whether to extend of terminate a lease
· The incremental borrowing rate (IBR) to discount future lease
payments where the interest rate is not implicit in the lease based on market
interest rates and the entity credit risk.
Share based payments (IFRS 2)
Judgement
The Group has made significant judgements in applying IFRS 2 to its
share-based payment arrangements. The key judgements include:
· Determining whether arrangements are equity-settled or cash-settled,
based on the terms and substance of the transaction.
· Establishing the grant date, particularly where there is a time lag
between board approval and communication to participants.
· Assessing whether the performance conditions are market-based or
non-market based, as this affects both the valuation methodology and the
recognition pattern.
· Evaluating modifications or cancellations of awards and their
accounting treatment.
These judgements directly affect the timing, classification, and measurement
of the expenditure recognised in the financial statements.
Estimation uncertainty
The measurement of share-based payments expenditure involves the use of
valuation models that require a number of subjective assumptions and estimates
which may have a material impact on the financial statements.
Key areas of estimation uncertainty include:
· Expected volatility which is estimated using historical share price
data, but may not be indicative of future volatility.
· The expected life of the options which is based on historical
exercise behaviour and management expectations.
· Risk-free interest rates which are based on current government bond
yields applicable to the expected life of the options.
· Fair value at grant date which is determined using valuation
techniques that are sensitive to input assumptions.
Any changes in these assumptions could significantly affect the amount of
share-based payment expenditure recognised.
Income taxes (IAS 12)
Judgement
The determination of the Group's tax position involves complex judgements and
estimates. Tax laws are subject to interpretation and outcomes may differ from
the amounts recorded. The main areas of judgement in accounting for income
taxes include:
· Recognition of Deferred Tax Assets in relation to losses based on the
expectation of sufficient taxable profits being generated.
· The classification of transactions for tax purposes (such as R&D
credits)
· Assessment of probability of availability of future taxable profits
against which to utilise tax losses.
· Assessment of uncertain tax positions
· Application of OECD guidelines and local tax law for intra-group
transactions and transfer pricing.
Estimation uncertainty
The most significant sources of estimation uncertainty in relation to income
taxes are forecasts of future taxable profits and the assumption that current
enacted tax rates will remain unchanged when temporary differences reverse,
and deferred tax assets and liabilities are settled.
3. Revenue
The Group derives revenue from the transfer of goods and services over time,
and at a point in time. (2023: at a point in time)
2024 2023
£'000 £'000
Rendering of services from contracts with customers over time - continuing 1,250 -
operations
Rendering of services from contracts with customers at a point in time - 1,387 -
continuing operations
Rendering of services from contracts with customers at a point in time-
discontinued operations
40 606
Revenue - continuing 2,637 -
Revenue - discontinued 40 606
Revenue is disaggregated further in Note 4, which is the level at which it is
analysed within the business. Further information on the timing of revenue
recognition is included in Note 2.
4. Segment information
Operating segments are reported in a manner consistent with the internal
reporting provided to chief operating decision-maker ("CODM") as required by
IFRS 8 'Operating Segments'. The chief operating decision-maker, who is
responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
The Group is organised into separate legal entities, each of which operates in
a distinct market segment and performs a specific function. The CODM reviews
financial performance and allocates resources at the entity level. As such,
each legal entity is considered an operating segment under IFRS 8.
In 2024 there were two reportable operating segments, Cosgrove & Drew Ltd
with a focus on provision of mechanical and electrical engineering services
across the commercial and industrial sectors, and South West Heating Services
Limited with a focus on provision of domestic maintenance services and heating
installations.
In 2023 there was one reportable operating segment, the development and
commercialisation of clean technologies.
There were no revenue transactions between operating segments in 2024 or 2023.
Segmental revenue and gross profit: Revenue Results
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Continuing operations
Commercial and Industrial mechanical and electrical engineering services 2,169 - 199 -
Domestic maintenance and heating installations 468 - 149 -
Development and commercialisation of clean technologies - - - -
Discontinued operations
Development and commercialisation of clean technologies 40 606 (28) (258)
Segmental revenue/profit - continuing operations 2,637 - 348 -
Segmental revenue/profit - discontinued operations 40 606 (28) (258)
Head office costs - continuing operations (1,533) (743)
Head office costs - discontinued operations (49) (473)
Operating loss before acquisition and disposal costs - continuing operations (1,185) (743)
Operating loss before acquisition and disposal costs - discontinued operations (77) (731)
Acquisition related costs - continuing operations (1,622) -
Loss on disposal of discontinued operations (58) -
Other income / expenses - continuing operations 1 (557)
Other income - discontinued operations -
Operating loss - continuing operations (2,806) (1,300)
Operating loss - discontinued operations (135) (731)
Finance income - continuing operations 39 3
Finance income - discontinued operations - -
Finance costs - continuing operations (113) (47)
Finance costs - discontinued operations - (14)
Other income - continuing operations 1
Loss before taxation - continuing operations (2,879) (1,344)
Loss before taxation - discontinued operations (135) (745)
Taxation - continuing operations 195 -
Loss for the year from continuing operations (2,684) (1,344)
Loss for the year from discontinued operations (135) (745)
Loss for the year (2,819) (2,089)
Segmental assets and liabilities Assets Liabilities
2024 2023 2024 2023
£ £ £ £
Commercial and Industrial mechanical and electrical engineering services 5,654 - (3,178) -
Domestic maintenance and heating installations 1,774 - (370) -
Development and commercialisation of clean technologies - 962 - (480)
Segment assets / liabilities 7,428 962 (3,548) (480)
Unallocated assets / liabilities 1,761 85 (1,665) (665)
9,189 1,047 (5,213) (1,145)
Unallocated assets predominantly relate to head office cash balances and
prepayments. (2023: cash balances, VAT and prepayments).
Unallocated liabilities include contingent consideration and head office trade
payables and accruals. (2023: Loan notes and accrued interest, head office
trade payables and accruals).
Segmental depreciation and amortisation
Non-current asset additions Depreciation Amortisation
(Fixed assets and ROU)
2024 2023 2024 2023 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Commercial and Industrial mechanical and electrical engineering services - - (32) - (19) -
Domestic maintenance and heating installations 60 - (8) - (15) -
Development and commercialisation of clean technologies -
- 433 (40) (219) -
Segment assets / liabilities 60 433 (80) - (33) -
Unallocated assets / liabilities 4 1 (1) (4) - -
Total 64 434 (81) (223) (33) -
Continuing 64 1 (41) (4) (33) -
Discontinued - 433 (40) (219) - -
Geographical
segments
Revenue location of generation: 2024 2023
£'000 £'000
United Kingdom - continuing operations 2,637 -
Italy - discontinued operations 40 606
Following the disposal of Verditek Solar srl on 29 February 2024, all of the
Group's operations and revenue-generating activities are conducted in the
United Kingdom. As such, no geographical segment disclosures are provided, as
the Group operates entirely within one geographic area. All non-current assets
are also located within the United Kingdom.
Country of Customer
The Group had revenues from customers in the following countries that were
determined to be material:
Revenue
Country 2024 2023
£'000 £'000
Continuing operations
United Kingdom - continuing operations 2,637 -
Discontinued operations
Belgium - 176
Sweden - 104
Czechia - 79
Denmark 1 73
Germany 11 37
UK - 17
Rest of the world 28 120
Total 2,677 606
Revenue - continuing 2,637 -
Revenue - discontinued 40 606
Customer concentration
In 2024 there were 2 customers that individually accounted for over 10% of the
Group's revenue. The revenue, derived from the two single external
customers, was £0.40m and £0.38m respectively, both amounts are included in
the revenue of Cosgrove & Drew Ltd.
In 2023 there were 3 customers that individually accounted for over 10% of the
Group's revenue. £0.18m, £0.1m and £0.08m included in revenue, from
development and commercialisation of clean technologies, were derived from
single external customers.
5. Other operating income and expenses
Operating profit from continuing operations is stated after charging:
2024 2023
Breakdown of expenses by nature £'000 £'000
Cost of Sales:
Materials (720) (536)*
Employee costs 5(a) (867) (234)*
Agency labour (768) -
Other (174) (94)*
Onerous contracts utilisation** 240 -
Total cost of goods sold - continuing operations (2,289) -
Total cost of goods sold - discontinued operations (67) (864)*
Administrative expenses:
Employee costs 5(a) (548) (39)
Training & development (18) -
Accommodation (35) (17)
Legal & professional (252) (277)
Audit & accountancy (294) (221)
IT & communication (82) (8)
Insurance (72) (29)
Repairs & maintenance (24) (3)
Travel & entertainment (43) (119)
Acquisition costs (1,622) -
Depreciation - continuing operations (40) (4)
Depreciation - discontinued operations (219)*
Amortisation (33) -
Bad debts (28)
Other (63) (26)
Other - discontinued operations - (254)*
Total cost of administrative expenses - continuing operations (3,154) (743)
Total cost of administrative expenses - discontinued operations (49) (473)*
* Discontinued values
** The Group utilised a provision of £240k relating to an onerous contract
provided for at the point of acquisition in C&D.
Other operating income and expenses
2024 2023
Other income / (expenses) £'000 £'000
Apprenticeship income and minor loss on disposal of fixed asset 1 -
Impairment of earn-out receivable (ICSI) - (557)
1 (557)
In 2023, the Company fully impaired earn-out payments related to its disposal
of its investment in Industrial Climate Solutions (ICSI), previously
recognised at a fair value of £556,783 due to being advised by the ICSI
Sellers' Committee that the earn-out targets were unlikely to be met.
The share purchase agreement relating to the transfer of Verditek Italy srl,
on 29 February 2024, to Verditek Solar Limited, included rights to the ICSI
receivable.
5(a) Staff costs
Average monthly number of persons employed by the Group during the year:
2024 2023
No. No.
Directors and key management personnel 5 4
Administration 4 1
Operations 19 6
28 11
Staff costs and key management personnel compensation
2024 2024 2023 2023
£'000 £'000 £'000 £'000
KMP Total KMP Total
Wages & salaries and fees 328 1,236 207 305
Social security contributions 36 126 4 12
Pension costs (defined contribution schemes) 10 27 - 32
Share-based payment expenses 23 23 (154) (154)
Other short-term employee benefits 3 3 - -
Total employee benefits 400 1,415 57 195
Consisting of:
Employee costs included in direct costs 867 234
Employee costs included in administrative expenses 548 (39)
1,415 195
Directors of Earnz Plc
2024 2023
£'000 £'000
Aggregate emoluments 212 188
Company contributions to money purchase pensions 8 -
Share-based payment charge 23 (154)
Total directors' remuneration 243 34
Detailed remuneration disclosures are provided in the remuneration
report.
Auditor remuneration
2024 2023
£'000 £'000
Fees payable to the Company's auditors for the audit of the Company's and 161 73
Group financial statements
Fees payable to the company's auditors and its associates for other services* 433 -
594 73
*Non-audit fees, included in acquisition costs, relate to financial due
diligence on the two acquisitions completed in the year to 31 December 2024 in
addition to a further acquisition that was aborted.
6. Finance costs
2024 2023
£'000 £'000
Finance income
Interest income on bank deposits 39 3
Total finance income 39 3
Finance costs
Interest expense on loans, borrowings and hire purchase (31) (31)
Interest expense on lease liabilities (12) -
Invoice factoring costs (39) -
Amortisation of bond issue costs (see note 13 Discontinued operations) - (16)
Unwinding of interest on contingent consideration (see note 12-Business (18) -
combinations)
Bank charges (5) -
Other finance costs including foreign exchange gains and losses (8) -
Total finance costs (113) (47)
Net finance costs (74) (44)
7. Taxation
Tax charged in the consolidated statement of profit or loss is as follows:
Current tax
2024 2023
£'000 £'000
Tax on profits for the year - -
Adjustments in respect of prior years - -
Total current tax in profit or loss - -
Deferred tax
2024 2023
£'000 £'000
Originating and reversal of timing differences 195 -
Total deferred tax credit in profit or loss 195 -
Total tax credit in profit or loss 195 -
Reconciliation of tax charge
The tax charge in the consolidated profit or loss statement for the year is
lower (2023: lower) than the average standard rate of corporation tax in the
UK of 25% (2023:19%). The differences are reconciled below:
2024 2023
Current tax £'000 £'000
Loss before taxation: (2,879) (2,089)*
Profit at UK corporation tax rate of 25% (2023:19%) (720) (397)
Non-deductible expenses 454 59
Difference in overseas tax rate - (5)
Difference between depreciation and capital allowances (15) -
Unrecognised tax losses carried forward 281 343
Tax charge in the profit or loss statement - -
*Include the discontinued operations
Deferred tax
Deferred tax credited in the consolidated statement of profit or loss is as
follows:
2024 2023
Deferred tax £'000 £'000
Recognition of previously unrecognised deferred tax assets 187 -
Reversal of temporary differences 8 -
Tax charge in the profit or loss statement 195 -
Total tax charge in the profit or loss statement 195 -
Deferred tax included in the balance sheet is as follows:
2024 2023
Deferred tax assets £'000 £'000
Deferred tax liabilities recognised on business combinations (65) -
Recognition of deferred tax assets in the year 212 -
Utilisation of deferred tax assets in year (25) -
Reversal of temporary differences 8 -
Total Deferred tax assets 130 -
Deferred tax assets and liabilities are offset and reported net where
appropriate and permitted.
Deferred tax assets are recognised to the extent that the realisation of the
related tax benefit through future taxable profits is probable.
All deferred tax movements arise from losses brought forward, and the
origination and reversal of temporary differences.
Deferred taxes at the balance sheet date have been measured using the
appropriate and substantively enacted tax rates at the date.
As at 31 December 2024, the Group has unrecognised deferred tax assets of
£1.68m.
8. Earnings per share
2024 2023*
£'000 £'000
Loss for the year attributable to equity holders of Parent Company - (2,684) (1,344)
continuing
Loss for the year attributable to equity holders of Parent Company - (135) (745)
discontinued
Weighted average number of ordinary shares - basic and diluted 61,388 4,789*
Basic and diluted loss per share - continuing operations (0.044p) (0.281p)
Basic and diluted loss per share - discontinued operations (0.002p) (0.155p)
Basic and diluted loss per share (0.046p) (0.436p)
*On 4 April 2024 there was a share consolidation of every 100 ordinary shares
of 0.04 pence each into one new ordinary share of 4 pence each. The weighted
average number of shares in the year
to 31 December 2024 and the comparative weighted average number of shares at
31 December 2023 have been retrospectively adjusted.
The effects of anti-dilutive potential ordinary shares are ignored in
calculating diluted EPS.
As the Group incurred a loss in the current year and the prior year, the
impact of potential ordinary shares is also anti-dilutive and therefore
excluded from the diluted earnings per share calculation.
Therefore, basic and diluted loss per share is the same for the year ended 31
December 2024, this was also the case for the year ended 31 December 2023.
9. Property, plant and equipment
Land and buildings Office equipment Motor Vehicles Plant & Machinery Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2024 - 5 - 302 307
Additions - 4 59 1 64
Arising on acquisition 42 28 176 13 259
Disposals - (5) (4) (298) (307)
Foreign exchange - - - (4) (4)
At 31 December 2024 42 32 231 14 319
Depreciation
At 1 January 2024 - (2) - (207) (209)
Charged during the year (3) (3) (5) (6) (17)
Disposals - 2 3 209 214
Foreign exchange - - - 3 3
At 31 December 2024 (3) (3) (2) (1) (9)
Net book value at 31 December 2024 39 29 229 13 310
Land and buildings Office equipment Motor Vehicles Plant & Machinery Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2023 82 6 - 648 736
Additions - 1 - 1 2
Disposals (80) (2) - (335) (417)
Foreign exchange (2) - - (12) (14)
At 31 December 2023 - 5 - 302 307
Depreciation
At 1 January 2023 (50) (3) - (487) (540)
Charged during the year (3) (1) - (46) (50)
Disposals 76 2 - 291 369
Foreign exchange (23) - - 35 12
At 31 December 2023 - (2) - (207) (209)
Net book value at 31 December 2023 - 3 - 95 98
10. Right-of-use assets
Land and buildings Motor Total
vehicles
£'000 £'000 £'000
Cost
At 1 January 2024 432 - 432
Arising on acquisition 108 140 248
Disposals (427) - (427)
Foreign exchange (5) - (5)
At 31 December 2024 108 140 248
Depreciation
At 1 January 2024 (126) - (126)
Charged during the year (44) (20) (64)
Disposals 160 - 160
Foreign exchange 2 - 2
At 31 December 2024 (8) (20) (28)
Net book value at 31 December 2024 100 120 220
Land and buildings Motor vehicles Total
£'000 £'000 £'000
Cost
At 1 January 2023 68 - 68
Additions 432 - 432
Disposals (67) - (67)
Foreign exchange (1) - (1)
At 31 December 2023 432 - 432
Depreciation
At 1 January 2023 (20) - (20)
Charged during the year (173) - (173)
Unwind of discount of lease deposit (1) (1)
Disposals 67 - 67
Foreign exchange 1 - 1
At 31 December 2023 (126) - (126)
Net book value at 31 December 2023 306 306
11. Goodwill and intangible assets
Goodwill Customer relationships Total
£'000 £'000 £'000
Cost
At 1 January 2024 - - -
Additions 3,577 1,036 4,613
At 31 December 2024 3,577 1,036 4,613
Amortisation
At 1 January 2024 - -
Charged during the year - (33) (33)
At 31 December 2024 - (33) (33 )
Net book value at 31 December 2024 3,577 1,003 4,580
The group did not hold any intangible assets in the year to 31 December 2023.
In 2024 the Group made acquisitions resulting in goodwill of £3.58m and
£1.04m of intangible assets. Intangible assets arose solely on the business
combinations which are detailed below.
Customer relationships are amortised based on their estimated useful life of
10 years. No intangibles held are considered to have an indefinite useful
life.
Amortisation charges in the year are included in other expenses in the profit
and loss statement.
12. Business combinations
Cosgrove & Drew Ltd
On 29 August 2024, Earnz Plc, through its intermediate holding company, Earnz
Holdings Limited, acquired 100% of the issued share capital of Cosgrove &
Drew Ltd.
Initial consideration comprised cash of £0.41m and £0.3m consideration
shares in Earnz Plc. Discounted contingent consideration of up to £1.043m
(£1.226m undiscounted), payable in shares, is dependent on the achievement of
post-transaction earnings targets and ongoing employment of the managing
directors. The amount will become payable following confirmation of exceeding
an annual adjusted EBITDA of £0.5m, to 31 August each year, until the maximum
consideration is reached. The fair value of the contingent consideration was
estimated by calculating the present value of future expected cash flows based
on a discount rate of 6.2%.
This acquisition represents a strong strategic fit, enabling immediate entry
into the maintenance and installation of energy efficient products market, in
commercial and industrial sectors.
Goodwill of £2.953m is attributable to the team acquired, their deep sector
knowledge and strategic benefits arising from integrating their expertise into
the Group. It will not be deductible for tax purposes.
South West Heating Services Limited
On 29 August 2024, Earnz Plc, through its intermediate holding company, Earnz
Holdings Limited, acquired 100% of the issued share capital of South West
Heating Services Limited.
Initial consideration comprised £0.78m and £0.35m consideration shares.
Discounted contingent consideration of up to £0.27m (£0.30m undiscounted)
payable, in cash or shares, is dependent on the achievement of
post-transaction earning targets and ongoing employment of the managing
director. The amount will become payable following confirmation of achieving
an annual adjusted EBITDA of £0.35m in each of the two consecutive 12-month
periods following the acquisition. The fair value of the contingent
consideration was estimated by calculating the present value of future
expected cash flows based on a discount rate of 6.2%.
This acquisition is a great strategic fit, providing access into the domestic
maintenance and installation market covered by national insurers, a client
base with significant barriers to entry.
Goodwill of £0.62m is attributable to the team acquired, their sector
expertise and long-standing reputation in the industry. It will not be
deductible for tax purposes.
As at 31 December 2024, the full discounted contingent consideration,
including the unwinding of the discount to the year end, has been recognised
in line with management's expectation that the targets will be achieved by
both entities.
The following table summarises the consideration paid, book value and the fair
value of assets acquired, and the liabilities assumed.
C&D C&D C&D SWH SWH SWH
Ltd FV FV Ltd FV FV
Book value Adjustment Book value Adjustment Adjustment
£'000 £'000 £'000 £'000 £'000 £'000
Intangible assets - 576 576 - 460 460
Property, plant and equipment 203 - 203 56 - 56
Right-of-use assets 208 - 208 40 - 40
Inventories 40 - 40 114 - 114
Trade and other receivables 1,780 - 1,780 104 - 104
Cash and cash equivalents 41 - 41 350 - 350
Deferred tax asset 194 - 194 - - -
Total assets 2,466 576 3,042 664 460 1,124
Trade and other payables (2,144) - (2,144) (166) - (166)
Lease liabilities (231) - (231) (37) - (37)
Provisions (240) - (240)* - - -
Borrowings (1,472) - (1,472) (40) - (40)
Deferred tax liabilities - (144) (144) - (115) (115)
Total Liabilities (4,087) (144) (4,231) (243) (358)
Net identifiable assets acquired (1,621) 432 (1,189) 421 345 766
Goodwill 2,953 624
Total consideration 1,764 1,390
Less consideration paid in shares (316) (343)
Less contingent consideration (1,043) (275)
Consideration paid in cash 405 772
*At the date of the acquisition, Cosgrove & Drew had recognised an onerous
contract provision of £240k in respect of two long-term contracts, where
forecasted costs to complete exceeded expected revenues, in line with IAS 37.
During the 4-month period to 31 December 2024, the Group exited one contract
and completed the other. The costs to terminate the contracts were fully
offset by the utilisation of the £240k onerous contract provision. As a
result, no net impact was recognised in the income statement in respect of
either onerous contract in the period from acquisition to 31 December 2024.
As at 31 December 2024 no onerous contract provision is recognised.
The table below details the revenue and net profit after tax contributed to
the Group since the acquisition date:
Cosgrove & Drew Ltd South West Heating Limited
£'000 £'000
Revenue contributed since acquisition 2,169 468
Net (loss)/profit after tax since acquisition (117) 29
The table below sets out the net cash outflow of the acquisitions:
2024
£'000
Cosgrove & Drew Ltd cash consideration 405
South West Heating Services Limited cash consideration 772
1,177
Less: cash acquired (391)
Less: Non-cash transaction offsetting amount owed by owner (39)
Net outflow of cash - investing activities 747
Acquisition related costs of £1.62m, predominantly relating to the financial
and legal due diligence on the two acquisitions noted above, in addition to
one further aborted acquisition, are included in administrative expenses in
the statement of profit or loss and in operating cash flows in the statement
of cash flows.
13. Discontinued operations
On 29 February 2024, the company completed the disposal of Verditek Solar srl,
(100% wholly owned sole operating subsidiary in Italy) in return for the
satisfaction of the outstanding secured convertible loan notes and accrued
interest totalling £528,340, to Verditek Solar Limited, a company owned by
the convertible loan note holders.
The results for the discontinued operations were not previously classified as
discontinued or held for sale in the 31 December 2023 year-end financial
statements as the criteria for such classification were not met as at that
date.
13a. Financial performance and cash flow information
The financial performance and cashflow information presented below are for the
two months ended 29 February 2024 and the year ended 31 December 2023.
Results of discontinued operations 2024 2023
£'000 £'000
Revenue 40 606
Expenses (117) (1,351)
Post tax results from operating activities (77) (745)
Loss on sale of discontinued operation (58) -
Loss from discontinued operation, net of tax (135) (745)
Loss attributable to:
Equity owners of the parent company (135) (745)
Earnings per Share
Basic and diluted (0.002p) (0.155p)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Translation of foreign operations 9 (17)
Total comprehensive loss from discontinued operations (126) (762)
Cashflows
Net cash inflow / (outflow) from operating activities 31 (40)
Net cash inflow/(outflow) from investing activities (162) -
Net cash inflow / (outflow) from financing activities (28) -
Net decrease in cash generated by discontinued operations (159) (40)
Cash and cash equivalents at beginning of period 7
(152)
Costs of disposal paid in cash (152) -
Cash and cash equivalents disposed of (10) -
Cash cost of disposal (162) -
13b. Details of the sale of the subsidiary
Verditek Solar srl
£'000
Property, plant and equipment 82
Right-of-use assets 267
Inventories 414
Trade and other receivables 147
Cash and cash equivalents 10
Trade and other payables (211)
Lease liabilities (270)
Provisions (30)
Carrying amount of net assets sold 409
Non-cash consideration - convertible loan principal and interest satisfied 528
Cost of disposal paid in cash (152)
Carrying amount on net assets on disposal (409)
Carrying amount of Company plant & equipment on disposal (10)
Foreign exchange including reversal of translation reserve (15)
Loss on sale of discontinued operation (58)
14. Impairment testing of goodwill and intangibles
The Group's intangible assets consist solely of customer relationships which
are subject to amortisation over their useful economic lives in accordance
with IAS 38. Impairment testing of these intangible assets is only carried out
if there is an indicator of impairment. Based on stable performance of the
related businesses and the absence of adverse market or operational
conditions, management has concluded there are no indicators of impairment and
therefore no impairment test has been carried out in relation to the
intangible assets.
The Group performs an annual goodwill impairment test at the year-end date or
at any point throughout the year, if there are indictors of impairment in
accordance with IAS 36 Impairment of Assets.
Goodwill is allocated to cash-generating units ('CGUs') that are expected to
benefit from the business combination in which the goodwill arose.
As at 31 December 2024, the carrying amount of goodwill acquired through
business combinations of £3,577,256 is allocated to the following CGUs:
2024
£'000
Cosgrove & Drew Ltd ('C&D') 2,953
South West Heating Service Limited ('SWH') 624
3,577
The recoverable amount of each CGU is determined based on a value-in-use
calculation. The value-in-use is derived from projected cash flows based on
financial budgets approved by the Directors covering a 5-year period. The
Directors consider these estimates to be reasonably
achievable based on current performance. Cash flows beyond that period are
extrapolated using a terminal growth rate that reflects expected business
long-term growth rates.
Key assumptions used in the value-in-use calculations include:
· Revenue growth rates : 5%
· EBITDA margins: 14%-17% (SWH) / 30%-32% (C&D)
· Pre-tax discount rate: 18.59% (SWH) / 25.35% (C&D)
· Terminal growth rate: 2%
These assumptions reflect past experience, current operating performance, and
external market data.
Based on the impairment tests performed, no impairment of goodwill was
identified for the year ended 31 December 2024. (2023: none).
Sensitivity Analysis:
Management has performed sensitivity analysis on key assumptions as follows:
For both CGUs a base case and two further scenarios were equally weighted to
provide a sensitised scenario. The assumed independent sensitivities in the
scenarios were decreasing revenue by 10% and increasing Cost of sales and
operating expenses by 10%.
15. Inventories
2024 2023
£'000 £'000
Finished goods (cost) - 76
Finished goods (fair value less costs to sell) - 208
Raw materials 145 135
145 419
Inventories of £414k comprising £76k finished goods, £208k finished goods
(fair value less costs to sell) and £135k raw materials were deconsolidated
following the disposal of the Verditek Solar srl on 29 February 2024.
On 29 August 2024, inventories with a combined value of £154k, comprising raw
materials only, were acquired on the acquisition of Cosgrove & Drew Ltd
and South West Heating Services Limited.
During the period £32,061 inventories relating to revenue were recognised as
a cost in the P&L (2023: £582,830). In 2023 there was also a release of a
provision against inventories to write-back defective and slow-moving stock,
£47,051, upon the sale of old stock panels.
16. Financial assets and financial liabilities
The group holds the following financial instruments:
2024 2023
Financial assets £'000 £'000
Cash and cash equivalents (i) 1,965 54
Trade and other receivables (ii) 1,125 30
Contract assets (iii) 266 -
Other current assets (iv) 29 -
Total current financial assets 3,385 84
Non-financial current assets 313 559
(iv)
Total current assets 3,698 643
Financial liabilities £'000 £'000
Trade and other payables (v) (1,533) (274)
Contingent consideration (vi) (1,335) -
Loans and other borrowings (incl. Hire Purchase) (vii) (772) (523)
Loans and other borrowings - Factoring liabilities (viii) (599) -
Lease liabilities (ix) (245) (308)
Total financial liabilities (4,484) (1,105)
Non-financial liabilities (478) (40)
(x)
Total liabilities (4,962) (1,145)
Fair values
In accordance with IFRS 13, financial instruments measured at fair value are
classified within a three-level hierarchy based on the observability of inputs
used in their valuation. This hierarchy provides transparency regarding the
reliability and source of data used to determine fair values:
Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices that are observable, either directly
or indirectly
Level 3: Unobservable inputs requiring significant management judgement and
estimation.
The Group's only financial instrument measured at fair value on a recurring
basis is the contingent consideration related to business combinations. This
financial instrument is classified as Level 3 due to reliance on unobservable
inputs, including estimates of future performance and probabilities.
16(i). Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and short-term
deposits with original maturities of three months or less.
2024 2023
£'000 £'000
Unrestricted cash and bank 1,382 54
Restricted cash (VCT funds) 583 -
Total (i) 1,965 54
The restricted cash balance of £0.6m represents funds raised through Venture
Capital Trust (VCT) investments. These funds are subject to investment
restrictions under VCT regulations and are held in segregated accounts pending
deployment in qualifying investments. The Group is not permitted to use these
funds for general corporate purposes until they are invested in accordance
with VCT rules.
16(ii). Trade and other receivables
2024 2023
£'000 £'000
Trade receivables 995 74
Less: Loss allowance (40) (44)
Retentions 170 -
(ii) 1,125 30
The Group's trade receivables are all denominated in pounds sterling (£)
therefore there is no foreign exchange risk on realisation of receivables.
Trade receivables are non-interest bearing and generally on terms payable
within 60 days. As at 31 December 2024, the allowance for impairment of trade
receivables was £40k (2023: £44k).
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses. The allowance is based on management experience and judgement,
adjusted for forward-looking macroeconomic information where necessary.
The following table shows the exposure to credit risk and expected credit
losses of trade receivables as at 31 December:
ECL base rate Adjusted ECL rate* Gross carrying amount Expected loss allowance Net carrying amount ECL loss rate Gross carrying amount Expected loss allowance Net carrying amount
% % £'000 £'000 £'000 % £'000 £'000 £'000
0-30 days 1% 1.8% 831 (15) 816 0% 15 - 15
31-60 days 3% 0.5% 98 0 97 0% 13 - 13
61-90 days 10% 12.9% 5 (1) 4 0% - - -
Over 90 days 100% 39% 61 (24) 38 96% 46 (44) 2
995 (40) 955 74 (44) 30
*The ECL rates have been adjusted where appropriate to reflect actual cash
receipts received and known bad debt right offs after the year-end but prior
to reporting finalisation. These adjustments were made to better reflect the
recoverability of aged balances that are presented in the table above.
Movements in the loss allowance for trade receivables were as follows:
2024 2023
£'000 £'000
At 1 January 44 73
Release of loss allowance (44) -
Receivable written off during the year as uncollectible - (46)
Increase in loss allowance 40 17
Foreign exchange differences - -
At 1 December 40 44
16(iii). Contract assets
Contract assets represent amounts due from customers for major project work
completed but not yet invoiced at the reporting date. These include:
· Revenue accruals for performance obligations satisfied over time
where the right to payment was not unconditional at the year-end date; and
· Retention amounts contractually withheld by customers pending defect
liability periods.
As at 31 December 2024, contract assets were as follows:
2024 2023
Description £'000 £'000
Other current assets - accrued revenue 266 -
Total contract assets (iii) 266 -
Contract assets relating to accrued revenue are expected to be invoiced and
collected within 2 months. Contract assets relating to retentions are
typically invoiced at the end of a major project (50%) and on the first
anniversary of the end of the major project (50%) The expectation is that
materially all retention balances will be invoiced and collected within 12
months.
16(iv). Other current assets
2024 2023
£'000 £'000
Other current assets (incl. staff advances and supplier rebates) 29 -
Total other current assets (financial assets) (iv) 29 -
Advances to suppliers and customer deposits - 67
Inventories (see Note15) 145 419
Other current assets - prepayments 127 34
Other current assets - VAT and other indirect taxes 41 39
Total other current assets (non-financial assets) (iv) 313 559
Total other current assets (excluding inventories) (iv) 197 140
16(v). Trade and other payables
2024 2023
£'000 £'000
Trade payables 1,224 173
Accruals 288 72
Deferred revenue - 10
Other financial liabilities 21 19
(v) 1,533 274
Trade and other payables - non financial liabilities - see Note 16 (x) 414 10
Total trade and other payables (v) 1,947 284
16(vi). Contingent consideration
As part of the consideration transferred for the acquisition of Cosgrove &
Drew Ltd and South West Heating Services Limited, the Group may be required to
make additional payments to the former shareholders, contingent on the future
performance of the acquired businesses.
There is no specified timeframe for the contingent consideration arrangement
with C&D, payments will become due only on the achievement of defined
performance targets. For SWH, the additional amount payable is contingent on
certain performance milestones over a period of 2 years from the date of
acquisition.
At the acquisition date, the fair value of total contingent consideration was
estimated to be £1.3m (2023: none) and has been included in the total
consideration transferred. The fair value was determined using a probability
-weighted expected payment approach and is classified as a financial liability
measured at fair value through profit or loss.
Subsequent changes in the fair value of the contingent consideration that do
not relate to measurement period adjustments are recognised in profit or loss
in accordance with IFRS 9.
The key assumptions used in estimating the fair value include:
· Estimated probability of achieving performance targets;
· Forecasts of EBITDA of the acquired businesses;
· A discount rate of 6.21% applied to expected future payments.
Movement in contingent consideration 2024 2023
£'000 £'000
Opening balance at 1 January - -
Addition on acquisition of C&D and SWH 1,317 -
Unwinding of discount 18 -
Closing balance at 31 December (viii) 1,335 -
Included in current liabilities 180 -
Included in non-current liabilities 1,155 -
16(vii). Loans and Borrowings
2024 2023
£'000 £'0000
Included in current liabilities 1,110 -
Included in non-current liabilities 261 523
Total loans and borrowings 1,371 523
2024 2023
Maturity analysis - contractual undiscounted liability at period end £'000 £'000
On demand 307 -
Less than one year 259 -
One to two years 216 523
Two to five years 68 -
More than five years - -
Total undiscounted cash flows 850 523
Total discounted borrowings (vii) 772 523
Current - related party loan 225 -
Current - credit cards 82 -
Current - bank borrowings 158 -
Current - HP 46 -
Non-current - bank borrowings 200 -
Non-current -HP 61 523
772 523
Current - Invoice factoring - see Note 16(ix) 599 -
Total loans and borrowings 1,371 523
Hire purchase and finance lease contracts are secured against the assets to
which they relate.
The total Group cash outflow relating to repayment of loans and HP in the year
was £89k(2023: nil)
2024 2023
Amounts recognised in the consolidated income statement £'000 £'000
Interest on borrowings 31 31
16(viii). Factoring liability
During the year, a subsidiary of the Group entered into an invoice factoring
agreement. Legal ownership of the trade receivables ledger was transferred to
the factor, but the subsidiary retains responsibility for the credit control
and remains exposed to material credit risk and late payment risk. As such,
the liability has been recognised in accordance with IFRS 9 and the related
receivables remain on the balance sheet.
As at 31 December 2024, the carrying amount of factored receivables that
remain on the balance sheet was £0.9m with a related liability of £0.6m. In
addition, the debtor balance used as a basis for drawdowns, included £0.2m
relating to project applications yet to be invoiced.
Associated finance cost of the invoice factoring facility of £0.04m for the
4m period from acquisition are recognised in finance costs in the profit or
loss account.
16(ix). Lease liabilities - Group
The Group has recognised lease liabilities under IFRS 16 for property and
vehicle leases. These liabilities represent the present value of future lease
payments, discounted using an entity specific incremental borrowing rate. The
IBR reflects the rate at which the entity would obtain borrowings over a
similar term, with similar security, in a comparable environment.
The table below includes the total contractual payments due on leases held by
the Group.
2024 2023
Maturity analysis - contractual undiscounted cash flows £'000 £'000
Less than one year 108 229
One to two years 88 -
Two to five years 84 95
More than five years - -
Total undiscounted cash flows 280 324
Total discounted lease 245 308
liabilities
(vii)
Included in current liabilities 92 214
Included in non-current liabilities 153 94
The total Group cash outflow for leases during 2024 was £73k (2023: £163k)
2024 2023
Amounts recognised in the consolidated income statement £'000 £'000
Interest on lease liabilities - continuing operations 31 -
Interest on lease liabilities - discontinued operations 3 14
Expenses relating to short-term leases 4 5
The Group manages lease-related liquidity risk by maintaining adequate cash
reserves and continuous forecasting of its lease payment obligations.
Management believes the Group has sufficient resources to meet its lease
obligations as they fall due.
16(x). Other liabilities (non-financial liabilities)
2024 2023
£'000 £'000
Payroll taxes 288 10
VAT and other indirect taxes 115 -
Pension accrual 11 -
Trade and other payables 414 10
Corporation tax 64 -
Provisions (see Note 17) - 30
Total other liabilities (non-financial) (x) 478 40
17. Provisions
The Group recognises provisions when there is a present legal or
constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation, and a reliable
estimate can be made of the amount of that obligation.
In accordance with IAS 37, a provision for an onerous contract is recognised
when:
· The contract is non-cancellable, or cancellation would incur
significant penalties, and
· The unavoidable costs of meeting the obligations exceed the economic
benefits expected to be received.
All provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate.
2024 2023
£'000 £'000
Opening balance at 1 January (30) -
Warranty provision - (30)
Onerous contracts recognised on acquisitions (240) -
Utilised 270 -
Total provisions - (30)
On acquisition the Group recognised a provision of £240k in relation to two
long-term contracts where forecast costs to fulfil or terminate the contract
exceeded the expected revenue. In the period to 31 December 2024, one contract
was settled through termination and agreement with the counterparty, and the
other contract was completed in full, resulting in the fulfilment of the
Group's obligations under the arrangement and the provision was utilised
accordingly.
In 2023 a warranty provision was recognised based on historical panel warranty
claim rates, at 5% of revenue. The provision was utilised in 2024 prior to the
disposal of the subsidiary.
18. Share capital
31 December 2024 31 December 2023
No. £ No. £
All issued shares are ordinary shares, which are fully paid 102,206,397 4,088,256 554,649,417 221,860
The Company's articles do not specify an authorised share capital.
Ordinary shares
The Ordinary shares in issue all rank equally with regards to the Company's
residual assets, and each carries the right to exercise once vote at a general
meeting. There are no special voting or dividend rights beyond those
prescribed in the Companies Act 2006. There are no redemption rights.
Movements in ordinary shares:
Note No. shares Par value Share Premium Total
£ £ £
Opening balance 1 January 2023 443,538,306 177,417 12,205,726 12,383,143
Share issue 6 September 2023 18(i) 111,111,111 44,443 420,557 465,000
Balance at 31 December 2023 554,649,417 221,860 12,626,283 12,848,143
Share subscription 5 March 2024 18(ii) 400,000,000 160,000 118,000 278,000
Share issue 4 April 2024 18(iii) 83 - - -
Share consolidation 4 April 2024 18(iv) (945,103,005) - - -
Loan conversion 8 April 2024 18(v) 4,000,000 160,000 140,000 300,000
Share placing 8 April 2024 18(vi) 39,554,667 1,582,187 1,166,672 2,748,859
Share subscription 8 April 2024 18 (vii) 9,778,666 391,147 320,878 712,025
VCT placing 28 August 2024 18(viii) 20,798,491 831,940 625,372 1,457,312
Loan conversion 29 August 2024 18(ix) 3,000,000 120,000 105,000 225,000
Consideration-share issue 29 August 2024 18(x) 8,975,119 359,005 314,129 673,134
Share placing 29 August 2024 18(xi) 6,552,959 262,118 204,780 466,898
Balance at 31 December 2024 102,206,397 4,088,257 15,621,114 19,709,371
(i) On 6 September 2023, a share subscription of 111,111,111
shares at 0.045 pence, raised £500,000 before share issue costs of £35,000.
(ii) On 5 March 2024, 400,000,000 shares were issued on at 0.075
pence, raising £300,000 before share issue costs of £22,000.
(iii) On 4 April 2024, 83 ordinary shares were allotted solely to
facilitate the share consolidation on a 1-for-10 basis. These shares were not
issued for consideration and did not change total shareholder rights or
ownership.
(iv) On 4 April 2024, there was a
share consolidation of every 100 ordinary shares of 0.04 pence each into one
new ordinary share of 4 pence each.
(v) On 8 April 2024, 4,000,000 shares were issued at 7.5 pence on
conversion of a £300,000 loan, made to the Company by Bob Holt, prior to his
appointment as director of the Company.
(vi) On 8 April 2024, there was a placing of 39,554,644 new ordinary
shares at a price of 7.5 pence raising £2,966,600 before share costs of
£217,742.
(vii) On 8 April, there was a share subscription for 9,778,689 shares
at 7.5 pence, raising £733,400 before share issue costs of £21,375.
(viii) On 28 August 2024, a VCT placing of 20,798,491 shares at 7.5
pence raised £1,559,887 before share issue costs of £102,574.
(ix) On 29 August 2024, 3,000,000 shares at 7.5 pence were issued on
conversion of a £225,000 loan, made to Cosgrove & Drew Ltd by Robert Holt
prior to the acquisition.
(x) On 29 August 2024, consideration shares were issued to acquire
Cosgrove & Drew Ltd (4,308,452) and South West Heating Services Limited
(4,666,667) at an agreed placing price of 7.5 pence
(xi) On 29 August 2024, there was a placing of 6,552,959 shares at
7.5 pence raising £491,472 before share issue costs of £24,574.
19. Share-based payment
The Group operates an equity-settled share-based remuneration scheme, the
Earnz plc Long Term Incentive Plan 2024 (the "LTIP") effective from the
re-admission to AIM, 29 August 2024. All employees of the group are eligible
however currently share awards have only been granted to the Executive Board.
Prior to the re-admission the Group operated an equity settled share-based
remuneration scheme for Senior Executives, the Verditek plc EMI and
Non-Qualifying Share Option Plan (the "Option Plan"). Only one award remains
in place following the re-admission, the rights and rewards of the award
remain the same however the number of shares and exercise price were adjusted
following the share consolidation on 4 April 2024.
The fair value of the employee services received in exchange for the grant of
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 but excluding the impact of any service or
non-market performance vesting conditions.
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 total expense recognised for equity-settled share-based payments during
the year was £22,634 (2023: (£154,010)). This is included within
administrative expenses.
General terms and conditions of each scheme and key assumptions used for the
fair value
calculation are noted in the table below:
LTIP Option Plan
Type of instrument Nil- cost option Option
Grant date 9 September 2024 17 September 2021
Vesting period 3(rd) anniversary of grant date 3(rd) anniversary of grant date
Exercise date 9 September 2027 17 September 2022 (2023 &2024)
Holding period To 9 September 2028 N/A
Service condition Not specified 1/3 entitlement pa from grant date
Performance conditions N/A N/A
Market conditions Share price at vesting date N/A
Expiry term 10 years from date of grant 10 years from date of grant
Forfeiture on leaving date 1(st) anniversary of leaving date
Option valuation model Monte Carlo model Black Scholes model
Exercise price £0.00 £3.80 (£0.038 pre-share consolidation)
Share price at grant date 7.35p 3.8p
Expected volatility 48.88% 100%
Expected life (months) 48 36
Risk-free interest rate 3.64% 0.07088%
Dividend yield 0% 0%
The following tables illustrates the number of, and movements in, share
options during the year in addition to weighted average contractual life and
exercise price (WAEP)
Movement in year to 31 December 2024 No. share options (Option plan) No. share options (LTIP) No. warrants WAEP Weighted average term
(pence) (years)
Opening balance 1 January 2024 3,700,000 - 2,250,000 4.68 3.81
Forfeited in year (3,033,334) - - (1.42) (1.89)
Adjustment on share consolidation*(1) (659,999) - (2,227,500) 322.74 -
Lapsed in year - - (22,500) 54.00 5.39
Granted in year*(2) - 5,192,409 - (379.51) 2.05(*3)
Outstanding balance at 31 December 2024 6,667 5,192,409 - 0.49 9.36
*(1) Following the share consolidation of 100:1 on 4 April 2024 the share
options in issue were adjusted accordingly
*(2) The LTIP option agreement specifies the number of options as a percentage
of share capital on vesting therefore the actual number of options may be
subject to change.
*(3) Includes time-based reduction to year end
Movement in year to 31 December 2023 No. share options (Option plan) No. share options (LTIP) No. warrants WAEP Weighted average term
(pence) (years)
Opening balance 1 January 2023 20,000,000 - 2,250,000 3.94 7.59
Forfeited in year (16,300,000) - - 0.74 (3.78)
Outstanding balance at 31 December 2024 3,700,000 - 2,250,000 4.68 3.81
20. Subsidiaries
Earnz Plc held investments in the following subsidiaries as at 31 December
2024. All shares in subsidiaries are ordinary share capital unless otherwise
stated.
Name of subsidiary Principal activity Registered office Proportion of ownership interest and voting rights held Audit exemption**
2024 2023
Earnz Holdings Limited* Intermediate holding 1(st) Floor, St James House, 100% 100% Yes
St James' Square, Cheltenham,
Gloucestershire, GL50 3PR
Earnz Regeneration Limited* Dormant 1(st) Floor, St James House, 100% 100% Yes
St James' Square, Cheltenham,
Gloucestershire, GL50 3PR
Cosgrove & Drew Ltd Commercial and industrial mechanical and electrical installation services 1(st) Floor, St James House, 100% 100% Yes
St James' Square, Cheltenham,
Gloucestershire, GL50 3PR
South West Heating Services Limited Domestic maintenance and heating installation services 1(st) Floor, St James House, 100% 100% Yes
St James' Square, Cheltenham,
Gloucestershire, GL50 3PR
SW Assessors Limited Provision of building assessment services 1(st) Floor, St James House, 100% 100% Yes
St James' Square, Cheltenham,
Gloucestershire, GL50 3PR
Verditek USA Limited* Dormant Corporation Trust Centre, 1209 Orange Street, Wilmington, Delaware 19801 100% 100% Yes
*Indicates direct investment in the company
** All current subsidiaries have taken advantage of audit exemptions available
under the Companies Act 2006 (sections 479 and 480) due to their size or
dormant status and are therefore not subject to a statutory audit.
21. Financial risk management
The Group's activities expose it to a variety of financial risks: credit risk,
liquidity risk, and market risk. The Group's overall risk management program
focuses on the unpredictability of financial markets and seeks to minimize or
mitigate where possible the potential adverse effects on the Group's financial
performance.
Risk management is carried out by the Board of Directors. The Group
identifies, evaluates, and manages financial risks in close cooperation with
its operating entities. The Group does not engage in speculative trading of
financial instruments.
Credit risk
Credit risk refers to the risk of financial loss if a customer or counterparty
to a financial instrument fails to meet its contractual obligations. The Group
is exposed to credit risk from operating activities, primarily trade
receivables, and from its financing activities including deposits with banks
and financial institutions.
To minimize the credit risk exposure of cash and cash equivalents, which are
considered a low credit risk, the Group only places cash and cash equivalents
with established banks that maintain high credit ratings and monitors the
concentration of exposure to any single institution.
In relation to trade receivables, which are considered a moderate credit
risk, the Group conducts credit evaluations and actively monitors
outstanding balances to reduce the risk of default. The analysis of trade
receivables and expected credit loss allocation is detail in Note 16(ii).
At the reporting date, the maximum exposure to credit risk was £3.38m.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group monitors its liquidity
requirements on a regular basis to ensure it has sufficient funds to meet its
operational needs.
To minimize the liquidity risk, the Group continuously monitors forecasted and
actual cash flows with the objective of ensuring sufficient funds are
available to meet its liabilities when due, under both normal and stressed
conditions. The Group also maintains strong relationships with its principal
banking partners and 3(rd) party credit facility providers, increasing the
prospect of them facilitating access to funding if required.
The following table details the Group's remaining contractual maturities for
its financial liabilities. The amounts disclosed are the contractual
undiscounted cash flows.
Up to 3 months 3 months to 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years
£'000 £'000 £'000 £'000 £'000
Wages and pensions payable 21 - - - -
Trade payables 1,224 - - - -
Accruals 288 - - - -
Lease liabilities 23 69 73 78 -
Loans and borrowings 973* 192 217 68 -
Contingent consideration - 150 150 - -
Total at 31 December 2024 2,529 411 440 146 -
*The invoice factoring facility included in loans and borrowings is a
revolving facility secured on trade receivables. Contractual outflows are
presented in line with expected receivable maturities. While individual
drawdowns are short-term, the facility is expected to be continually utilised,
and therefore total exposure may extend beyond 3 months. The facility limit is
£600k, of which £599k was drawn at year-end.
Up to 3 months 3 months to 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years
£'000 £'000 £'000 £'000 £'000
Wages and pensions payable 19 - - - -
Trade payables 173 - - - -
Accruals 72 - - - -
Lease liabilities 57 172 95 - -
Loans and borrowings - - 523 - -
Contingent consideration - - - - -
Total at 31 December 2023 321 172 618 - -
Market risk
In the prior year, the Group was exposed to foreign exchange risk, primarily
through its investment in a foreign subsidiary, Verditek Solar srl, whose
functional currency (euros), differed from that of the parent company. The
Group's exposure related to translation of net assets and intercompany
balances denominated in foreign currency in addition to supplier payables and
customer receivables denominated in foreign currency.
During the year, the Group disposed of the foreign subsidiary, eliminating its
material exposure to foreign currency risk. As such, the Group is no longer
subject to foreign exchange currency risk as at the reporting date.
All of the Group's financial instruments are denominated in pounds sterling,
which is the Group's functional and presentational currency. Accordingly, no
sensitivity analysis has been presented for foreign currency risk.
Interest rate risk
Interest rate risk is the risk that changes in market interest rates will
adversely affect the Group's financial performance or the value of its
financial instruments.
Capital Risk
The Group's objectives when managing capital are to:
· Safeguard its ability to continue as a going concern
· Provide returns to shareholders
· Maintain an optimal capital structure to reduce the cost of capital,
and
· Comply with externally imposed capital requirements, if any.
The Group manages its capital structure and makes adjustments in light of
economic conditions and the requirements of its operations. In order to
maintain or adjust the capital structure, the Group may:
· Issue new shares
· Return capital to shareholders
· Adjust or abstain from payments of dividends, and/or
· Adjust levels of debt
Capital structure overview
The Group regularly reviews its gearing ratio to ensure alignment with
strategic goads and compare to industry benchmarks.
22. Employee benefits
The Group operates a defined contribution pension scheme only.
2024 2023
£'000 £'000
Pension cost at 1 January
Pension cost recognised as an expense in staff costs (see Note 5) 10 32
Pension liability at 31 December
Pension liability included current trade and other payables (see Note 16) (11) -
23. Related party transactions
The ultimate parent company of the Group is Earnz Plc, which is listed on the
AIM market of the London Stock Exchange. No individual shareholder or group of
shareholders holds more than 50% of the voting rights or exercises control
over the Group. Accordingly, control is considered to be dispersed amount a
wide range of shareholders.
The remuneration of key management personnel, which includes the directors of
the Company, is set out below in aggregate for each of the applicable
categories as required by IAS 24. Further details of individual directors'
remuneration are provided in the Directors' Remuneration Report.
Key management personnel compensation
2024 2023
£'000 £'000
KMP KMP
Short-term employee benefits 331 207
Post-employment benefits 10 -
Share-based payment expenses 23 (154)
Total employee benefits 364 53
Transactions with related parties
Related party Nature of relationship Nature of transaction 2024 value 2023 value
£'000 £'000
Earnz Holdings Limited Subsidiary Intercompany loan 2,035 -
Earnz Holdings Limited Subsidiary Pass-through operating expenses 17 -
Cosgrove & Drew Ltd Subsidiary Intercompany loan 540 -
Cosgrove & Drew Ltd Subsidiary Intercompany sale of services 26 -
Cosgrove & Drew Ltd Subsidiary Pass-through operating expenses 50 -
South West Heating Services Limited Subsidiary Intercompany loan (VCT) 366 -
South West Heating Services Subsidiary Intercompany loan (345) -
South West Heating Services Limited Subsidiary Intercompany sale of services 14 -
South West Heating Services Limited Subsidiary Pass-through operating expenses 2 -
SW Assessors Limited Subsidiary Intercompany loan (VCT) 300 -
Quoted Companies Alliance Common Directorship Annual membership subscription 3 -
Logical Utilities Company Common Directorship Cost reimbursement relating to potential acquisition (60) -
Bob Holt Director Loan to Company (prior to becoming Director) 300 -
Bob Holt Director Loan share conversion (300) -
Bob Holt Director Loan to subsidiary 450 -
Bob Holt Director Reimbursement of personal invoice in full 12
Bob Holt Director Loan share conversion (225) -
Bob Holt Director Consideration shares on acquisition of subsidiary 189 -
Bob Holt Director Contingent consideration agreed 405 -
Fly Solar Tech Solutions srl Common Directorship Service agreement-rental income - 42
Fly Solar Tech Solutions srl Common Directorship Service agreement - rental payment - (247)
Outstanding balances with related parties
Related party Nature of relationship Type 31.12.24 Terms
£'000
Earnz Holdings Limited Subsidiary Intercompany loan 2,052 Unsecured, interest-free, repayable on demand
Cosgrove & Drew Ltd Subsidiary Intercompany loan 616 Unsecured, interest-free, repayable on demand
South West Heating Services Limited Subsidiary Intercompany loan receivable (VCT) 366 Unsecured, interest-free, repayable on demand
South West Heating Services Limited Subsidiary Intercompany loan payable (343) Unsecured, interest-free, repayable on demand
South West Heating Services Limited Subsidiary Accounts receivable 14 Payment made post-year end
SW Assessors Limited Subsidiary Intercompany loan 300 Unsecured, interest-free, repayable on demand
Bob Holt Director Interest free loan repayable on demand (225) Unsecured, interest-free, repayable on demand
24. Commitments, contingencies and guarantees
There were no capital commitments as at 31 December 2024 (2023: none)
There are instances that the Group is engaged in litigation in the ordinary
course of business. The Group has professional indemnity insurance.
25. Events after the reporting period
On 12 June 2025, the Group signed a Sale and Purchase agreement to acquire all
the share capital of A&D Carbon Solutions LTD at a cost of £2.8m with
initial consideration of £1.3m, £1.04m in cash, to be adjusted for net
debt and normalized working capital and £0.2m of which is contingent on
meeting targets by 31 December 2025. The remaining initial consideration of
£260k is payable in new ordinary shares in EARNZ plc. The remaining
consideration is deferred and contingent upon reaching EBITDA targets for up
to 3 years post completion and is payable 60% cash and 40% new ordinary shares
in EARNZ plc. On 12 June the Company raised £1.02m through a share placing,
to fund the acquisition and provide additional working capital for the Group.
The sale is expected to complete on 1 July following a successful general
meeting authorising the directors to issue the consideration shares.
As the acquisition occurred after the reporting date, the results and
financial position of the acquired company have not been included in these
financial statements. The Group is currently assessing the fair values of the
identifiable assets acquired and liabilities assumed. Accordingly, the
accounting for this acquisition is provisional and subject to adjustment.
Company statement of financial position
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Non-current assets
Investments in subsidiaries H 0 9
Property, plant and equipment I 3 11
Total non-current assets 3 20
Current assets
Cash and cash equivalents J(i) 1,341 47
Trade and other receivables J(ii) 133 27
Net amounts due from subsidiaries 4,326 490
Total current assets 5,800 564
Current liabilities
Trade and other payables J(iii) (329) (143)
Financial liability <1 year J(iv) (180)
Total current liabilities (509) (143)
Net current (liabilities) / assets 5,291 421
Non-current liabilities
Loans and borrowings J(v) - (523)
Financial liability >1 year J(iv) (1,155)
Total non-current liabilities (1,155) (523)
Net assets 4,139 (82)
Capital and reserves
Share capital 4,088 222
Share premium 15,621 12,626
Share-based payment reserve 39 179
Retained earnings (15,609) (13,109)
Total equity 4,139 (82)
The accompanying notes are an integral part of these financial statements.
The Company's loss for the year was £2,663k (2023: £1,344k)
These financial statements were approved and authorised for issue by the board
on 26 June 2025 and signed on its behalf by:
Bob Holt
Chief Executive Officer
Company statement of changes in equity
for the year ended 31 December 2024
Share capital Share Premium Share-based payment reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000
177 12,206 333 (11,765) 951
Balance at 1 January 2023
Loss for the year - - - (1,344) (1,344)
Total comprehensive loss - - - (1,344) (1,344)
Transactions with owners:
Shares issued, net of costs 45 420 - - 465
Equity settled share-based payments - - (154) - (154)
Total transactions with owners 45 420 (154) - 311
Balance at 31 December 2023 222 12,626 179 (13,109) (82)
Loss for the year - - - (2,663) (2,663)
Total comprehensive loss - - - (2,663) (2,663)
Transactions with owners:
Shares issued, net of costs 3,227 2,436 - - 5,663
Consideration shares issued on acquisitions 639 559 - - 1,198
Transfer of lapsed share-based payments - - (163) 163 -
Equity-settled share-based payments - - 23 - 23
Total transactions with owners 3,866 2,995 (140) 163 6,884
Balance at 31 December 2024 4,088 15,621 39 (15,609) 4,139
The accompanying notes are an integral part of these financial statements.
A Statement of compliance
The financial statements of Earnz Plc, the Company, have been prepared in
accordance with Financial Reporting Standard 101 - Reduced Disclosure
Framework ('FRS101') and the Companies Act 2006 as applicable to companies
using FRS101.
B Basis of preparation
The financial statements have been prepared under the historical cost
convention, as modified and in accordance with the Companies Act 2006.
The Company's financial statements are presented in pounds sterling, which is
the Company's functional and presentation currency. All amounts are rounded to
the nearest £1,000, unless otherwise stated.
The Company has taken advantage of s.408 of the Companies Act 2006 in not
preparing its own statement of profit or loss and statement of other
comprehensive income.
As permitted by FRS101, Earnz Plc has taken advantage of disclosure
exemptions, on the basis that equivalent disclosures are, where required,
given in the consolidated financial statements of Earnz Plc. The following
exemptions have been applied in the preparation of these financial statements:
(a) Paragraphs 45(b) and 46 to 52 of IFRS 2, 'Share-based payment' (details
of the number and weighted average exercise prices of share options, and how
the fair value of goods or services received was determined) - permitted by
FRS101 para.8(a)
(b) IFRS 7, 'Financial instruments: Disclosures - permitted by FRS101
para.8(d).
(c) Paragraphs 91 to 99 of IFRS 13, 'Fair value measurement' (disclosure
of valuation techniques and inputs used for fair value measurement of assets
and liabilities) - permitted by FRS101 para.8(e).
(d) Paragraph 38 of IAS 1, 'Presentation of financial statements' -
comparative information requirements in respect of: - Paragraph 79(a)(iv) of
IAS 1, - Paragraph 73(e) of IAS 16, 'Property, plant and equipment', and -
Paragraph 118(e) of IAS 38, 'Intangible assets' (reconciliations between the
carrying amount at the beginning and end of the period) - permitted by FRS101
para.8(f).
(e) The following paragraphs of IAS 1, 'Presentation of financial
statements': - 10(d) (statement of cash flows), - 16 (statement of compliance
with all IFRS), - 38A (requirement for minimum of two primary statements,
including cash flow statements), - 38B-D (additional comparative information),
- 111 (statement of cash flows information), and - 134-136 (capital management
disclosures) - permitted by FRS101 para.8(g).
(f) IAS 7, 'Statement of cash flows' - permitted by FRS101 para.8(h)
(g) The requirements of paragraphs 88C and 88D of IAS 12 Income Taxes -
permitted by FRS 101 para.8(iZA)
(h) Paragraphs 30 and 31 of IAS 8, 'Accounting policies, changes in
accounting estimates and errors' (requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but
is not yet effective) - permitted by FRS101 para.8(i)
(i) Paragraph 17 of IAS 24, 'Related party disclosures' (key management
compensation)-permitted by FRS101 para.8(j)
(j) The requirements in IAS 24, 'Related party disclosures', to disclose
related party transactions entered into between two or more members of a group
- permitted by FRS101 para.8(k).
Going concern
The Directors have assessed the Company's ability to continue as a going
concern and are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future.
For a more detailed assessment of going concern, please refer to the
consolidated financial statements.
C Critical accounting judgements and estimates
The critical accounting judgements and estimates applied in the preparation of
the parent company accounts are consistent with those disclosed in the
consolidated financial statements. For further details on the key assumptions
and estimates, refer to the consolidated financial statements.
D Accounting policies
The accounting policies applied in the preparation of the Parent Company
financial statements are the same as those set out in Note 2 to the
consolidated financial statements, except for the following additional
policies.
Investment in subsidiaries
The Company does not hold direct equity investments in its trading
subsidiaries. Instead, all operating subsidiaries are held through an
intermediate holding company, which is a 100% wholly owned subsidiary of the
Company.
Impairment of investments
The Company's investment in subsidiaries is primarily reflected in the
intercompany loan receivable from its holding company that has direct
ownership of all trading entities.
This loan is classified as a financial asset and is measured at amortised
cost, less any impairment. The recoverability of the loan is assessed based on
the net asset position and expected future cash flows of the wider group
structure. Any impairment is recognised in the profit or loss when there is
objective evidence that the carrying amount is not fully recoverable.
Share-based payments
The Company operates equity-settled share-based payment arrangements for
certain employees. The cost of these arrangements is measured at fair value at
grant date and recognised over the vesting period.
The Company has taken advantage of the exemption available under FRS101 and
therefore has not disclosed detailed information about share-based payments.
Equivalent disclosures are included in the consolidated financial statements.
Intercompany receivables
Amounts due from group undertakings are initially recognised at fair value and
subsequently measured at amortised cost. No unconditional right to defer
settlement for at least 12 months after the reporting date exists and
therefore all intercompany loans are classified as current.
Notes to the financial statements
E Staff costs
Average monthly number of persons employed by the Company during the year:
2024 2023
No. No.
Directors 4 4
Administration 1 -
Total average number of employees 5 4
The cost of employees (including directors) during the period was made up as
follows:
2024 2023
£'000 £'000
Salaries (including directors) 285 111
Share-based payments 23 (154)
Social security costs 29 4
Pension costs 12 -
Total staff costs 349 (39)
Director's remuneration is disclosed separately in Note 5.
F Auditor remuneration
The Company paid all audit and non-audit fees for the Group during the year.
These included £161k for the audit of the company and consolidated
financial statements and £433k for non-audit services relating to financial
due diligence on acquisition targets in the year.
G Operating expenses
Following the disposal of the sole operating subsidiary Verditek Solar Italy
srl on 28 February 2024, the Company became an AIM Rule 15 cash shell.
Included in operating expenses are costs associated with re-admission
requirements and financial and legal due diligence on acquisition targets,
incurred by the Company, totalling £1.6m.
H Investments in subsidiary undertakings
2024 2023
Cost £'000 £'000
At 1 January 609 609
Investment 0* -
Disposal (609) -
At 31 December 2023 0 609
2024 2023
Impairment £'000 £'000
At 1 January (600) (600)
Investment 0* -
Disposal 600 -
At 31 December 2023 0 (600)
Net book value 0 9
*During the year, the Company incorporated a new 100% wholly owned subsidiary,
Earnz Holdings Limited, as the Group's intermediate holding company. The
investment on incorporation was a nominal amount of £1 , which has been
rounded to £0 in the table above.
Full details of the Company's subsidiaries, held directly or indirectly
through Earnz Holdings Limited are provided in Note 20 of the consolidated
financial statements.
I Property, plant and Equipment
Computers & Electronic equipment Plant & Machinery Total
£'000 £'000 £'000
Cost
At 1 January 2024 5 14 19
Additions 4 - 4
Disposals (5) (14) (19)
At 31 December 2024 4 - 4
Depreciation
At 1 January 2024 (3) (6) (9)
Charged during the year (1) (1) (2)
Disposals 3 7 10
At 31 December 2024 (1) - (1)
Net book value at 31 December 2024 3 - 3
Computers & Electronic equipment Plant & Machinery Total
£'000 £'000 £'000
Cost
At 1 January 2023 4 14 18
Additions 1 - 1
At 31 December 2023 5 14 19
Depreciation
At 1 January 2023 (1) (3) (4)
Charged during the year (1) (3) (4)
At 31 December 2023 (2) (6) (8)
Net book value at 31 December 2023 3 8 11
J Financial Instruments
The Company's principal financial instruments comprise intercompany
receivables, trade receivables, trade payables and interest-bearing
borrowings.
At 31 December 2024, the carrying amounts of financial instruments were:
2024 2023
Category £'000 £'000
Cash and cash equivalents J(i) 1,341 47
Intercompany receivables 2,991 490
Trade and other receivables J(ii) 133 27
Trade and other payables J(iii) (329) (142)
Loans and borrowings J(iv) - (523)
The Company has applied the exemptions available in FRS101 and has not
disclosed further information required by IFRS7 and IFRS 13 relating to
financial risk management and fair value hierarchy. Equivalent disclosures are
included in the consolidated financial statements of the group.
J(i) Cash and cash equivalents
2024 2023
£'000 £'000
Cash at bank and in hand 512 47
Restricted cash 829 -
Total cash and cash equivalents 1,341 47
Restricted cash of £829k relates to cash held arising from capital raised
under VCT tax-advantaged status. These funds are ring-fenced and are not
available for general use by the Company. The Company can only use this money
in accordance with the qualifying investment criteria of the VCT regulations.
J(ii) Trade and other receivables
2024 2023
£'000 £'000
Prepayments 76 12
VAT receivable 43 15
Trade receivables 14 -
Total trade and other receivables 133 27
J(iii) Trade and other payables
2024 2023
£'000 £'000
Trade payables 64 94
Accruals and deferred income 247 46
Social security & other taxes payable 14 2
Pension cost 4 -
Total trade and other receivables 329 142
J(iv) Financial liabilities
The Company has recognised a financial liability, relating to the obligation
to issue shares or settle in cash, the contingent consideration on behalf of
its 100% wholly owned subsidiary Earnz Holdings Limited.
An equal and corresponding receivable of £1.335m has been recognised as a
financial asset in the balance 'net amounts due from subsidiaries'.
J(v) Loans and borrowings
2024 2023
Non-current - movement £'000 £'000
Balance 1 January 523 -
Corporate bond issue (convertible loan notes) - 500
Accrued interest on corporate bonds 5 23
Derecognition on disposal of subsidiary (528) -
Balance 31 December - 523
The convertible loan note holders incorporated Verditek Solar Limited on 27
February 2024.
On 28 February 2024, Earnz Plc (previously Verditek Plc until 6 March 2024)
disposed of its sole operating subsidiary, Verditek Solar Italy srl to
Verditek Solar Limited, in return for satisfaction of the outstanding secured
convertible loan notes and accrued interest (£528,340).
K Taxation
(i) There is no current tax or deferred tax charge for the year in
respect of the Company.
(ii) No deferred tax asset has been recognised in respect of accumulated
tax losses due to the uncertainty over availability of future taxable profits
against which these losses can be utilised.
At 31 December 2024, the Company had unrecognised tax losses of £1.45m that
may be available for relief against taxable profits of its subsidiaries,
subject to relevant tax rules and elections.
L Share capital and reserves
For details of share capital see Note 18 in the consolidated financial
statements.
M Commitments
As at 31 December 2024, the Company had no material commitments for capital
expenditure or other contractual obligations, including guarantees given in
respect of subsidiaries or third parties.
N Contingent liabilities
As at 31 December 2024, the Company had no contingent liabilities, including
potential liabilities arising from guarantees or indemnities provided to
subsidiaries or other parties.
O Ultimate controlling party
The Company is the ultimate parent undertaking and controlling party of the
Group.
P Events after the reporting period
There were no material events after the reporting period specific to the
company. Refer to Note 25 of the consolidated financial statements for details
of events after the reporting period affecting the Group.
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