Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2021
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COMPANY INFORMATION
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CONTENTS
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their report and the financial statements for the year ended 31 December 2021.
Our goal is working towards a waste-free, circular economy in the future, helping to secure our planet’s health and wealth for generations to come. We are passionate about sustaining the planet, people and profit in equal measure.
2021 has been a continuation of 2020 where the group sought further streamlining of its business and operations to progress through the extend Covid period. Significant impact from the global supply chain, particularly in specialist steels and electronic components had taken its toll on the business in both its contracted projects in addition to the research & development activities.
The group added key technical resources of engineering and science expertise, which has supported the business’ efforts to further enhance its intellectual property and technology efficiencies. Key focus has been firmly placed on its PLUTUS business in Shetland, Scotland where investment has been made to install upgrades to the facility. The investment has seen taking it from a storage and processing facility for Salmon Category 2 silage, to maximising the recovery of core nutrients in oil, solids and water status and working towards the end goal in 2022, to producing EN standard biofuels. Baseline carbon assessments of the operation versus the status quo has also been completed, highlighting potentially significant carbon savings. Attraction and sales enquiries from across key fish farming regions across the world including Canada, North America and Europe provides the company confidence in the pipeline. In parallel, the group continues to develop it H2OPE technology focusing initially in the UK and Ireland Biogas sector but through a government funded programme, Innovate UK, it looks to be developing a similar solution for Agriculture long-term. Both markets should see prototypes being demonstrated in their respective markets by late 2023, early 2024. The group’s healthy pipeline derives from both of these markets where a global scale challenge in heavy polluted slurries being treated onsite, to recover the valuable nutrients, to produce a high-in-demand bio fertiliser. As such, the group has engaged with advisers Jefferies to commence a growth capital raise to enable the company to capitalise on both its short term and long term opportunities. Target to complete subject to interest, will be end of 2022, early 2023. International entities in both Oman and The Netherlands have seen slower progress due to Covid and the company will assess the priorities and resources required as part of its ongoing strategic review. Further interest in the business continues from a plethora of stakeholders from governments, trade associations, environmental agencies, industry partners and customers in the core markets of Agriculture, Biogas and Food & Drink markets. The company has been assessing the correct option for carbon emission monitoring and disclosures and look to formalise its choice looking ahead in 2023. The group continues to have its own carbon footprint assessed by a third party provider in One Carbon World and provided support to One Carbon World at COP 27 in 2022. Across the business there is the enduring commitment to being at the forefront of sustainable technology and have continued to invest in and protect our intellectual properties.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
Turnover in the year was £2,486,481 (2020: £448,950). Revenue was generated mainly from the group’s engineering consultancy services for a large corporate client in addition to supply key commodity solutions and its distribution agreement for a first-of-its-kind, live water monitor quality monitoring device across the Food & Drink markets. The operating loss was £3,174,576 (2020: £2,917,301) reflecting further investment to support the group whilst its key technologies are being developed towards commercialisation, adding experienced team members and the costs of supporting the group in international markets.
The passion for sustainability is one that is shared across the team at SEM and this has driven the strong progress made during the last 12 months. The group is very enthusiastic of the opportunities that have been presented to the group from its core markets.
The directors who served during the year were:
As with any new product development, testing and qualification outcomes can be unknown and unpredictable and as such can delay the target date for commercialisation and whilst during a global Pandemic such as Covid, made things extremely challenging, like for most small-medium enterprises. The group has taken precautionary actions, to ensure business continuity and that its disrupting technologies continues to be progressed towards market deployment.
The group continues to enhance and develop through research and simulations of its resource recovery and by-product creating solutions, across both core and mid-term markets.
The auditor, Anderson Anderson & Brown Audit LLP, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
In preparing this report, the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors are responsible for preparing the Directors' report and the
consolidated
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year
. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙
make judgements and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SEM ENERGY (HOLDINGS) LIMITED
We have audited the financial statements of SEM Energy (Holdings) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2021, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group and Company Statement of changes in equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw attention to note 2.3 in the financial statements, which indicates that required funding has not been secured as at the date of signing. As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SEM ENERGY (HOLDINGS) LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Directors' report has been prepared in accordance with applicable legal requirements.
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 Directors' report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SEM ENERGY (HOLDINGS) LIMITED (CONTINUED)
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 Group 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:
We obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and UK Taxation legislation. We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
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timing and completeness of revenue recognition;
∙
compliance with relevant laws and regulations which may impact on the financial statements and those that
∙
the company needs to comply with for the purpose of trading;
∙
management judgements applied in calculating provisions; and
∙
management override of controls to manipulate the Company’s key performance indicators to meet targets.
We discussed these risks with client management, designed audit procedures to address these risks including:
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reviewed internal documentation and correspondence with regulators for evidence or irregularities;
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testing the timing and completeness of revenue;
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consideration of the assumptions applied whether the judgements applied in calculation of provisions were appropriate;
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reviewed areas of judgement and tested a sample of journal entries for indicators of management bias; and
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performed analytical procedures to identify any unusual or unexpected relationships which may be an indication of material misstatement due to fraud.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditor's report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SEM ENERGY (HOLDINGS) LIMITED (CONTINUED)
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.
for and on behalf of
Statutory Auditor
Kingshill View
Prime Four Business Park
Kingswells
AB15 8PU
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
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CONSOLIDATED BALANCE SHEET
AS AT
31 DECEMBER 2021
The
financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 14 to 24 form part of these financial statements.
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COMPANY BALANCE SHEET
AS AT
31 DECEMBER 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 14 to 24 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2021
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2021
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The company is a private limited company registered in the United Kingdom. The registered office is 17-19 Innovation Centre, Aberdeen Science and Energy Park, Bridge of Don, Aberdeen, AB23 8GX.
The principal activity of the company is that of a holding company, and also to provide personnel to the group. The principal activity of the subsidiaries is the research and development of environmentally friendly waste solution products.
2.
Accounting policies
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The group reported a loss of £2,854,805 (2020 - £2,574,545) for the year and net assets totalling £3,601,304 (2020 - £2,904,970). The company has net assets of £12,675,594 (2020 - £8,949,440).
Since the year end the existing investor has provided a loan of £1.5m to allow the group to meet its financial obligations. The directors have prepared forecasts and this shows as the group moves to the commercialisation phase of the waste and water treatment technology there is a requirement for additional funding. The group is currently in discussions with investors to secure additional funding which will allow the group to finalise the development phase of the products and to help with the working capital needs. There is no signed agreement in place as at the date of signing of the accounts and as a result there is an uncertainty with regards to the going concern basis of the financial statements. However, the directors are confident the funding will be concluded in early 2023 and as a result, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure. The Group contributes to a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations. The contributions are recognised as an expense in the Consolidated statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Group in independently administered funds.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.
Accounting policies (continued)
At each balance sheet date, stocks are assessed for impairment. If stock 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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
A1, A, B and D shares carry full voting and dividend rights.
C shares do not carry any voting or dividend rights. Upon a distribution of assets on a liquidiation or return of capital, A and B shares rank in priority to any other classes of shares. During the year there were 35,504 A Ordinary shares and 7,394 E Ordinary shares allotted.
The Group contributes to a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. Contributions totalling £
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
There is no ultimate controlling party of SEM Energy (Holdings) Limited.
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