REG - EQTEC PLC - Final Results
25/04/2022 07:01
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RNS Number : 0856J EQTEC PLC 25 April 2022
25 April 2022
EQTEC plc
("EQTEC", the "Company" or the "Group")
Audited Results for the year ended 31 December 2021
EQTEC plc (AIM: EQT), a world-leading technology innovation company enabling
the Net Zero Future through advanced solutions for hydrogen, biofuels, SNG and
other energy production, announces its audited results for the year ended 31
December 2021.
2021 HIGHLIGHTS:
• Delivery of c. €9.2m revenue, 410% of c. €2.2m revenue in previous year
• Reduction in EBTIDA loss with an increase in net assets
• Growth across 7 geographies
o 2 new projects led to financial close with financing for a 3(rd) in
progress
o 2 Market Development Centres under commissioning
o 3 additional plants under construction
o 12 projects under development
• Establishment of platform for growth
o Formal legal entities in Croatia and Greece established, with two more
expected in 2022
o Advancement of strategic partnerships including collaborations with Wood,
Toyota, Logik, H2
o Recruitment of engineering and project development talent
o Successful placing raised £16m applied towards market, project and
capability growth
David Palumbo, CEO of EQTEC, commented: "We set ambitious targets for 2021 and
delivered more than 4x revenue over 2020, building the momentum we intended.
We converted more opportunities than ever into focused, planned projects and
amongst these was closure of both of our targeted Market Development Centres
in Italy and Croatia. We formalised majority-owned joint ventures in Croatia
and the Aegean and invested in our go-to-market presence across USA, UK,
France, Italy and Ireland, with a view to increasing pace and impact in those
markets. Critically, we also started extending our partnership network to
major players that will credibly support our growth into new geographies and
solutions.
"I am especially proud of these achievements in the face of strong market
headwinds, including significant price increases and delays in receiving
critical raw materials or manufactured parts. Our business platform grows
increasingly resilient as we add partners and new talent to our global
network. From post-Covid challenges to COP26 to more recent geopolitical
events, we experience more demand than ever and are taking our place as a
leading technology innovator for fossil fuel replacements and clean, baseload
energy and biofuels, as well as an innovator of new business models for energy
independence and security."
OPERATIONAL, COMMERCIAL AND CORPORATE HIGHLIGHTS:
In less than two years, EQTEC has grown both its active projects and the
pipeline of interest and opportunity behind it. In our 2020 annual report, we
announced 10 projects under development or construction, against a pipeline of
75 opportunities. In our 2021 interim results last September, we announced 17
projects under development or construction, against a pipeline of well over
100.
Corporate development
R&D: The Company confirmed completion of a successful R&D programme in
December, including tests with Refuse Derived Fuel (RDF) and others with
contaminated plastics, all at its R&D facility in France, operated with
partner Université de Lorraine.
Collaboration with Wood: The Company in November signed a strategic
collaboration agreement with Tier 1 engineering company Wood, to focus on
joint development of integrated technology solutions for waste-to-SNG and
waste-to-hydrogen. Company executives joined Wood at COP26 to share its
propositions and strategy for waste-to-value business.
Collaboration with H2: The Company in December signed a collaboration
framework agreement with development consultancy H2 Energy Solutions Ltd of
Germany. The partners will pursue opportunities for deployment of
waste-to-hydrogen and other solutions, particularly in Germany and Turkey.
Appointment of CFO: The Company in July appointed Nauman Babar as CFO and to
the Board of Directors.
Appointment of joint broker: The Company in March appointed Canaccord Genuity
Limited as the Company's joint broker along with Arden Partners.
Launch of Long-Term Incentive Plan: The Company in February launched its first
Long-Term Incentive Plan for Group employees, to support joint ownership and
drive performance through shared accountability.
Plants under construction
USA:
The Company in October invested c. US$2.8 million (c. £2.1 million) in the
North Fork Community Power (NFCP) project, increasing its equity share to 49%,
offering a US$4.5 million convertible loan facility. Following execution of
the facility, construction work continued. The Company in December announced a
new partnership with Phoenix Energy, North Fork Community Development Council
and Carbonfuture GmbH to help Sierra Nevada communities sequester carbon,
reduce wildfire risk, generate green energy, create jobs and support the local
community whilst generating tradeable carbon credits.
Italy:
The Company in May together with a consortium of investors, acquired a
decommissioned, biomass waste-to-energy plant in Tuscany, Italy that it
intends to recommission as a Market Development Centre (MDC), with EQTEC as
O&M contractor. The plant will convert multiple types of biomass feedstock
into heat, power and biochar. Once operational, the Italia MDC is expected to
generate annual revenues of c. €2,000,000 and EBITDA of c. €750,000.
Croatia:
The Company in August acquired, through its Croatian JV, a 1.2 MWe
biomass-to-energy gasification plant in Belišće, Croatia. Once
operational, it will become a Croatia MDC, with EQTEC as O&M contractor.
Technology sales for EQTEC over the life of the project are expected to be c.
€2.0 million, of which c. 60% was invoiced in Q4 2021.
In September, the Company's JV acquired a 1.2 MWe biomass-to-energy
gasification plant in Karlovaç, Croatia. The plant will be retrofitted with
EQTEC technology and repowered, and is expected to produce 3 MWe of green
electricity and high-quality biochar. It is expected that the Company will
become the plant's O&M contractor. Technology sales for EQTEC over the
life of the project are expected to be c. €15m, of which c.10% was invoiced
by EQTEC in Q4 2021.
Greece:
The Company in October confirmed that all deliveries of EQTEC technology had
been made to the 0.5 MWe Larissa, Thessaly project. The project is building
Greece's first advanced gasification, waste-to-energy plant.
Projects under development
USA:
The Company and its local partners appointed EPC contractor Infinity Project
Management Inc (IPM) as owners' representative for the Blue Mountain Electric
Company LLC opportunity in Wilseyville, California (BMEC). The project is
expected to complete front-end engineering design (FEED) in H2 2022, toward
financial close in the same year. The BMEC plant will convert c. 24,000 tonnes
of forestry waste per year into c. 2,400 tonnes of high-quality biochar and 3
MWe of power for the local community, whilst contributing to prevention of
forest fires.
UK:
In September, the Company's Southport project SPV entered into a conditional
share purchase agreement to acquire full ownership of the project, with the
agreement expected to complete in due course. In November, the Company
submitted a revised planning application for a Phase 1 waste reception centre
and anaerobic digestion facility as a precursor to the intended Phase 2
planning application for an EQTEC facility. The planned Phase 1 facility is
designed to convert 80,000 tonnes of waste into six million cubic metres of
biomethane, which, in turn would output 9 MWe. The Phase 2 facility is
intended to convert up to 25,000 tonnes of RDF into an estimated 3 MWe of
green electricity per year. Further, the Company and its partner, Rotunda
Group Ltd., identified the potential for an additional gasification facility
nearby. The additional site would potentially allow for installation of a
larger, Phase 3 EQTEC facility that could transform waste into synthetic
natural gas (SNG) and/or hydrogen. The Company and its partners are carrying
out feasibility studies. EQTEC expects to be the project developer for all
phases of the project, providing design and core Advanced Gasification
Technology and retaining a portion of the O&M contract.
The Company in February signed a Collaboration Framework Agreement (CFA) with
Logik Developments Limited, toward development of a 9.9 MWe plant at Deeside,
Flintshire, UK, including a Phase 1 recycling and anaerobic digestion
facility. The Company in March announced it had signed a CFA with Toyota Motor
Manufacturing UK, whose manufacturing facility is adjacent to the site. The
CFA expressed Toyota's intention to work with the Company on innovative,
circular and sustainable waste-to-energy solutions for Toyota's engine
manufacturing plant next to the prospective Deeside plant. The Company in June
submitted a planning application for a Phase 2 gasification facility deploying
EQTEC technology. The proposed plant would combine a 182,000-tonne waste
reception plant with anaerobic digestion and EQTEC technology. The Company in
October announced it had through the project SPV entered into a cooperation
agreement with Anaergia Inc. for delivery of the multi-technology plant. In
December, the Company announced entering into a Supplementary Agreement with
Logik under which the two partners would develop an additional Phase 3
waste-to-value infrastructure on the Deeside site. The partners successfully
completed a feasibility study for hydrogen production that indicated planning
and environmental viability.
The Company in January received notification of planning approval from
Stockton-on-Tees Borough Council for an improved waste-to-energy scheme for
the Company's RDF-to-energy project at Billingham, Teesside. In February, the
Company's project signed a conditional Land Purchase Agreement. The Company in
June completed concept design work for the core gasification process, with
progress on design of the full plant.
The Company in December confirmed it was investigating new offtake
opportunities for both Deeside and Billingham and that it was working with
technology and delivery partners toward feasibility work at both sites. The
Company in December also confirmed its decision to defer financial close for
both projects to enable further feasibility work. Company executives visited
both sites in December and had constructive meetings with the local Members of
Parliament.
France:
The Company in December signed a Letter of Intent (LoI) with SEPS SAS of
France (SEPS), a company specialising in the management and recycling of
industrial waste. The LoI will support the Company's pursuit of the safe and
clean transformation of contaminated plastics into energy, hydrogen and
biofuels.
The Company also confirmed it had identified and was pursuing an additional
six project opportunities in France for a range of biomass, RDF and other
feedstock, as well as a range of offtake applications.
Greece:
In January, the Company signed a MoU with Nobilis Pro Energy S.A. The
agreement includes collaborative development of Nobilis's existing pipeline of
opportunities and for construction in Nobilis, Almyros, where grid connection
and land agreement are already confirmed.
The Company, in September, announced formation of EQTEC Synergy Projects
Limited, a JV between EQTEC and its strategic partners in Greece, German EPC
ewerGy GmbH and ECO Hellas M IKE. It also confirmed that the JV had acquired
a 1 MWe biomass-to-energy project in Livadia, Greece and exclusivity for a
second 1 MWe project nearby.
In October, the Company's Greek JV acquired the rights to a project in
Nevrokopi, Drama. The project would develop a biomass-to-energy plant that
could generate 5 MW green electricity from locally and sustainably sourced
forestry waste.
Ireland:
The Company and its partner, Carbon Sole Group Limited, pursued development of
3 projects in Ireland for biomass-to-bioenergy plants and in particular for
sustainable forestry waste for production of synthetic natural gas (SNG).
FINANCIAL HIGHLIGHTS
· Revenue: For the financial year to 31 December 2021, the Group recognised
revenue of €9.2 million (FY 2020: €2.2 million).
· Profit/loss: For the financial year, the Group incurred losses of €4.7
million (FY 2020: €5.8 million).
· Assets: The net assets of the Group increased to €43.4 million at 31
December 2021 (31 December 2020: €25.3 million).
· Placing: The Company in May raised £16 million (€19 million) before
expenses, in an institutional investor-led, oversubscribed placing.
· Cash: The cash balance of the Group at 31 December 2021 stood at €6.4
million (31 December 2020: €6.4 million).
· Debt: The Company in January agreed a new loan facility of €1.39 million
with EQTEC shareholder, Altair Group Investment Limited, with a maturity date
of 31 December 2021. The loan, fully drawn down to repay an outstanding debt
with another lender, had a lower interest rate than the previously held debt
facility and was itself repaid in full in June 2021, six months ahead of
schedule.
POST-PERIOD HIGHLIGHTS:
• January 2022:
The Company announced its Environmental, Social and Governance ("ESG")
statement of intent. In addition to outlining a direction of travel for coming
years, the Company's ESG Statement specifies objectives for 2022 including
establishment of a baseline assessment of greenhouse gas emissions, including
carbon. As a cleantech business, the Company intends to report on and exercise
active accountability for its ESG work.
• February 2022:
Haverton WTV Limited ("Haverton"), a wholly-owned subsidiary of EQTEC, and
Scott Bros. Enterprises Limited reached an agreement to extend the existing,
conditional Land Purchase Agreement (the "LPA") relating to the land on which
the proposed, up to 25 MWe Billingham EQTEC-enabled syngas plant at Haverton
Hill, Billingham, UK, will be constructed. The LPA Longstop Date was extended
to 23 December 2022.
• March 2022:
The Company formally entered the French market with the creation of a
wholly-owned subsidiary, EQTEC France SAS, and completed a Strategic
Collaboration Agreement with SEPS, a French company specialising in the
management and recycling of industrial waste. The Agreement confirmed the
shared intent to pursue development of contaminated waste treatment plants
that apply the combined capabilities of SEPS and EQTEC technologies, with
initial interest focused on specific, offtake applications including
electricity, heat, combined cooling, heat & power (CCHP) and biofuels.
Also in March, the Company announced that it had entered into arrangements in
respect of the provision of a new unsecured bridging loan facility for up to
£10 million, with an initial advance of £5 million received by the Company
on 29 March 2022, provided by Riverfort Global Opportunities PCC Limited and
YA II PN, Ltd.
Also in March, at the Company's Italia MDC in Italy, the thermal cracking
reactor and heat exchanger were assembled and the piping installed. The drying
and feeding system were ordered and are expected to be on site, on time, to
meet the planned commissioning in H2 2022.
Also in March, at the Company's Belišće MDC in Croatia, a full engineering
and specification process was completed. Negotiations advanced with a local
industrial customer for power and heat offtake. In Q2, the Company expects to
agree heads of terms with the industrial customer for the offtake. In
addition, a preferred customer for the biochar to be produced at the site has
been identified and commercial discussions commenced. A further site visit
with EPC contractor COS.M.I. Srl is confirmed for the last week of April
towards commissioning as planned in H2 2022.
OUTLOOK:
By the end of 2022, the Company expects to make fully operational two MDCs and
two additional plants under construction for other owner-operators. It also
expects to reach financial close on additional projects that extend existing
propositions but also add new capabilities with different feedstock and new
offtake applications. The Company is targeting continued, strong revenue
growth and reduction in EBITDA losses, with planned investment in new and
innovative projects that raise EQTEC's visibility and range of propositions.
To further position EQTEC's technology as a replacement for fossil fuel
technologies and support growth and scale, the Company will focus on four key
areas of development. First, it will invest in its go-to-market model,
formalising subsidiaries in the USA, the UK, France and Italy, with JVs in
Croatia, Greece and Ireland. Second, it will invest in innovation, with a full
R&D programme in 2022 and a three-year strategy for technology development
with university partners as well as Wood and other, top-tier technology
businesses to be announced. Third, it will enrich its global network to
include multinational, Tier 1 development, delivery and technology partners as
well as local, market-specific partners, including project funding partners.
Fourth, it will invest in talent in its technical and corporate centres as
well as in its go-to-market partners, to deepen and broaden capabilities with
technology innovation, project development and corporate venturing. Finally,
the Company has ramped up its engagement with policymakers and influencers in
the EU, UK and USA, toward greater awareness and understanding of EQTEC's
capabilities, propositions and place in the Net Zero future.
The 2021 annual report and accounts will shortly be available on the Company's
website at www.eqtec.com (http://www.eqtec.com) .
Investor Presentation
EQTEC plc is pleased to announce that CEO David Palumbo, CFO Nauman Babar and
COO Jeffrey Vander Linden will provide a live presentation based on 2021
Annual Results, via the Investor Meet Company ("IMC") platform on 26th April
2022 at 1:00pm BST.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event, via the IMC dashboard, up until 0900 UK time on
the day before the meeting, or at any time during the presentation. Investors
may sign up to IMC for free and add EQTEC plc via:
https://www.investormeetcompany.com/eqtec-plc/register-investor
(https://www.investormeetcompany.com/eqtec-plc/register-investor) . Investors
who already follow EQTEC plc on the Investor Meet Company platform will be
invited automatically.
The Company will update shareholders in its Q2 update in summer 2022.
ENQUIRIES
EQTEC plc +44 203 883 7009
David Palumbo / Nauman Babar
Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
James Harris / James Dance
Arden Partners - Joint Broker +44 20 7614 5900
Paul Shackleton (Corporate) / Simon Johnson (Sales)
Canaccord Genuity - Joint Broker +44 20 7523 8000
Henry Fitzgerald-O'Connor / James Asensio / Patrick Dolaghan
Alma PR - Financial Media & Investor Relations +44 20 3405 0205
Josh Royston / Sam Modlin EQTEC@almapr.co.uk (mailto:EQTEC@almapr.co.uk)
BECG - General Media Enquiries +44 7554 014 188 / +44 7867 452 269
Carrie Lowe / Tom Gosschalk EQTEC@BECG.com (mailto:EQTEC@BECG.com)
About EQTEC plc
As one of the world's most experienced gasification technology and engineering
companies, with a growing track record of delivering operational and
commercial success for transforming waste-to-energy through best-in-class
technology innovation, engineering and project development, EQTEC brings
together design innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's proven,
proprietary and patented technology is at the centre of clean energy projects,
sourcing local waste, championing local businesses, creating local jobs and
supporting the transition to localised, decentralised and resilient energy
systems.
EQTEC designs, supplies and builds advanced gasification facilities in the UK,
EU and US, with highly efficient equipment that is modular and scalable from
1MW to 30MW. EQTEC's versatile solutions process over 50 varieties of
feedstock, including forestry wood waste, vegetation and other agricultural
waste from farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions. EQTEC's solutions produce a
pure, high-quality synthesis gas ("syngas") that can be used for the widest
range of applications, including the generation of electricity and heat,
production of synthetic natural gas (through methanation) or biofuels (through
Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen.
EQTEC's technology integration capabilities enable the Group to lead
collaborative ecosystems of qualified partners and to build sustainable waste
reduction and green energy infrastructure around the world.
The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange has
awarded EQTEC the Green Economy Mark, which recognises listed companies with
50% or more of revenues from environmental/green solutions.
Further information on the Company can be found at www.eqtec.com
(http://www.eqtec.com/) .
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Chairman's Statement
2021 in review
The past year, more than any other, has reinforced my view of EQTEC's
strengths. We asked a lot of our executive directors and the team going into
2021. I'm delighted their efforts and leadership are reflected in an excellent
performance for the period, delivering 410% of last year's revenues, operating
losses were reduced and real progress made with projects and Market
Development Centres.
Our people and technology are our greatest strengths. We have a talented and
committed leadership team and world-leading technology capabilities that we
continue to evolve and patent. This powerful combination enables us to produce
what we believe is the world's most versatile synthesis gas (syngas), to offer
the world efficient baseload energy and biofuels generated from waste.
As outlined by the CEO in his report, our team has successfully built the
platform for growth set out as an objective at the end of 2020 and there has
been a big expansion in essential capabilities across the business. We
converted more opportunities into formal projects, exercising more proficiency
than ever in pushing projects to financial close and hiring more professionals
to guarantee more closes in future.
Most importantly, we delivered healthy revenue growth, moved four projects
from development into construction, eight opportunities into formally managed
projects and strategically deferred the two most complex projects in the
interest of increasing their value for customers, partners and shareholders.
EQTEC's purpose and potential
It should come as no surprise that this business is growing. The Company is
positioned at the intersection of two essential growth sectors: clean waste
disposal and sustainable energy production. EQTEC brings a proven, versatile
technology that transforms an exceptionally wide variety of waste types into
an exceptionally wide range of clean energy types and fuels.
The COP26 Climate Summit in November 2021 amplified the need for our
technology. The commitments made there by 190 nations to making greenhouse gas
emissions net zero by 2050 still need to be delivered and then exceeded.
Non-baseload renewables including solar, wind and hydro all have important
roles to play in well-managed national energy strategies but these
technologies will not alone replace fossil fuels. Reliable sources of clean
baseload energy are also required.
And even after everything is done first to reduce, re-use and recycle, waste
is still an almost infinite supply as a resource. Innovative, cleantech
companies such as EQTEC will take leading positions as providers of
carbon-negative, baseload energy and biofuels as well as reduce waste and its
associated emissions. Policymakers, in my view, are only now starting to
understand the untapped potential of syngas from waste as an alternative fuel
for baseload generation. Markets, too, are underestimating the significant
impact that cleantech innovation will have.
I joined the board of EQTEC to help the Company realise its potential as a
provider of advanced solutions that enable the Net Zero future and I see real
progress being made. We believe our three-year strategy, with its focus on
rapid growth, building scale, and enhancing our technological capabilities, is
in your long-term interests. We will, of course, keep the strategy in review
and react to market developments that are continually and rapidly evolving.
Outlook and closing thanks
We are living with risks to the world economy not seen for more than a
generation and there is a need to navigate our business through a range of
macroeconomic, political and environmental challenges. I believe that the
Board has a thorough understanding of the issues and risks and has appropriate
plans in place.
As I noted above, our primary challenge is not technology capabilities nor the
quality of our people - these are already the main Company's assets. The
primary challenge - even in this turbulent market - is how to scale rapidly
and keep pace with ever-increasing demand for what it offers. The company has
proven its technology. It must move quickly to make its solutions more readily
available to more customers in more markets for greater impact in supporting a
Net Zero world.
The Company has reported in successive trading updates the expansion of its
pipeline, improving conversion and closure of deals. I expect that in 2022 we
will begin turning also to reporting the operational performance of more live
plants powered by EQTEC technology. As Chairman of your Board of Directors, I
am conscious of my responsibilities to our shareholders who should expect a
year of strong growth as we continue to execute on our strategy.
We at EQTEC enjoy committed, active and vocal stakeholders and I thank you for
your continued support.
Chief Executive's Report
OPENING REMARKS
2021 was a year of unprecedented change and challenge, as the world's gradual
recovery from the Covid-19 pandemic revealed mismatches in supply and demand,
with associated market disruptions. Prices for commodities such as steel,
copper and other essential metals soared, supply chains were unable to keep up
with sudden surges in demand and global shipping and transport brought
inevitable delays. Like many, EQTEC witnessed significantly longer order lead
times, much higher production prices and pricing guarantees measurable in days
instead of months.
But even in the face of these challenges, EQTEC delivered solid results. We
reached financial close on Market Development Centres in Italy and Croatia,
moved four projects from development into construction and eight opportunities
into formally managed projects. We delivered 410% of revenues recorded in the
previous year and reduced the operating loss by 17%. Our momentum indicates we
are on the right track for continued growth and targeting increasingly
positive, year-on-year results.
Our progress relies on a growing network of license distributors, developers,
contractors and other partners across target geographies. At the end of 2021,
we were active in seven countries: USA, UK, France, Italy, Croatia, Greece and
Ireland. Each of these markets has its own growing pipeline of opportunities,
developed and managed by a professional team and with a growing, local network
of partners to support development, construction and operations &
maintenance (O&M).
To support our Go-to-Market entities, we focused global partnering efforts on
Tier 1, multinational technology and Engineering, Procurement &
Construction (EPC) partners. On 26 November, we announced a technology
partnership with Wood, for development and sales of waste-to-synthetic natural
gas (SNG) and waste-to-hydrogen solutions. Our joint pipeline already includes
a dozen opportunities. Additionally, we worked through much of H2 2021 with
three, Tier 1 EPCs on our larger projects in the UK and France, and expect to
announce their engagement in one or more projects in due course.
Further, we formalised joint venture (JV) arrangements in Croatia and Greece,
with a view to establishing more subsidiaries and JVs in other target markets
in 2022. These arrangements will ensure that our standards for quality,
efficiency and innovation are applied everywhere, but also that we support
successful, local businesses to operate independently and become reliable
licensing and distribution partners for EQTEC technologies.
Finally, and in support of our broadening and deepening market presence, we
grew our global team, hiring process engineers, control systems engineers and
solidifying our relationship with project engineering partner CT3 Ingeniería
(CT3). These hires, and the CT3 relationship, extended our core technical team
and added dozens of additional, project-critical engineers to our global
capacity. We brought in a new CFO, who is raising the bar for strategic
finance, and we added several other key roles to our commercial and
operational capabilities in support of our Go-to-Markets.
We ended 2021 having done what we set out to do: construct our platform for
growth; strengthen our presence across geographies; grow our pipeline of
go-to-market entities and future licensors, each with a pipeline of projects;
grow our partner network and future-proof our technology leadership.
OPERATIONAL, COMMERCIAL AND CORPORATE HIGHLIGHTS
In less than two years, EQTEC has grown both its active projects and the
pipeline of interest and opportunity behind it. In our 2020 annual report, we
announced 10 projects under development or construction, against a pipeline of
75 opportunities. In our 2021 interim results last September, we announced 17
projects under development or construction, against a pipeline of well over
100.
Corporate development
R&D. The Company confirmed completion of a successful R&D programme in
December, including tests with Refuse Derived Fuel (RDF) and others with
contaminated plastics, all at its R&D facility in France, operated with
partner Université de Lorraine.
Collaboration with Wood. The Company in November signed a strategic
collaboration agreement with Tier 1 engineering company Wood, to focus on
joint development of integrated technology solutions for waste-to-SNG and
waste-to-hydrogen. Company executives joined Wood at COP26 to share its
propositions and strategy for waste-to-value business.
Collaboration with H2. The Company in December signed a collaboration
framework agreement with development consultancy H2 Energy Solutions Ltd of
Germany. The partners will pursue opportunities for deployment of
waste-to-hydrogen and other solutions, particularly in Germany and Turkey.
Appointment of CFO: The Company in July appointed Nauman Babar as CFO and to
the Board of Directors.
Appointment of joint broker: The Company in March appointed Canaccord Genuity
Limited as the Company's joint broker along with Arden Partners.
Launch of Long-Term Incentive Plan: The Company in February launched its first
Long-Term Incentive Plan for Group employees, to support joint ownership and
drive performance through shared accountability.
Plants under construction
USA:
The Company in October invested c. US$2.8 million (c. £2.1 million) in the
North Fork Community Power (NFCP) project, increasing its equity share to 49%,
offering a US$4.5 million convertible loan facility. Following execution of
the facility, construction work continued. The Company in December announced a
new partnership with Phoenix Energy, North Fork Community Development Council
and Carbonfuture GmbH to help Sierra Nevada communities sequester carbon,
reduce wildfire risk, generate green energy, create jobs and support the local
community whilst generating tradeable carbon credits.
Italy:
The Company in May together with a consortium of investors, acquired a
decommissioned, biomass waste-to-energy plant in Tuscany, Italy that it
intends to recommission as a Market Development Centre (MDC), with EQTEC as
O&M contractor. The plant will convert multiple types of biomass feedstock
into heat, power and biochar. Once operational, the Italia MDC is expected to
generate annual revenues of c. €2,000,000 and EBITDA of c. €750,000.
Croatia:
The Company in August acquired, through its Croatian JV, a 1.2 MWe
biomass-to-energy gasification plant in Belišće, Croatia. Once
operational, it will become a Croatia MDC, with EQTEC as O&M contractor.
Technology sales for EQTEC over the life of the project are expected to be c.
€2.0 million, of which c. 60% was invoiced in Q4 2021.
In September, the Company's JV acquired a 1.2 MWe biomass-to-energy
gasification plant in Karlovaç, Croatia. The plant will be retrofitted with
EQTEC technology and repowered, and is expected to produce 3 MWe of green
electricity and high-quality biochar. It is expected that the Company will
become the plant's O&M contractor. Technology sales for EQTEC over the
life of the project are expected to be c. €15m, of which c.10% was invoiced
by EQTEC in Q4 2021.
Greece:
The Company in October confirmed that all deliveries of EQTEC technology had
been made to the 0.5 MWe Larissa, Thessaly project. The project is building
Greece's first advanced gasification, waste-to-energy plant.
Projects under development
USA:
The Company and its local partners appointed EPC contractor Infinity Project
Management Inc (IPM) as owners' representative for the Blue Mountain Electric
Company LLC opportunity in Wilseyville, California (BMEC). The project is
expected to complete front-end engineering design (FEED) in H2 2022, toward
financial close in the same year. The BMEC plant will convert c. 24,000 tonnes
of forestry waste per year into c. 2,400 tonnes of high-quality biochar and 3
MWe of power for the local community, whilst contributing to prevention of
forest fires.
UK:
In September, the Company's Southport project SPV entered into a conditional
share purchase agreement to acquire full ownership of the project, with the
agreement expected to complete in due course. In November, the Company
submitted a revised planning application for a Phase 1 waste reception centre
and anaerobic digestion facility as a precursor to the intended Phase 2
planning application for an EQTEC facility. The planned Phase 1 facility is
designed to convert 80,000 tonnes of waste into six million cubic metres of
biomethane, which, in turn would output 9 MWe. The Phase 2 facility is
intended to convert up to 25,000 tonnes of RDF into an estimated 3 MWe of
green electricity per year. Further, the Company and its partner, Rotunda
Group Ltd., identified the potential for an additional gasification facility
nearby. The additional site would potentially allow for installation of a
larger, Phase 3 EQTEC facility that could transform waste into synthetic
natural gas (SNG) and/or hydrogen. The Company and its partners are carrying
out feasibility studies. EQTEC expects to be the project developer for all
phases of the project, providing design and core Advanced Gasification
Technology and retaining a portion of the O&M contract.
The Company in February signed a Collaboration Framework Agreement (CFA) with
Logik Developments Limited, toward development of a 9.9 MWe plant at Deeside,
Flintshire, UK, including a Phase 1 recycling and anaerobic digestion
facility. The Company in March announced it had signed a CFA with Toyota Motor
Manufacturing UK, whose manufacturing facility is adjacent to the site. The
CFA expressed Toyota's intention to work with the Company on innovative,
circular and sustainable waste-to-energy solutions for Toyota's engine
manufacturing plant next to the prospective Deeside plant. The Company in June
submitted a planning application for a Phase 2 gasification facility deploying
EQTEC technology. The proposed plant would combine a 182,000-tonne waste
reception plant with anaerobic digestion and EQTEC technology. The Company in
October announced it had through the project SPV entered into a cooperation
agreement with Anaergia Inc. for delivery of the multi-technology plant. In
December, the Company announced entering into a Supplementary Agreement with
Logik under which the two partners would develop an additional Phase 3
waste-to-value infrastructure on the Deeside site. The partners successfully
completed a feasibility study for hydrogen production that indicated planning
and environmental viability.
The Company in January received notification of planning approval from
Stockton-on-Tees Borough Council for an improved waste-to-energy scheme for
the Company's RDF-to-energy project at Billingham, Teesside. In February, the
Company's project signed a conditional Land Purchase Agreement. The Company in
June completed concept design work for the core gasification process, with
progress on design of the full plant.
The Company in December confirmed it was investigating new offtake
opportunities for both Deeside and Billingham and that it was working with
technology and delivery partners toward feasibility work at both sites. The
Company in December also confirmed its decision to defer financial close for
both projects to enable further feasibility work. Company executives visited
both sites in December and had constructive meetings with the local Members of
Parliament.
France:
The Company in December signed a Letter of Intent (LoI) with SEPS SAS of
France (SEPS), a company specialising in the management and recycling of
industrial waste. The LoI will support the Company's pursuit of the safe and
clean transformation of contaminated plastics into energy, hydrogen and
biofuels.
The Company also confirmed it had identified and was pursuing an additional
six project opportunities in France for a range of biomass, RDF and other
feedstock, as well as a range of offtake applications.
Greece:
In January, the Company signed a MoU with Nobilis Pro Energy S.A. The
agreement includes collaborative development of Nobilis's existing pipeline of
opportunities and for construction in Nobilis, Almyros, where grid connection
and land agreement are already confirmed.
The Company, in September, announced formation of EQTEC Synergy Projects
Limited, a JV between EQTEC and its strategic partners in Greece, German EPC
ewerGy GmbH and ECO Hellas M IKE. It also confirmed that the JV had acquired
a 1 MWe biomass-to-energy project in Livadia, Greece and exclusivity for a
second 1 MWe project nearby.
In October, the Company's Greek JV acquired the rights to a project in
Nevrokopi, Drama. The project would develop a biomass-to-energy plant that
could generate 5 MW green electricity from locally and sustainably sourced
forestry waste.
Ireland:
The Company and its partner, Carbon Sole Group Limited, pursued development of
3 projects in Ireland for biomass-to-bioenergy plants and in particular for
sustainable forestry waste for production of synthetic natural gas (SNG).
FINANCIAL HIGHLIGHTS
· Revenue: For the financial year to 31 December 2021, the Group
recognised revenue of €9.2 million (FY 2020: €2.2 million).
· Profit/loss: For the financial year, the Group incurred losses of
€4.7 million (FY 2020: €5.8 million).
· Assets: The net assets of the Group increased to €43.4 million at 31
December 2021 (31 December 2020: €25.3 million).
· Placing: The Company in May raised £16 million (€19 million)
before expenses, in an institutional investor-led, oversubscribed placing.
· Cash: The cash balance of the Group at 31 December 2021 stood at
€6.4 million (31 December 2020: €6.4 million).
· Debt: The Company in January agreed a new loan facility of €1.39
million with EQTEC shareholder, Altair Group Investment Limited, with a
maturity date of 31 December 2021. The loan, fully drawn down to repay an
outstanding debt with another lender, had a lower interest rate than the
previously held debt facility and was itself repaid in full in June 2021, six
months ahead of schedule.
OUTLOOK AND FUTURE PLANS
The challenges of 2021 have only expanded in 2022. The tragedy in Ukraine and
sanctions against Russia have brought home to many the critical importance of
energy independence and security. We see the recent, concerted efforts to
replace Russian oil and gas as more than a short-term reaction; it is a
catalyst and accelerator of much more fundamental, lasting change. Far greater
investment will now go into making the shift away from fossil fuels. This
presents an enormous opportunity for EQTEC.
For the world to make this shift, governments, investors and owner-operators
will turn their attention to the pervasive, baseload energy challenge. 67% of
baseload power is from non-renewable sources that solar, wind and hydro power
cannot replace. Yet, more than 90% of investments in alternative energy
solutions have gone toward such non-baseload solutions. These complementary
solutions are also essential, but the intermittency of their supply makes them
inadequate to address baseload demand alone.
EQTEC and other companies able to provide scalable, always-on, 24 x 7 x 365
solutions will increasingly find themselves at the centre of attention with
policymakers and investors.
EQTEC's ability to build smaller-scale, local plants that use locally-sourced
feedstock for locally distributed energy and biofuels not only advances the
Net Zero agenda, but it revolutionises waste management, energy generation and
distribution. Our technology supports communities and industries, in better
using local, unrecyclable types of waste, transforming it into valuable
resources.. EQTEC's local-to-local approach also adds grid resilience: one
plant's downtime does not result in mass outages but is supported by a
distributed network. This approach creates energy security and independence
and transition away from fossil fuels.
We were happy to be acknowledged in the UK Parliament for these very points.
Previous Leader of the House of Commons Jacob Rees-Mogg commented in January
2022 that, "Companies such as EQTEC are exactly what we need to keep us on
course for net zero by 2050 while maintaining a healthy, varied and affordable
energy supply." We are finding increasing acknowledgement in the UK and
elsewhere across Europe, North America and Asia that true gasification is the
preferred intermediate fuel solution for hydrogen, synthetic natural gas and
biofuels. EQTEC is the innovation leader in advanced gasification and we
intend to engage much more closely with governments, investors and
owner-operators, embracing the post-fossil fuel economy and the leading
solutions in it.
To position EQTEC's technology as a replacement for fossil fuel technologies
and to support our growth and scale, we are doing four key things:
First, we are investing in our Go-to-Market model. We are formalising
subsidiaries in the USA, the UK, France and Italy, with JVs in Croatia, the
Aegean and possibly elsewhere. We are looking again to Asia, where we have
long had demand and see increasing opportunity.
Second, we are doubling-down on our investments in innovation. A successful
year of tests and trials in 2021 is expected to be followed by another in
2022. We have a three-year strategy for technology development and a solid
plan every year. Our partners at Université de Lorraine and Universidad de
Extremadura will be joined by Wood and other, top-tier technology businesses
to be announced.
Third, we are enriching our global network of partners. As EQTEC pursues
relationships with multinational, Tier 1 development, delivery and technology
partners, each of our Go-to-Markets is building local partnerships. The
balance of local and multinational will bring resilience to our delivery model
and support development of a global, technology licensing network.
Fourth, we are investing in talent. 2021 saw growth in both our technical and
corporate centres with a doubling across the business as a whole. We invested
in veteran delivery managers with decades of experience in large-scale
infrastructure project management and complex deal-making. In 2022, we are
investing in corporate finance and venturing capabilities to pursue private-
and public-sector funding. We are hiring more process engineers and
engineering project managers to cover our growing project portfolio. We are
adding financial accountants to drive discipline with forecasting and budget
management. Finally, we are investing in targeted Go-to-Markets, including
some of our partner organisations, to ensure the quality and discipline we
expect is delivered through all projects.
By the end of 2022, we are committed to having two MDCs fully operational and
clocking the efficiency and high operational availability we expect. The
importance of these and future MDCs cannot be overstated. Not only will these
further prove EQTEC's proposition, but they will be visitor centres for the
local community and for prospective partners and customers. They will be
training and development facilities for our partners and their partners. They
will be R&D facilities for testing capabilities in a live environment.
They will be the plants that raise EQTEC's visibility and prove to large-scale
owner-operators that we have a highly scalable solution that will be the core
of at least one of their future lines of business.
The Net Zero future is one with minimum dependency on fossil fuels. EQTEC and
companies like us will be the ones to make that future possible. To accelerate
progress toward it, and to transform the greatest challenge of our time into
the greatest opportunity, we are building a resourceful and resilient team, a
global ecosystem of top-tier partners and technology-led solution business
models as a platform to support exponential growth. 2022 is expected to prove
an even greater inflection point than 2021 and we are embracing its challenges
fully, to show ourselves and our shareholders that EQTEC can fulfil our
mission as a leading, technology innovator for baseload energy and biofuels.
Consolidated statement of profit or loss
for the financial year ended 31 December 2021
Notes 2021 2020
€ €
Revenue 8 9,171,764 2,234,727
Cost of sales (7,541,354) (1,978,987)
Gross profit 1,630,410 255,740
Operating income/(expenses)
Administrative expenses (4,190,592) (3,694,217)
Other income 9 - 61,922
Impairment costs 14 (5,498) (17,250)
Other losses 12 (1,418,860) (170,059)
Employee share-based compensation 10 (205,648) (1,297,309)
Foreign currency gains 348,885 211,337
Operating loss (3,841,303) (4,649,836)
Share of results from equity accounted investments 20 (24,188) -
Gains from sales to equity accounted investments deferred 20 (211,478) -
Gain arising from loss of control of subsidiaries 19 9,957 -
Change in fair value of financial investments (250,378)
22 -
Finance income 11 134,069 17,329
Finance costs 11 (517,108) (1,206,392)
Loss before taxation 14 (4,700,429) (5,838,899)
Income tax 15 - -
Loss for the financial year from continuing operations (4,700,429) (5,838,899)
Profit for the financial year from discontinued operations 32 - 71,084
LOSS FOR THE FINANCIAL YEAR (4,700,429) (5,767,815)
Loss attributable to:
Owners of the Company (4,700,497) (5,762,733)
Non-controlling interest 68 (5,082)
(4,700,429) (5,767,815)
2021 2020
€ per share € per share
Basic loss per share:
From continuing operations 16 (0.001) (0.001)
From continuing and discontinued operations 16 (0.001) (0.001)
Diluted loss per share:
From continuing operations 16 (0.001) (0.001)
From continuing and discontinued operations 16 (0.001) (0.001)
Consolidated statement of other comprehensive income
for the financial year ended 31 December 2021
2021 2020
€ €
Loss for the financial year (4,700,429) (5,767,815)
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss
Exchange differences arising on retranslation
of foreign operations 238,715 6,080
Other comprehensive income for the year 238,715 6,080
Total comprehensive loss for the financial year (4,461,714) (5,761,735)
Attributable to:
Owners of the company (4,301,511) (5,848,045)
Non-controlling interests (160,203) 86,310
(4,461,714) (5,761,735)
Consolidated statement of financial position
At 31 December 2021
Notes 2021 2020
ASSETS € €
Non-current assets
Property, plant and equipment 17 446,861 187,792
Intangible assets 18 17,702,833 15,283,459
Investments accounted for using the equity method 20 8,074,184 3,379,625
Financial assets 21 4,050,030 2,570,888
Other financial investments 22 506,976 -
Total non-current assets 30,780,884 21,421,764
Current assets
Development assets 24 3,455,496 503,653
Loan receivable from project development undertakings 24 3,000,469 482,537
Trade and other receivables 25 6,876,747 894,531
Cash and cash equivalents 26 6,446,217 6,394,791
19,778,929 8,275,512
Assets included in disposal group classified as held for resale 32 - -
Total current assets 19,778,929 8,275,512
Total assets 50,559,813 29,697,276
Consolidated statement of financial position
At 31 December 2021 - continued
Notes 2021 2020
EQUITY AND LIABILITIES € €
Equity
Share capital 27 25,977,130 24,355,545
Share premium 27 83,610,562 62,896,521
Other reserves 2,353,868 2,148,220
Accumulated deficit (66,177,072) (61,875,561)
Equity attributable to the owners of the company 45,764,488 27,524,725
Non-controlling interests 28 (2,384,189) (2,223,986)
Total equity 43,380,299 25,300,739
Non-current liabilities
Lease liabilities 30 56,855 106,465
Total non-current liabilities 56,855 106,465
Current liabilities
Trade and other payables 31 6,921,806 3,183,979
Borrowings 29 - 1,020,851
Lease liabilities 30 200,853 85,242
7,122,659 4,290,072
Liabilities included in disposal group classified as held for resale 32 - -
Total current liabilities 7,122,659 4,290,072
Total equity and liabilities 50,559,813 29,697,276
The financial statements were approved by the Board of Directors on 22 April
2022 and signed on its behalf by:
Ian
Pearson
David Palumbo
Chairman
Director
Consolidated statement of changes in equity
for the financial year ended 31 December 2021
Share Other Accumulated deficit Equity attributable to owners of the company Non-controlling interests
Capital Share premium reserves Total
€ € € € € € €
Balance at 1 January 2020 21,317,482 52,487,278 - (56,011,538) 17,793,222 (2,326,274) 15,466,948
Issue of ordinary shares in EQTEC plc (Note 27) 2,658,622 9,841,484 - - 12,500,106 - 12,500,106
Conversion of debt into equity (Notes 27) 379,441 1,536,252 - - 1,915,693 - 1,915,693
Share issue costs (Note 27) - (639,931) - - (639,931) - (639,931)
Employee share-based compensation (Notes 10 & 27) - - 1,297,309 - 1,297,309 - 1,297,309
Recognition of equity element of debt (Notes 12 & 27) - - 522,349 - 522,349 - 522,349
Warrants issued on placing of shares - (328,562) 328,562 - - - -
Change in the ownership interest - - - (15,978) (15,978) 15,978 -
Transactions with owners 3,038,063 10,409,243 2,148,220 (15,978) 15,579,548 15,978 15,595,526
Loss for the financial year - - - (5,762,733) (5,762,733) (5,082) (5,767,815)
Unrealised foreign exchange losses - - - (85,312) (85,312) 91,392 6,080
Total comprehensive loss for the financial year - - - (5,848,045) (5,848,045) 86,310 (5,761,735)
Balance at 31 December 2020 24,355,545 62,896,521 (61,875,561) 27,524,725 (2,223,986) 25,300,739
2,148,220
Issue of ordinary shares in EQTEC plc (Note 27) 1,402.324 18,206,268 - - 19,608,592 - 19,608,592
Conversion of debt into equity (Note 27) 167,728 3,285,013 - - 3,452,741 - 3,452,741
Issued in acquisition of financial asset (Note 27) 51,533 693,628 - - 745,161 - 745,161
Share issue costs (Note 27) - (1,470,868) - - (1,470,868) - (1,470,868)
Employee share-based compensation (Note 10) - - 205,648 - 205,648 - 205,648
Transactions with owners 1,621,585 20,714,041 205,648 - 22,541,274 - 22,541,274
Loss for the financial year - - - (4,700,497) (4,700,497) 68 (4,700,429)
Unrealised foreign exchange losses - - - 398,986 398,986 (160,271) 238,715
Total comprehensive loss for the financial year - - - (4,301,511) (4,301,511) (160,203) (4,461,714)
Balance at 31 December 2021 25,977,130 83,610,562 2,353,868 (66,177,072) 45,764,488 (2,384,189) 43,380,299
Consolidated statement of cash flows
for the financial year ended 31 December 2021
Notes 2021 2020
€ €
Cash flows from operating activities
Loss for the financial year (4,700,429) (5,838,899)
Adjustments for:
Depreciation of property, plant and equipment 17 156,520 83,463
Amortisation of intangible assets 18 72,685
Loss on disposal of investments - 1,275
Impairment of other financial investments 22 - 17,250
Employee share-based compensation 10 205,648 1,297,309
Impairment of trade receivables 25 - 19,016
Share of loss of equity accounted investments 24,188 -
Gains from sales to equity accounted investments deferred 211,478 -
Gain on loss of control of subsidiary 19 (9,957) -
Change in fair value of financial investments 22 250,378 -
Loss on debt for equity swap 12 1,418,860 170,059
Unrealised foreign exchange movements 103,234 (201,723)
Operating cash flows before working capital changes (2,267,395) (4,452,250)
Decrease/(increase) in:
Development assets (3,144,600) (503,653)
Trade and other receivables (5,946,010) 6,754
Increase in Trade and other payables 3,432,256 264,141
Cash used in operating activities - continuing operations (7,925,749) (4,685,008)
Finance income 11 (134,069) (17,329)
Finance costs 11 517,108 1,206,392
Net cash used in operating activities - continuing operations (7,542,710) (3,495,945)
Net cash used in operating activities - discontinued operations
32 - (47,741)
Cash used in operating activities (7,542,710) (3,543,686)
Cash flows from investing activities
Additions to intangible assets (1,000,000) -
Proceeds from the disposal of property, plant and equipment - 300,000
Cash inflow from disposal of subsidiary 33 - 218,635
Selling expenses on disposal of subsidiary 33 - (65,261)
Loans advanced to project development undertakings (2,430,137) (469,769)
Proceeds from the disposal of other investments - 84
Investment in equity accounted undertakings (978,825) (1,150,619)
Loans advanced to equity accounted undertakings (3,746,984) -
Investment in related undertakings (697,635) (333,882)
Other advances to equity accounted undertakings (27,508) -
Net cash used in investing activities - continuing operations (8,881,089) (1,500,812)
Net cash used in investing activities - discontinued operations 32 - (19,997)
Net cash used in investing activities (8,881,089) (1,520,809)
Consolidated statement of cash flows
for the financial year ended 31 December 2021 - continued
Notes 2021 2020
€ €
Cash flows from financing activities
Proceeds from borrowings and lease liabilities 29 1,391,174 107,000
Repayment of borrowings and lease liabilities 29 (3,031,724) (1,363,348)
Loan issue costs 29 - (30,944)
Proceeds from issue of ordinary shares 19,420,222 12,735,236
Share issue costs (1,180,217) (635,911)
Interest paid (20) (21,955)
Net cash generated from financing activities - continuing operations
16,599,435 10,790,078
Net cash used in financing activities - discontinued operations 32 - (63,196)
Net cash generated from financing activities 16,599,435 10,726,882
Net increase in cash and cash equivalents 175,636 5,662,387
Cash and cash equivalents at the beginning of the financial period 6,270,581 608,194
Cash and cash equivalents at the end of the financial period 26 6,446,217 6,270,581
Cash and cash equivalents included in disposal group 32 - -
Cash and cash equivalents for continuing operations 26 6,446,217 6,270,581
Details of non-cash transactions are set out in Note 36 of the financial
statements.
Company statement of financial position
At 31 December 2021
Notes 2021 2020
ASSETS € €
Non-current assets
Intangible assets 18 2,419,374 -
Investment in subsidiary undertakings 19 17,994,504 17,869,630
Investments accounted for using the equity method 20 6,569,432 3,379,625
Other financial investments 22 506,976 -
Total non-current assets 27,490,286 21,249,255
Current assets
Development assets 24 305,553 9,275
Loan receivable from project development undertakings 24 613,678 243,598
Trade and other receivables 25 14,507,848 2,703,491
Cash and bank balances 26 4,845,633 6,111,864
Total current assets 20,272,712 9,068,228
Total assets 47,762,998 30,317,483
EQUITY AND LIABILITIES
Equity
Share capital 27 25,977,130 24,355,545
Share premium 27 102,544,642 81,830,601
Other reserves 2,353,868 2,148,220
Accumulated deficit (83,603,698) (79,661,097)
Total equity 47,271,942 28,673,269
Total non-current liabilities - -
Current liabilities
Borrowings 29 - 896,641
Trade and other payables 31 491,056 747,573
Total current liabilities 491,056 1,644,214
Total equity and liabilities 47,762,998 30,317,483
The Group is availing of the exemption in Section 304 of the Companies Act
2014 from filing its Company Statement of Comprehensive Income. The loss for
the financial year incurred by the Company was €3,942,601 (2020:
€3,270,895).
The financial statements were approved by the Board of Directors on 22 April
2022 and signed on its behalf by:
Ian
Pearson
David Palumbo
Chairman
Director
Company statement of changes in equity
for the financial year ended 31 December 2021
Share capital Share premium Accumulated deficit Total
Other
reserves
€ € € € €
Balance at 1 January 2020 21,317,482 71,421,358 - (76,390,202) 16,348,638
Issue of ordinary shares in EQTEC plc (Note 27) 2,658,622 9,841,484 - - 12,500,106
Conversion of debt into equity (Notes 27 and 29) 379,441 1,536,252 - - 1,915,693
Share issue costs (Note 27) - (639,931) - - (639,931)
Employee share-based compensation (Notes 10 and 27) - - 1,297,309 - 1,297,309
Recognition of equity element of debt (Notes 12 and 27) - - 522,349 - 522,349
Warrants issued on placing of shares (Note 27) - (328,562) 328,562 - -
Transactions with owners 3,038,063 10,409,243 2,148,220 - 15,595,526
Loss for the financial year (Note 37) - - - (3,270,895) (3,270,895)
Total comprehensive loss for the financial year - - - (3,270,895) (3,270,895)
Balance at 31 December 2020 24,355,545 81,830,601 2,148,220 (79,661,097) 28,673,269
Issue of ordinary shares in EQTEC plc (Note 27) 1,402.324 18,206,268 - - 19,608,592
Conversion of debt into equity (Note 27) 167,728 3,285,013 - - 3,452,741
Issued in acquisition of financial asset (Note 27) 51,533 693,628 - - 745,161
Share issue costs (Note 27) - (1,470,868) - - (1,470,868)
Employee share-based compensation (Note 10) - - 205,648 - 205,648
Transactions with owners 1,621,585 20,714,041 205,648 - 22,541,274
Loss for the financial year - - - (3,942,601) (3,942,601)
Total comprehensive loss for the financial year - - (3,942,601) (3,942,601)
-
Balance at 31 December 2021 25,977,130 102,544,642 2,353,868 (83,603,698) 47,271,942
Company statement of cash flows
for the financial year ended 31 December 2021
Notes 2021 2020
€ €
Cash flows from operating activities
Loss before taxation (3,942,601) (3,270,895)
Adjustments for:
Amortisation of intangible assets 18 72,685 -
Employee share-based compensation 10 80,771 1,297,309
Reversal of impairment of intercompany loans - (1,720,704)
Finance costs 508,747 1,177,335
Finance income (104,568) (13,397)
Impairment of intercompany balances 5,627 140,678
Change in fair value of financial investments 22 250,378 -
Loss on debt for equity swap 10 1,418,860 170,059
Foreign currency (gains)/losses arising from retranslation of borrowings
(280,767) 235,968
Operating cash flows before working capital changes (1,990,868) (1,983,647)
Funds advanced to inter-company accounts (13,490,118) (2,112,285)
Repayment of inter-company balances 2,205,863 689,637
Increase in development assets (296,278) (9,275)
Increase in trade and other receivables (283,968) (107,773)
Increase in trade and other payables 178,869 352,350
Net cash used in operating activities (13,676,500) (3,170,993)
Cash flows from investing activities
Addition to intangible assets (1,000,000) -
Investment in equity accounted undertakings (968,324) (1,150,619)
Loans advanced to equity accounted undertakings (2,036,074) -
Investment in subsidiary (10,000) (1,000,000)
Subsidiaries transferred to other subsidiary undertakings 10,003 -
Loans advanced to project development undertakings (350,000) (230,957)
Net cash used in investing activities (4,354,395) (2,381,576)
Cash flows from financing activities
Proceeds from borrowings 29 1,391,174 -
Repayment of borrowings 29 (2,866,515) (852,567)
Proceeds from issue of ordinary shares 19,420,222 12,735,236
Share issue costs (1,180,217) (635,911)
Loan issue costs 29 - (30,944)
Net cash generated from financing activities 16,764,664 11,215,814
Net (decrease)/increase in cash and cash equivalents (1,266,231) 5,663,245
Cash and cash equivalents at the beginning of the financial year 6,111,864 448,619
Cash and cash equivalents at the end of the financial year 26 4,845,633 6,111,864
Notes to the financial statements
1. GENERAL INFORMATION
EQTEC plc ("the Company") is a company domiciled in Ireland. These financial
statements for the financial year ended 31 December 2021 consolidate the
individual financial statements of the Company and its subsidiaries (together
referred to as 'the Group').
The Group is a waste-to-value group, which uses its proven proprietary
Advanced Gasification Technology to generate safe, green energy from over 50
different kinds of feedstock such as municipal, agricultural and industrial
waste, biomass, and plastics. The Group collaborates with waste operators,
developers, technologists, EPC contractors and capital providers to build
sustainable waste elimination and green energy infrastructure.
Our income currently comes from the following streams: gasification technology
sales including software, engineering & design and other related services;
maintenance income from operating plants; and we receive development fees from
projects where we invest development capital. In the future we expect to
receive potential revenue from licensing opportunities and revenue from live
operations where EQTEC has an equity stake in a plant.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRSs)
New/revised standards and interpretations adopted in 2021
In the current financial year, the Group has applied a number of amendments to
IFRS Standards and Interpretations issued by the International Accounting
Standards Board (IASB), as adopted by the European Union, that are effective
for an annual period that begins on or after 1 January 2021. Their adoption
has not had any impact on the disclosures or on the amounts reported in these
financial statements.
· Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16: Interest Rate Benchmark Reform Phase 2;
· Amendments to IFRS 16: COVID-19 Rent Related
Concessions.
New and revised IFRS Standards in issue but not yet effective
The following new and revised Standards and Interpretations have not been
adopted by the Group, whether endorsed by the European Union or not. The Group
is currently analysing the practical consequences of the new Standards and the
effects of applying them to the financial statements. The related standards
and interpretations are:
· IFRS 17 Insurance Contracts and Amendments to IFRS 17 Insurance Contracts
(Amendments to IFRS 17 and IFRS 4);
· IFRS 10 and IAS 28 (amendments) Sale of Contribution of Assets between an
Investor and its Associate or Joint Venture;
· Amendments to IAS 1 Classification of Liabilities as Current or Non-current;
· Amendments to IFRS 3 Reference to the Conceptual Framework;
· Amendments to IAS 16 Property, Plant and Equipment-Proceeds before Intended
Use;
· Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract;
· Annual improvements to IFRS Standards 2018-2020 cycle Amendments to IFRS 1
First time adoption of International Financial Reporting Standards, IFRS 9
Financial Instruments, IFRS 16 Leases and IAS 41 Agriculture;
· Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting
Policies;
· Amendments to IAS 8 Definition of Accounting Estimates;
· Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising
from a Single Transaction.
The directors do not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of the Group in future
periods.
3. STATEMENT OF ACCOUNTING POLICIES
Statement of Compliance, Basis of Preparation and Going Concern
The Group's consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union ('EU') and effective at 31 December 2021 for all years
presented as issued by the International Accounting Standards Board.
The financial statements of the parent company, EQTEC plc have been prepared
in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union ('EU') effective at 31 December 2021 for all
years presented as issued by the International Accounting Standards Board and
Irish Statute comprising the Companies Act 2014.
The consolidated financial statements are prepared under the historical cost
convention except for certain financial assets and financial liabilities which
are measured at fair value. The principal accounting policies set out below
have been applied consistently by the parent company and by all of the
Company's subsidiaries to all years presented in these consolidated financial
statements.
Comparative amounts have been re-presented where necessary, to present the
financial statements on a consistent basis.
The financial statements are presented in euros and all values are not
rounded, except when otherwise indicated.
The Group incurred a loss of €4,700,429 (2020: €5,767,815) during the
financial year ended 31 December 2021 and had net current assets of
€12,656,270 (2020: €3,985,440) and net assets of €43,380,299 (2020:
€25,300,739) at 31 December 2021.
The financial statements have been prepared on a going concern basis. The
Group's business activities, together with the factors likely to affect its
future development, performance and position, are set out in the Chairman's
Statement and Chief Executive's Report. The principal risks and uncertainties
are set out in the Directors' Report.
Management have produced forecasts for the period up to April 2023 taking
account of reasonably plausible changes in trading performance and market
conditions, which have been reviewed by the Directors. These reasonably
plausible changes include the continued impact of the Covid-19 pandemic and
any related operational and execution delays caused by it. The forecasts
demonstrate that the Group and Company is forecast to generate cash in
2022/2023 and that the Group has sufficient cash reserves to enable the Group
and Company to meet its obligations as they fall due for a period of at least
12 months from the date when these financial statements have been signed.
Amongst other things, the assessment involved assumptions around collection of
receivables from associate and joint venture companies and availability of
project funding.
After undertaking the assessments and considering the uncertainties set out
above, the Directors have a reasonable expectation that the Group and Company
has adequate resources to continue to operate for the foreseeable future and
for these reasons they continue to adopt the going concern basis in preparing
the financial statements.
Basis of consolidation
The Group financial statements consolidate those of the parent company and all
of its subsidiaries as of 31 December 2021. All subsidiaries have a reporting
date of 31 December.
All transactions and balances between Group companies are eliminated on
consolidation, including unrealised gains and losses on transactions between
Group companies. Where unrealised losses on intra-group asset sales are
reversed on consolidation, the underlying asset is also tested for impairment
from a Group perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or
disposed of during the financial year are recognised from the effective date
of acquisition, or up to the effective date of disposal, as applicable. The
Group attributes total comprehensive income or loss of subsidiaries between
the owners of the parent and the non-controlling interests based on their
respective ownership interests.
A change in the ownership interest of a subsidiary, without a loss of control,
is accounted for as an equity transaction. The carrying amount of the
Group's interests and the non-controlling interests are adjusted to reflect
the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the noncontrolling interests are adjusted and the
fair value of the consideration paid or received is recognised directly in
equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, the gain or loss on disposal
recognised in profit or loss is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the fair value
of any retained interest and (ii) the previous carrying amount of the assets
(including goodwill), less liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in other
comprehensive income in relation to that subsidiary are accounted for as if
the Group had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to another
category of equity as required/permitted by applicable IFRS Standards). The
fair value of any investment retained in the former subsidiary at the date
when control is lost is regarded as the fair value on initial recognition for
subsequent accounting under IFRS 9 when applicable, or the cost on initial
recognition of an investment in an associate or a joint venture.
Business combinations
The Group applies the acquisition method in accounting for business
combinations. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition-date fair values of
assets transferred, liabilities incurred, and the equity interests issued by
the Group, which includes the fair value of any asset or liability arising
from a contingent consideration arrangement. Acquisition costs are expensed as
incurred. Assets acquired and liabilities assumed are generally measured at
their acquisition-date fair values.
Step Acquisitions
Business combination achieved in stages is accounted for using acquisition
method at acquisition date. The components of a business combination,
including previously held investments are remeasured at fair value at
acquisition date and a gain or loss is recognised in the consolidated
statement of profit or loss.
Profit or loss from discontinued operations
A discontinued operation is a component of the Group that either has been
disposed of or is classified as held for sale. Profit or loss from
discontinued operations comprises the post-tax profit or loss of discontinued
operations and the post-tax gain or loss resulting from the measurement and
disposal of assets classified as held for sale (see also policy on non-current
assets and liabilities classified as held for sale and discontinued operations
below and Note 32).
Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for using the
equity method. The carrying amount of the investment in associates and joint
ventures is increased or decreased to recognise the Group's share of the
profit or loss and other comprehensive income of the associate and joint
venture, adjusted where necessary to ensure consistency with the accounting
policies of the Group. When the Group's share of losses on an associate or a
joint venture exceeds the Group's interest in that associate or joint venture
(which includes any long-term interests that, in substance, form part of the
Group's net investment in the associate or joint venture), the Group
discontinues recognising its share of future losses. Additional losses are
recognised only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate or joint
venture.
Unrealised gains and losses on transactions between the Group and its
associates and joint ventures are eliminated to the extent of the Group's
interest in those entities. Where unrealised losses are eliminated, the
underlying asset is also tested for impairment.
Investments in related undertaking
Advances paid to acquire investee shares are recognised at cost and will be
reclassified to either to investments in associates and joint ventures or
investments in subsidiaries, as applicable.
Investments in subsidiaries
Investments in subsidiaries in the Company's statement of financial position
are measured at cost less accumulated impairment. When necessary, the entire
carrying amount of the investment is tested for impairment by comparing its
recoverable amount (higher of value in use and fair value less costs to sell)
with its carrying amount, any impairment loss recognised forms part of the
carrying amount of the investment. Any reversal of that impairment loss is
recognised to the extent that the recoverable amount of the investment
subsequently increases.
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Euro, which is also the
functional and presentation currency of the parent company. The Group has
subsidiaries in the United Kingdom, whose functional currency is the GBP £.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of
the respective Group entity, using the exchange rates prevailing at the dates
of the transactions (spot exchange rate). Foreign exchange gains and losses
resulting from the settlement of such transactions and from the remeasurement
of monetary items denominated in foreign currency at year-end exchange rates
are recognised in consolidated statement of profit or loss.
Non-monetary items are not retranslated at year-end and are measured at
historical cost (translated using the exchange rates at the transaction date),
except for non-monetary items measured at fair value which are translated
using the exchange rates at the date when fair value was determined.
Foreign operations
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than Euro are translated
into Euro upon consolidation. The functional currency of the entities in the
Group has remained unchanged during the reporting financial year.
On consolidation, assets and liabilities have been translated into Euro at the
closing rate at the reporting date. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into Euro at the closing
rate. Income and expenses have been translated into Euro at the average rate
over the reporting financial year. Exchange differences are charged or
credited to consolidated statements of other comprehensive income and
recognised in the accumulated deficit reserve in equity. On disposal of a
foreign operation, the related cumulative translation differences recognised
in equity are reclassified to profit or loss and are recognised as part of the
gain or loss on disposal. To the extent that foreign subsidiaries are not
under the full control of the parent company, the relevant share of currency
differences is allocated to the non-controlling interests.
Segment reporting
The Group has two operating segments: the power generation segment and the
technology sales segment. In identifying these operating segments, management
generally follows the Group's service lines representing its main products and
services.
Each operating segment is managed separately as each requires different
technologies, marketing approaches and other resources. All inter-segment
transfers are carried out at arm's length prices based on prices charged to
unrelated customers in standalone sales of identical goods or services.
For management purposes, the Group uses the same measurement policies as those
used in its financial statements. In addition, corporate assets which are not
directly attributable to the business activities of any operating segment are
not allocated to a segment. This primarily applies to the Group's central
administration costs and directors' salaries.
Revenue
Revenue arises from the rendering of services. Revenue is measured based on
the consideration to which the Group expects to be entitled in a contract with
a customer and excludes amounts collected on behalf of third parties. The
Group recognises revenue when it transfers control of a product or service to
a customer. To determine whether to recognise revenue, the Group follows a
5-step process:
1. Identifying the contract with a customer;
2. Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance
obligations; and
5. Recognising revenue when/as performance obligation(s) are
satisfied.
The Group applies the revenue recognition criteria set out below to each
separately identifiable component of the sales transaction. The consideration
received from these multiple-component transactions is allocated to each
separately identifiable component in proportion to its relative fair value.
Revenue is recognised either at a point in time or over time, when the Group
satisfies performance obligations by transferring the promised goods or
services to its customers.
Rendering of services
The Group generates revenues from after-sales service and maintenance,
consulting, and construction contracts for renewable energy systems.
Consideration received for these services is initially deferred, included in
other payables, and is recognised as revenue in the financial year when the
performance obligation is satisfied. In recognising after-sales service and
maintenance revenues, the Group determines the stage of completion by
considering both the nature and timing of the services provided and its
customer's pattern of consumption of those services, based on historical
experience. Where the promised services are characterised by an indeterminate
number of acts over a specified year of time, revenue is recognised over time.
Revenue from consulting services is recognised when the services are provided
by reference to the contract's stage of completion at the reporting date in
the same way as construction contracts for renewable energy systems described
below.
Construction contracts for renewable energy systems
Construction contracts for renewable energy systems specify a fixed price for
the design, development and installation of biomass systems. When the outcome
can be assessed reliably, contract revenue and associated costs are recognised
by reference to the stage of completion of the contract activity at the
reporting date. Contract revenue is measured at the fair value of
consideration received or receivable and recognised over time on a
cost-to-cost method. When the Group cannot measure the outcome of a contract
reliably, revenue is recognised only to the extent of contract costs that have
been incurred and are recoverable. Contract costs are recognised in the
financial year in which they are incurred. In either situation, when it is
probable that total contract costs will exceed total contract revenue, the
expected loss is recognised immediately in consolidated statement of profit or
loss.
A construction contract's stage of completion is assessed by management by
comparing costs incurred to date with the total costs estimated for the
contract (a procedure sometimes referred to as the cost-to-cost method). Only
those costs that reflect work performed are included in costs incurred to
date. The gross amount due from customers for contract work is presented
within trade and other receivables for all contracts in progress for which
costs incurred plus recognised profits (less recognised losses) exceeds
progress billings. The gross amount due to customers for contract work is
presented within other liabilities for all contracts in progress for which
progress billings exceed costs incurred plus recognised profits (less
recognised losses).
Interest and dividends
Interest income and expenses are reported on an accrual basis using the
effective interest method. Dividends, other than those from investments in
associates and joint ventures, are recognised at the time the right to receive
payment is established.
Operating expenses
Operating expenses are recognised in consolidated statement of profit or loss
upon utilisation of the service or as incurred. Expenditure for warranties is
recognised when the Group incurs an obligation, which is typically when the
related goods are sold.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. All other borrowing costs
are recognised in profit or loss in the period in which they are incurred.
Goodwill
Goodwill represents the future economic benefits arising from a business
combination that are not individually identified and separately recognised.
Goodwill is carried at cost less accumulated impairment losses. Goodwill is
not amortised but is reviewed for impairment at least annually. Refer below
for a description of impairment testing procedures.
Non-controlling interests
Non-controlling interests that are present ownership interest and entitle
their holders to a proportionate share of the entity's net assets in the event
of a liquidation may be initially measured either at fair value of at the
non-controlling interests' proportionate share of the recognised amounts of
the acquiree's identifiable net assets. Other types of non-controlling
interests are measured at fair value, or, when applicable, on the basis
specified in another IFRS.
Property, plant and equipment
Property, plant and equipment are initially recognised at acquisition cost or
manufacturing cost, including any costs directly attributable to bringing the
assets to the location and condition necessary for them to be capable of
operating in the manner intended by the Group's management. Property, plant
and equipment, are subsequently measured at cost less accumulated depreciation
and impairment losses. Depreciation is recognised on a straight-line basis to
write down the cost less estimated residual value of leasehold buildings. The
following useful lives are applied:
• Leasehold buildings: 5-50 years
• Office equipment: 2-5 years
Material residual value estimates and estimates of useful life are updated as
required, but at least annually. Gains or losses arising on the disposal of
leasehold buildings are determined as the difference between the disposal
proceeds and the carrying amount of the assets and are recognised in profit or
loss within other income or other expenses.
Construction in progress is stated at cost less any accumulated impairment
loss. Cost comprises direct costs of construction as well as interest expense
and exchange differences capitalised during the year of construction and
installation. Capitalisation of these costs ceases and the asset in course of
construction is transferred to fixed assets when substantially all the
activities necessary to prepare the assets for their intended use are
completed. No depreciation is provided in respect of payments on account and
asset in course of construction until it is fully completed and ready for its
intended use. Construction in progress is derecognised upon disposal or when
the asset is permanently withdrawn from use and no future economic benefits
are expected from the disposal. Any gain or loss arising on derecognition of
the construction in progress (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in profit
or loss in the period in which the asset is derecognised.
Leased assets
The Group as a lessee
The Group makes the use of leasing arrangements principally for the provision
of the main office space. The rental contract for offices are typically
negotiated for terms of between 3 and 10 years and some of these have
extension terms. The Group does not enter into sale and leaseback
arrangements. All the leases are negotiated on an individual basis and contain
a wide variety of different terms and conditions such as purchase options and
escalation clauses.
The Group assesses whether a contract is or contains a lease at inception of
the contract. A lease conveys the right to direct the use and obtain
substantially all of the economic benefits of an identified asset for a period
of time in exchange for consideration. Some lease contracts contain both lease
and non-lease components. The Group has elected to not separate its leases for
offices into lease and non-lease components and instead accounts for these
contracts as a single lease component.
Measurement and recognition of leases
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the consolidated statement of financial position. The
right-of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred by the
Group, an estimate of any costs to dismantle and remove the asset at the end
of the lease, and any lease payments made in advance of the lease commencement
date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from
the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
Measurement and recognition of leases - continued
At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
Group's incremental borrowing rate because as the lease contracts are
negotiated with third parties it is not possible to determine the interest
rate that is implicit in the lease. The incremental borrowing rate is the
estimated rate that the Group would have to pay to borrow the same amount over
a similar term, and with similar security to obtain an asset of equivalent
value. This rate is adjusted should the lessee entity have a different risk
profile to that of the Group.
Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in substance fixed), variable payments based on
an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be
exercised. Subsequent to initial measurement, the liability will be reduced by
lease payments that are allocated between repayments of principal and finance
costs. The finance cost is the amount that produces a constant periodic rate
of interest on the remaining balance of the lease liability.
The lease liability is reassessed when there is a change in the lease
payments. Changes in lease payments arising from a change in the lease term or
a change in the assessment of an option to purchase a leased asset. The
revised lease payments are discounted using the Group's incremental borrowing
rate at the date of reassessment when the rate implicit in the lease cannot be
readily determined. The amount of the remeasurement of the lease liability is
reflected as an adjustment to the carrying amount of the right-of-use asset.
The exception being when the carrying amount of the right-of-use asset has
been reduced to zero then any excess is recognised in consolidated statement
profit or loss.
Payments under leases can also change when there is either a change in the
amounts expected to be paid under residual value guarantees or when future
payments change through an index or a rate used to determine those payments,
including changes in market rental rates following a market rent review. The
lease liability is remeasured only when the adjustment to lease payments takes
effect and the revised contractual payments for the remainder of the lease
term are discounted using an unchanged discount rate. Except for where the
change in lease payments results from a change in floating interest rates, in
which case the discount rate is amended to reflect the change in interest
rates.
The remeasurement of the lease liability is dealt with by a reduction in the
carrying amount of the right-of-use asset to reflect the full or partial
termination of the lease for lease modifications that reduce the scope of the
lease. Any gain or loss relating to the partial or full termination of the
lease is recognised in profit or loss. The right-of-use asset is adjusted for
all other lease modifications.
The Group has elected to account for short-term leases and leases of low-value
assets using the practical expedients. Instead of recognising a right-of-use
asset and lease liability, the payments in relation to these are recognised as
an expense in consolidated statement of profit or loss on a straight-line
basis over the lease term.
On the consolidated statement of financial position, right-of-use assets have
been included in property, plant and equipment and lease liabilities have been
presented in separate lines therein.
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are
carried at cost less accumulated amortisation and accumulated impairment
losses. All finite-lived intangible assets, including patents, are accounted
for using the cost model whereby capitalised costs are amortised on a
straight-line basis over their estimated useful lives. Residual values and
useful lives are reviewed at each reporting date The following useful lives
are applied:
• Patents: 20 years
Impairment testing of goodwill, intangible assets and property, plant and
equipment
For impairment assessment purposes, assets are grouped at the lowest levels
for which there are largely independent cash inflows (cash-generating units).
As a result, some assets are tested individually for impairment and some are
tested at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies of a related
business combination and represent the lowest level within the Group at which
management monitors goodwill. Cash-generating units to which goodwill has been
allocated (determined by the Group's management as equivalent to its operating
segments) are tested for impairment at least annually. All other individual
assets or cash-generating units are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset's (or
cash-generating unit's) carrying amount exceeds its recoverable amount, which
is the higher of fair value less costs of disposal and value-in-use. To
determine the value-in-use, management estimates expected future cash flows
from each cash-generating unit and determines a suitable discount rate in
order to calculate the present value of those cash flows. The data used for
impairment testing procedures are directly linked to the Group's latest
approved budget, adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount factors are determined
individually for each cash-generating unit and reflect current market
assessments of the time value of money and asset-specific risk factors.
Impairment losses for cash-generating units reduce first the carrying amount
of any goodwill allocated to that cash-generating unit. Any remaining
impairment loss is charged pro rata to the other assets in the cash-generating
unit. With the exception of goodwill, all assets are subsequently reassessed
for indications that an impairment loss previously recognised may no longer
exist. An impairment loss is reversed if the asset's or cash-generating unit's
recoverable amount exceeds its carrying amount.
Development assets
Development assets are stated at the lower of cost and net realisable value.
Cost comprises direct materials and overheads that have been incurred in
furthering the development of a project towards financial close, when
project financing is in place so that the project undertaking can commence
construction. Net realisable value represents the costs plus an estimated
development premium to be earned on the costs at financial close of a project.
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument and
are measured initially at fair value adjusted for transaction costs, except
for those carried at fair value through profit or loss which are measured
initially at fair value, and trade receivables that do not contain a
significant financing component, which are measured at the transaction price
in accordance with IFRS 15. Subsequent measurement of financial assets and
financial liabilities is described below.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires. If
the Group issues equity instruments to a creditor to extinguish all or part of
a financial liability, the Group recognises in profit or loss the difference
between the carrying amount of the financial liability (or part thereof)
extinguished and the measurement of the equity instruments issued.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement financial assets, other than those
designated and effective as hedging instruments, are classified into the
following categories upon initial recognition:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive
income (FVOCI)
In the periods presented, the Group does not have any financial assets
categorised as FVOCI.
The classification is determined by both:
· the Group's business model for managing the financial
asset; and
· the contractual cash flow characteristics of the
financial asset.
All income and expenses relating to financial assets that are recognised in
consolidated statement of profit or loss are presented within finance costs or
finance income, except for impairment of trade receivables which is presented
within administrative expenses.
Financial assets at amortised cost and impairment
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated at FVTPL):
· they are held within the business model whose objective
is to hold the financial asset and collect its contractual cash flows;
· the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
After initial recognition, they are measured at amortised cost using the
effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Group and Company's cash and cash equivalents,
trade and most other receivables fall into this category of financial
instruments.
The Group and Company makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance as lifetime
expected credit losses. These are the expected shortfalls in contractual cash
flows, considering the potential for default at any point during the life of
the financial instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to calculate
the expected credit losses.
Individually significant receivables are considered for impairment when they
are past due or when other objective evidence is received that a specific
counterparty will default. Receivables that are not considered to be
individually impaired are reviewed for impairment in groups, which are
determined by reference to the industry and region of the counterparty and
other shared credit risk characteristics. The impairment loss estimate is then
based on recent historical counterparty default rates for each identified
group.
In measuring the expected credit losses, the trade receivables have been
assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped based on the days past due and also
according to the geographical location of customers.
The expected loss rates are based on the payment profile for sales over the
past 48 months before 31 December 2021 and 1 January respectively as well as
the corresponding historical credit losses during that period. The historical
rates are adjusted to reflect current and forward-looking macroeconomic
factors affecting the customer's ability to settle the amount outstanding. The
Group has identified gross domestic product (GDP) and unemployment rates in
the countries in which the customers are domiciled to be the most relevant
factors and accordingly adjusts historical loss rates for expected changes in
these factors. However, given the short period exposed to credit risk, the
impact of these macroeconomic factors has not been considered significant
within the reporting period.
Classification and subsequent measurement of financial liabilities
The Group and Company's financial liabilities include borrowings, lease
liabilities, trade and other payables and derivative financial instruments.
Financial liabilities are measured subsequently at amortised cost using the
effective interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss (other than derivative financial
instruments that are designated and effective as hedging instruments). All
interest-related charges and, if applicable, changes in an instrument's fair
value that are reported in profit or loss are included within finance costs or
finance income.
Fair values
For financial reporting purposes, fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which inputs to the fair value
measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities
Level 2: valuation techniques for which the lowest level of inputs which have
a significant effect on the recorded fair value are observable, either
directly or indirectly
Level 3: valuation techniques for which the lowest level of inputs that have a
significant effect on the recorded fair value are not based on observable
market data
Income taxes
Tax expense recognised in consolidated statement of profit or loss comprises
the sum of deferred tax and current tax not recognised in consolidated
statement of other comprehensive income or directly in equity.
Calculation of current tax is based on tax rates and tax laws that have been
enacted or substantively enacted by the end of the reporting financial year.
Deferred income taxes are calculated using the liability method.
Deferred tax assets are recognised to the extent that it is probable that the
underlying tax loss or deductible temporary difference will be utilised
against future taxable income. This is assessed based on the Group's forecast
of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss or credit.
Deferred tax liabilities are generally recognised in full, although IAS 12
'Income Taxes' specifies limited exemptions. As a result of these exemptions
the Group does not recognise deferred tax on temporary differences relating to
goodwill, or to its investments in subsidiaries.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together
with other short-term, highly liquid investments maturing within 90 days from
the date of acquisition that are readily convertible into known amounts of
cash and which are subject to an insignificant risk of changes in value.
Non-current assets and liabilities classified as held for sale and
discontinued operations
Non-current assets classified as held for sale are presented separately and
measured at the lower of their carrying amounts immediately prior to their
classification as held for sale and their fair value less costs to sell.
However, some held for sale assets such as financial assets or deferred tax
assets, continue to be measured in accordance with the Group's relevant
accounting policy for those assets. Once classified as held for sale, the
assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale or remeasurement of discontinued
operations is presented as part of a single line item, profit or loss from
discontinued operations (see also policy on profit or loss from discontinued
operations above).
Equity, reserves and dividend payments
Share capital represents the nominal (par) value of shares that have been
issued. Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of shares are
deducted from share premium, net of any related income tax benefits.
Accumulated deficit includes all current and prior financial year retained
losses. All transactions with owners of the parent are recorded separately
within equity. Dividend distributions payable to equity shareholders are
included in other liabilities when the dividends have been approved in a
general meeting prior to the reporting date.
Share-based payments
All goods and services received in exchange for the grant of any share-based
payment are measured at their fair values. The Company issues equity- settled
share-based payments in the form of share options and warrants to certain
Directors, employees and advisers.
Equity-settled share-based payments are made in settlement of professional and
other costs. These payments are measured at the fair value of the services
provided which will normally equate to the invoiced fees and charged to the
consolidated statement of profit or loss, share premium account or are
capitalised according to the nature of the fees incurred.
Where employees are rewarded using share-based payments, the fair value of
employees' services is determined indirectly by reference to the fair value of
the equity instruments granted. This fair value is appraised at the grant date
and excludes the impact of non-market vesting conditions (for example
profitability and sales growth targets and performance conditions). Fair value
is estimated using the Black-Scholes valuation model. The expected life used
in the model has been adjusted on the basis of management's best estimate for
the effects of non- transferability, exercise restrictions and behavioural
considerations. All share-based remuneration is ultimately recognised as an
expense in profit or loss with a corresponding credit to retained earnings. If
vesting years or other vesting conditions apply, the expense is allocated over
the vesting year, based on the best available estimate of the number of share
options expected to vest.
Non-market vesting conditions are included in assumptions about the number of
options that are expected to become exercisable. Estimates are subsequently
revised if there is any indication that the number of share options expected
to vest differs from previous estimates. Any adjustment to cumulative
share-based compensation resulting from a revision is recognised in the
current financial year. The number of vested options ultimately exercised by
holders does not impact the expense recorded in any financial year.
Upon exercise of share options, the proceeds received, net of any directly
attributable transaction costs, are allocated to share capital up to the
nominal (or par) value of the shares issued with any excess being recorded as
share premium.
Warrants
Share warrants issued to shareholders in connection with share capital issues
are measured at fair value at the date of issue and treated as a separate
component of equity, in Other Reserves. Fair value is determined at the grant
date and is estimated using the Black-Scholes valuation model. Share warrants
issued separately to Directors, employees and advisers are accounted for in
accordance with the policy on share-based payments.
Post-employment benefit plans
The Group provides post-employment benefit plans through various defined
contribution plans.
Defined contribution plans
The Group pays fixed contributions into independent entities in relation to
several retirement plans and insurances for individual employees. The Group
has no legal or constructive obligations to pay contributions in addition to
its fixed contributions, which are recognised as an expense in the period that
related employee services are received.
Short-term employee benefits
A liability is recognised for benefits accruing to employees in respect of
wages and salaries, annual leave and sick leave in the period the related
service is rendered at the undiscounted amount of the benefits expected to be
paid in exchange for that service. Liabilities recognised in respect of
short-term employee benefits are measured at the undiscounted amount of the
benefits expected to be paid in exchange for the related service.
Provisions, contingent assets and contingent liabilities
Provisions for legal disputes, onerous contracts or other claims 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 from the Group and amounts can be estimated reliably. Timing
or amount of the outflow may still be uncertain.
Restructuring provisions are recognised only if a detailed formal plan for the
restructuring exists and management has either communicated the plan's main
features to those affected or started implementation. Provisions are not
recognised for future operating losses.
Any reimbursement that the Group is virtually certain to collect from a third
party with respect to the obligation is recognised as a separate asset.
However, this asset may not exceed the amount of the related provision.
No liability is recognised if an outflow of economic resources as a result of
present obligations is not probable. Such situations are disclosed as
contingent liabilities unless the outflow of resources is remote.
4. Significant management judgement in applying accounting
policies and estimation uncertainty
When preparing the financial statements, management makes a number of
judgements, estimates and assumptions about the recognition and measurement of
assets, liabilities, income and expenses.
Significant management judgements
The following are significant management judgements in applying the accounting
policies of the Group that have the most significant effect on the financial
statements.
Going concern
As described in the basis of preparation and going concern in Note 3 above,
the validity of the going concern basis is dependent upon the achievement of
management forecasts taking account of reasonably plausible changes in trading
performance and market conditions, which include the continued impact of the
Covid-19 pandemic and any related operational and execution delays caused by
it. After undertaking the assessments and considering the uncertainties set
out above, the Directors have a reasonable expectation that the Group and the
Company has adequate resources to continue to operate for the foreseeable
future. Furthermore, the Directors are not aware of any material uncertainties
that may cast significant doubt upon the Group and Company's ability to
continue as a going concern.
Control assessment in a business combination.
As disclosed in Note 19, the Group owns 50.02% of the voting rights in Newry
Biomass Limited. One other company owns the remaining voting rights.
Management has reassessed its involvement in Newry Biomass Limited in
accordance with IFRS 10's revised control definition and guidance and has
concluded that, based on its sufficiently dominant voting interests to direct
its activities, it has control of Newry Biomass Limited.
Interests in joint ventures
The Group holds 50.1% of the share capital of EQTEC Synergy Projects Limited
but this entity is considered to be a joint venture as decisions about the
relevant activities requires the unanimous consent of both the Group and the
joint venture partner.
The Group holds 49% of the share capital of Synergy Karlovac d.o.o. and
Synergy Belisce d.o.o. However, this entity is considered to be a joint
venture of the Group as decisions about the relevant activities requires the
unanimous consent of both the Group and the joint venture partner.
Revenue
As revenue from construction contracts is recognised over time, the amount of
revenue recognised in a reporting period depends on the extent to which the
performance obligation has been satisfied. It also requires significant
judgment in determining the estimated costs required to complete the promised
work when applying the cost-to-cost method.
Deferred tax assets
Deferred tax is recognised based on differences between the carrying value of
assets and liabilities and the tax value of assets and liabilities. Deferred
tax assets are only recognised to the extent that the Group estimates that
future taxable profits will be available to offset them. The Group and Company
has not recognised any deferred tax assets in the current or prior financial
years.
Estimation uncertainty
Information about estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and
expenses is provided below. Actual results may be substantially different.
Impairment of goodwill and non-financial assets
Determining whether goodwill and non-financial assets are impaired requires an
estimation of the value in use of the cash generating units to which the
assets have been allocated. The value in use calculation requires the
directors to estimate the future cash flows to arise from the cash-generating
unit and a suitable discount rate in order to calculate present value. Where
the actual cash flows are less than expected, a material impairment may arise.
The estimate for future cash flows includes consideration of possible delays
due to Covid-19. The total property, plant and equipment reversal of
impairment charges during the financial year as included in Note 17 amounted
to €Nil (2020: €Nil), while the impairment for goodwill during the
financial year as included in Note 18 amounted to €Nil (2020: €Nil).
Provision for impairment of financial assets - Group
Determining whether the carrying value of financial assets has been impaired
requires an estimation of the value in use of the investment in associated
undertakings and joint venture vehicles. The value in use calculation requires
the directors to estimate the future cash flows expected to arrive from these
vehicles and a suitable discount rate in order to calculate present value.
After reviewing these calculations, the directors are satisfied that a net
impairment cost of €Nil (2020: €Nil) be recognised in the Group accounts
of EQTEC plc.
Provision for impairment of investment in subsidiaries - Company
Determining whether the carrying value of the Company's investment in
subsidiaries has been impaired requires an estimation of the value in use of
the investment in subsidiaries. The value in use calculation requires the
directors to estimate the future cash flows expected to arrive from these
vehicles and a suitable discount rate in order to calculate present value.
After reviewing these calculations, the directors are satisfied that a net
impairment cost of €Nil (2020: €Nil) be recognised in the Company accounts
of EQTEC plc.
Useful lives and residual values of intangible assets
Intangible assets are amortised over their useful lives taking into account,
where appropriate, residual values. Assessment of useful lives and residual
values are performed annually, taking into account factors such as
technological innovation, market information and management considerations. In
assessing the residual value of an asset, its remaining life, projected
disposal value and future market conditions are taken into account. Detail on
intangible assets can be found in note 18.
Allowances for impairment of trade receivables
The Group estimates the allowance for doubtful trade receivables based on
assessment of specific accounts where the Group has objective evidence
comprising default in payment terms or significant financial difficulty that
certain customers are unable to meet their financial obligations. In these
cases, judgment used was based on the best available facts and circumstances
including but not limited to, the length of relationship. The Group and
Company measure expected credit losses of a financial instrument in a way that
reflects an unbiased and probability-weighted amount that is determined by
evaluating a range of possible outcomes, the time value of money and
information about past events, current conditions and forecasts of future
economic conditions. When measuring ECL the Group and Company use reasonable
and supportable forward-looking information, which is based on assumptions for
the future movement of different economic drivers and how these drivers will
affect each other. At 31 December 2021, provisions for doubtful debts amounted
to €475,687 which represents 9% of trade receivables at that date (31
December 2020: €475,687- 74%) (see note 25).
Share based payments and warrants
The calculation of the fair value of equity-settled share-based awards and
warrants issued in connection with share issues and the resulting charge to
the consolidated statement of profit or loss or share-based payment reserve
requires assumptions to be made regarding future events and market conditions.
These assumptions include the future volatility of the Company's share price.
These assumptions are then applied to a recognised valuation model in order to
calculate the fair value of the awards at the date of grant (See Notes 10 and
27).
Estimating impairment of development assets
Management estimates the net realisable values of development assets, taking
into account the most reliable evidence available at each reporting date. The
future realisation of these development assets may be affected by
market-driven changes that may reduce future prices/premiums (See Note 24).
5. FINANCIAL RISK MANAGEMENT
Financial risk management objectives and policies
The Group and Company's activities expose it to a variety of financial risks:
credit risk, liquidity risk, interest rate risk and foreign currency exchange
risk.
The Group and Company's financial risk management programme aims to manage the
Group's exposure to the aforementioned risks in order to minimise the
potential adverse effects on the financial performance of the Group and
Company. The Group and Company seeks to minimise the effects of these risks by
monitoring the working capital position, cash flows and interest rate exposure
of the Group and Company. There is close involvement by members of the Board
of Directors in the day-to-day running of the business.
Many of the Group and Company's transactions are carried out in Pounds
Sterling.
Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation
to the Group and Company. The Group and Company is exposed to credit risk from
financial assets including cash and cash equivalents held at banks, trade and
other receivables and loans receivable from project development undertakings.
The Group's maximum exposure to credit risk is represented by the balance
sheet amount of each financial asset:
2021 2020
€ €
Loans receivable from project development undertakings 3,000,469 482,537
Trade and other receivables 6,876,747 894,531
Cash and cash equivalents 6,446,217 6,394,791
The Company's maximum exposure to credit risk is represented by the balance
sheet amount of each financial asset:
2021 2020
€ €
Loans receivable from project development undertakings 613,678 243,598
Trade and other receivables 14,507,848 2,703,491
Cash and cash equivalents 4,845,633 6,111,864
The Group and Company's credit risk is primarily attributable to its loans
receivable from project development undertakings and trade and other
receivables.
Credit risk (continued)
The Group has adopted procedures in extending credit terms to customers and in
monitoring its credit risk. The Group's exposure to credit risk arises from
defaulting customers, with a maximum exposure equal to the carrying amount of
the related receivables. Provisions are made for impairment of trade
receivables when there is default of payment terms and significant financial
difficulty. On-going credit evaluation is performed on the financial condition
of accounts receivable at operating unit level at least on a monthly basis.
The Group had risk exposure to the following counterparties at year-end:
2021 2020
€ €
Loans receivable from project development undertakings
Loan receivable from Logik Wte Limited 1,538,420 170,561
Loan receivable from Shankley Biogas Limited 848,371 68,378
Trade and other receivables
Receivable from Synergy Karlovac d.o.o. 2,202,884 -
Receivable from Synergy Belisce d.o.o. 1,962,925 -
Apart from the above, the Group does not have significant risk exposure to any
single counterparty or any group of counterparties having similar
characteristics. The Group defines counterparties as having similar
characteristics if they are related parties. Concentration of credit risk
related to the above companies did not exceed 20% of gross monetary assets at
any time during the year. Concentration of credit risk to any other
counterparty did not exceed 5% of gross monetary assets at any time during the
financial year.
Exposure to credit risk on cash deposits and liquid funds is monitored by
directors. Cash held on deposit is with financial institutions in the Ba
rating category of Moody's (2020: Ba). The directors are of the opinion that
the likelihood of default by a counter party leading to material loss is
minimal. The reconciliation of loss allowance is included in Note 25.
Liquidity risk
The Group and Company's liquidity is managed by ensuring that sufficient
facilities are available for the Group and Company's operations from diverse
funding sources. The Group uses cash flow forecasts to regularly monitor the
funding requirements of the Group. The Group's operations are funded by cash
generated from financing activities, borrowings from banks and investors and
proceeds from the issuance of ordinary share capital.
The table below details the maturity of the Group's liabilities as at 31
December 2021:
After 5 years
Up to 1 year 1 - 5 years Total
Notes € € € €
Trade and other payables 31 6,921,806 - - 6,921,806
Investor loans 29 - - - -
Bank overdraft 29 - - - -
6,921,806 - - 6,921,806
The table below details the maturity of the Group's liabilities as at 31
December 2020:
After 5 years
Up to 1 year 1 - 5 years Total
Notes € € € €
Trade and other payables 31 3,183,980 - - 3,183,980
Investor loans 29 896,641 - - 896,641
Bank overdraft 29 124,210 - - 124,210
4,204,831 - - 4,204,831
Maturity of all Company's liabilities as at 31 December 2021 and 31 December
2020 are up to 1 year. Refer to Note 29 and 31 for the outstanding balance.
Interest rate risk
The primary source of the Group's interest rate risk relates to bank loans and
other debt instruments while the Company's interest rate risk relates to debt
instruments. The interest rates on these liabilities are disclosed in Note 29.
Interest rate risk (continued)
The Group's bank borrowings and other debt instruments (excluding amounts in
the disposal group) amounted to €Nil and €1,020,851 in 31 December 2021
and 31 December 2020, respectively. The Company's debt instruments amounted
to €Nil and €896,641 in 31 December 2021 and 31 December 2020,
respectively.
The interest rate risk is managed by the Group and Company by maintaining an
appropriate mix of fixed and floating rate borrowings. The Group does not
engage in hedging activities. Bank borrowings and certain debt instruments are
arranged at floating rates which are mainly based upon EURIBOR and the prime
lending rate of financial institutions thus exposing the Group to cash flow
interest rate risk. The other remaining debt instruments were arranged at
fixed interest rates and expose the Group to a fixed cash outflow.
These bank borrowings and debt instruments are mostly medium-term to long-term
in nature. Interest rates on loans received from investors and shareholders
are fixed in some cases while others are a fixed percentage greater than
current prime lending rates. 'Medium-term' refers to bank borrowings and
debt instruments repayable between 2 and 5 years and 'long-term' to bank
borrowings repayable after more than 5 years.
The sensitivity analysis below has been determined based on the exposure to
interest rates for non-derivative instruments at the end of the reporting
financial year. For floating rate liabilities, the analysis is prepared
assuming that the amount of the liability outstanding at the end of the
financial year was outstanding for the whole year. A 50-basis point increase
or decrease is used when reporting interest rate risk internally to key
management personnel and represents management's assessment of the reasonably
possible changes in interest rates.
If interest rates have been 50 basis points higher/lower and all other
variables were held constant, the Group's loss for the financial year ended 31
December 2021 would increase/decrease by €Nil (2020: increase/decrease by
€621) with a corresponding decrease/increase in equity.
The Group's sensitivity to interest rates has decreased during the current
financial year mainly due to the repayment of investor loans in EQTEC plc in
the financial year.
Foreign exchange risk
The Group and Company is mainly exposed to future changes in the Sterling, the
US Dollar and the Croatian Kuna relative to the Euro. These risks are managed
by monthly review of Sterling, US Dollar and Croatian Kuna denominated
monetary assets and monetary liabilities and assessment of the potential
exchange rate fluctuation exposure. The Group and Company's exposure to
foreign exchange risk is not actively managed. Management will reassess their
strategy to foreign exchange risk in the future.
The carrying amount of the Group's foreign currency denominated monetary
assets and monetary liabilities at the end of the reporting financial year are
as follows:
Liabilities Assets
2021 2020 2021 2020
€ € € €
Sterling 3,813,537 2,722,298 8,208,131 6,441,771
US Dollar - 984,906 25,695 38,354
Croatian Kuna 240,247 - 1,212,271 -
The carrying amount of the Company's foreign currency denominated monetary
assets and monetary liabilities at the end of the reporting financial year are
as follows:
Liabilities Assets
2021 2020 2021 2020
€ € € €
Sterling 169,433 461,909 12,822,699 7,221,106
US Dollar - 984,906 45,549 54,661
The following table details the Group and Company's sensitivity to a 10%
increase and decrease in the Euro against the relevant foreign currencies. 10%
is the sensitivity rate used when reporting foreign currency risk internally
to key management personnel and represents management's assessment of the
reasonably possible change in foreign exchange rates. The sensitivity analysis
includes only outstanding foreign currency denominated monetary items and
adjusts their translation at the year-end for a 10% change in foreign currency
rates. The sensitivity analysis includes external loans as well as loans to
foreign operations within the Group where the denomination of the loan is in
the currency other than the currency of the lender or the borrower. A positive
number below indicates an increase in profit where the Euro strengthens 10%
against the relevant currency. For a 10% weakening of the Euro against the
relative currency, there would be a comparable impact on the loss, and the
balances below will be negative.
Group Company
2021 2020 31 Dec 2021 31 Dec 2020
€ € € €
Sterling Impact: Profit and loss/equity 443,898 375,704 1,278,108 682,747
US Dollar Impact: Profit & Loss/Equity 2,288 95,611 4,056 93,964
Croatian Kuna: Profit and loss/equity 98,184 - - -
Foreign exchange risk (continued)
The Group and Company's sensitivity to foreign currency has increased during
the current financial year mainly due to the placing of equity for sterling in
the financial year, coupled with the set up of a new Croatian subsidiary.
Market risk
The Group's activities expose it primarily to the financial risks of changes
in foreign currency exchange rates and interest rates, which are detailed
above. There has been no change to the Group's exposure to market risks or the
manner in which it manages and measures the risk.
Price risk
The Group is exposed to equity price risk in respect of its investment in
Metal NRG plc, which is listed on the London Stock Exchange (see Note 22).
The investment in Metal NRG plc is considered a long-term, strategic
investment. In accordance with the Group's policies, no specific hedging
activities are undertaken in relation to these investments. The investments
are continuously monitored and voting rights arising from these equity
instruments are utilised in the Group's favour.
The sensitivity analyses below have been determined based on the exposure to
equity price risks at the reporting date. If the quoted stock price for these
securities increased or decreased by 5%, the net loss for the year ended 31
December 2021 and 2020 would increase/decrease by €25,349 (2020: Not
applicable) as a result of the changes in fair value of the investments in
listed shares.
6. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group manages its capital to ensure that the Group is able to continue as
a going concern while maximising the return to shareholders through the
optimisation of the debt and equity balance.
The capital structure of the company consists of financial liabilities, cash
and cash equivalents and equity attributable to the equity holders of the
parent company.
The Group's management reviews the capital structure on a yearly basis. As
part of the review, management considers the cost of capital and risks
associated with it. The Group's overall strategy on capital risk management is
to continue to improve the ratio of debt to equity.
The Group manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares, or sell assets to reduce debt.
No changes were made in the objectives, policies or processes for managing
capital during the years ended 31 December 2021 and 2020.
The gearing ratio of the Group for the financial year presented is as follows:
31 Dec 2021 31 Dec 2020
€ €
Borrowings - 1,020,851
Lease liabilities 257,708 191,707
Cash and bank balances (6,446,217) (6,394,791)
Net debt (6,188,509) (5,182,233)
Equity 45,764,488 27,524,725
Net debt to equity ratio (14%) (19%)
7. SEGMENT INFORMATION
Information reported to the chief operating decision maker for the purposes of
resource allocation and assessment of segment performance focuses on the
products and services sold to customers. The Group's reportable segments under
IFRS 8 Operating Segments are as follows:
Technology Sales: Being the sale of Gasification Technology and associated
Engineering and Design Services;
Power Generation: Being the development and operation of renewable energy
electricity and heat generating plants.
The chief operating decision maker is the Chief Executive
Officer. Information regarding the Group's current reportable segment is
presented below. The following is an analysis of the Group's revenue and
results from continuing operations by reportable segment:
Segment Revenue Segment Profit/(Loss)
2021 2020 2021 2020
€ € € €
Technology Sales 9,171,764 2,234,727 995,000 (878,877)
Power Generation - - (328) (11,094)
Total from continuing operations
9,171,764 2,234,727 994,672 (889,971)
Central administration costs and directors' salaries (3,554,854) (2,548,506)
Impairment costs (5,498) (17,250)
Other income - 61,922
Other losses (1,418,860) (170,059)
Change in fair value of financial investments (250,378) -
Foreign currency gains 348,885 211,337
Employee share-based compensation (205,648) (1,297,309)
Share of results from equity accounted investments (24,188) -
Gains from sales to equity accounted investments deferred (211,478) -
Gain arising from loss of control of subsidiaries 9,957 -
Finance income 134,069 17,329
Finance costs (517,108) (1,206,392)
Loss before taxation (continuing operations) (4,700,429) (5,838,899)
Revenue reported above represents revenue generated from associated companies,
jointly controlled entities and external customers. Inter-segment sales for
the financial year amounted to €Nil (2020: €Nil). Included in revenues in
the Technology Sales Segment are revenues of €7,084,872 (2020: €1,980,000)
which arose from sales to associate undertakings and joint ventures of EQTEC
plc. This represents 77% (2020: 89%) of total revenues in the financial year.
A breakdown of the turnover by associated undertaking and joint venture is set
out in Note 34 Related Party Transactions.
The accounting policies of the reportable segments are the same as the Group's
accounting policies described in Note 3. Segment profit or loss represents the
profit or loss earned by each segment without allocation of central
administration costs and directors' salaries, other operating income, share of
profit or loss of jointly controlled entities, profit on disposal of jointly
controlled entities, interest costs, interest income and income tax expense.
This is the measure reported to the chief operating decision maker for the
purpose of resource allocation and assessment of segment performance.
Other segment information:
Depreciation and amortisation Additions to non-current assets
2021 2020 2021 2020
€ € € €
Technology sales 84,381 83,463 195,643 -
Power Generation - - - -
Head Office 144,824 - 2,708,474 -
229,205 83,463 2,904,117 -
In addition to the depreciation and amortisation reported above, reversal of
impairment losses of €Nil (2020: €Nil) were recognised in respect of
property, plant, equipment and intangible assets and goodwill respectively.
The Group operates in four principal geographical areas: Republic of Ireland
(country of domicile), the European Union, the United States of America and
the United Kingdom. The Group's revenue from continuing operations from
external customers and information about its non-current assets* by
geographical location are detailed below:
Revenue from Associates and External Customers Non-current assets*
2021 2020 2021 2020
€ € € €
Republic of Ireland - - - -
EU 6,734,156 254,727 2,720,427 187,792
United States of America 2,437,608 1,980,000 - -
United Kingdom - - 147,808 -
9,171,764 2,234,727 2,868,235 187,792
*Non-current assets excluding goodwill, financial instruments, deferred tax
and investment in jointly controlled entities and associates.
The management information provided to the chief operating decision maker does
not include an analysis by reportable segment of assets and liabilities and
accordingly no analysis by reportable segment of total assets or total
liabilities is disclosed.
8. REVENUE
An analysis of the Group's revenue for the financial year (excluding interest
revenue), from continuing and discontinued operations, is as follows:
Continuing Discontinued
2021 2020 2021 2020
€ € € €
Revenue from technology sales 8,022,509 2,234,727 - -
Revenue from the generation of energy from wind - - - 135,644
Revenue from development fees 1,149,255 - - -
9,171,764 2,234,727 - 135,644
9. OTHER INCOME
Continuing Discontinued
2021 2020 2021 2020
€ € € €
Operating grants - 39,782 - -
Reimbursement of wind development costs - 16,449 - -
Other income - 5,691 - -
- 61,922 - -
10. EMPLOYEE SHARE-BASED PAYMENTS
Continuing Discontinued
2021 2020 2021 2020
€ € € €
Expensed in the year 205,648 1,297,309 - -
The share-based payment expense includes the cost of employee warrants and
options granted and vested in the year (Note 27).
11. FINANCE COSTS AND INCOME
Continuing Discontinued
2021 2020 2021 2020
Finance Costs € € € €
Interest on loans, bank facilities and overdrafts 41,818 1,149,141 - 18,382
Fees on early redemption of loans 466,929 50,149 - -
Interest expense for leasing arrangements 8,341 7,102 - -
Other interest 20 - - -
517,108 1,206,392 - 18,382
Finance Income
Interest receivable on loans advanced 121,459 13,397 - -
Interest receivable on deferred consideration 12,610 3,932 - -
Interest receivable on bank deposits - - 3 3
134,069 17,329 3 3
Included in finance costs under continuing activities is an amount of €Nil
(2020: €522,349) with respect to lender warrants granted during the year
(see Note 27).
12. OTHER LOSSES
Continuing Discontinued
2021 2020 2021 2020
€ € € €
Loss on debt for equity swap 1,418,860 170,059 - -
During the financial year the Group extinguished some of its financial
liabilities by issuing equity instruments. In accordance with IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments, the loss
recognised on these transactions was €1,418,860 (2020: €170,059).
13. EMPLOYEE DATA 2021 2020
€ €
The aggregate payroll costs of employees (including executive directors) in
the Group were as follows:
Salaries 1,575,325 858,915
Social insurance costs 284,643 163,423
Pension costs - defined contribution plans 34,134 (16,932)
Termination payments 241,061 -
Other compensation costs:
Cost of share-based payments 205,648 1,297,309
Short term incentives 506,999 -
Private health insurance and other insurance costs 15,071 -
2,862,881 2,302,715
No. No.
Average number of employees (including executive directors) 19 13
Company
Average number of employees (including executive directors) 4 2
Capitalised employee costs in the financial year amounted to €Nil (2020
€Nil).
14. LOSS BEFORE TAXATION 2021 2020
€ €
Loss before taxation on continuing operations is stated after
charging/(crediting):
Depreciation of leasehold buildings (Note 17) 156,520 83,463
Amortisation of intangible assets (Note 18) 72,685 -
Impairment of investments (Note 22) - 17,250
Movement in fair value of investments (Note 22) 250,378 -
Research and development 17,991 26,412
Gains on foreign exchange (348,885) (211,337)
Directors' remuneration: for services as directors 111,234 486,122
(Note 730,496 408,948
34).
for salaries as management
86,261 1,127,141
share-based payments
241,061 -
compensation for loss of office
Impairment of development assets (Note 24) 5,498 -
2021 2020
€ €
Auditor's remuneration:
Audit of Group accounts 90,000 60,000
Tax advisory services 15,000 11,000
105,000 71,000
15. INCOME TAX 2021 2020
€ €
Income tax expense comprises:
Current tax expense - -
Deferred tax credit - -
Adjustment for prior financial years - -
Tax expense - -
2021 2020
€ €
Loss before taxation (4,700,429) (5,767,815)
Applicable tax 12.50% (2020: 12.50%) (587,554) (720,977)
Effects of:
Amortisation & depreciation in excess of capital allowances 28,475 17,130
Expenses not deductible for tax purposes 234,361 248,715
Losses carried forward 324,718 455,132
Movement in deferred tax - -
Actual tax expense - -
The tax rate used for the reconciliation above is the corporate rate of 12.5%
payable by corporate entities in Ireland on taxable profits under tax law in
that
jurisdiction.
16. LOSS PER SHARE 2021 2020
€ per share € per share
Basic loss per share
From continuing operations (0.001) (0.001)
From discontinued operations - -
Total basic loss per share (0.001) (0.001)
Diluted loss per share
From continuing operations (0.001) (0.001)
From discontinued operations - -
Total diluted loss per share (0.001) (0.001)
The loss and weighted average number of ordinary shares used in the
calculation of the basic and diluted loss per share are as follows:
2021 2020
€ €
Loss for financial year attributable to equity holders of the parent (4,700,497) (5,762,733)
Profit for the financial year from discontinued operations used in the
calculation of basic earnings per share from discontinued operations
- 71,084
Losses used in the calculation of basic loss per share from continuing
operations
(4,700,497) (5,833,817)
No. No.
Weighted average number of ordinary shares for
the purposes of basic loss per share 7,956,449,726 5,435,107,932
Weighted average number of ordinary shares for
the purposes of diluted loss per share 7,956,449,726 5,435,107,932
Dilutive and anti-dilutive potential ordinary shares
The following potential ordinary shares were excluded in the diluted earnings
per share calculation as they were anti-dilutive.
2021 2020
Share warrants in issue 464,005,793 651,936,876
Share options in issue 67,304,542 33,652,271
LTIP options in issue 21,124,586 -
Total anti-dilutive shares 552,434,921 685,589,147
Details of share warrants and share options in issue outstanding at year-end
are set out in Note 27.
17. PROPERTY, PLANT AND EQUIPMENT
Right of Use Assets Office equipment Construction in Progress Total
Group € € € €
Cost
At 1 January 2020 354,718 181,264 2,465,103 3,001,085
Disposals - (117,922) - (117,922)
Derecognition of assets - - (2,465,103) (2,465,103)
At 31 December 2020 354,718 63,342 - 418,060
Additions 219,301 - 192,757 412,058
Exchange differences 5,297 - - 5,297
At 31 December 2021 579,316 63,342 192,757 835,415
Accumulated depreciation
At 1 January 2020 83,463 181,264 2,465,103 2,729,830
Charge for the financial year 83,463 - - 83,463
Charge on disposal - (117,922) - (117,922)
Derecognition of assets - - (2,465,103) (2,465,103)
At 31 December 2020 166,926 63,342 - 230,268
Charge for the financial year 156,520 - - 156,520
Exchange differences 1,766 - - 1,766
At 31 December 2021 325,212 63,342 - 388,554
Carrying amount
At 31 December 2020 187,792 - - 187,792
At 31 December 2021 254,104 - 192,757 446,861
Included in the net carrying amount of property, plant and equipment are
right-of-use assets as follows:
2021 2020
€ €
Leasehold buildings 254,104 187,792
Office Total
Equipment
Company € €
Cost
At 1 January 2020, at 31 December 2020 and at 31 December 2021 1,233 1,233
Accumulated depreciation
At 1 January 2020, at 31 December 2020 and at 31 December 2021 1,233 1,233
Carrying amount
At 1 January 2021 - -
At 31 December 2021 - -
18. INTANGIBLE ASSETS
Group Goodwill Patents Total
Cost € € €
As at 1 January 2020 and at 31 December 2020
16,710,497 - 16
,7
10
,4
97
Additions, separately acquired - 2,492,059 2,492,059
As at 31 December 2021 16,710,497 2,492,059 19,202,556
Amortisation and Impairment
As at 1 January 2020 1,427,038 - 1,427,038
Impairment losses - -
-
As at 31 December 2020 1,427,038 - 1,
42
7,
03
8
Amortisation - 72,685 72
,6
85
Impairment losses - -
-
As at 31 December 2021 1,427,038 72,685 1,
49
9,
72
3
Carrying value
As at 31 December 2020 15,283,459 - 15
,2
83
,4
59
As at 31 December 2021 15,283,459 2,419,374 17
,7
02
,8
33
Company Patents Total
Cost € €
As at 1 January 2020 and at 31 December 2020
- -
Additions 2,492,059 2,492,059
As at 31 December 2021 2,492,059 2,492,059
Amortisation and Impairment
As at 1 January 2020 and at 31 December 2020
- -
Amortisation 72,685 72,685
As at 31 December 2021 72,685 72,685
Carrying value
As at 31 December 2020 - -
As at 31 December 2021 2,419,374 2,419,374
Patents
During the year ended 31 December 2021, the Group acquired patents from a
company controlled by one of the directors. Patents and trademarks are
amortised over their estimated useful lives, which is on average 20 years. The
average remaining amortisation period for these patents is 19.4 years (2020:
Not applicable).
Goodwill
Cash-generating units
Goodwill acquired in business combinations is allocated, at acquisition, to
the cash-generating units (CGUs) that are expected to benefit from that
business combination. A CGU is the smallest identifiable group of assets that
generate cash inflows that are largely independent of the cash inflows from
other assets or group of assets. The CGUs represent the lowest level within
the Group at which the associated goodwill is assessed for internal management
purposes and are not larger than the operating segments determined in
accordance with IFRS 8 Operating Segments. A total of 1 CGUs (2020: 1) have
been identified and these are all associated with the Technology Sales
Segment. The carrying value of the goodwill within the Technology Sales
Segment is €15,283,459 (2020: €15,283,459).
In accordance with IAS 36 Impairment of Assets, the CGUs to which significant
amounts of goodwill have been allocated are as follows:
2021 2020
€ €
Eqtec Iberia SLU 15,283,459 15,283,459
For the purpose of impairment testing, the discount rates applied to this CGU
to which significant amounts of goodwill have been allocated was 14% (2020:
14%) for the Eqtec Iberia CGU.
Annual test for impairment
Goodwill acquired through business combinations has been allocated to the
above CGU for the purpose of impairment testing. Impairment of goodwill occurs
when the carrying value of the CGU is greater than the present value of the
cash that it is expected to generate (i.e. the recoverable amount). The Group
reviews the carrying value of each CGU at least annually or more frequently if
there is an indication that a CGU may be impaired.
The recoverable amount of each CGU is determined from value-in-use
calculations. The forecasts used in these calculations are based on a
financial plan approved by the Board of Directors, plus 5-year projections
forecasted by management, and specifically excludes any future acquisition
activity.
The value in use calculation represents the present value of the future cash
flows, including the terminal value, discounted at a rate appropriate to each
CGU. The real pre-tax discount rates used is 14% (2020: 14%). These rates are
based on the Group's estimated weighted average cost of capital, adjusted for
risk, and are consistent with external sources of information.
The cash flows and the key assumptions used in the value in use calculations
are determined based on management's knowledge and expectation of future
trends in the industry. Expected future cash flows are, however, inherently
uncertain and are therefore liable to material change over time. The key
assumptions used in the value in use calculations are subjective and include
projected EBITDA margins, net cash flows, discount rates used and the duration
of the discounted cash flow model. The estimate for future cash flows includes
consideration of possible delays due to Covid-19.
The directors performed sensitivity analysis to account for changes in value
in use calculation due to potential delays in commencement of the projects.
The following are the sensitivities performed:
· 1% increase in discount rate
· 1 project delayed in 2022, 2 projects delayed in 2023, 3 projects
delayed in 2024
· Zero percentage long term growth rate (year 6 onwards)
· 1 major anticipated project delayed until 2023
All of these sensitivity analysis resulted in no impairment. An impairment
loss of €Nil (2020: €Nil) has been calculated for the financial year ended
31 December 2021.
19. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
COMPANY
2021 2020
Investment in subsidiary undertakings € €
At beginning of financial year 17,869,630 16,869,625
Reclassification of inter-company balance as contribution to capital in Eqtec
Iberia
- 1,000,000
Investment in other subsidiaries 10,000 5
Transfer of investment in subsidiaries to other subsidiary undertakings
(10,003) -
Share options and awards 124,877 -
At end of financial year 17,994,504 17,869,630
Loans to subsidiary undertakings
At beginning of financial year - 571,304
Provision for impairment of investment in subsidiaries - (571,304)
At end of financial year - -
The share options and awards addition reflect the cost of share-based payments
attributable to employees of subsidiary undertakings, which are treated as
capital contributions by the Company.
During the year, the Company transferred shareholdings in subsidiary
undertakings at cost to other subsidiary undertakings.
Details of EQTEC plc subsidiaries at 31 December 2021 are as follows:
Country of
Name Incorporation Shareholding Registered Office Principal activity
Eqtec Iberia SLU Spain 100% 5 Provision of technical engineering services
EQTEC Holdings Limited Republic of Ireland 100% 1 Development of building projects
EQTEC UK Services Limited (formerly EQTEC Holdings (UK) Limited) United Kingdom 100% 2 Development of building projects
Haverton WTV Limited United Kingdom 100% 2 Waste-to-energy developer
Deeside WTV Limited United Kingdom 100% 2 Waste-to-energy developer
Southport WTV Limited (formerly Humber Gate WTV Limited) United Kingdom 100% 2 Waste-to-energy developer
Newry Biomass No. 1 Limited Republic of Ireland 100% 1 Dormant company
React Biomass Limited Republic of Ireland 100% 1 Dormant company
Reforce Energy Limited Republic of Ireland 100% 1 Dormant company
Grass Door Limited United Kingdom 100% 3 Dormant company
Newry Biomass Limited Northern Ireland 50.02% 4 Dormant company
Enfield Biomass Limited United Kingdom 100% 3 Dormant company
Moneygorm Wind Turbine Limited Republic of Ireland 100% 1 Dormant company
Eqtec No. 1 Limited Republic of Ireland 100% 1 Dormant company
Eqtec Strategic Project Finance Limited United Kingdom 100% 3 Dormant company
Clay Cross Biomass Limited United Kingdom 100% 3 Dormant company
Altilow Wind Turbine Limited Republic of Ireland 100% 1 Dormant company
Synergy Projects d.o.o. Croatia 100% 6 Waste-to-energy developer
EQTEC France SAS France 100% 7 Waste-to-energy developer
The shareholding in each company above is equivalent to the proportion of
voting power held.
Key to registered offices:
1. Building 1000, City Gate, Mahon, Cork T12 W7CV, Ireland.
2. 3 Stucley Place, London NW1 8NS, England.
3. Labs Triangle, Camden Lock Market, Chalk Farm Road, London NW1 8AB,
England.
4. 68 Cloughanramer Road, Carnmeen, Newry, Co. Down BT34 1QG, Northern
Ireland.
5. Rosa Sensat nº 9-11 Planta 5ª, 08005 Barcelona, Spain.
6. Zagorska 31, HR-10000 Zagreb, Croatia.
7. 28 Cours Albert 1er, 75008 Paris, France.
The table below shows details of non-wholly owned subsidiaries of the Group
that have non-controlling interests:
Principal place of business and place of incorporation Proportion of ownership interests and voting rights held by non-controlling Profit/(loss) allocated to non-controlling interests for the financial year
interests
Name of Subsidiary Non-controlling interests
2021 2020 2021 2020 2021 2020
% % € € € €
Newry Biomass Limited
Northern Ireland 49.98 49.98 68 (5,080) (2,489,189) (2,328,986)
Individually immaterial subsidiaries with non-controlling interests
0.00 0.00 - (2) 105,000 105,000
Total 68 (5,082) (2,384,189) (2,223,986)
EQTEC plc owns 50.02% of the voting rights in Newry Biomass Limited. One other
company owns the remaining voting rights. Management has reassessed its
involvement in Newry Biomass Limited in accordance with IFRS 10's revised
control definition and guidance and has concluded that it has control of Newry
Biomass Limited. The activities of Newry Biomass Limited are not considered
material to the Group as a whole.
No dividends were paid to the non-controlling
interests during the years ended 31 December 2021 and 2020.
During the year, the Group set up two subsidiaries, Synergy Belisce d.o.o. and
Synergy Karlovac d.o.o. that were initially accounted for as an investment in
subsidiaries. On 26 November 2021, the Group disposed of 51% of its share in
the two companies to Sense ESCO d.o.o. for proceeds of €2,709 (receivable
after the year-end). The Group has accounted for the remaining 49% interest in
these companies as an investment in joint ventures. The transaction has
resulted in the recognition of a gain in profit and loss, calculated as
follows:
€
Proceeds of disposal 2,709
Plus: Fair value of investment retained (49%) 489
Add: Carrying amount of net liabilities of investments on the date of loss of 6,759
control
Gain recognised 9,957
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
GROUP
2021 2020
€ €
Investment in associate undertakings (a) 6,951,064 3,379,625
Investment in joint ventures (b) 1,123,120 -
8,074,184 3,379,625
COMPANY
Investment in associate undertakings (a) 6,569,432 3,379,625
a) Investment in associate undertakings
GROUP
At beginning of financial year 3,379,625 2,229,006
Derecognition of loans (1,150,619) -
Investment in shares 2,458,584 -
Loans advanced to associate undertakings 2,272,113 1,150,619
Interest accrued on loans to associate undertakings 64,693 -
Share of loss of associate undertakings (19,441) -
Adjustment in respect of unrealised sales from the Group (101,296) -
Exchange differences 47,405 -
At end of financial year 6,951,064 3,379,625
Made up as follows:
Investment in shares in associate undertakings 4,597,855 2,229,006
Loans advanced to associate undertakings 2,384,248 1,150,619
Less: Losses recognised under the equity method (31,039) -
6,951,064 3,379,625
Investment in associate undertakings
Details of the Group's interests in associated undertakings at 31 December
2021 is as follows:
Shareholding Principal Activity
Name of associate undertaking County of Incorporation 2021 2020
North Fork Community Power LLC United States of America 49% ((2)) 19.99% ((1)) Operator of biomass gasification power project
EQTEC Italia MDC srl Italy 20.02% N/a Operator of biomass gasification power project
Notes:
(1) Per the original shareholders' agreement, the share of profits
in the associate was limited to 0.1999% rising to 19.99% thereafter.
(2) On 14 October 2021, the Group announced an additional investment
of US$2.8 million in North Fork, increasing the Group's equity in the
associate to 49%, with no restriction on the share of profits.
EQTEC Italia MDC srl was set up originally as a subsidiary undertaking of the
Group. On 21 June 2021, it was announced that three different parties have
agreed to contribute additional capital into EQTEC Italia MDC srl, leaving the
Group with an interest of 20.02% in the associate undertaking.
On 14 October 2021, it was announced that the Group would provide North Fork
Community Power LLC with a two-year convertible loan facility of up to $4.5
million. The Convertible Loan Facility will accrue interest at a rate of 10%
per annum, payable annually, and the balance outstanding (including any
accrued interest) will be convertible at the Group's option at the earliest
of: the maturity date, any default or any takeover. If the Convertible Loan
Facility were fully drawn down and converted into equity, it would result in
the Company's taking a controlling interest in North Fork Community Power LLC.
At 31 December 2021, the total of principal and accrued interest amounted to
€1,891,842.
On 21 June 2021, the group advanced €482,000 to EQTEC Italia MDC srl by way
of a five-year loan. The loan will accrue interest at a rate of 4% per annum,
and the principal and accrued interest will become payable on the expiry date,
being 18 June 2026.
Summarised financial information in respect of the Group's interests in
associated undertakings is as follows:
2021 2020
North EQTEC Italia North EQTEC Italia
Fork Total Fork Total
€ € € € € €
Non-current assets 46,469 2,155,006 2,201,475 44,552 - 44,552
Current assets 23,555,070 454,946 24,010,016 17,686,647 - 17,686,647
Non-current liabilities (19,422,943) (2,542,001) (21,964,944) (16,213,836) - (16,213,836)
Current liabilities 74,253 (110,805) (36,552) (263,150) - (263,150)
Net Assets 4,252,849 (42,854) 4,209,995 1,254,213 - 1,254,213
Reconciliation to carrying amount
Group's share of net assets/(liabilities) 2,083,896 (8,589) 2,075,307 250,717 - 250,717
Carrying value of loan to associate 1,891,842 492,406 2,384,248 1,150,519 - 1,150,519
Adjustment in respect of unrealised profits on sales from the Group (78,846) (22,450) (101,296) - - -
Exchange differences (1,245,590) - (1,245,590) (135,427) - (135,427)
Goodwill 3,838,395 - 3,838,395 2,113,816 - 2,113,816
Carrying amount 6,489,697 461,367 6,951,064 3,379,625 - 3,379,625
Summarised income statement
Revenue 12,888 - 12,888 22,047 - 22,047
(Loss)/Profit after tax for period 3,481 (92,852) (89,371) 5,541 - 5,541
Other comprehensive income - - - - - -
Total comprehensive income/(loss) 3,481 (92,852) (89,371) (5,541) - (5,541)
Reconciliation to Group's share of total comprehensive income
Group's share of total comprehensive income/(loss) (852) (18,589) (19,441) (-) (-) (-)
Group's share of total comprehensive income/(loss)
(852) (18,589) (19,441) (-) (-) (-)
COMPANY
2021 2020
€ €
At beginning of financial year 3,379,625 2,229,006
Derecognition of loans (1,150,619) -
Investment in shares 2,448,584 -
Loans advanced to associate undertakings 1,790,113 1,150,619
Interest accrued on loans to associate undertakings 54,287 -
Exchange differences 47,442 -
At end of financial year 6,569,432 3,379,625
Made up as follows:
Investment in shares in associate undertakings 4,677,590 2,229,006
Loans advanced to associate undertakings 1,891,842 1,150,619
At end of financial year 6,569,432 3,379,625
b) Investment in joint ventures
GROUP
The Group's interests in joint ventures at the end of the reporting period is
as follows
2021 2020
€ €
Synergy Belisce d.o.o. 506,664 -
Synergy Karlovac d.o.o. 519,437 -
Eqtec Synergy Projects Limited 97,019 -
Interests in joint ventures 1,123,120 -
Details of the Group's interests in joint ventures is as follows:
Shareholding Principal Activity
Name of joint venture County of Incorporation 2021 2020
Synery Belisce d.o.o. Croatia 49% N/a Operator of biomass gasification power project
Synery Belisce d.o.o. Croatia 49% N/a Operator of biomass gasification power project
Eqtec Synergy Products Limited Cyrprus 50.1% N/a Operator of biomass gasification power project
The joint ventures have share capital, consisting solely of ordinary shares.
Decisions about the relevant activities of the joint ventures require
unanimous consent of the Group and the respective joint venture partners.
a) Synergy Belisce d.o.o. was set up in April 2021 as a 100% subsidiary
of Synergy Projects d.o.o., a 100% subsidiary of the Group. On 26 November
2021, the Group's Croatian project development partner, Sense ESCO d.o.o.
subscribed for additional shares in Synergy Belisce d.o.o. which resulted in
the Group owning 49% of the equity of the joint venture. Synergy Belisce
d.o.o. has acquired a 1.2 MWe waste-to-energy gasification plant in Belisce,
Croatia which had been built in 2016 around EQTEC's proprietary and patented
Advanced Gasification Technology. The plant is expected to be updated,
recommissioned and repowered for operations towards the end of 2022.
b) Synergy Karlovac d.o.o. was set up in April 2021 as a 100% subsidiary
of Synergy Projects d.o.o., a 100% subsidiary of the Group. On 26 November
2021, the Group's Croatian project development partner, Sense ESCO d.o.o.
subscribed for additional shares in Synergy Karlovac d.o.o. which resulted in
the Group owning 49% of the equity of the joint venture. Synergy Karlovac
d.o.o. Synergy Karlovac d.o.o. has acquired a 1.2 MWe waste-to-energy
gasification plant in Karlovac, Croatia which originally employed an early
gasification technology from a third party. The plant was not able to achieve
the designed operational availability and had to be closed. The Group's
intention is to redesign and reconfigure the Plant to incorporate the
patented, proprietary EQTEC Advanced Gasification Technology at the centre.
When subsequently commissioned, it will transform locally sourced wood chips
and forestry wood waste from regional forests into green electricity for use
by the local community. The plant is expected to be updated, recommissioned
and repowered for operations towards the end of 2022.
c) Eqtec Synergy Projects Limited was set up in 2020 in partnership
with its Greek strategic partners, ewerGy GmbH. The Group owns 50.1% of the
equity of the joint venture. The joint venture has signed an agreement for the
proposed acquisition of a 5MWe project in Drama, North-eastern Greece. Once
acquired, the joint venture will lead the development of a new
biomass-to-energy plant, generating 5MW green electricity from locally and
sustainably sourced forestry waste. Due diligence, including financial and
technical feasibility, has been completed.
The movement in the investment in joint ventures is as follows:
The joint ventures have share capital, consisting solely of ordinary shares.
Decisions about the relevant activities of the joint ventures require
unanimous consent of the Group and the respective joint venture partners.
a) Synergy Belisce d.o.o. was set up in April 2021 as a 100% subsidiary
of Synergy Projects d.o.o., a 100% subsidiary of the Group. On 26 November
2021, the Group's Croatian project development partner, Sense ESCO d.o.o.
subscribed for additional shares in Synergy Belisce d.o.o. which resulted in
the Group owning 49% of the equity of the joint venture. Synergy Belisce
d.o.o. has acquired a 1.2 MWe waste-to-energy gasification plant in Belisce,
Croatia which had been built in 2016 around EQTEC's proprietary and patented
Advanced Gasification Technology. The plant is expected to be updated,
recommissioned and repowered for operations towards the end of 2022.
b) Synergy Karlovac d.o.o. was set up in April 2021 as a 100% subsidiary
of Synergy Projects d.o.o., a 100% subsidiary of the Group. On 26 November
2021, the Group's Croatian project development partner, Sense ESCO d.o.o.
subscribed for additional shares in Synergy Karlovac d.o.o. which resulted in
the Group owning 49% of the equity of the joint venture. Synergy Karlovac
d.o.o. Synergy Karlovac d.o.o. has acquired a 1.2 MWe waste-to-energy
gasification plant in Karlovac, Croatia which originally employed an early
gasification technology from a third party. The plant was not able to achieve
the designed operational availability and had to be closed. The Group's
intention is to redesign and reconfigure the Plant to incorporate the
patented, proprietary EQTEC Advanced Gasification Technology at the centre.
When subsequently commissioned, it will transform locally sourced wood chips
and forestry wood waste from regional forests into green electricity for use
by the local community. The plant is expected to be updated, recommissioned
and repowered for operations towards the end of 2022.
c) Eqtec Synergy Projects Limited was set up in 2020 in partnership
with its Greek strategic partners, ewerGy GmbH. The Group owns 50.1% of the
equity of the joint venture. The joint venture has signed an agreement for the
proposed acquisition of a 5MWe project in Drama, North-eastern Greece. Once
acquired, the joint venture will lead the development of a new
biomass-to-energy plant, generating 5MW green electricity from locally and
sustainably sourced forestry waste. Due diligence, including financial and
technical feasibility, has been completed.
The movement in the investment in joint ventures is as follows:
2021 2020
€ €
At the beginning of the year - -
Investment in joint ventures 501 -
Fair value retained on disposal of control in subsidiary 490 -
Loans advanced to joint ventures 1,228,909 -
Interest receivable on loans to joint ventures 6,485 -
Share of loss after tax (4,747) -
Unrealised profits on sales to joint ventures (110,182) -
Exchange differences 1,664 -
Interests in joint ventures 1,123,120 -
Made up as follows:
Investment in shares in joint ventures - -
Loans advanced to associate ventures 1,237,059 -
Less: Losses recognised under the equity method (113,939) -
1,123,120 -
Summarised financial information for joint ventures accounted for using the
equity method
Set out below is the summarised financial information for the Group's joint
ventures which are accounted for using the equity method. The information
below reflects the amounts presented in the financial statements of the joint
ventures reconciled to the carrying value of the Group's investments in joint
ventures. (Note: As this is the first year of the operation of the joint
ventures, there is no comparative figures).
Eqtec Synergy Projects Limited
Synergy Belisce d.o.o. Synergy Karlovac d.o.o.
2021 Total
Summarised balance sheet (100%) € € € €
Non-current assets 4,043,271 3,128,485 - 7,171,756
Current assets
Cash and Cash equivalents 640 747 10,412 11,799
Other current assets 133,308 123,510 200,499 457,317
133,948 124,257 210,911 469,116
Non-current liabilities - - - -
Current liabilities
Bank overdrafts and loans 555,331 588,987 100,000 1,244,318
Other current liabilities 3,613,016 2,666,235 116,860 6,396,111
4,168,347 3,255,222 216,860 7,640,429
Net assets/(liabilities) (100%) 8,872 (2,480) (5,949) 443
Reconciliation to carrying amount:
Group's share of net assets/(liabilities) 4,347 (1,215) (2,981) 151
Carrying value of loans to joint ventures 551,808 585,251 100,000 1,237,059
Unrealised gains on sales to joint ventures (45,185) (64,997) - (110,182)
Adjustment arising on loss of control in period (4,306) 398 - (3,908)
Carrying amount 506,664 519,437 97,019 1,123,120
2021 Eqtec Synergy Projects Limited
Synergy Belisce d.o.o. Synergy Karlovac d.o.o.
Total
Summarised income statement (100%) € € € €
Revenue - - - -
Depreciation - - - -
Amortisation - - - -
Interest expenses - - - -
Taxation - - - -
Profit/(loss) after tax (917) (1,666) (6,949) (9,532)
Other comprehensive income - - - -
Total comprehensive income/(loss) (917) (1,666) (6,949) (9,532)
Reconciliation to Group's share of total comprehensive income
Group's share of total comprehensive income (449) (816) (3,482) (4,747)
Group's share of total comprehensive income (449) (816) (3,482) (4,747)
21. FINANCIAL ASSETS
GROUP
2021 2020
Investment in related undertakings € €
At beginning of financial year 2,570,888 -
Advance payment on purchase of in shares in Logik WTE Limited 1,034,825 2,570,888
Advance payment on purchase of shares in Shankley Biogas Limited 116,272 -
Exchange differences 328,045 -
At end of financial year 4,050,030 2,570,888
Investment in Logik WTE Limited
On 8 December 2020, it was announced that the Company's wholly owned
subsidiary, Deeside WTV Limited ("Deeside"), had signed a share purchase
agreement ("SPA") with Logik Developments Limited ("Logik") to acquire full
ownership of the Deeside Refuse Derived Fuel project ("Project") through the
acquisition of Logik WTE Limited ("Project SPV"), a company incorporated in
the United Kingdom.
The key terms of the SPA are as follows:
· Initial consideration of €2,570,888 (£2,310,000) of which a
deposit amount of €333,882 (£300,000), from which the existing exclusivity
payment of £100,000 will be deducted, is payable on the signing of the
agreement and the balance of €2,237,006 (£2,010,000) payable on or before
12 months from 8 December 2021 (and which sum shall be netted off the existing
debts of Logik WTE Limited);
· Additional deferred conditional consideration of €2,548,630
(£2,290,000) payable on the achievement of certain conditions precedent
related to development milestones of the Project.
· The issue of a fixed dividend share in the Buyer to Logik
Developments Limited, which gives Logik Developments Limited the right to 5%
of distributable profits in Deeside WTV Limited. This share carries no voting
rights in Deeside WTV Limited.
· An additional development premium or overage payment, subject
to a maximum further amount of €6.01 million (£5.4 million), calculated in
accordance with an agreed formula payable on the achievement of each of the
following:
Financial close on the funding for the Waste Reception & Anaerobic
Digestion plant on the site for which planning and the necessary permits have
been obtained ("Project Phase I").
Financial close as defined on the funding for the Advanced Gasification plant
on the site for which planning and the necessary permits have been obtained
("Project Phase II").
On 6 December 2021, the Company announced that Deeside has signed a binding
supplemental agreement (the "Agreement") with Logik. The Agreement, inter
alia, set out the terms on which the parties have agreed to vary the terms of
the existing SPA signed by Logik and Deeside (together, the "Parties"), as
announced on 8 December 2020 pursuant to which Deeside agreed to acquire full
ownership of the Project SPV from Logik. Through the new Agreement the Parties
will now act in partnership and seek to develop additional waste-to-value
infrastructure on the Deeside site.
The key terms of the Agreement were as follows:
• Deeside will acquire 32% of the share capital of the
Project SPV, the entity which holds the land and necessary planning
permissions for the Project, from Logik for a consideration of £3.3 million
to be paid no later than 31 March 2022. Deeside can select to make this
payment from its existing cash resources or investment raised directly at the
Project SPV level;
• Under the Agreement, £500k was paid as a fee to
Logik. The Parties have agreed that this payment will be converted to equity
in the Project SPV by 31 March 2022;
• The Project site currently comprises 6.27 hectares
of land located off Weighbridge Road in the Deeside Industrial Estate. Under
the new Agreement, the Parties have agreed that c. 2.4 hectares of the land
will be retained by Logik to be used in connection with the proposed
hydrogen/biofuel project intended to be carried out jointly between the
parties;
• The new Agreement removes any overage payments,
deferred consideration and fixed dividend sum due to Logik in the SPA, since
the Parties intend that their relationship going forward be that of joint
venture partners, rather than seller and buyer; and
• The Parties are seeking a minimum of £10 million of
third-party funding in order to bring the Project to Financial Close.
Following receipt of such funding, EQTEC will invoice £1,500,000 for its
project development services to the Project SPV (such fee to be reduced on a
pound for pound basis if the investment received is less than £10 million),
subject to certain conditions to be finalised and agreed with third-party
funders.
Contracts have been exchanged but completion as defined in the Agreement had
not occurred at the year-end, and as a result Logik WTE Limited is not
considered a joint venture of the Group at 31 December 2021.
In these financial statements the full initial consideration of €3,930,911
(£3,300,000) (2020: €2,570,888 (£2,310,000)) has been recognised as an
investment in a related undertaking and the balance of consideration payable
of €2,977,963 (£2,500,000) (2020: €2,237,006 (£2,010,000)) has been
recognised as a payable in other payables (see note 31).
Investment in Shankley Biogas Limited
On 27 September 2021, EQTEC announced that EQTEC's wholly owned subsidiary,
Southport WTV Limited ("Southport"), had signed a Share Purchase Agreement
("SPA - Southport") with Rotunda Group Limited ("Rotunda") to acquire full
ownership of the Southport Hybrid Energy Park project ("Southport Project")
from Rotunda through the acquisition of Shankley Biogas Limited ("Shankley").
The key terms of the SPA-Southport were as follows:
• Initial consideration of £382,000
(€444,161) from which the existing exclusivity payment of £100,000 was
deducted, payable on the achievement of certain conditions precedent related
to development milestones of the Southport Project on or before a date 12
months from the date of signing of the SPA-Southport;
• One of the conditions precedent is that EQTEC
is granted a lease in relation to the Southport Project sufficient for the
development and operation of the Southport Project and on terms generally
acceptable to Southport and any funder (in their entire discretion); and
• The issue of a fixed dividend share
in Southport to Rotunda, which gives Rotunda the right to 20% of distributable
profits in Southport. This share carries no voting rights or entitlement to
dividends in EQTEC.
Contracts have been exchanged but completion as defined in SPA-Southport had
not occurred at the year-end, and as a result Shankley Biogas Limited is not
considered a subsidiary undertaking of the Group at 31 December 2021.
In these financial statements the exclusivity payment of €119,119
(£100,000) has been recognised as an investment in a related undertaking and
the balance of consideration payable of €335,914 (£282,000) has classified
as a commitment (see note 39).
22. OTHER FINANCIAL INVESTMENTS
2021 2020
Group: € €
Financial investments at amortised cost
Bonds and Debentures 402,644 402,644
Less: Provision against investment in Bonds (402,644) (402,644)
Investment in Shares 1,832 1,832
Other investments 15,418 15,418
Less: Provisions against other investments (17,250) (17,250)
- -
Financial investments at fair value through profit or loss (FVTPL)
Investment in Metal NRG plc 506,976 -
Total 506,976 -
Company
Financial investments at fair value through profit or loss (FVTPL)
Investment in Metal NRG plc 506,976 -
Total 506,976 -
Financial assets at FVTPL include the equity investment in Metal NRG plc which
was financed through the exchange of shares in the Company. The Group and the
Company accounts for the investment in Metal NRG plc at FVTPL and did not make
the irrevocable election to account for it at FVOCI. As at 31 December 2021,
the fair value of the Group's interest in Metal NRG plc, which is listed on
the London Stock Exchange, was €506,976 (2020: Not applicable) based on the
quoted market price available on the London Stock Exchange, which is a Level 1
input in terms of IFRS 13.
Movement in other financial investments was as follows:
2021 2020
€ €
At beginning of financial year - -
Acquired via the exchange of shares in EQTEC plc 745,161 -
Movement in fair value (250,378) -
Exchange differences 12,193 -
At end of financial year 506,976 -
23. DEFERRED TAXATION
A deferred tax asset has not been recognised at the consolidated statement of
financial position date in respect of trading tax losses arising from the
Irish and UK subsidiaries. Due to the history of past losses, the Group has
not recognised any deferred tax asset in respect of tax losses to be carried
forward which are approximately €24.4 million at 31 December 2021 (2020:
€21.5 million).
24. DEVELOPMENT ASSETS
2021 2020
€ €
Group
Costs associated with project development undertakings 3,455,496 503,653
Loan receivable from project development undertakings 3,000,469 482,537
The Group invests capital in assisting in the development of waste to value
projects which can deploy its technology and expertise and make a profit from
the realisation of the development costs at the financial close, when
project financing is in place so that the project undertaking can commence
construction. Cost comprises direct materials and overheads that have been
incurred in furthering the development of a project towards financial close.
For the financial year ended 31 December 2021, €Nil (2020: €Nil) of
development assets was included in consolidated statement of profit or loss as
an expense and €5,498 (2020: €Nil) was impaired resulting from write down
of development assets.
Included in loans receivable from project development undertakings is an
amount of €550,000, (2020: €200,000) which is receivable, along with
accrued interest, 18 months from the date of drawdown. Interest is charged at
15% per annum. At 31 December 2021, the loan is valued at €613,678 (2020:
€213,297).
The remaining loans receivables were issued with no interest and no fixed
repayment date.
2021 2020
€ €
Company
Costs associated with project development 305,553 9,275
Loan receivable from project development undertakings 613,678 243,598
Included in loans receivable from project development undertakings is an
amount of €550,000, (2020: €200,000) which is receivable, along with
accrued interest, 18 months from the date of drawdown. Interest is charged at
15% per annum. At 31 December 2021, the loan is valued at €613,678 (2020:
€213,297).
25. TRADE AND OTHER RECEIVABLES
2021 2020
€ €
Group
Trade receivables gross 5,268,923 638,602
Allowance for credit losses (475,687) (475,687)
Trade receivables net 4,793,236 162,915
VAT receivable 903,069 172,405
Deferred consideration for the disposal of Pluckanes Windfarm (see note 33) 133,034 120,424
Advances to related undertakings 60,000 60,000
Allowance for credit losses (60,000) (60,000)
Prepayments 133,344 133,403
Amounts receivable from associate companies 27,508 -
Deposit payment on land (See below) 309,708 -
Corporation tax 381 6,841
Payments on account to suppliers 355,267 120,798
Other receivables 221,200 177,745
6,876,747 894,531
The option payment represents a deposit paid with respect to a conditional
land purchase agreement relating to the land on which the proposed up to 25
MWe Billingham waste gasification and power plant at Haverton Hill,
Billingham, UK, will be constructed.
All amounts are short-term. The net carrying value of trade receivables is
considered a reasonable approximation of fair value.
The following table shows an analysis of trade receivables split between past
due and within terms accounts. Past due is when an account exceeds the agreed
terms of trade, which are typically 60 days.
2021 2020
€ €
Within terms 4,649,704 10,579
Past due more than one month but less than two months 2,876 149,925
Past due more than two months 616,343 478,098
5,268,923 638,602
Included in the Group's trade receivables balance are debtors with carrying
amount of €140,656 (2020: €2,411) which are past due at year end and for
which the Group has not provided.
The Group does not hold any collateral over these balances. No interest is
charged on overdue receivables. The quality of past due not impaired trade
receivables is considered good. The carrying amount of trade receivables
approximates to their fair values.
The Group's policy is to recognise an allowance for doubtful debts of 100%
against all receivables over 120 days because historical experience has been
that trade receivables that are past due beyond 120 days are not recoverable.
Allowances for doubtful debts are recognised against trade receivables between
60 days and 120 days based on estimated irrecoverable amounts determined by
reference to past default experience of the counterparty and an analysis of
the counterparty's current financial position. The review on these balances
shows that all of the above amounts, with the exception of €Nil (2020:
€4,754) are considered recoverable.
In determining the recoverability of a trade receivable, the Group considers
any changes in the credit quality of the trade receivable from the date credit
was initially granted up to the end of the current reporting financial year.
The concentration of the credit risk is limited due to the customer base being
large and unrelated, and the fact that no one customer holds balances that
exceeds 10% of the gross assets of the Group. The maximum exposure risk to
trade and other receivables at the reporting date by geographic region,
ignoring provisions, is as follows:
2021 2020
€ €
Ireland 72,919 30,000
Spain 4,007,695 608,602
Croatia 1,188,309 -
5,268,923 638,602
The aged analysis of other
receivables is within terms.
The closing balance of the trade receivables loss allowance as at 31 December
2021 reconciles with the trade receivables loss allowance opening balance as
follows:
€
Opening loss allowance as at 1 January 2020 475,687
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2020 475,687
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2021 475,687
The closing balance of the advances to related undertakings loss allowance as
at 31 December 2021 reconciles with the advances to related undertakings loss
allowance opening balance as follows:
€
Opening loss allowance as at 1 January 2020 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2020 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 2020 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2021 60,000
There is no concentration of credit risk with respect to receivables as
disclosed in Note 5 under credit risk.
2021 2020
Company € €
Amounts due from subsidiary undertakings 14,091,925 2,567,624
Allowance for impairment of balances - -
14,091,925 2,567,624
Trade receivables 353,219 30,000
Allowance for credit losses (30,000) (30,000)
Advances to related undertakings 60,000 60,000
Allowance for credit losses (60,000) (60,000)
Prepayments 87,567 124,582
Receipts from share fundraise - -
Corporation Tax 96 96
VAT Receivable 2,281 8,429
Other receivables 2,760 2,760
14,507,848 2,703,491
The concentration of credit risk in the individual financial statements of
EQTEC plc relates to amounts due from subsidiary undertakings. The directors
have reviewed these balances in the light of the impairment review carried out
on the investments by EQTEC plc in its subsidiaries.
The directors considered the future cash flows arising from subsidiaries and
are satisfied that the appropriate impairment has been applied to these
balances. All amounts are short-term. The net carrying values of amounts due
from subsidiary undertakings, trade and loans receivables are considered a
reasonable approximation of their fair values.
The closing balance of the trade receivables loss allowance as at 31 December
2021 reconciles with the trade receivables loss allowance opening balance as
follows:
€
Opening loss allowance as at 1 January 2020 30,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2020 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 2020 30,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2021 30,000
The closing balance of the advances to related undertakings loss allowance as
at 31 December 2021 reconciles with the advances to related undertakings loss
allowance opening balance as follows:
€
Opening loss allowance as at 1 January 2020 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2020 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 2020 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2021 60,000
26. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents include
cash on hand and in banks and bank overdrafts. Cash and cash equivalents at
the end of the financial year as shown in the cash flow statement can be
reconciled to the related items in the balance sheet as follows:
2021 2020
Group € €
Cash and bank balances 6,446,217 6,394,791
Bank overdrafts (Note 29) - (124,210)
Sub-total 6,446,217 6,270,581
Cash and cash equivalents included in a disposal group held for resale (Note
32)
- -
6,446,217 6,270,581
Company
Cash and bank balances 4,845,633 6,111,864
Bank overdrafts (Note 29) - -
4,845,633 6,111,864
The carrying amount of the cash and cash equivalents is considered a
reasonable approximation of its fair value.
27. EQUITY
Share Capital
Allotted and Allotted and
At 31 December 2020 Authorised Number called up Authorised called up
Number € €
Ordinary shares of €0.001 each
12,561,091,094 6,977,439,598 12,561,091 6,977,439
Deferred ordinary shares of €0.40 each
200,000,000 22,370,042 80,000,000 8,948,017
Deferred "B" Ordinary Shares of €0.099 each
75,140,494 75,140,494 7,438,909 7,438,909
Deferred convertible "A" ordinary shares of €0.01 each
10,000,000,000 99,117,952 100,000,000 991,180
200,000,000 24,355,545
Allotted and Allotted and
At 31 December 2021 Authorised called up Authorised called up
Number Number € €
Ordinary shares of €0.001 each
12,561,091,094 8,599,024,945 12,561,091 8,599,024
Deferred ordinary shares of €0.40 each
200,000,000 22,370,042 80,000,000 8,948,017
Deferred "B" Ordinary Shares of €0.099 each
75,140,494 75,140,494 7,438,909 7,438,909
Deferred convertible "A" ordinary shares of €0.01 each
10,000,000,000 99,117,952 100,000,000 991,180
200,000,000 25,977,130
The holders of the ordinary shares are entitled to participate in the profits
or assets of the Company (by way of payment of any dividends, on a winding up
or otherwise) and are entitled to receive notice, attend, speak and vote at
general meetings of the Company. Each ordinary share equates to one vote at
meetings of the Company.
The holders of the deferred convertible "A" ordinary shares are entitled to
participate pari passu with ordinary shareholders in the profits or assets of
the Company on a winding-up, up to an amount equal to the par value paid in
respect of such deferred convertible "A" ordinary shares but are not entitled
to participate in the profits or assets of the Company (by way of payment of
any dividends or otherwise). The holders of the deferred convertible "A"
ordinary shares are not entitled to receive notice, attend, speak and vote at
general meetings of the Company.
The holders of the deferred ordinary shares and the deferred "B" ordinary
shares are not entitled to participate in the profits or assets of the Company
(by way of payment of any dividends, on a winding up or otherwise) and are not
entitled to receive notice, attend, speak and vote at general meetings of the
Company.
Share Premium
Proceeds received in excess of the nominal value of the shares issued during
the financial year have been included in share premium, less registration and
other regulatory fees. Costs of new shares charged to equity amounted to
€1,470,868 (2020: €639,931).
Company Share Premium
The share premium included in the consolidated and company statement of
financial position is different by €18,934,080 due to the reverse
acquisition of the Group which occurred on 13 October 2008. The reverse
acquisition resulted to a reverse acquisition reserve which has been netted
off against the share premium in the consolidated statement of financial
position.
Movements in the financial year to 31 December 2021
Amounts of shares 2021 2020
Ordinary Shares of €0.001 each issued and fully paid
- Beginning of the financial year 6,977,439,598 3,939,376,266
- Issued on exercise of warrants 335,657,692 436,400,000
- Issued in lieu of borrowings and settlement of payables 167,728,038 379,441,112
- Issued in exchange for financial instruments 51,532,961 -
- Share issue placement 1,066,666,656 2,222,222,220
Total Ordinary shares of €0.001 each authorised, issued and fully paid at
the end of the financial year
8,599,024,945 6,977,439,598
Share warrants and options
As at 31 December 2021 the Company had
554,355,338 share warrants and options outstanding (2020: 866,968,027).
No of warrants/options Exercise price (pence) Final exercise date
1,533,505 5.53 05/02/2022
38,450,000 10.0 15/07/2022
424,022,288 0.25 31/03/2023
67,304,542 0.65 30/06/2024
23,045,003 0.01 31/01/2032
554,355,338
Details of warrants granted
LTIP 2021 Options Placing warrants Employee warrants Employee options Advisor warrants
Number Exercise price (Pence) Number Exercise price (Pence) Number Exercise price (Pence) Number Exercise price (Pence) Number Exercise price (Pence)
At 1 January 2021 138,000,000 0.25 590,906,437 0.25 67,304,542 - 30,773,543 0.33
- -
Issued in year 23,045,003 0.01 - - - - - - - -
Cancelled or expired in year - - - - - - - -
- -
Exercised in year 0.25 166,884,149 - - - 30,773,543 0.33
- - 138,000,000
At 31 December 2021 - - 424,022,288 0.25 67,304,542 0.65 - -
23,045,003 0.01
Exercisable at 31 December 2021 - - 424,022,288 0.25 67,304,542 0.65 - -
- -
Average life remaining at 31 December 2021 - 1.25 years 2.58 years
10.08 years
Advisor warrants Advisor warrants
Number Exercise price (Pence) Number Exercise price (Pence)
At 1 January 2021 and 31 December 2021 1,533,505 5.53 38,450,000 10.0
Exercisable at 31 December 2021 1,533,505 5.53 38,450,000 10.0
Average life remaining at 31 December 2021 0.08 years 0.54 years
Advisor warrants totalling 1,533,505 lapsed post year end leaving a Nil
balance.
The options granted during the year related to the adoption of the EQTEC All
Employee Long-term Incentive Plan (the "LTIP"). The LTIP is a core part of the
Company's new approach to business planning, performance management and
employee incentives and is designed to drive individual and team performance
in line with Company performance, thereby creating value for shareholders
while minimising cash outlay. All Company Executive Directors and employees
are eligible to participate in the LTIP.
Any awards made under the LTIP will comprise zero-cost share allocations
("Incentive Shares") and will be settled in equity. 60% will vest providing
the relevant individual is employed by the Company as of the vesting date,
subject to no notice of termination, disciplinary proceedings or similar, and
in the view of the Board, fulfilling his/her responsibilities to the highest
possible standards. The remaining 40% of Incentive Shares will vest provided
the relevant individual has met the aforementioned employment conditions and,
in addition, a Company-wide performance condition. The condition will be set
annually by the Board against one or more of the Company's priority financial
targets. In respect of these Company performance allocations, there will be a
minimum or 'threshold' achievement that must be obtained to qualify, with a
'straight-line' calculation of award up to a maximum level. Both types of
Incentive Shares will be allocated annually and, subject to the above vesting
conditions would vest over three years. The 2021 share allocation would vest
in three equal instalments on 1 May 2022, 1 May 2023 and 1 May 2024, following
announcement of the Company's annual results. All vested awards are subject to
a lock-in period, whereby any new ordinary shares of €0.001 each issued
("Ordinary Shares") cannot be sold for two years from vesting for Directors
and Heads of Function, or 12 months for all other employees. Awards are
further subject to certain malus and clawback provisions, at the Board's
discretion.
The Group recognised total expenses of €205,648 and €1,819,658 related to
equity-settled share-based payment transactions in 2021 and 2020 respectively
(see notes 10 and 11).
28. NON-CONTROLLING INTERESTS
2021 2020
€ €
Balance at beginning of financial year (2,223,986) (2,326,274)
Share of profit/(loss) for the financial year 68 (5,082)
Release of non-controlling interest - 15,978
Unrealised foreign exchange (losses)/gains (160,271) 91,392
Balance at end of financial year (2,384,189) (2,223,986)
29. BORROWINGS 2021 2020
Group € €
Current liabilities
At amortised cost
Bank overdrafts - 124,210
Secured loan facility (SLF) - 896,641
- 1,020,851
Company 2021 2020
Current liabilities € €
At amortised cost
Secured loan facility (SLF) - 896,641
- 896,641
Borrowings at amortised cost
The secured loan facility (SLF) was secured through an intercreditor deed by
mortgage debentures, cross guarantees and share pledges over the Group. The
interest rate on the loan is fixed at 10% (2020: 12.5%) and the loan was due
to mature on 30 June 2021. On 4 January 2021, the SLF was repaid early using
funds from a separate facility (see below). Included in the repayment was an
early redemption fee of €466,929.
On 4 January 2021 the Company agreed an unsecured term loan facility of
€1.39 million (£1.25 million) (ULF) with Altair Group Investment Limited, a
substantial shareholder in the Company. The ULF is for a term of 12 months and
the principal and any accrued interest are repayable in full on 31 December
2021 but the Company can repay the ULF early without penalty. The ULF is
unsecured and has a coupon of 6% per annum, payable quarterly in arrears. The
ULF was used to pay all sums due under the SLF releasing and discharging any
secured assets and obligations under the SLF.
On 1 March 2021, the Company repaid £285,000 of the ULF and the balance of
principal plus accrued interest was settled on 2 June 2021.
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or
future cash flows will be, classified in the Group's consolidated statement of
cash flows as cash flows from financing activities. Except where noted, all
liabilities noted below are disclosed in Note 29.
Lease
Other Loans Bank Bank Overdraft Liabilities
CSLN SLF Borrowings (Note 30) Total
€ € € € € € €
Balance at 1 January 2020 1,008,017 1,418,028 5,691 313,953 - 274,434 3,020,123
Financing Cash Flows
Proceeds from borrowings - - - 107,000 - - 107,000
Repayment of borrowings - (852,567) - (420,953) - (89,828) (1,363,348)
Change in bank overdraft - - - 124,210 - 124,210
Loan issue costs (11,489) (19,455) - - - - (30,944)
Total from financing cash flows (11,489) (872,022) - (313,953) 124,210 (89,828) (1,163,082)
Non-cash changes
Conversion into equity (1,165,809) - - - - - (1,165,809)
Effect of changes in foreign exchange rates (72,470) (82,502) - - - - (154,972)
Amortisation of loan issue costs 50,022 89,921 - - - - 139,943
Reprofiling fee levied 104,989 157,341 - - - - 262,330
Redemption fee levied - 50,149 - - - - 50,149
Other changes 86,740 135,726 (5,691) - - 7,101 223,876
Total non-cash changes (996,528) 350,635 (5,691) - - 7,101 (644,483)
Balance at 31 December 2020 - 896,641 - - 124,210 191,707 1,212,558
Reconciliation of liabilities arising from financing activities - continued
Lease Total
Bank Overdraft Liabilities
ULF SLF (Note 30)
€ € € € €
Balance at 1 January 2021 - 896,641 124,210 191,707 1,212,558
Financing Cash Flows
Proceeds from borrowings 1,391,174 - - - 1,391,174
Repayment of borrowings (1,479,764) (1,386,752) - (165,208) (3,031,724)
Change in bank overdraft - - (124,210) - (124,210)
Total from financing cash flows (88,590) (1,386,752) - (165,208) (1,764,760)
Non-cash changes
Capitalisation of leases - - - 219,301 219,301
Effect of changes in foreign exchange rates
60,019 9,936 - 3,567 73,522
Amortisation of loan issue costs - 12,058 - - 12,058
Redemption fee levied - 466,929 - - 466,929
Other changes 28,571 1,188 - 8,341 38,100
Total non-cash changes 88,590 490,111 - 231,209 809,910
Balance at 31 December 2021 - - - 257,708 257,708
Other changes include interest accruals and payments.
30. LEASES
Lease liabilities are presented in the statement of financial position as
follows:
2021 2020
Group € €
Current 200,853 85,242
Non-current 56,855 106,465
257,708 191,707
The Group has leases for its offices in London, England and in Barcelona,
Spain. With the exception of short-term leases and leases of low-value
underlying assets, each lease is reflected on the statement of financial
position as a right-of-use asset and a lease liability. The Group classifies
its right-of-use assets in a consistent manner to its property, plant and
equipment (see Note 17).
Each lease generally imposes a restriction that, unless there is a contractual
right for the Group to sublet the asset to another party, the right-of-use
asset can only be used by the Group. Leases are either non-cancellable or may
only be cancelled by incurring a substantive termination fee. Some leases
contain an option to purchase the underlying leased asset outright at the end
of the lease, or to extend the lease for a further term. The Group is
prohibited from selling or pledging the underlying leased assets as security.
For leases over office buildings, the Group must keep those properties in a
good state of repair and return the premises in their original condition at
the end of the lease. Further, the Group must insure items of property, plant
and equipment and incur maintenance fees on such items in accordance with the
lease contracts.
The table below describes the nature of the Group's leasing activities by type
of right-of-use asset recognized in the statement of financial position:
Right-of-use asset No. of right-of-use assets leased Range of remaining term Average remaining lease term No. of leases with extension options No of leases with options to purchase No of leases with variable payments linked to an index No of leases with termination options
Leasehold Building 2 1.33 years 1.29 years 0 0 0 0
The lease liabilities are secured by the related underlying asset. Further
minimum lease payments at 31 December 2021 were as follows:
Minimum lease payments due
Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years After 5 years Total
€ € € € € € €
2021
Lease payments 205,838 57,177 - - - - 263,015
Finance charges (4,985) (322) - - - - (5,307)
Net Present Values 200,853 56,855 - - - - 257,708
2020
Lease payments 89,828 89,828 18,714 - - - 198,370
Finance charges (4,586) (1,993) (84) - - - (6,663)
Net Present Values 85,242 87,835 18,630 - - - 191,707
Lease
payments not recognised as a liability
The Group has elected not to recognise a lease liability for short-term leases
(leases with an expected term of 12 months or less) or for leases of low value
assets. Payments made under such leases are expensed on a straight-line basis.
The expense related to payments not included in the measurement of the lease
liability is as follows:
2021 2021
€ €
Short term leases 29,053 37,406
Leases of low-value assets 12,566 14,594
41,619 52,000
At 31 December 2021, the Group was committed to short-term leases and the
total commitment at that date was €17,472 (2020: €53,287).
Total cash outflow for lease liabilities for the financial year ended 31
December 2021 was €165,208 (2020: €89,828).
Additional information on the right-to-use assets by class of assets is as
follows:
Carrying Amount (Note 17) Depreciation Expense Impairment
€ € €
Leasehold Buildings 254,104 156,520 -
Total Right-of-use assets 254,104 156,520 -
The right-of-use assets are included in the same line item as where the
corresponding underlying assets would be presented if they were owned.
31. TRADE AND OTHER PAYABLES 2021 2020
Group € €
VAT payable 220,167 -
Trade payables 2, 526,017 146,091
Advances paid by customers 400,000 -
Other payables 2,986,084 2,243,257
Accruals 680,938 716,473
PAYE & social welfare 108,600 78,158
6,921,806 3,183,979
The carrying amount of trade and other payables approximates its fair value.
All trade and other payables fall due within one year.
Included in other payables is an amount of €2,977,963 (£2,500,000)
(2020:€2,237,006 (£2,010,000)) relating to consideration payable under the
share purchase contract to acquire Logik WTE Limited (see Note 21).
Trade and other creditors are payable at various dates in accordance with the
suppliers' usual and customary credit terms. Corporation tax and other taxes
including social insurance are repayable at various dates over the coming
months in accordance with the applicable statutory provisions.
2021 2020
Company € €
Trade payables 89,669 91,390
Other creditors 2,840 1,250
Amounts payable to subsidiary undertakings 2 3
PAYE & social welfare 16,604 12,022
Accruals 381,941 642,908
491,056 747,573
The carrying amount of trade and other payables approximates its fair value.
All trade and other payables fall due within one year.
Trade and other creditors are payable at various dates in accordance with the
suppliers' usual and customary credit terms. Corporation tax and other taxes
including social insurance are repayable at various dates over the coming
months in accordance with the applicable statutory provisions.
32. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE AND DISCONTINUED OPERATIONS
In 2017, the Group made the decision to sell its subsidiary, Pluckanes
Windfarm Limited, which is involved in the generation of electricity through
wind. The disposal is consistent with the Group's long-term policy to
focus its activities as a technology solution company for waste gasification
to energy projects. Consequently, assets and liabilities allocable to
Pluckanes Windfarm Limited were classified as a disposal group. Revenues and
expenses, gains and losses relating to the discontinuation of this subgroup
have been eliminated from profit or loss from the Group's continuing
activities and are shown as a single line item on the face of the consolidated
statement of profit or loss.
On 24 August 2020, the Group announced that it had entered into a sales
purchase agreement to dispose of its shares in Pluckanes Windfarm Limited on a
debt free/cash free basis. Details of the assets and liabilities disposed of,
and the calculation of the profit or loss on disposal, are disclosed in Note
33.
The combined results of the discontinued operations included in the loss for
the financial year are set out below.
Period ended 24 August 2020
Profit for the financial year from discontinued operations €
Revenue (Note 8) 135,644
Cost of sales (663)
134,981
Administrative Expenses (91,233)
Operating Profit 43,748
Finance Costs (Note 11) (18,381)
Finance Income (Note 11) 3
Profit from discontinued operations before tax 25,370
Tax Expenses -
Profit for the financial period from discontinued operations (attributable to
owners of the Company)
25,370
Profit after tax on disposal of subsidiary (Note 33) 45,714
Profit for the financial period from discontinued operations 71,084
Cash flows generated by Pluckanes Windfarm Limited for the financial periods
under review are as follows:
Period ended 24 August 2020
Cash flows from discontinued operations €
Operating activities (47,741)
Investing activities (19,997)
Financing activities (63,196)
Net cash flows used in discontinued operations (130,934)
The carrying amount of assets and liabilities in this disposal group are
summarised as follows:
Cash flows generated by Pluckanes Windfarm Limited for the financial periods
under review are as follows:
Period ended 24 August 2020
Cash flows from discontinued operations
€
Operating activities
(47,741)
Investing activities
(19,997)
Financing activities
(63,196)
Net cash flows used in discontinued operations
(130,934)
The carrying amount of assets and liabilities in this disposal group are
summarised as follows:
2021 2020
Assets classified as held for resale: € €
Non-current assets:
Property, plant and equipment - -
Current assets:
Trade and other receivables - -
Cash and cash equivalents (Note 26) - -
Assets classified as held for resale - -
Liabilities classified as held for resale:
Current liabilities:
Borrowings - -
Trade and other payables - -
Liabilities classified as held for resale - -
33. DISPOSAL OF SUBSIDIARY
Cash flows generated by Pluckanes Windfarm Limited for the financial periods
under review are as follows:
Period ended 24 August 2020
Cash flows from discontinued operations
€
Operating activities
(47,741)
Investing activities
(19,997)
Financing activities
(63,196)
Net cash flows used in discontinued operations
(130,934)
The carrying amount of assets and liabilities in this disposal group are
summarised as follows:
2021 2020
Assets classified as held for resale: € €
Non-current assets:
Property, plant and equipment - -
Current assets:
Trade and other receivables - -
Cash and cash equivalents (Note 26) - -
Assets classified as held for resale - -
Liabilities classified as held for resale:
Current liabilities:
Borrowings - -
Trade and other payables - -
Liabilities classified as held for resale - -
33.
DISPOSAL OF SUBSIDIARY
As referred to in Note 32 on 24 August 2020, the Group disposed of its
interest in Pluckanes Windfarm Limited.
The net assets of Pluckanes Windfarm Limited at the date of disposal were as
follows:
24 August 2020
€
Property, Plant & Equipment 969,035
Financial non-current assets 20,000
Loss allowance as at 31 December 2020 556
Loss allowance recognised during the gear
Trade and other receivables 22,622
Trade and other payables (8,740)
Bank overdraft (5,132)
Bank borrowings (778,765)
Net assets disposed of 219,020
Selling expenses 65,261
Gain on disposal 45,714
Total consideration 329,995
Satisfied by:
Cash and cash equivalents 213,503
Fair value of deferred consideration 116,492
329,995
Net cash
inflow arising on disposal
Consideration received in cash and cash equivalents 213,503
Add: negative cash equivalents disposed of 5,132
218,635
Per the sales
purchase agreement, €170,000 is being deferred and held in escrow subject to
the following conditions:
(i) the Buyer obtaining a planning extension to Pluckanes
Windfarm Limited's existing planning permission on its property, in order to
extend the term of the wind turbine activity, within two years of the date of
the requisite planning application which must be submitted by the Buyer within
three months of completion of the sale;
(ii) the
Group procuring the transfer of the substation between the landlord and ESB
Networks; and
(iii) the Group procuring a letter from the relevant local
authority confirming compliance with a certain customary condition of the
existing planning permission.
If all three conditions are satisfied on or before the first anniversary of
the date of planning application (as set out in condition (i) above) then the
total deferred consideration of €170,000 shall become immediately due and
payable to the Group. The deferred consideration will reduce to:
(a)
€159,000 if the planning extension is obtained between 12 and 18 months from
the date of planning application; and
(b)
€152,000 if the planning extension is obtained between 18 and 24 months from
the date of planning application.
In the event that the conditions listed above are not obtained within 24
months from the date of planning application, the entire deferred
consideration element will fall away.
The fair value of the deferred consideration was calculated as €116,492 on
the date of disposal. At 31 December 2021, the fair value of the deferred
consideration was valued at €133,034 (31 December 2020: €120,424) and is
included in trade and other receivables (See Note 25).
The impact of Pluckanes Windfarm Limited on the Group's results in the current
and prior years is disclosed in Note 32.
The gain on disposal was included in the profit for the year from discontinued
operations (see Note 32).
34. RELATED PARTY TRANSACTIONS
The Group's related parties include Altair Group Investment Limited
("Altair"),who at 31 December 2021 held 19.00% (2020: 19.66%) of the shares in
the Company. Other Group related parties include the associate and joint
venture companies and key management.
Transactions with Altair
During the financial year ended 31 December 2021, Altair advanced €1,391,174
(2020: €Nil) to the Group by way of borrowings. During the financial year
ended 31 December 2021, the Group repaid borrowings of €1,479,764 (2020:
€1,175,839 by way of conversion into equity) by way of conversion into
equity. Interest payable to Altair for the financial year ended 31 December
2021 amounted to €28,571 (2020: €170,084); this includes a reprofiling fee
of €Nil (2020: €106,321) with respect to the reprofiling of the debt.
Included in borrowings, net of amortisation costs, at 31 December 2021 is an
amount of €Nil (2020: €Nil) due to Altair from the Group.
Transactions with key management personnel
Key management of the Group are the members of EQTEC plc's board of directors.
Key management personnel remuneration includes the following:
Name Date of Directorship appointment/ Salary Fees Pension Contribution Other Benefits Termination Payments €000's Short Term Incentives Long term Incentives 2021 Total 2020
retirement €'000s €'000s €'000s €'000s €'000s €000's €'000s Total
€'000s
Executive Directors
D Palumbo 174 - 9 2 - 105 - 290 565
J Vander Linden Appointed 01/12/2020 174 - 10 4 - 105 61 354 14
N Babar Appointed 19/07/2021 70 - 4 1 - 42 25 142 -
Y Alemán 154 - - - - 90 - 244 383
Former Executive Directors
G Madden Retired 15/07/2021 159 - - 14 241 - - 414 947
Non-Executive Directors
I Pearson - 69 - - - - - 69 68
T Quigley - 42 - - - - - 42 69
Total 2021 731 111 23 21 241 342 86 1,555 -
Total 2020 409 486 - 24 - - 1,127 - 2,046
At 31 December 2021, directors' remuneration unpaid (including past directors)
amounted to €341,812 (31 December 2020: €260,875).
Prior to becoming a director, Mr D Palumbo provided advisory services to the
Company. The cost of these services amounted to €Nil (2020: €103,201) for
the financial year ended 31 December 2021. In addition, a company controlled
by Mr. Palumbo provided office space to the Group in London. The cost of these
services amounted to €12,566 (2020: €21,843). At 31 December 2021, an
amount of €Nil is included in trade and other payable with respect to
payments due to this company (2020: €3,172).
Prior to becoming a director, Mr J Vander Linden provided advisory services to
the Company. The cost of these services amounted to €Nil (2020: €144,148)
for the financial year ended 31 December 2021. At 31 December 2021, an amount
of €Nil is included in trade and other payable with respect to payments due
to this company (2020: €63,883). This balance was settled through the issue
of new ordinary shares of €0.001 each in the capital of the Company on 1
February 2021.
During the year ended 31 December 2021, the Group entered into a royalty
settlement arrangement, to the value of €2,492,059, with Syngas Technology
Engineering, S.L. (a company controlled by Dr. Yoel Alemán, the Group's CTO
and current Board Director). This balance was settled through a cash payment
of €1,000,000 with the remainder through the issue of new ordinary shares of
€0.001 each in the capital of the Company on 3 June 2021.
During the year ended 31 December 2021 a director, Mr I Pearson. provided
consultancy services to the Group to the value of €116,261 (2020: €Nil)
for which he received 6,666,666 in shares. Included in trade and other
payables at 31 December 2021 is an amount of €Nil (31 December 2020: €Nil)
with respect to payments due to these services.
Transactions with key management personnel - continued
During the year, a director, Mr. T Quigley, provided consultancy services to
the Group in the year ended 31 December 2021 amounting to €11,543 (2020:
€Nil). Included in trade and other payables is an amount of €Nil (2020:
€Nil) with respect to these services.
During the year, the company settled certain debts owed to directors and
former directors by way of equity. In accordance with IFRIC 19 Extinguishing
Financial Liabilities with Equity Instruments, the loss recognised on these
transactions related to directors and former directors was €1,104,374 (2020:
loss of €128,900).
Details of each director's interests in shares and equity related instruments
that were in office at the year-end are shown in the Directors' Report.
Transactions with associate undertakings and joint
ventures
The following transactions were made with associate undertakings and joint
ventures in the year ended 31 December 2021:
North Fork Community Power LLC Synergy Belisce d.o.o. Synergy Karlovac d.o.o. EQTEC Italia MDC srl Eqtec Synergy Projects Limited Total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
€ € € € € € € € € € € €
Loans to associated undertakings and joint ventures
At start of year 1,150,619 - - - - - - - - - 1,150,619 -
Advanced during year 1,790,113 1,150,619 547,853 - 581,056 - 482,000 - 100,000 - 3,501,022 1,150,619
Loans derecognised (1,150,619) - - - - - - - (1,150,619)
Interest charged in year 54,287 - 3,147 - 3,338 10,406 - - - 71,178 -
Exchange differences 47,442 - 808 - 857 - - - - 49,107
At end of year 1,891,842 1,150,619 551,808 - 585,251 492,406 - 100,000 - 3,621,307 1,150,619
Sales of goods and services
Technology sales 2,158,118 1,980,000 1,237,500 - 1,540,000 - 1,000,000 - - - 5,935,618 1,980,000
Development fees - - 599,607 - 549,647 - - - - - 1,149,254 -
2,158,118 1,980,000 1,837,107 - 2,089,647 - 1,000,000 - - - 7,084,872 1,980,000
Year-end balances
Included in trade receivables 34,900 - 1,962,925 - 2,202,884 - 42,919 - - - 4,243,628 -
Included in loans to development companies - 30,201 - - - - - - - - - 30,201
Included in other receivables - - - - 12,452 - 100 - 14,956 - 27,508 -
34,900 30,201 1,962,925 - 2,215,336 - 43,019 - 14,956 - 4,271,136 30,201
Unless otherwise stated, none of the transactions incorporate special terms
and conditions and no guarantees were given or received. Outstanding balances
are usually settled in cash.
35. EVENTS AFTER THE BALANCE SHEET DATE
Variation to Land Purchase Agreement
On 15 February 2022, the Group announced an agreement to extend the existing,
conditional Land Purchase Agreement (the "LPA") relating to the land on which
the proposed, up to 25 MWe Billingham waste gasification and power plant (the
"Project") at Haverton Hill, Billingham, UK, will be constructed (the "Project
Site"). Pursuant to the variation, the Group agreed to make a payment of on 24
February 2022, with an additional payment of £500,000 to be paid on or before
30 September 2022 to Scott Bros, the sellers. These two payments will be
deducted from the total purchase price along with the previously paid deposit.
The balance of £7,590,000 is payable at completion of the land purchase,
which must occur on or before 23 December 2022. In addition, the Group paid a
further fee of £250,000 as consideration for the Variation to Scott Bros on
24 February 2022.
Loan Facility
On 29 March 2022, the Group announced that it had entered into a loan
agreement with Riverfort Global Opportunities PCC Limited and YA II PN, Ltd
(together, the "Lenders") for the provision of an unsecured loan facility of
up to £10 million. The Loan Facility may be drawn down in multiple
instalments with the Initial Advance being received on 29 March 2022.
Each instalment of the Loan Facility will have a maturity date of 12 months
from the date of advance with repayments of principal made on a monthly basis,
as set out in a closing statement to be agreed at the time of each advance.
The Loan Facility will accrue a fixed interest coupon equivalent to 7.5% of
the Initial Advance and of any further advance, payable on a quarterly basis.
Instalments of the Loan Facility subsequent to the Initial Advance are not
committed and would only be advanced to the Company in the event that the
Lenders and the Company agree in writing and upon the satisfaction of certain
conditions precedent. The Loan Agreement has a commitment period of 18 months.
The Company and the Lenders may mutually agree that the Company satisfies any
payment of the amounts due under the Loan Agreement by the issue of ordinary
shares of €0.001 each in the capital of the Company ("Ordinary Shares") at a
reference price of the average daily VWAP for each of the five consecutive
trading days preceding the drawdown date of each advance of the Facility (the
"Reference Price"). If such settlement is agreed by the parties, the value of
Ordinary Shares the Lenders will receive at the Reference Price will be 115%
of the amount of the Loan Facility being settled in lieu of repayment of the
debt.
The Company may elect to redeem the Loan Facility early by repaying all
outstanding principal and interest together with an early repayment fee of 5%
of the outstanding principal at the date of repayment. If the Company elects
to repay the Loan Facility early, the Lenders may elect to subscribe up to 20%
of the outstanding amount in Ordinary Shares, at the Reference Price. In
addition, if the Company completes an equity placing whilst the facility is in
place, the Lenders may elect to convert up to 20% of the outstanding amount of
the Facility into Ordinary Shares in the Company at the price at which such
shares are issued pursuant to the placing and multiplying the resulting number
by 1.1.
The Company received net approximately £4,750,000 from the Initial Advance
following the deduction of a commitment fee of 2.5% of the aggregate amount of
the Loan Facility, being £10 million. The Company will use the proceeds of
the Loan Facility to fund further growth and development activities in its key
markets, and for general working capital purposes.
Deeside RDF Project Update
On 1 April 2022, the Group announced that its wholly owned subsidiary, Deeside
WTV Limited ("Deeside WTV") had signed a binding supplemental agreement (the
"Supplemental Agreement") with Logik Developments Limited ("Logik"). The
Supplemental Agreement, inter alia, sets out the terms on which Logik and
Deeside WTV (together, the "Parties") have agreed to vary the terms of the
share purchase agreement signed by the Parties on 7 December 2020, as amended
by the supplemental agreement announced on 6 December 2021 (the "Existing
SPA").
The key terms of the Supplemental Agreement are as follows:
· Deeside WTV will acquire 32% of the share capital of Logik WTE
Limited (the "Project SPV"), the entity which holds the land and
necessary planning permissions for the Deeside RDF project (the "Project"),
with the consideration to be satisfied by the settlement of advances from the
Group to Logik and the Project SPV in an amount of c. £2.3 million;
· Completion of Deeside WTV's acquisition of the interest in the
share capital in the Project SPV is subject to third party consent and is
expected to complete on or before 30 June 2022;
· Parties are in discussions to procure a buyer for the Project SPV
at a minimum valuation of £15 million. Subject to the sale of the Project
SPV, EQTEC will invoice up to £2 million for its project development services
to the Project SPV (such fee to be reduced on a pound for pound basis if the
investment received is less than £17 million), subject to certain conditions
to be finalised and agreed as part of ongoing discussions with potential
buyers; and
· While the amendment of the Existing SPA to extend the completion
date to 30 June 2022 is immediately effective, the Parties have agreed to act
in good faith and to use all reasonable endeavours to implement the additional
undertakings and agreements in the Supplemental Agreement as summarised in
this announcement, including to amend the terms of the Existing SPA and to
finalise other necessary documentation such as a shareholders' agreement for
the Project SPV.
No other adjusting or significant non-adjusting events have occurred between
the 31 December reporting date and the date of authorisation.
36. NON-CASH TRANSACTIONS
During the financial year, the Group entered into the following non-cash
investing and financing activities which are not reflected in the consolidated
statement of cash flows:
2021 2020
€ €
Issue of shares in settlement of borrowings and other liabilities 3,452,741 1,915,693
Issue of shares in exchange for financial assets 745,161 -
37. COMPANY PROFIT AND LOSS
As a consolidated group income statement is published, a separate income
statement for the parent company is omitted from the Group's financial
statements by virtue of section 304(2) of the Companies Act, 2014. The
Company's loss for the financial year ended 31 December 2021 was €3,942,601
(2020: €3,270,895).
38. CONTINGENT LIABILITIES
On 13 July 2020, the Group announced that lawyers acting for Aries Clean
Energy LLC of Franklin, Tennessee, USA ("Aries") filed a complaint in a
Californian court on 9 July 2021 against the Company and others, alleging
patent infringement through the use of the Group's advanced gasification
technology in the North Fork Community Power plant in California USA.
On 22 March 2021 the Company announced the Aries had withdrawn its patent
infringement complaint. The joint stipulation that the action be voluntarily
dismissed with prejudice was filed in the United States District Court Eastern
District of California on 19 March 2021 and operates as a final determination
on the merits of the case, forbidding Aries from filing another lawsuit on the
same grounds.
39. COMMITMENTS
As disclosed in Note 21, consideration of €335,914 (£282,000) will become
payable on the achievement of certain conditions precedent related to
development milestones of the Southport Project on or before a date 12 months
from the date of signing of the Share Purchase Agreement (i.e. 27 September
2022) to acquire full ownership of the Southport Hybrid Energy Park project
through the acquisition of Shankley Biogas Limited
40. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved by the Board of Directors on 22 April
2022.
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