REG - EQTEC PLC - Final Results
28/06/2024 07:00
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RNS Number : 2415U EQTEC PLC 28 June 2024
28 June 2024
EQTEC plc
("EQTEC", the "Company" or the "Group")
Audited results for the year ended 31 December 2023
EQTEC plc (AIM: EQT), a global technology innovator powering distributed,
decarbonised, new energy infrastructure through its waste-to-value solutions
for hydrogen, biofuels and energy generation announces, its audited results
for the year ended 31 December 2023, together with post-period progress.
Financial highlights
· Revenue and other operating income: €2.5 million (2022: €8.0
million)
· Operating loss before interest, significant and non-recurring
items: €3.5 million (2022: €4.9 million)
· Net assets: €21.2 million (31 December 2022: €37.1 million)
· Capital raise of £3.5 million (€4.1 million) through the placing
of new shares
· Financial restructuring for additional funding of up to £3.0
million (c. €3.5 million)
The net loss including significant and non-recurring items was €23.5
million, which included investment impairments of €18.8 million in relation
to a number of legacy projects in the business and unrecoverable debts to the
Company.
Commercial and operational highlights
· EQTEC Italia MDC commissioning completed and operations commenced
o Plant restart in March 2023
o Full team hired, trained and deployed by year-end 2023
o Operations and maintenance activities throughout 2023 and into 2024
· Evolution of R&D, innovation and engineering quality
o Testing with steam-oxygen gasification toward large-scale RNG project for
French government
o Confirmation that results in R&D environment applicable for commercial
scale
o Achievement of three ISO certifications: ISO9001, ISO14001, ISO45001
· New, revenue-earning client projects acquired
o Sale of Grande-Combe project to Idex with contract for supply of engineering
and equipment
o Joint win with Idex of RNG project in Limoges, France
o Grant and feasibility work for large-scale RNG plant in France
o New contract for engineering in Hawaii, USA
o Engineering and equipment contract in California, USA
· Strategic transition implemented
o Shift out of development work, with focus on engineering and equipment sales
o 20% reduction in operational expenditure
o Withdrawal from high-risk projects, including Billingham project in UK
· Business continuity secured
o Financial restructure of Group for additional funding
o Refinance of EQTEC Italia MDC with loan from respected Italian bank
o Legal action in the UK toward recovery of unpaid fees and loan repayments
due
David Palumbo, CEO of EQTEC, commented:
"We ended 2023 with reasonable revenues of €2.5 million, a declining
operating loss versus the previous year (€3.5 million vs. €4.9 million in
2022) and a financial restructuring that provided the Company with additional
funding of up to £3 million (c. €3.5 million). In 2023, EQTEC reaffirmed
our capabilities with syngas for new energy applications; we demonstrated our
advanced engineering at our LERMAB R&D centre and at our EQTEC Italia MDC
reference plant; we transitioned our business away from risk and cost toward
greater predictability and sustainability. As committed the previous year, we
pivoted away from project ownership and development, toward provision of our
unique technology and engineering capabilities to projects owned and managed
by others. These decisions have reshaped the business for more focused,
reliable and sustainable growth."
Current trading and outlook
· Continued active R&D, innovation and engineering development to
retain leading capability
o Steam-oxygen advanced gasification capability installed in 2022 actively
applied to client trials and tests in 2023 at LERMAB facility of Université
de Lorraine in Épinal, France
o From late 2023 to early 2024, attraction of several, prospective Utility
clients and technology partners via LERMAB R&D facility, with a focus on
renewable natural gas (RNG) and liquid fuels
o Shift away from Company investment into R&D activities toward
client-funded R&D work for specific client project opportunities (2023
testing revenues: c. €119,000)
o Successful achievement of three international standards certifications,
including ISO9001, ISO14001 and ISO45001
o Significant reduction in non-engineering staff, toward management of
operational expenditure and toward future investment in operations-focused
engineering capability
· Shift in focus away from EQTEC-owned or developed projects to
client-owned or developed projects with risks to the Company mitigated by
contracted and/or larger, better-funded partners
o Sale of Grande-Combe project to infrastructure owner-operator Idex, with
rights to use as reference centre for EQTEC technology and with engineering
services and equipment contracts
o Successful completion of feasibility work with a team of French and
European experts on a major RNG project in France, funded by a €1 million
grant from the national government
o Competitive win of RNG project for Limoges Métropole in France, through
partnership with large-scale infrastructure partner Idex
o Actively qualified, negotiated and contracted with Hawaii, USA-based
developer for supply of technology with limited need for regular, on-site
work, through ecosystem approach to delivery
o Contracted with small, California-based developer Phoenix Biomass Energy
for development of second power and biochar plant in Sierra, based on a
contract that derisks EQTEC's involvement
o By end of 2023, the Company retained equity or carried interest only in
specific, EQTEC reference centre projects and in the North Fork project in
California, USA, but in no other projects in its portfolio
· Maintenance of business continuity through strategic transition
o Reduction in operational expenditure by 20% and step up in pursuit of late
accounts receivable
o Gross margin of 15% in 2023 with c. 30% forecast in H1 2024, through
application of a market-aligned rate card and disciplines with commercial
offer management and execution
o £3.5 million capital raise in March 2023 through a placing of shares to
support working capital through transition for the Company's business model
o In Q4 2023, financial restructuring with lenders, which included provision
of a new syndicated facility of up to £3.0 million, with an initial, advance
of £950,000; in May 2024, refinance of the historic secured debt facilities
with a new, 24-month bullet term loan, with no fixed payments during the
period
o Refinance of EQTEC Italia MDC with a secure a loan facility of €2.9
million from a historic private banking group in Italy
o Discontinuation of Billingham, UK project and legal action on another
project toward recovery of unpaid fees and loan repayments due
o Impairments totalling c. €18.8 million on a number of legacy projects
and a number of unrecoverable debts payable to the Company
Annual report
The full, 2023 annual report, which addresses all the points above and which
details full, financial results and other performance outcomes for the
Company, may be found on the Company's website at
https://eqtec.com/investing-in-eqtec/ (https://eqtec.com/investing-in-eqtec/)
Additionally, the full, 2023 annual report for the Company is available at the
following
hyperlink: http://www.rns-pdf.londonstockexchange.com/rns/2415U_1-2024-6-27.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2415U_1-2024-6-27.pdf)
The principal financial tables and associated notes, extracted from the Annual
Report, are set out below:
Consolidated statement of profit or loss
for the financial year ended 31 December 2023
Notes 2023 2022
€ €
Revenue 8 2,546,975 7,970,072
Cost of sales (2,174,345) (7,002,314)
Gross profit 372,630 967,758
Operating income/(expenses)
Administrative expenses (4,363,765) (5,708,787)
Other income 9 109,672 33,645
Impairment costs 14 - (2,752)
Other gains 12 431,962 10,088
Employee share-based compensation 10 - (340,257)
Foreign currency losses/(gains) (48,212) 156,835
Operating loss (3,497,713) (4,883,470)
Share of results from equity accounted investments 21 (23,603) (52,059)
Gains from sales to equity accounted investments deferred 21 - (28,378)
Loss arising from loss of control of subsidiaries - (489)
Change in fair value of financial investments 23 (26,143) (326,501)
Finance income 11 121,320 316,805
Finance costs 11 (1,486,020) (589,618)
Significant and non-recurring transactions:
Impairment of equity-accounted investments 15 (2,619,234) (4,712,490)
Impairment of other investments 15 (1,417,066) -
Impairment on loans receivable from project development undertakings 15 (3,528,550)
-
Impairment of development assets 15 (4,603,546) -
Impairment of goodwill 15 (5,283,459) -
Impairment of trade and other receivables 15 (1,393,864) -
Loss on disposal of tangible asset 15 - (154,205)
Loss before taxation 14 (23,757,878) (10,430,405)
Income tax 16 (22,768) (60,934)
Loss for the year from continuing operations (23,780,646) (10,491,339)
Profit/(loss) for the year from discontinued operations 35 271,954 (33,776)
LOSS FOR THE FINANCIAL YEAR (23,508,692) (10,525,115)
Loss attributable to:
Owners of the Company (23,508,657) (10,525,104)
Non-controlling interest (35) (11)
(23,508,692) (10,525,115)
2023 2022
€ per share € per share
(Restated)
Basic loss per share:
From continuing operations 17 (0.208) (0.117)
From discontinued operations 17 0.002 -
Total basic loss per share 17 (0.206) (0.117)
Diluted loss per share:
From continuing operations 17 (0.208) (0.117)
From discontinued operations 17 0.002 -
Total diluted loss per share 17 (0.206) (0.117)
The notes on pages 11 to 58 form part of these financial statements.
Consolidated statement of comprehensive income
for the financial year ended 31 December 2023
2023 2022
€ €
Loss for the financial year (23,508,692) (10,525,115)
Other comprehensive (loss)/income
Items that may be reclassified
subsequently to profit or loss
Exchange differences arising on retranslation
of foreign operations 179,037 (478,066)
Other comprehensive (loss)/income for the year 179,037 (478,066)
Total comprehensive loss for the financial year (23,329,655) (11,003,181)
Attributable to:
Owners of the company (23,282,246) (11,128,847)
Non-controlling interests (47,409) 125,666
(23,329,655) (11,003,181)
The notes on pages 11 to 58 form part of these financial statements.
Consolidated statement of financial position
At 31 December 2023
Notes 2023 2022
ASSETS € €
Non-current assets
Property, plant and equipment 18 615,634 133,053
Intangible assets 19 12,177,408 17,578,231
Investments accounted for using the equity method 21 6,832,388 7,619,514
Financial assets 22 - 3,728,434
Other financial investments 23 6,715 171,186
Total non-current assets 19,632,145 29,230,418
Current assets
Development assets 25 613,516 6,033,543
Loan receivable from project development undertakings 25 2,066,099 5,446,087
Trade and other receivables 26 7,044,217 7,221,046
Cash and cash equivalents 27 262,019 1,693,116
Total current assets 9,985,851 20,393,792
Total assets 29,617,996 49,624,210
Notes 2023 2022
EQUITY AND LIABILITIES € €
Equity
Share capital 28 32,497,848 26,799,584
Share premium 28 88,916,950 87,203,372
Other reserves 28 2,694,125 2,694,125
Accumulated deficit (100,588,165) (77,305,919)
Equity attributable to the owners of the company 23,520,758 39,391,162
Non-controlling interests 29 (2,305,932) (2,258,523)
Total equity 21,214,826 37,132,639
Non-current liabilities
Borrowings 30 2,457,984 1,064,598
Lease liabilities 31 400,518 -
Total non-current liabilities 2,858,502 1,064,598
Current liabilities
Trade and other payables 32 2,853,641 6,264,404
Borrowings 30 2,488,229 5,106,038
Lease liabilities 31 202,798 56,531
Total current liabilities 5,544,668 11,426,973
Total equity and liabilities 29,617,996 49,624,210
The financial statements were approved by the Board of Directors on 27 June
2024 and signed on its behalf by:
Ian
Pearson
David Palumbo
Non-Executive
Chairman
Chief Executive Officer
The notes on pages 11 to 58 form part of these financial statements.
Consolidated statement of changes in equity
for the financial year ended 31 December 2023
Share Other reserves Accumulated deficit Equity attributable to owners of the company Non-controlling interests
Capital Share premium Total
€ € € € € € €
Balance at 1 January 2022 25,977,130 83,610,562 2,353,868 (66,177,072) 45,764,488 (2,384,189) 43,380,299
Issue of ordinary shares in EQTEC plc (Note 28) 769,697 3,717,379 - - 4,487,076 - 4,487,076
Conversion of debt into equity (Notes 28) 52,757 237,672 - - 290,429 - 290,429
Share issue costs (Note 28) - (362,241) - - (362,241) - (362,241)
Employee share-based compensation (Notes 10) - - 340,257 - 340,257 - 340,257
Transactions with owners 822,454 3,592,810 340,257 - 4,755,521 - 4,755,521
Loss for the financial year - - - (10,525,104) (10,525,104) (11) (10,525,115)
Unrealised foreign exchange losses - - - (603,743) (603,743) 125,677 (478,066)
Total comprehensive loss for the financial year - - - (11,128,847) (11,128,847) 125,666 (11,003,181)
Balance at 31 December 2022 26,799,584 87,203,372 2,694,125 (77,305,919) 39,391,162 (2,258,523) 37,132,639
Issue of ordinary shares in EQTEC plc (Note 28) 1,596,560 2,399,413 - - 3,995,973 - 3,995,973
Conversion of debt into equity (Note 28) 4,101,704 (224,713) - - 3,876,991 - 3,876,991
Share issue costs (Note 28) - (461,122) - - (461,122) - (461,122)
Transactions with owners 5,698,264 1,713,578 - - 7,411,842 - 7,411,842
Loss for the financial year - - - (23,508,657) (23,508,657) (35) (23,508,692)
Unrealised foreign exchange losses - - - 226,411 226,411 (47,374) 179,037
Total comprehensive loss for the financial year - - - (23,282,246) (23,282,246) (47,409) (23,329,655)
Balance at 31 December 2023 32,497,848 88,916,950 2,694,125 (100.588,165) 23,520,758 (2,305,932) 21,214,826
The notes on pages 11 to 58 form part of these financial statements.
Consolidated statement of cash flows
for the financial year ended 31 December 2023
Notes 2023 2022
€ €
Cash flows from operating activities
Loss for the financial year before income tax (23,757,878) (10,430,405)
Adjustments for:
Depreciation of property, plant and equipment 18 181,584 239,233
Amortisation of intangible assets 19 124,664 124,602
Loss on disposal of tangible assets 15 - 154,205
Impairment of goodwill 15 5,283,459 -
Impairment of equity-accounted investments 15 2,619,234 4,712,490
Impairment of other investments 15 1,417,066 -
Impairment of loans receivable 15 3,528,550 -
Employee share-based compensation 10 - 340,257
Impairment of development assets 25 4,603,546 2,752
Impairment of trade and other receivables 15 1,393,864 -
Share of loss of equity accounted investments 21 23,603 52,059
Gains from sales to equity accounted investments deferred 21 - 28,378
Loss on loss of control of subsidiary 20 - 489
Change in fair value of financial investments 23 26,143 326,501
Gain on debt for equity swap 12 (431,962) (10,088)
Unrealised foreign exchange movements 451,240 (319,440)
Operating cash flows before working capital changes (4,536,887) (4,778,967)
Decrease/(Increase) in:
Development assets 54,100 (2,578,047)
Trade and other receivables (1,274,229) (2,837,708)
Decrease in Trade and other payables (1,020,070) (274,938)
Net cash used in operating activities - continuing operations (6,777,086) (10,469,660)
Finance income 11 (121,320) (316,805)
Finance costs 11 1,486,020 589,618
Taxes paid 145 (108,311)
Net cash used in operating activities - continuing operations (5,412,241) (10,305,158)
Net cash used in operating activities - discontinued operations
35 (1,448) (33,776)
Net cash used in operating activities (5,413,689) (10,338,934)
Cash flows from investing activities
Addition to tangible assets 18 (6,265) (29,199)
Additions to intangible assets 19 (7,300) -
Payments on deposit on land 26 - (586,421)
Cash inflow from disposal of subsidiary 34 225,573 170,000
Loans advanced to project development undertakings 25 - (773,034)
Loans repaid by project development undertakings 25 - 100,000
Investment in equity accounted undertakings 21 (29,780) (6,790)
Loans advanced to equity accounted undertakings 21 (350,450) (2,852,699)
Loans repaid by equity accounted undertakings 21 35,700 40,018
Investment in related undertakings 22 - (351,853)
Investment in unconsolidated subsidiary 23 (1,000) -
Addition to other investments 23 (5,665) -
Grants received 33 300,000 -
Other advances to equity accounted undertakings (2,000) (2,000)
Interest received 39 -
Net cash generated from/(used in) investing activities - continuing operations
158,852 (4,291,978)
Net cash generated from/(used in) investing activities - discontinued
operations
35 - (50,000)
Net cash generated from/(used in) investing activities 158,852 (4,341,978)
Cash flows from financing activities
Proceeds from borrowings and lease liabilities 30 2,291,952 7,236,850
Repayment of borrowings and lease liabilities 30 (2,309,483) (1,126,483)
Loan issue costs 30 (50,361) (334,557)
Proceeds from issue of ordinary shares 28 4,051,609 4,430,069
Share issue costs 28 (295,670) (274,784)
Interest paid (12,488) (3,284)
Net cash generated from financing activities - continuing operations
3,675,559 9,927,811
Net cash generated from financing activities - discontinued operations
35 - -
Net cash generated from financing activities 3,675,559 9,927,811
Net decrease in cash and cash equivalents (1,579,278) (4,753,101)
Cash and cash equivalents at the beginning of the financial year 1,693,116 6,446,217
Cash and cash equivalents at the end of the financial year 27 113,838 1,693,116
Details of non-cash transactions are set out in Note 38 of the financial
statements.
The notes on pages 11 to 58 form part of these financial statements.
Company statement of financial position
At 31 December 2023
Notes 2023 2022
ASSETS € €
Non-current assets
Intangible assets 19 2,170,169 2,294,772
Investment in subsidiary undertakings 20 4,948,536 19,729,486
Investments accounted for using the equity method 21 - 2,728,959
Other financial investments 23 - 171,186
Total non-current assets 7,118,705 24,924,403
Current assets
Development assets 25 88,129 1,258,191
Loan receivable from project development undertakings 25 - 3,421,901
Trade and other receivables 26 18,761,984 23,671,749
Cash and bank balances 27 108,763 980,098
Total current assets 18,958,876 29,331,939
Total assets 26,077,581 54,256,342
EQUITY AND LIABILITIES
Equity
Share capital 28 32,497,848 26,799,584
Share premium 28 107,851,030 106,137,452
Other reserves 28 2,694,125 2,694,125
Accumulated deficit (122,312,919) (88,820,042)
Total equity 20,730,084 46,811,119
Total non-current liabilities
Borrowings 30 2,457,984 1,064,598
Current liabilities
Borrowings 30 2,242,250 5,006,076
Trade and other payables 32 647,263 1,374,549
Total current liabilities 2,889,513 6,380,625
Total equity and liabilities 26,077,581 54,256,342
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 €33,492,877 (2022:
€5,216,344).
The financial statements were approved by the Board of Directors on 27 June
2024 and signed on its behalf by:
Ian
Pearson
David Palumbo
Non-Executive
Chairman
Chief Executive Officer
The notes on pages 11 to 58 form part of these financial statements.
Company statement of changes in equity
for the financial year ended 31 December 2023
Share capital Share premium Accumulated deficit Total
Other
reserves
€ € € € €
Balance at 1 January 2022 25,977,130 102,544,642 2,353,868 (83,603,698) 47,271,942
Issue of ordinary shares in EQTEC plc (Note 28) 769,697 3,717,379 - - 4,487,076
Conversion of debt into equity (Notes 28 and 30) 52,757 237,672 - - 290,429
Share issue costs (Note 28) - (362,241) - - (362,241)
Employee share-based compensation (Note 10) - - 340,257 - 340,257
Transactions with owners 822,454 3,592,810 340,257 - 4,755,521
Loss for the financial year (Note 39)
- - - (5,216,344) (5,216,344)
Total comprehensive loss for the financial year - - (5,216,344) (5,216,344)
-
Balance at 31 December 2022 26,799,584 106,137,452 2,694,125 (88,820,042) 46,811,119
Issue of ordinary shares in EQTEC plc (Note 28) 1,596,560 2,399,413 - - 3,995,973
Conversion of debt into equity (Note 28) 4,101,704 (224,713) - - 3,876,991
Share issue costs (Note 28) - (461,122) - - (461,122)
Transactions with owners 5,698,264 1,713,578 - - 7,411,842
Loss for the financial year (Note 39) - - - (33,492,877) (33,492,877)
Total comprehensive loss for the financial year - - - (33,492,877) (33,492,877)
Balance at 31 December 2023 32,497,848 107,851,030 2,694,125 (122,312,919) 20,730,084
The notes on pages 11 to 58 form part of these financial statements.
Company statement of cash flows
for the financial year ended 31 December 2023
Notes 2023 2022
€ €
Cash flows from operating activities
Loss for the financial year before taxation (33,492,877) (5,216,344)
Adjustments for:
Amortisation of intangible assets 19 124,603 124,602
Employee share-based compensation 10 - 151,411
Impairment of subsidiaries 20 15,783,854 -
Impairment of equity-accounted investments 15 2,728,959 4,712,490
Impairment of other investments 23 148,521 -
Impairment of loans to project development undertakings 25 3,528,550 -
Impairment of development assets 25 496,312 -
Reversal of impairment of intercompany loans - (170,000)
Finance costs 11 1,459,891 579,137
Finance income 11 (48,176) (260,720)
Impairment of intercompany balances 26 8,986,681 2,786
Change in fair value of other financial investments 23 26,143 326,501
Gain on debt for equity swap 12 (431,962) (10,088)
Foreign currency losses arising from retranslation of borrowings 43,971 349,360
Operating cash flows before working capital changes (645,530) 589,135
Funds advanced to intercompany accounts (3,862,913) (11,029,109)
Repayment of intercompany balances 1,771,585 3,832,442
Increase in development assets (88,631) (952,638)
Increase in trade and other receivables (883,808) (5,310,477)
(Decrease)/increase in trade and other payables (27,068) 773,618
Net cash used in operating activities (3,736,365) (12,097,029)
Cash flows from investing activities
Loans advanced to equity accounted undertakings 21 - (528,085)
Investment in subsidiary 20 (1,000,000) (1,550,000)
Loans to subsidiaries repaid - 170,000
Loans repaid by project development undertakings 25 - 100,000
Interest received 12 -
Net cash used in investing activities (999,988) (1,808,085)
Cash flows from financing activities
Proceeds from borrowings 30 2,291,952 7,138,782
Repayment of borrowings 30 (2,132,512) (919,931)
Proceeds from issue of ordinary shares 28 4,051,609 4,430,069
Share issue costs 28 (295,670) (274,784)
Loan issue costs 30 (50,361) (334,557)
Net cash generated from financing activities 3,865,018 10,039,579
Net decrease in cash and cash equivalents (871,335) (3,865,535)
Cash and cash equivalents at the beginning of the financial year 980,098 4,845,633
Cash and cash equivalents at the end of the financial year 27 108,763 980,098
The notes on pages 11 to 58 form part of these financial statements.
Notes to the financial statements
1. GENERAL INFORMATION
EQTEC plc ("the Company/parent company") is a company domiciled in Ireland.
These financial statements for the financial year ended 31 December 2023
consolidate the individual financial statements of the Company and its
subsidiaries (together referred to as 'the Group').
The Group is a technology provider to clients in the Utility, Industrial and
Waste Management sectors with its own, proprietary and patented technology for
clean production of synthesis gas (syngas), a fossil fuel alternative that
will increasingly contribute to production of the world's baseload energy and
biofuels. Syngas plants utilising EQTEC technology are fuelled by waste from
industrial, municipal, agricultural, forestry and other sources. Syngas can be
used either as a direct replacement for natural gas or as an intermediate fuel
for generation of a range of final fuels including hydrogen, renewable natural
gas (RNG), liquid biofuels, thermal energy, electrical power and chemicals
such as methanol or ethanol.
EQTEC designs, develops and supplies core technology to syngas production
plants in Europe and the USA, with highly efficient equipment that is modular
and scalable from 1MW to 30MW and beyond. EQTEC's versatile solutions convert
at least 60 types of feedstock, including biomass wastes, industrial wastes
and municipal solid waste, with no hazardous or toxic emissions.
In future, EQTEC intends to augment its services and equipment revenues with
recurring revenues from licensing of its technology to syngas plant owners,
providing value-added services including maintenance, upgrades and data-based
services over the lifetime of each plant.
The Company is quoted on the London Stock Exchange's Alternative Investment
Market (AIM: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.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
STANDARDS (IFRSs)
New/revised standards and interpretations adopted in 2023
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 2023. Their adoption
has not had any impact on the disclosures or on the amounts reported in these
financial statements.
· IFRS 17 Insurance Contracts and Amendments to IFRS 17 Insurance
Contracts (Amendments to IFRS 17 and IFRS 4);
· Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of
Accounting Policies;
· Amendments to IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single Transaction;
· Amendments to IAS 12 International Tax Reform - Pillar Two
Model Rules;
· Amendments to IAS 8 Definition of Accounting Estimates.
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:
· Amendments to IFRS 10 and IAS 28 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 IAS 1 Non-current Liabilities with Covenants;
· Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements;
· Amendments to IAS 21 Lack of Exchangeability;
· Amendments to IFRS 16 Lease Liability in a Sale and Leaseback.
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 MATERIAL 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 2023 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 2023 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 €23,508,692 after posting non-recurring items
of €18,845,719 (2022: €10,525,115) during the financial year ended 31
December 2023 and had net current assets of €4,441,183 (2022: €8,966,819)
and net assets of €21,214,826 (2022: €37,132,639) at 31 December 2023.
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.
The directors had carried out an evaluation of financial forecasts, sensitised
to reflect a rational judgement of the level of inherent risk. The forecasts
which Management have prepared covering the next 12 months include certain
assumptions with regard to cost and overhead reductions, the timing and amount
of any funds generated from sales of the Group's technology and committed
proceeds from a legal settlement agreement. The forecasts indicate that during
this period the Group will have sufficient funds to continue with its
activities for a period of at least 12 months from the date of signing these
financial statements.
After undertaking the assessments and considering the level of inherent risk,
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 2023. 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 non-controlling 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 35).
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.
If there is objective evidence that the Group's net investment in an associate
or joint venture is impaired, the requirements of IAS 36 are applied to
determine whether it is necessary to recognise any impairment loss with
respect to the Group's investment. When necessary, the entire carrying amount
of the investment (including goodwill) is tested for impairment in accordance
with IAS 36 as a single asset by comparing its recoverable amount (higher of
value in use and fair value less costs of disposal) with its carrying amount.
Any impairment loss recognised is not allocated to any asset, including
goodwill that forms part of the carrying amount of the investment. Any
reversal of that impairment loss is recognised in accordance with IAS 36 to
the extent that the recoverable amount of the investment subsequently
increases.
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.
Foreign operations - continued
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.
Financial assets as fair value through profit or loss (FVPTL)
Financial assets held within a different business model other than 'hold to
collect and sell' are categorised at FVTPL. Further, irrespective of the
business model used, financial assets whose contractual cash flows are not
solely payments of principal and interest are accounted for at FVTPL.
This category contains equity investments. The Group accounts for the
investment at FVTPL and did not make the irrevocable election to account for
the investments at FVOCI. The fair value was determined in line with the
requirements of IFRS13 'Fair Value Measurement'.
Assets in this category are measured at fair value with gains or losses
recognised in profit or loss. The fair values of financial assets in this
category are determined by reference to active markets transactions or using a
valuation technique where no active market exists.
Impairment of financial assets
IFRS 9's impairment requirements use forward-looking information to recognise
expected credit losses - the 'expected credit loss (ECL) model'. Instruments
within the scope of the requirements included loans and other debt-type
financial assets measured at amortised cost and FVOCI, trade receivables,
contract assets recognised and measured under IFRS 15 and loan commitments and
some financial guarantee contracts (for the issuer) that are not measured at
fair value through profit or loss.
The Group considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
Impairment of financial assets - continued
In applying this forward-looking approach, a distinction is made between:
· financial instruments that have not deteriorated significantly in
credit quality since initial recognition or that have low credit risk ('Stage
1') and
· financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is not low
('Stage 2').
'Stage 3' would cover financial assets that have objective evidence of
impairment at the reporting date.
'12-month expected credit losses' are recognised for the first category (ie
Stage 1) while 'lifetime expected credit losses' are recognised for the second
category (ie Stage 2).
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial instrument.
Trade and other receivables
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 2023 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.
Income taxes - continued
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 a rational judgement of the level of
inherent risk and market conditions. 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 20, 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.
As disclosed in Note 20, the Group owns 100% of the shares in Biogaz Gardanne
SAS. Biogaz Gardanne SAS was created to fulfil a narrow, specific purpose
which was to fulfil the objectives of the French government. Management has
assessed its involvement in Biogaz Gardanne SAS in accordance with IFRS 10's
revised control definition and guidance and has concluded that, based on the
fact that control over the activities of the company is driven by the French
government, it does not have control over Biogaz Gardanne SAS and that the
investment should be accounted for as an unconsolidated structured entity.
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, these entities are 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.
5. Significant management judgement in applying accounting
policies and estimation uncertainty - Continued
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 total property, plant and equipment reversal of impairment charges during
the financial year as included in Note 18 amounted to €Nil (2022: €Nil),
while the impairment for goodwill during the financial year as included in
Note 19 amounted to €5,283,459 (2022: €Nil).
Provision for impairment of equity-accounted investments - Group
Determining whether the carrying value of Group's equity-accounted investments
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 €2,619,234 (2022: €4,712,490) be
recognised in the Group accounts of EQTEC plc. Details on equity-accounted
investments can be found in note 21.
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 €15,783,854 (2022: €Nil) be recognised in the Company
accounts of EQTEC plc. Details on investment in subsidiaries can be found in
note 20.
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 19.
Provision for impairment of financial assets
Determining whether the carrying value of Group's financial assets has been
impaired requires an estimation of the value in use of the financial assets.
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 €1,417,066 (2022:
€Nil) be recognised in the Group accounts of EQTEC plc. Details on financial
assets can be found in Note 22.
Allowances for impairment of loans receivable from project development
undertakings
The Group estimates the allowance for doubtful loan receivables based on
assessment of specific accounts where the Group has objective evidence
comprising default in payment terms or significant financial difficulty that
certain borrowers 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 2023, provisions for doubtful loans
receivable amounted to €3,528,550 (2022: €Nil) (see note 25).
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 2023, provisions for doubtful debts amounted
to €875,687 which represents 12% of trade receivables at that date (2022:
€475,687- 7%) (see note 26).
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
28).
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 25).
After reviewing the development assets, the directors are satisfied that a net
impairment cost of €4,603,546 (2022: €2,752) be recognised in the Group
accounts of EQTEC plc.
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:
2023 2022
€ €
Loans receivable from project development undertakings (Note 25) 2,066,099 5,446,087
Trade and other receivables (Note 26) 6,723,599 6,094,669
Cash and cash equivalents (Note 27) 262,019 1,693,116
The Company's maximum exposure to credit risk is represented by the balance
sheet amount of each financial asset:
2023 2022
€ €
Loans receivable from project development undertakings (Note 25) - 3,421,901
Trade and other receivables (Note 26) 18,591,102 23,552,137
Cash and cash equivalents (Note 27) 108,763 980,098
The Group and Company's credit risk is primarily attributable to its loans
receivable from project development undertakings and trade and other
receivables.
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:
2023 2022
€ €
Loans receivable from project development undertakings
Loan receivable from Logik Wte Limited (Note 25) 2,066,099 2,024,186
Loan receivable from Shankley Biogas Limited (Note 25) - 2,824,572
Trade and other receivables
Receivable from Synergy Karlovac d.o.o. (Note 36) 2,320,428 2,245,191
Receivable from Synergy Belisce d.o.o. (Note 36) 2,292,836 2,217,523
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 (2022: Ba). During the financial year ended 31
December 2023, the Group impaired the balance receivable from Shankley Biogas
Limited, resulting in a loss of €2,883,057 (see Note 25). The directors are
of the opinion that the likelihood of default by any other counter party
leading to material loss is minimal. The reconciliation of loss allowance is
included in Note 26.
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 contracted liabilities as
at 31 December 2023:
After 5 years
Up to 1 year 1 - 5 years Total
Notes € € € €
Trade and other payables 32 2,853,641 - - 2,853,641
Borrowings 30 3,025,476 2,775,242 - 5,800,718
5,879,117 2,775,242 - 8,654,359
The table below details the maturity of the Group's liabilities as at 31
December 2022:
After 5 years
Up to 1 year 1 - 5 years Total
Notes € € € €
Trade and other payables 32 6,264,404 - - 6,264,404
Borrowings 30 5,180,902 1,131,513 - 6,312,415
11,445,306 1,131,513 - 12,576,819
Refer to Notes 30 and 32 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 30.
The Group's bank borrowings and other debt instruments (excluding amounts in
the disposal group) amounted to €4,946,213 and €6,170,636 in 31 December
2023 and 31 December 2022, respectively. The Company's bank borrowings and
debt instruments amounted to €4,700,234 and €6,070,674 in 31 December 2023
and 31 December 2022, 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 2023 would increase/decrease by €741 (2022: €Nil) with a
corresponding decrease/increase in equity.
The Group's sensitivity to interest rates has increased as a result of
obtaining a bank overdraft in the 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.
Foreign exchange risk (continued)
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
2023 2022 2023 2022
€ € € €
Sterling 5,498,875 10,475,339 2,453,921 6,559,389
US Dollar 44,938 29,463 2,301 2,076
Croatian Kuna - 426,154 - 5,143,044
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
2023 2022 2023 2022
€ € € €
Sterling 5,088,681 7,274,170 12,374,437 13,894,925
US Dollar 44,938 27,802 20,421 19,463
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
2023 2022 31 Dec 2023 31 Dec 2022
€ € € €
Sterling Impact: Profit and loss/equity 307,571 395,550 735,935 668,763
US Dollar Impact: Profit & Loss/Equity 4,307 2,766 2,476 893
Croatian Kuna: Profit and loss/equity - 476,454 - -
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.
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 23).
However, as the likelihood of the Group recovering this amount is considered
remote, it was deemed prudent to provide fully for the investment in Metal NRG
plc, thus eliminating further price risk.
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 2023 and 2022.
The gearing ratio of the Group for the financial year presented is as follows:
31 Dec 2023 31 Dec 2022
€ €
Borrowings 4,946,213 6,170,636
Lease liabilities 603,316 56,531
Cash and cash equivalents (262,019) (1,693,116)
Net debt 5,287,510 4,534,051
Equity attributable to the owners of the company 23,520,758 39,391,162
Net debt to equity ratio 22% 12%
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.
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)
2023 2022 2023 2022
€ € € €
Technology Sales 2,546,975 7,970,072 (1,629,462) (988,906)
Total from continuing operations
2,546,975 7,970,072 (1,629,462) (988,906)
Central administration costs and directors' salaries (2,361,673) (3,785,899)
Impairment costs - (2,752)
Other income 109,672 33,645
Other gains 431,962 10,088
Change in fair value of financial investments (26,143) (326,501)
Foreign currency (losses)/gains (48,212) 156,835
Employee share-based compensation - (340,257)
Share of results from equity accounted investments (23,603) (52,059)
Gains from sales to equity accounted investments deferred - (28,378)
Loss arising from loss of control of subsidiaries - (489)
Impairment of equity-accounted investment (2,619,234) (4,712,490)
Impairment of other investments (1,417,066) -
Impairment of loans receivable from project development undertakings
(3,528,550) -
Impairment of development assets (4,603,546) -
Impairment of goodwill (5,283,459) -
Impairment of trade and other receivables (1,393,864) -
Loss on disposal of tangible asset - (154,205)
Finance income 121,320 316,805
Finance costs (1,486,020) (589,618)
Loss before taxation (continuing operations) (23,757,878) (10,464,181)
Revenue reported above represents revenue generated from associated companies,
jointly controlled entities, unconsolidated structured entities and external
customers. Inter-segment sales for the financial year amounted to €Nil
(2022: €Nil). Included in revenues in the Technology Sales Segment are
revenues of €1,126,977 (2022: €4,860,015) which arose from sales to
associate undertakings, joint ventures and unconsolidated structured entities
of EQTEC plc. This represents 44% (2022: 61%) of total revenues in the
financial year. A breakdown of the turnover by associated undertaking, joint
venture and unconsolidated structured entity is set out in Note 36 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
2023 2022 2023 2022
€ € € €
Technology sales 113,376 130,084 502,696 83,241
Head Office 192,872 233,751 217,574 -
306,248 363,835 720,270 83,241
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*
2023 2022 2023 2022
€ € € €
Republic of Ireland - - - -
EU 2,256,621 5,128,979 2,607,493 2,392,776
United States of America 290,354 - - -
United Kingdom - 2,841,093 185,549 35,049
2,546,975 7,970,072 2,793,042 2,427,825
*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 operations, is as follows:
2023 2022
€ €
Revenue from technology sales 1,469,589 4,768,964
Revenue from development fees 1,077,386 3,201,108
2,546,975 7,970,072
9. OTHER INCOME
2023 2022
€ €
Other income 109,672 33,645
10. EMPLOYEE SHARE-BASED PAYMENTS
2023 2022
€ €
Expensed in the year - 340,257
The share-based payment expense includes the cost of employee warrants and
options granted and vested in the year (Note 28).
11. FINANCE COSTS AND INCOME
2023 2022
Finance Costs € €
Interest on loans, bank facilities and overdrafts 1,144,349 582,620
Fees on early redemption of loans 320,474 -
Interest expense for leasing arrangements 13,641 5,000
Other interest 7,556 1,998
1,486,020 589,618
Finance Income
Interest receivable on loans advanced 119,726 279,839
Interest receivable on deferred consideration - 36,966
Other interest receivable 1,594 -
121,320 316,805
12. OTHER GAINS
2023 2022
€ €
Gain on debt for equity swap 431,962 10,088
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 gain
recognised on these transactions was €431,962 (2022: €10,088).
13. EMPLOYEE DATA 2023 2022
€ €
The aggregate payroll costs of employees (including executive directors) in
the Group were as follows:
Salaries 2,495,084 2,375,349
Social insurance costs 504,769 543,682
Pension costs - defined contribution plans 61,998 64,317
Other compensation costs:
Cost of share-based payments - 340,257
Short term incentives (547,575) 444,690
Private health insurance and other insurance costs 54,555 58,897
2,568,831 3,827,192
No. No.
Average number of employees (including executive directors) 28 27
Company
Average number of employees (including executive directors) 3 3
Capitalised employee costs in the financial year amounted to €Nil (2022
€Nil).
14. LOSS BEFORE TAXATION 2023 2022
€ €
Loss before taxation on continuing operations is stated after
charging/(crediting):
Depreciation of property, plant and equipment (Note 18) 181,584 239,233
Amortisation of intangible assets (Note 19) 124,664 124,602
Movement in fair value of investments (Note 23) 26,143 326,501
Research and development - 12,170
Losses/(gains) on foreign exchange 48,212 (156,835)
Directors' remuneration: for services as directors 110,442 112,860
(Note 901,379 919,776
34).
for salaries as management
- 185,495
share-based payments
Impairment of development assets (Note 25) 4,603,546 2,752
2023 2022
€ €
Auditor's remuneration:
Audit of Group accounts 100,000 93,000
Tax advisory services 15,000 15,000
115,000 108,000
15. SIGNIFICANT AND NON-RECURRNING TRANSACTIONS 2023 2022
€ €
Impairment of investment (Note (a)) 2,619,234 4,712,490
Impairment of other investments (Note (b)) 1,417,066 -
Impairment on loans receivable from project development undertakings (Note 3,528,550 -
(c))
Impairment of development assets (Note (d)) 4,603,546 -
Impairment of goodwill (Note (e)) 5,283,459 -
Impairment of trade and other receivables (Note (f)) 1,393,864 -
Loss on disposal of tangible asset (Note (g)) - 154,205
a) Please see note 21 for further details
b) Please see notes 22 and 23 for further details
c) Please see note 25 for further details
d) Please see note 25 for further details
e) Please see note 19 for further details
f) Please see note 26 for further details
g) This is a loss arising on the disposal of gasification equipment
installed in the University of Lorraine for R&D purposes.
16. INCOME TAX 2023 2022
€ €
Income tax expense comprises:
Current tax expense - -
Deferred tax credit - -
Adjustment for prior financial years 22,768 60,934
22,768 60,934
Tax expense
2023 2022
€ €
Loss before taxation (23,485,924) (10,464,181)
Applicable tax 12.50% (2022: 12.50%) (2,935,741) (1,308,023)
Effects of:
Amortisation & depreciation in excess of capital allowances 38,281 45,479
Expenses not deductible for tax purposes 1,114,243 690,421
Losses carried forward 1,783,217 572,123
- -
Adjustment for prior financial years 22,768 60,934
Actual tax expense 22,768 60,934
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.
17. LOSS PER SHARE 2023 2022
€ per share € per share
(Restated)
Basic loss per share
From continuing operations (0.208) (0.117)
From discontinued operations 0.002 -
Total basic loss per share (0.206) (0.117)
Diluted loss per share
From continuing operations (0.208) (0.117)
From discontinued operations 0.002 -
Total diluted loss per share (0.206) (0.117)
The loss and weighted average number of ordinary shares used in the
calculation of the basic and diluted loss per share are as follows:
2023 2022
€ €
Loss for financial year attributable to equity holders of the parent (23,508,657) (10,525,104)
Profit/(loss) for the financial year from discontinued operations used in the
calculation of basic earnings per share from discontinued operations
271,954 (33,776)
Losses used in the calculation of basic loss per share from continuing
operations
(23,780,611) (10,491,328)
No. No.
(Restated)
Weighted average number of ordinary shares for
the purposes of basic loss per share 114,129,384 89,660,843
Weighted average number of ordinary shares for
the purposes of diluted loss per share 114,129,384 89,660.843
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.
2023 2022
(Restated)
Share warrants in issue 27,339,399 4,598,810
Share options in issue 673,045 673,045
LTIP options in issue 2,116,938 1,488,109
Convertible loans 207,422,790 3,918,853
Total anti-dilutive shares 237,552,172 10,678,817
Details of share warrants and share options in issue outstanding at year-end
are set out in Note 28.
Events after the year-end
As disclosed in Note 37, 12,802,031 shares were issued on 8 May 2024 in
settlement of debt. If these shares were in issue prior to 31 December 2023,
they would have affected the calculation of the weighted average number of
shares in issue for the purposes of calculating both the basic and diluted
loss per share by 1,066,836 (assuming the shares were issued in December
2023).
As disclosed in Note 37, 63,322,989 were issued in June 2024 as part of a
share placing. If these shares were in issue prior to 31 December 2023, they
would have affected the calculation of the weighted average number of shares
in issue for the purposes of calculating both the basic and diluted loss per
share by 5,276,916 (assuming the shares were issued in December 2023).
Retrospective Adjustments
The comparative earnings per share figures have been restated to reflect:
(1) The disposal of a subsidiary in 2023, leading to a restatement of
comparative figures to reflect discontinued operations (see Notes 34 and 35);
and
(2) The capital reorganisation that took place in the current financial
year, leading to a decrease in the number of ordinary shares outstanding (see
Note 28).
18. PROPERTY, PLANT AND EQUIPMENT
Right of Use Assets Office equipment Construction in Progress Total
Group € € € €
Cost
At 1 January 2022 579,316 63,342 192,757 835,415
Additions 4,042 29,199 50,000 83,241
Disposals - - (192,757) (192,757)
Exchange differences (11,420) - - (11,420)
At 31 December 2022 571,938 92,541 50,000 714,479
Additions 706,705 6,265 - 712,970
Disposal of subsidiary - - (50,000) (50,000)
De-recognition of assets (575,620) - - (575,620)
Exchange differences 4,365 - - 4,365
At 31 December 2023 707,388 98,806 - 806,194
Accumulated depreciation
At 1 January 2022 325,212 63,342 - 388,554
Charge for the financial year 197,016 3,666 38,551 239,233
Charge on disposal - - (38,551) (38,551)
Exchange differences (7,810) - - (7,810)
At 31 December 2022 514,418 67,008 - 581,426
Charge for the financial year 168,187 13,397 - 181,584
De-recognition of assets (575,620) - - (575,620)
Exchange differences 3,170 - - 3,170
At 31 December 2023 110,155 80,405 - 190,560
Carrying amount
At 31 December 2022 57,520 25,533 50,000 133,053
At 31 December 2023 597,233 18,401 - 615,634
Included in the net carrying amount of property, plant and equipment are
right-of-use assets as follows:
2023 2022
€ €
Leasehold buildings 597,233 57,520
Office Total
Equipment
Company € €
Cost
At 1 January 2022, at 31 December 2022 and at 31 December 2023 1,233 1,233
Accumulated depreciation
At 1 January 2022, at 31 December 2022 and at 31 December 2023 1,233 1,233
Carrying amount
At 1 January 2023 - -
At 31 December 2023 - -
19. INTANGIBLE ASSETS
Group Goodwill Other intangibles Patents Total
Cost € € € €
As at 1 January 2022 16,710,497 - - 16
,7
10
,4
97
Additions, separately acquired - - 2,492,059 2,492,059
As at 31 December 2022 16,710,497 - 2,492,059 19,202,556
Additions, separately acquired - 7,300 - 7,300
As at 31 December 2023 16,710,497 7,300 2,492,059 19,209,856
Amortisation and Impairment
As at 1 January 2022 1,427,038 - 72,685 1,499,723
Amortisation - - 124,602
12
4,
60
2
As at 31 December 2022 1,427,038 - 197,287 1,
62
4,
32
5
Amortisation - 61 124,603 12
4,
66
4
Impairment 5,283,459 - - 5,
28
3,
45
9
As at 31 December 2023 6,710,497 61 321,890 7,
03
2,
44
8
Carrying value
As at 31 December 2022 15,283,459 - 2,294,772 17
,5
78
,2
31
As at 31 December 2023 10,000,000 7,239 2,170,169 12
,1
77
,4
08
Company Patents Total
Cost € €
As at 1 January 2022 - -
Additions 2,492,059 2,492,059
As at 31 December 2022 and as at 31 December 2023 2,492,059 2,492,059
Amortisation and Impairment
As at 1 January 2022 72,685 72,685
Amortisation 124,602 124,602
As at 31 December 2022 197,287 197,287
Amortisation 124,603 124,603
As at 31 December 2023 321,890 321,890
Carrying value
As at 31 December 2022 2,294,772 2,294,772
As at 31 December 2023 2,170,169 2,170,169
Patents
During the year ended 31 December 2021, the Group acquired patents from a
company controlled by one of the directors. Patent are amortised over their
estimated useful lives, which is on average 20 years. The average remaining
amortisation period for these patents is 17.4 years (2022: 18.4 years).
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 (2022: 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 €10,000,000 (2022: €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:
2023 2022
€ €
Eqtec Iberia SLU 10,000,000 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 12.39% (2022:
11.78%) 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 the CGU (2023: €10,000,000; 2022: €15,283,459)
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 12.39% (2022: 11.78%). 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 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:
· Revenues being risk adjusted between 30% to 80% based on the
project specific probabilities.
· Reduction in gross margin to 11%
· 5% increase in discount rate
· Zero percentage long term growth rate (year 6 onwards)
All of these sensitivity analysis resulted in an impairment loss of
€5,283,459 (2022: €Nil) calculated for the financial year ended 31
December 2023.
20. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
COMPANY
2023 2022
Investment in subsidiary undertakings € €
At beginning of financial year 19,729,486 17,994,504
Contribution to capital in Eqtec Iberia 1,000,000 1,550,000
Impairment of investment in subsidiaries (15,783,854) -
Foreign currency movement 2,904 (3,864)
Share options and awards - 188,846
At end of financial year 4,948,536 19,729,486
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.
Details of EQTEC plc subsidiaries at 31 December 2023 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 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 United Kingdom 100% 2 Waste-to-energy developer
EQTEC Southport H2 MDC 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.
Acre House, 11/15 William Road, London NW1 3ER, 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.
During the year, the Group disposed of its investment in Grande-Combe SAS.
Details of this disposal are set out in Note 34.
Subsequent to the financial year-end, three dormant subsidiaries (Enfield
Biomass Limited, Clay Cross Biomass Limited and EQTEC Strategic Project
Finance Limited) were voluntarily struck off the Company Register.
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
2023 2022 2023 2022 2023 2022
% % € € € €
Newry Biomass Limited
Northern Ireland 49.98 49.98 (32) (11) (2,410,932) (2,363,523)
Individually immaterial subsidiaries with non-controlling interests
0.00 0.00 - - 105,000 105,000
Total (32) (11) (2,305,932) (2,258,523)
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 2023 and 2022.
Interests in unconsolidated structured entities
The Group had the following interest in
unconsolidated structured entities in 2023:
Country of
Name Incorporation Shareholding Registered Office Principal activity
Biogaz Gardanne
SAS
France
100% 28 Cours Albert 1er, 75008 Paris,
France. Vehicle to fulfil energy
requirements
Biogaz Gardannes SAS was set up in 2023 was set up as an easily transferable
legal entity (SPV) to hold all assets associated with a project initiated and
wholly support by the national government of France. Biogaz Gardanne was
created to fulfil a narrow, specific purpose which was to fulfil the
objectives of the French government. EQTEC has had and continues to have no
control over defining or changing those objectives. All relevant decisions
regarding scope of activity, investor rights and right of returns are
controlled by the French government, not EQTEC, and on that basis, EQTEC does
not have control over Biogaz Gardanne SAS under IFRS 10 and is therefore
not consolidated in these accounts. Details of the investment are included
in Note 2
21. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
GROUP 2023 2022
€ €
Investment in associate undertakings (a) 3,474,359 4,263,604
Investment in joint ventures (b) 3,358,029 3,355,910
6,832,388 7,619,514
COMPANY
Investment in associate undertakings (a) - 2,728,959
a) Investment in associate undertakings
GROUP
At beginning of financial year 4,263,604 6,951,064
Impairment of investment in North Fork Community Power LLC (Note 15) (2,619,234) -
Derecognition of investment arising from Chapter 11(Note 15) - (4,677,590)
Investment in shares 29,780 6,790
Acquisition of increased share in associate 856,967 -
Loans advanced to associate undertakings 334,750 528,085
Loans repaid from associate undertakings (32,000) -
Receivables converted into loans to associate undertakings 554,067 1,161,000
Payables reclassified 279,000 -
Derecognition of loans (252,500)
Interest accrued on loans to associate undertakings 71,562 196,188
Share of loss of associate undertakings (12,577) (31,626)
Adjustment in respect of unrealised sales from the Group - (907)
Exchange differences 940 130,600
At end of financial year 3,474,359 4,263,604
Made up as follows:
Investment in shares in associate undertakings 783,801 2,777,249
Loans advanced to associate undertakings 2,747,141 1,656,573
Less: Losses recognised under the equity method (56,583) (170,218)
3,474,359 4,263,604
Investment in associate undertakings
Details of the Group's interests in associated undertakings at 31 December
2023 is as follows:
Shareholding Principal Activity
Name of associate undertaking County of Incorporation 2023 2022
North Fork Community Power LLC United States of America 28.52% 49% Operator of biomass gasification power project
EQTEC Italia MDC srl Italy 49.27% 19.99% Operator of biomass gasification power project
On 6 November 2023, it was announced that, to fund performance improvements in
the project, EQTEC Italia MDC SRL raised funds through a combination of
shareholder loans and equity from the Group and one of the other investors,
resulting in a change to relative ownership of the SPV. The Group's share
increased from 19.99% to 38.30% as a result of this increase in equity. On 20
November 2023, it was announced that the Group had agreed to purchase all of
another investor's participation (equity and debt) in EQTEC Italia MDC srl
which was settled through the issue of shares in the Group to the value of
£800,000. As a result of this transaction, the Group's share of ownership in
EQTEC Italia MDC srl increased to 49.27%.
On 12 October 2022, it was announced that North Fork Community Power, LLC
("NFCP") has entered into an agreement for a financial restructuring with the
project lenders ("Lenders"), for the provision of a standby facility, in the
amount of USD 4.3 million, towards full funding of the project up to the
commercial operations date ("COD") of a plant, with EQTEC technology at its
core, in North Fork California, USA (the "Plant"). The third-party funding has
been agreed as part of a pre-negotiated petition filed by NFCP for relief
under Chapter 11 of the US Bankruptcy Code, following alignment between NFCP
managing members, including the Company, with the Lenders. As part of the
agreed terms, it was specified that the Group will remain as an equity
shareholder in NFCP with the final shareholding being determined during the
legal process post 31 December 2023 as 28.52%. However, arising from this, it
was determined that the Group is no longer in control of how the North Fork
project progresses, as this now rests with the lender bondholders. As a
result, the Group deems it prudent to fully impair its investment in North
Fork.
Summarised financial information in respect of the Group's interests in
associated undertakings is as follows:
2023 2022
North EQTEC Italia North EQTEC Italia
Fork Total Fork Total
€ € € € € €
Non-current assets 1,691,299 6,962,172 8,653,471 1,738,412 5,687,496 7,425,908
Current assets 35,171,261 609,671 35,780,932 27,869,071 141,018 28,010,089
Non-current liabilities (19,647,815) (5,243,088) (24,890,903) (25,064,040) (4,875,541) (29,939,581)
Current liabilities (14,873,565) (991,939) (15,865,504) 90,586 (869,152) (778,566)
Net Assets 2,341,180 1,336,816 3,677,996 4,634,029 83,821 4,717,850
Reconciliation to carrying amount
Group's share of net assets 667,704 658,649 1,326,353 2,270,674 16,743 2,287,417
Carrying value of loan to associate
- 2,747,141 2,747,141 - 1,656,573 1,656,573
Adjustment in respect of unrealised profits on sales from the Group (78,846) (23,358) (102,204) (78,846) (23,358) (102,204)
Adjustment arising from Chapter 11
(1,948,631) - (1,948,631) (1,948,631) - (1,948,631)
Exchange differences 140,612 - 140,612 (1,467,946) - (1,467,946)
Goodwill 3,838,395 91,927 3,930,322 3,838,395 - 3,838,395
Impairment of asset (2,619,234) - (2,619,234) - - -
Carrying amount - 3,474,359 3,474,359 2,613,646 1,649,958 4,263,604
Summarised income statement
Revenue - 4,615 4,615 6,105 - 6,105
(Loss)/Profit after tax for period 17,718 (72,009) (54,291) (73,613) 12,937 (60,676)
Other comprehensive income - - - - - -
Total comprehensive income/(loss)
17,718 (72,009) (54,291) (73,613) 12,937 (60,676)
Reconciliation to Group's share of total comprehensive income
Group's share of total comprehensive income
4,673 (17,250) (12,577) (34,216) 2,590 (31,626)
Group's share of total comprehensive income
4,673 (17,250) (12,577) (34,216) 2,590 (31,626)
COMPANY 2023 2022
€ €
At beginning of financial year 2,728,959 6,569,432
Impairment of investment (2,728,959) -
Derecognition of investment arising from Chapter 11 - (4,677,590)
Loans advanced to associate undertakings - 528,085
Interest accrued on loans to associate undertakings - 177,069
Exchange differences - 131,963
At end of financial year - 2,728,959
Made up as follows:
Investment in shares in associate undertakings - 2,728,959
b) Investment in joint ventures
GROUP
The Group's interests in joint ventures at the end of the reporting period is
as follows
2023 2022
€ €
Synergy Belisce d.o.o. 2,174,542 2,171,174
Synergy Karlovac d.o.o. 1,095,061 1,091,612
Eqtec Synergy Projects Limited 88,425 93,124
Interests in joint ventures 3,358,028 3,355,910
Details of the Group's interests in joint ventures is as follows:
Shareholding Principal Activity
Name of joint venture County of Incorporation 2023 2022
Synergy Belisce d.o.o. Croatia 49% 49% Operator of biomass gasification power project
Synergy Belisce d.o.o. Croatia 49% 49% Operator of biomass gasification power project
Eqtec Synergy Projects Limited Cyprus 50.1% 50.1% Operator of biomass gasification power project
Synergy Projects Aegean Energy Production and Distribution Society SA. Greece 50.1% 50.1% Holding company
Synergy Drama Single Member PC Greece 50.1% 50.1% Operator of biomass gasification power project
Synergy Livadia Single Member PC Greece 50.1% 50.1% Operator of biomass gasification power project
The purpose of the joint ventures is to act as go-to-market entities, in
partnership with the local partners, to actively seek business development and
project development in the territory. 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
reconfigured as an industrial waste processing facility, recommissioned and
repowered for operations once final round of funding has been completed
(expected Q4 2024).
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. has acquired a 3 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 once
funding is agreed.
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. Eqtec Synergy Projects Limited owns 100% of
Synergy Projects Aegean Energy Production and Distribution Society SA, and
this company holds 100% of the shares in two further companies, which are
special purpose vehicles for projects (Project SPV): Synergy Drama Single
Member PC and Synergy Livadia Single Member PC. The objective of these two
companies is the development of biomass-to-energy plants, generating green
electricity from locally and sustainably sourced forestry waste.
In line with the agreed Company strategy to minimise or eliminate development
activities across the Group, it has progressed discussions and has reached
agreement, subject to final legal documentation, with its joint venture
partners in Croatia and Greece to restructure its ownership and financial
arrangements in relation to the joint venture entities. In line with its
stated objective to move away from development activities the Group will seek
to reduce its equity stake to below 20% in each joint venture and to
restructure its loans and receivables due to facilitate early repayment.
The movement in the investment in joint ventures is as follows:
The purpose of the joint ventures is to act as go-to-market entities, in
partnership with the local partners, to actively seek business development and
project development in the territory. 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
reconfigured as an industrial waste processing facility, recommissioned and
repowered for operations once final round of funding has been completed
(expected Q4 2024).
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. has acquired a 3 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 once
funding is agreed.
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. Eqtec Synergy Projects Limited owns 100% of
Synergy Projects Aegean Energy Production and Distribution Society SA, and
this company holds 100% of the shares in two further companies, which are
special purpose vehicles for projects (Project SPV): Synergy Drama Single
Member PC and Synergy Livadia Single Member PC. The objective of these two
companies is the development of biomass-to-energy plants, generating green
electricity from locally and sustainably sourced forestry waste.
In line with the agreed Company strategy to minimise or eliminate development
activities across the Group, it has progressed discussions and has reached
agreement, subject to final legal documentation, with its joint venture
partners in Croatia and Greece to restructure its ownership and financial
arrangements in relation to the joint venture entities. In line with its
stated objective to move away from development activities the Group will seek
to reduce its equity stake to below 20% in each joint venture and to
restructure its loans and receivables due to facilitate early repayment.
The movement in the investment in joint ventures is as follows:
2023 2022
€ €
At the beginning of the year 3,355,910 1,123,120
Impairment of fair value of joint venture - (489)
Loans advanced to joint ventures 15,700 2,324,614
Loans repaid by joint ventures (3,700) (40,018)
Share of loss after tax (11,025) (20,433)
Unrealised profits on sales to joint ventures - (27,470)
Exchange differences 1,144 (3,414)
Interests in joint ventures 3,358,029 3,355,910
Made up as follows:
Investment in shares in joint ventures - -
Loans advanced to associate ventures 3,531,128 3,517,979
Less: Losses recognised under the equity method (173,099) (162,069)
3,358,029 3,355,910
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.
2023 2022
Eqtec Synergy Projects Limited Group Eqtec Synergy Projects Limited Group
Synergy Belisce d.o.o. Synergy Karlovac d.o.o. Synergy Belisce d.o.o. Synergy Karlovac d.o.o.
2023 Total Total
Summarised balance sheet (100%) € € € € € € € €
Non-current assets 4,279,612 3,236,785 - 7,516,397 4,278,173 3,235,696 - 7,513,869
Current assets
Cash and Cash equivalents 103 655 296 1,054 124 580 424 1,128
Other current assets 188,366 169,685 203,023 561,074 187,340 168,592 203,022 558,954
188,469 170,340 203,319 562,128 187,464 169,172 203,446 560,082
Non-current liabilities - - - - - - - -
Current liabilities
Bank overdrafts and loans 2,256,237 1,182,134 100,000 3,538,371 2,250,880 1,174,339 100,000 3,525,219
Other current liabilities 2,213,242 2,263,141 126,423 4,602,806 2,212,103 2,259,812 117,521 4,589,436
4,469,479 3,445,275 226,423 8,141,177 4,462,983 3,434,151 217,521 8,114,655
Net (liabilities)/assets (100%) (1,398) (38,150) (23,104) (62,652) 2,654 (29,283) (14,075) (40,704)
Reconciliation to carrying amount:
Group's share of net assets/(liabilities) (685) (18,693) (11,575) (30,953) 1,300 (14,349) (6,876) (19,925)
Carrying value of loans to joint ventures 2,252,722 1,178,406 100,000 3,531,128 2,247,366 1,170,613 100,000 3,517,979
Unrealised gains on sales to joint ventures (72,655) (64,997) - (137,652) (72,655) (64,997) - (137,652)
Exchange differences (4,839) 345 - (4,494) (4,348) 345 - (4,003)
Adjustment arising on loss of control in period - - - - (489) - - (489)
Carrying amount 2,174,543 1,095,061 88,425 3,358,029 2,171,174 1,091,612 93,124 3,355,910
2023 2022
Eqtec Synergy Projects Limited Eqtec Synergy Projects Limited
Group Group
Synergy Belisce d.o.o. Synergy Karlovac d.o.o. Synergy Belisce d.o.o. Synergy Karlovac d.o.o.
Total Total
Summarised income statement (100%) € € € € € € € €
Revenue - 13,737 - 13,737 - - - -
Depreciation - - - - - - - -
Amortisation - - - - - - - -
Interest expenses 3 77 - 80 - 23 - 23
Taxation - - - - - - - -
Loss after tax (4,053) (8,857) (9,380) (22,290) (6,584) (27,167) (7,776) (41,527)
Other comprehensive income - - - - - - - -
Total comprehensive loss (4,053) (8,857) (9,380) (22,290) (6,584) (27,167) (7,776) (41,527)
Reconciliation to Group's share of total comprehensive income
Group's share of total comprehensive loss (1,986) (4,340) (4,699) (11,025) (3,226) (13,312) (3,896) (20,434)
Group's share of total comprehensive loss (1,986) (4,340) (4,699) (11,025) (3,226) (13,312) (3,896) (20,434)
22. FINANCIAL ASSETS
GROUP
2023 2022
Investment in related undertakings € €
At beginning of the financial year 3,728,434 4,050,030
Derecognition of investment in Logik WTE Limited (3,805,636) -
Derecognition of investment in Shankley Biogas Limited - (113,644)
Exchange differences 77,202 (207,952)
At end of the financial year - 3,728,434
Investment in Logik WTE Limited
On 8 December 2020, EQTEC announced that EQTEC's wholly owned subsidiary,
Deeside WTV Limited ("Deeside"), had signed a Share Purchase Agreement (the
"SPA") with Logik Developments Limited ("Logik") to acquire full ownership of
the Deeside Refuse Derived Fuel ("RDF") project (the "Project") from Logik
through the acquisition of Logik WTE Limited ("Logik WTE").
On 20 September 2023, EQTEC announced that it had issued a claim against Logik
and Logik WTE in connection with payments made by the Group and due to the
Group in relation to the Project, and for breach of the SPA between Logik and
Deeside. Consequently, the Group has decided to de-recognise the investment in
Logik WTE, with a corresponding derecognition of the associated liability.
(€2,537,091 - see Note 32)
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").
On 21 September 2022, the Company announced that it had entered into
agreements for the cancellation of the SPA-Southport. Any investments costs
previously recognised has now been de-recognised (€113,644) and included in
the costs associated with development fee services charged to Shankley
amounting to €2,841,093.
23. OTHER FINANCIAL INVESTMENTS
2023 2022
Group: € €
Financial investments at amortised cost
Investment in unconsolidated subsidiary (Biogaz Gardanne SAS)
1,000 -
Investment in previously consolidated company Grande Combe SAS
50 -
Convertible loan note in Metal NRG plc 115,322 112,983
Less: Provision against convertible loan note (115,322) -
Bonds and Debentures 402,644 402,644
Less: Provision against investment in Bonds (402,644) (402,644)
Other investments 22,915 17,250
Less: Provisions against other investments (17,250) (17,250)
6,715 112,983
Financial investments at fair value through profit or loss (FVTPL)
Investment in Metal NRG plc 33,199 58,203
Less: Provision against investment in Metal NRG plc (33,199) -
- 58,203
Total 6,715 171,186
Company
Financial investments at amortised cost
Convertible loan note in Metal NRG plc 115,322 112,983
Less: Provision against convertible loan note (115,322) -
- 112,983
Financial investments at fair value through profit or loss (FVTPL)
Investment in Metal NRG plc 33,199 58,203
Less: Provision against investment in Metal NRG plc (33,199) -
- 58,203
Total - 171,186
Financial assets at FVTPL include the equity investment in Metal NRG plc
("MRNG") which was financed through the exchange of shares in the Company. The
Group and the Company accounts for the investment in MRNG at FVTPL and did not
make the irrevocable election to account for it at FVOCI.
As at 31 December 2023, the fair value of the Group's interest in Metal NRG
plc, which is listed on the London Stock
Exchange, was €33,199 (2022:
€58,203) based on the quoted market price available on the London Stock
Exchange, which is a Level 1 input in terms of IFRS 13. However, as the
likelihood of the Group recovering this amount is considered remote, it was
deemed prudent to provide fully for both the investment and the convertible
loan note in Metal NRG plc.
Movement in other financial investments was as follows:
2023 2022
€ €
At beginning of financial year 171,186 506,976
Acquisition of unconsolidated subsidiary 1,000 -
Acquisition of other investments 5,665 -
Investment in previously recognised subsidiary 50 -
Movement in fair value (26,143) (326,501)
Exchange differences 3,478 (9,289)
Provision against investments in Metal NRG plc (148,521) -
At end of financial year 6,715 171,186
24. 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 €43.9 million at 31 December 2023 (2022:
€29.3 million).
25. DEVELOPMENT ASSETS
2023 2022
€ €
Group
Costs associated with project development undertakings 613,516 6,033,543
Loan receivable from project development undertakings
Convertible loans 2,883,057 2,824,572
Other loans 2,711,592 2,621,515
Less: Loss Allowance (3,528,550) -
2,066,099 5,446,087
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 2023, €212,280 (2022: €2,160,694)
of development assets was included in consolidated statement of profit or loss
as an expense and €4,603,546 (2022: €2,752) was impaired resulting from
write down of development assets. The impairment arose via the suspension of
the Billingham and Deeside projects.
Included in loans receivable from project development undertakings is an
amount of €Nil (2022: €450,000) which is receivable, along with accrued
interest, 18 months from the date of drawdown. Interest is charged at 15% per
annum. During the financial year, the company has determined it is unlikely to
recover the value of the loan from the borrower and has impaired the value of
the loan in full, incurring an impairment cost of €645,493 (2022: €Nil).
Included in loans receivable is an amount of £Nil (2022: £2,500,000) arising
from development service fees to Shankley Biogas Limited which has been
converted into a convertible loan note secured by a fixed and floating charge
on the assets and business of Shankley Biogas Limited. The loan note, which is
interest-free, is due to be paid to the company following sale of, or
investment into Shankley Biogas Limited by any third party. During the
financial year, the Company has determined it is unlikely to recover the value
of the loan and have impaired the value of the loan in full, incurring an
impairment cost of €2,883,057 (2022: €Nil).
The remaining loans receivables were issued with no interest and no fixed
repayment date.
Company
Costs associated with project development 88,129 1,258,191
Loan receivable from project development undertakings
Convertible loans 2,883,057 2,824,572
Other loans 645,493 597,329
Less: Loss Allowance (3,528,550) -
- 3,421,901
26. TRADE AND OTHER RECEIVABLES
2023 2022
Group € €
Trade receivables gross 7,268,720 5,961,004
Allowance for credit losses (875,687) (475,687)
Trade receivables net 6,393,033 5,485,317
VAT receivable 166,134 257,288
Advances to related undertakings 60,000 60,000
Allowance for credit losses on advances to related undertakings (60,000) (60,000)
Prepayments 295,780 149,786
Amounts receivable from associate companies 31,482 29,477
Deposit payment on land (See below) - 858,670
Corporation tax 24,838 47,757
Receivable arising from issue of ordinary shares - 55,635
Payments on account to suppliers - 14,529
Other receivables 132,950 322,587
7,044,217 7,221,046
The deposit option payment on land represented 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, would have been constructed. As the Group has
announced that this project has been discontinued, this deposit has been
written off in 2023 at a cost of €876,449.
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.
2023 2022
€ €
Within terms 1,580,193 1,063,269
Past due more than one month but less than two months 7,000 4,317
Past due more than two months 5,681,527 4,893,418
7,268,720 5,961,004
Included in the Group's trade receivables balance are debtors with carrying
amount of €4,805,840 (2022: €4,417,731) 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 with non-related parties 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 from non-related parties 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 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:
2023 2022
€ €
Ireland 300,209 30,000
Spain 4,482,383 4,295,790
France 807,373 -
Croatia 1,678,756 1,635,214
7,268,720 5,961,004
The aged analysis of other receivables is
within terms.
The closing balance of the trade receivables loss allowance as at 31 December
2023 reconciles with the trade receivables loss allowance opening balance as
follows:
€
Notes to the financial statements
25. TRADE AND OTHER RECEIVABLES
25. TRADE AND OTHER RECEIVABLES - continued
Opening loss allowance as at 1 January 2022 475,687
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2022 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 475,687
2022
Loss allowance recognised during the financial year 400,000
Loss allowance as at 31 December 2023 875,687
25. TRADE AND OTHER RECEIVABLES - continued
€
Opening loss allowance as at 1 January 2022
475,687
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2022 556
Loss allowance recognised during the gear
-
Loss allowance as at 31 December
2022
475,687
Loss allowance recognised during the financial year
400,000
Loss allowance as at 31 December 2023
875,687
The closing balance of the advances to related undertakings loss allowance as
at 31 December 2023 reconciles with the advances to related undertakings loss
allowance opening balance as follows:
€
Opening loss allowance as at 1 January 2022 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2022 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 2022 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2023 60,000
There is no concentration of credit risk with respect to receivables as
disclosed in Note 5 under credit risk.
2023 2022
Company € €
Amounts due from subsidiary undertakings 23,997,996 20,731,916
Allowance for impairment of balances (9,004,018) (9,004,018) -
14,993,978 20,731,916
Trade receivables - Intercompany and related parties 310,496 310,300
Trade receivables - third party 270,013 -
Allowance for credit losses on trade receivables (30,000) (30,000)
Advances to related undertakings 60,000 60,000
Allowance for credit losses on advances to related undertakings (60,000) (60,000)
Management charges receivable 3,034,241 2,532,848
Prepayments 170,786 63,881
Receivable arising from issue of ordinary shares - 55,635
Corporation Tax 96 96
VAT Receivable 9,248 4,157
Other receivables 3,126 2,916
18,761,984 23,671,749
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
2023 reconciles with the trade receivables loss allowance opening balance as
follows:
€
Notes to the financial statements
25. TRADE AND OTHER RECEIVABLES
25. TRADE AND OTHER RECEIVABLES - continued
Opening loss allowance as at 1 January 2022 30,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2022 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 2022 30,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2023 30,000
25. TRADE AND OTHER RECEIVABLES - continued
€
Opening loss allowance as at 1 January 2022
30,000
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2022 556
Loss allowance recognised during the gear
-
Loss allowance as at 31 December 2022
30,000
Loss allowance recognised during the financial year
-
Loss allowance as at 31 December 2023
30,000
The closing balance of the advances to related undertakings loss allowance as
at 31 December 2023 reconciles with the advances to related undertakings loss
allowance opening balance as follows:
€
Opening loss allowance as at 1 January 2022 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2022 556
Loss allowance recognised during the gear
Loss allowance as at 31 December 2022 60,000
Loss allowance recognised during the financial year -
Loss allowance as at 31 December 2023 60,000
The closing balance of the amounts due to subsidiary undertakings loss
allowance as at 31 December 2023 reconciles with the amounts due to subsidiary
undertakings opening balance as follows:
€
Opening loss allowance as at 1 January 2022 and at 31 December 2022 -
Loss allowance recognised during the financial year 9,004,018
Loss allowance as at 31 December 2023 9,004,018
27. CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents include
cash on hand and in banks. 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:
2023 2022
Group € €
Cash and bank balances 262,019 1,693,116
Bank overdrafts (Note 30) (148,181) -
113,838 1,693,116
Company
Cash and bank balances 108,763 980,098
The carrying amount of the cash and cash equivalents is considered a
reasonable approximation of its fair value.
28. EQUITY
Share Capital
Allotted and Allotted and
At 31 December 2022 Authorised Number called up Authorised called up
Number € €
Ordinary shares of €0.001 each
12,561,091,094 9,421,479,112 12,561,091 9,421,478
Deferred ordinary shares of €0.40 each
200,000,000 22,370,042 80,000,000 8,948,017
Deferred convertible "A" ordinary shares of €0.01 each
10,000,000,000 99,117,952 100,000,000 991,180
Deferred "B" Ordinary Shares of €0.099 each
75,140,494 75,140,494 7,438,909 7,438,909
200,000,000 26,799,584
Allotted and Allotted and
At 31 December 2023 Authorised called up Authorised called up
Number Number € €
Ordinary shares of €0.01 each
257,610,911 181,485,890 2,576,109 1,814,859
Deferred ordinary shares of €0.40 each
200,000,000 22,370,042 80,000,000 8,948,017
Deferred convertible "A" ordinary shares of €0.01 each
10,000,000,000 99,117,952 100,000,000 991,180
Deferred "B" Ordinary Shares of €0.099 each
75,140,494 75,140,494 7,438,909 7,438,909
Deferred "C" Ordinary Shares of €0.01 each
2,318,498,198 1,330,488,404 23,184,982 13,304,883
213,200,000 32,497,848
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, the deferred "B" ordinary shares
and the deferred "C" 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
€461,122 (2022: €362,241).
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.
Capital reorganisation
On 17 December 2023, a capital re-organisation took place whereby (1) each
existing ordinary share of €0.001 each was sub-divided into 10 ordinary
shares of €0.0001 each; (2) every 1,000 sub-divided shares of €0.0001 each
was consolidated into 10 ordinary shares of €0.01 each; and (3) 9 out of
every 10 ordinary shares of €0.01 each was re-designated into 9 deferred "C"
ordinary shares of €0.01 each.
Movements in the financial year to 31 December 2023
Amounts of shares 2023 2022
Ordinary Shares of €0.001 each issued and fully paid
- Beginning of the financial year 9,421,479,112 8,599,024,945
- Issued on exercise of warrants - 19,696,881
- Issued in lieu of borrowings and settlement of payables 3,765,165,007 52,757,286
- Share issue placement 1,596,560,373 750,000,000
- Consolidation of shares from €0.001 to €0.01 (14,783,204,492) -
Total Ordinary shares of €0.001 each authorised, issued and fully paid at
the end of the financial year
- 9,421,479,112
Ordinary Shares of €0.01 each issued and fully paid
- Beginning of the financial year - -
- Consolidation of shares from €0.001 to €0.01 147,832,044 -
- Issued in lieu of borrowings and settlement of payables 33,653,846 -
Total Ordinary shares of €0.01 each authorised, issued and fully paid at the
end of the financial year
181,485,890 -
Other Reserves
Other reserves relates to equity-settled share-based
payment transactions.
Share warrants and options
As at 31 December 2023 the Company had 55,787,668
share warrants and options outstanding (2022 (restated): 13,499,903).
No of warrants/options Exercise price (pence) Final exercise date
9,999,847 33 30/03/2025
43,670,884 7.878 19/11/2027
230,450 1 31/01/2032
1,886,487 1 30/04/2033
55,787,668
Details of warrants granted
LTIP 2022 Options LTIP 2023 Options Lender warrants Employee warrants Employee options
Number Exercise price (Pence) Number Exercise price (Pence) Number Exercise price (Pence) Number Exercise price (Pence) Number Exercise price (Pence)
At 1 January 2023 (Restated) 6,666,667 7.878 4,043,254 7.878 673,045 7.878
230,450 1 1,886,487 1
Issued in year - - - - 32,287,918 7.878 - - - -
Cancelled or expired in year - - - - - -
- - - -
Exercised in year - - - - - -
- - - -
At 31 December 2023 38,954,585 7.878 4,043,254 7.878 673,045 7.878
230,450 1 1,886,487 1
Exercisable at 31 December 2023 38,954,585 7.878 4,043,254 7.878 673,045 7.878
- - - -
Average life remaining at 31 December 2023 3.87 years 3.87 years 3.87 years
8.08 years 9.25 years
Placing warrants 2023
Number Exercise price (Pence)
At 1 January 2023 (Restated) - -
Issued in year 9,999,847 33
Cancelled or expired in year - -
Exercised in year - -
At 31 December 2023 9,999,847 33
Exercisable at 31 December 2023 9,999,847 33
Average life remaining at 31 December 2023 1.25 years
The opening position on warrants has been restated to reflect the capital
reorganisation that took place in the year (see above).
During the year, the Company announced that the EQTEC All Employee Long-term
Incentive Plan (the "LTIP") has been cancelled for all Executive directors and
staff. Previously issued LTIP options will remain in place and options granted
through 2022 will continue to vest.
The Group recognised total expenses of €Nil and €340,257 related to
equity-settled share-based payment transactions in 2023 and 2022 respectively
(see note 10). The corresponding credit is recognised in the share-based
payments reserve.
29. NON-CONTROLLING INTERESTS
2023 2022
€ €
Balance at beginning of financial year (2,258,523) (2,384,189)
Share of loss for the financial year (35) (11)
Unrealised foreign exchange (losses)/gains (47,374) 125,677
Balance at end of financial year (2,305,932) (2,258,523)
30. BORROWINGS 2023 2022
Group € €
Current liabilities
At amortised cost
Unsecured loan facility (USLF) - 5,006,076
Secured loan facility (SLF) 2,242,250 -
Other loans 97,798 99,962
Bank overdraft 148,181 -
2,488,229 5,106,038
Non-current liabilities
At amortised cost
Unsecured shareholder loan (USSL) - 1,064,598
Secured loan facility (USLF) 1,635,275 -
New syndicated facility (NSF) 822,709 -
2,457,984 1,064,598
Company 2023 2022
Current liabilities € €
At amortised cost
Unsecured loan facility (USLF) - 5,006,076
Secured loan facility (SLF) 2,242,250 -
2,242,250 5,006,076
Non-current liabilities
At amortised cost
Unsecured shareholder loan (USSL) - 1,064,598
Secured loan facility (SLF) 1,635,275 -
New syndicated facility (NSF) 822,709 -
2,457,985 1,064,598
Borrowings at amortised cost
On 28 March 2022, the Company entered into arrangements in respect of the
provision of a new unsecured loan facility (USLF) for up to £10 million, with
an initial advance received by the Company of £5 million. The initial advance
is to be repaid on a monthly basis commencing 5 months after the receipt of
the advance by the Company and have a final maturity date of 12 months. The
Company will also pay a fixed interest coupon to the lenders on a quarterly
basis calculated at 7.5% of the value of each advance of the USLF. On 20
November 2023, it was announced that the USLF was to be replaced by a new
secured loan facility (SLF) the initial advance of which was made of the
balance on the old USLF (£4.2 million) plus £1.1 million of 30 months 10%
p.a. fixed coupon less £200,000 paid off by way of shares. This initial
advance will have a 6-month principal repayment holiday, followed by 24 equal
monthly cash repayments of principal and interest thereafter to the maturity
date. The Company has entered into a debenture with Riverfort Global Capital
Limited (as security agent) to provide the lenders with fixed and floating
charges on all of the assets of the company. The Debenture secures all
monies owed to the Lenders under the SLF from time to time. The Company's
obligations are also guaranteed by certain of its subsidiaries. At 31
December 2023, the face value of the SLF and accrued interest at 31 December
2023 was €4,715,173 (2022: €Nil).
On 8 December 2022, the Company entered into a loan facility (USSL) with
Altair Group Investment Limited, the Company's largest shareholder. The USSL
will provide the Company with an up to £2.0 million unsecured loan with a
term of 24 months from the date of execution. The USSL carries an annual
interest rate of 8.0% on funds drawn and outstanding, with interest payable
quarterly in advance. Additionally, the Company will pay a 2.5% fee for
arrangement of the Facility. On 20 November 2023, it was announced that the
balance of the USSL will be settled by the issue of shares in the Company. At
31 December 2023, the face value of the USSL and accrued interest at 31
December 2023 was €Nil (2022: €1,131,513).
On 20 November 2023, the Company entered into a new unsecured convertible loan
facility ("New Syndicated Facility" or NSF) which has been provided by
existing lenders, including Altair Group Investment Limited. The facility is
for up to £3 million, with an initial advance received by the Company of
£950,000. Each Tranche will be repaid in instalments agreed with the Lenders
at the time of each draw down and will have a final maturity date of 24 months
from the date of advance to the Company. The Company will pay a fixed interest
coupon calculated at 8% per annum of the amount of the Tranche, paid in
instalments on each Repayment Date. In respect of the First Tranche, the
entire amount of the advance plus fixed interest is repayable on the final
maturity date. The NSF is unsecured, but the Company's obligations are
guaranteed by certain of its subsidiaries. At 31 December 2023, the face value
of the NSF and accrued interest at 31 December 2023 was €987,747 (2022:
€Nil).
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 30.
Lease Total
Other Liabilities
USLF USSL Loans (Note 31)
€ € € € €
Balance at 1 January 2022 - - - 257,708 257,708
Financing Cash Flows
Proceeds from borrowings 5,981,262 1,157,520 98,068 - 7,236,850
Repayment of borrowings and lease liabilities
(919,931) - - (206,552) (1,126,483)
Change in bank overdraft (328,769) (5,788) - - (334,557)
Total from financing cash flows 4,732,562 1,151,732 98,068 (206,552) 5,775,810
Non-cash changes
Capitalisation of leases - - - 4,042 4,042
Effect of changes in foreign exchange rates
(303,002) (27,615) (303) (3,667) (334,587)
Amortisation of loan issue costs 243,825 896 - - 244,721
Other changes 332,691 (60,415) 2,197 5,000 279,473
Total non-cash changes 273,514 (87,134) 1,894 5,375 193,649
Balance at 31 December 2022 5,006,076 1,064,598 99,962 56,531 6,227,167
Other changes include interest accruals and payments.
Reconciliation of liabilities arising from financing activities - continued
Lease Total
Other Bank Liabilities
USLF SLF USSL NSF Loans Overdraft (Note 31)
€ € € € € € € €
Balance at 1 January 2023 5,006,076 - 1,064,598 - 99,962 - 56,531 6,227,167
Financing Cash Flows
Proceeds from borrowings - - 1,373,190 918,762 - - - 2,291,952
Repayment of borrowings and lease liabilities
(424,594) - (1,707,919) - (2,197) - (174,773) (2,309,483)
Loan issue costs paid (3,423) (34,386) - (6,877) - - - (44,686)
Total from financing cash flows
(428,017) (34,386) (334,729) 911,885 (2,197) - (174,773) (62,217)
Non-cash changes
Capitalisation of leases - - - - - - 706,705 706,705
Conversion of debt into equity
(1,010,519) (640,727) (1,296,226) (65,334) - - - (3,012,806)
Effect of changes in foreign exchange rates
71,239 22,833 13,016 3,084 33 - 1,212 111,417
Redemption fee levied - - 250,294 - - - - 250,294
Commitment fee levied - - 100,293 - - - - 100,293
Transfers (4,280,754) 4,256,684 - 24,070 - - - -
Transfer from cash and cash equivalents
- - - - - 148,181 - 148,181
Amortisation of loan issue costs
305,530 43,144 68,294 7,962 - - - 424,930
Other changes 336,445 229,977 134,460 (58,958) - - 13,641 655,565
Total non-cash changes (4,578,059) 3,911,911 (729,869) (89,176) 33 148,181 721,558 (615,421)
Balance at 31 December 2023 - 3,877,525 - 822,709 97,798 148,181 603,316 5,549,529
Other changes include interest accruals and payments.
31. LEASES
Lease liabilities are presented in the statement of financial position as
follows:
2023 2022
Group € €
Current 202,798 56,531
Non-current 400,518 -
603,316 56,531
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 18).
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 1.75-4.33 years 3.04 years 0 0 0 0
The lease liabilities are secured by the related underlying asset. Further
minimum lease payments at 31 December 2023 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
€ € € € € € €
2023
Lease payments 218,124 184,420 105,600 105,600 22,000 - 635,744
Finance charges (15,326) (9,270) (9,2 (5,391) (5, (2,343) (5, (98) - (32,428)
Net Present Values 202,798 175,150 100,209 103,257 21,902 - 603,316
2022
Lease payments 56,849 - - - - - 56,849
Finance charges (318) - - - - - (318)
Net Present Values 56,531 - - - - - 56,531
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:
2023 2022
€ €
Short term leases 57,845 16,131
Leases of low-value assets 27,452 10,294
85,297 26,425
At 31 December 2023, the Group was committed to short-term leases and the
total commitment at that date was
€18,651 (2022: €18,837).
Total cash outflow for lease liabilities for the financial year ended 31
December 2023 was €174,773 (2022: €206,552).
Additional information on the right-to-use assets by class of assets is as
follows:
Carrying Amount (Note 18) Depreciation Expense Impairment
€ € €
Leasehold Buildings 597,233 168,187 -
Total Right-of-use assets 597,233 168,187 -
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.
32. TRADE AND OTHER PAYABLES 2023 2022
Group € €
VAT payable 227,242 273,570
Trade payables 1,458,810 1,537,888
Advances paid by customers 228,510 186,018
Other payables 30,585 2,629,734
Amounts payable to associates 129,737 -
Deferred income - government grants (Note 33) 300,000 -
Accruals 361,636 1,522,092
PAYE & social welfare 117,121 115,102
2,853,641 6,264,404
Trade and other creditors are payable at various dates in accordance with the
suppliers' usual and customary credit terms. PAYE and social welfare and other
taxes including social insurance are repayable at various dates over the
coming months in accordance with the applicable statutory provisions.
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 €Nil (£Nil) (2022: €2,485,623
(£2,500,000)) relating to consideration payable under the share purchase
contract to acquire Logik WTE Limited. This liability was derecognised at a
credit of €2,357,091 as the associated investment was derecognised (See Note
22).
2023 2022
Company € €
Trade payables 368,192 161,177
Other creditors 3,437 4,504
Amounts payable to subsidiary undertakings 2 2
Advances paid by customers - 69,018
PAYE & social welfare 15,017 24,685
Accruals 260,615 1,115,163
647,263 1,374,549
Trade and other creditors are payable at various dates in accordance with the
suppliers' usual and customary credit terms. PAYE & social welfare are
repayable at various dates over the coming months in accordance with the
applicable statutory provisions.
The carrying amount of trade and other payables approximates its fair value.
All trade and other payables fall due within one year.
33. DEFERRED INCOME - GOVERNMENT GRANTS 2023 2022
Group € €
Government Grant 300,000 -
The above grant was received from the French government to lead a technical
and commercial feasibility on the site of a decommissioned coal-fired power
station. The income will be offset against sales arising from this project.
There are no unfulfilled conditions or other contingencies attaching to this
grant.
34. DISPOSAL OF SUBSIDIARY
On 12 July 2023, the Group disposed of 95% of its interest in Grande-Combe
SAS, retaining 5% which has been transferred to other investments (See Note
23).
The net liabilities of Grande Combe SAS at the date of disposal were as
follows:
12 July 2023
€
Property, plant & equipment 50,000
Development costs 386,197
Trade and other receivables 39,841
Bank balances and cash 1,404
Trade and other payables (523,817)
(46,375)
Gain on disposal 273,402
Total Consideration 227,027
Satisfied by:
Cash and cash equivalents 226,977
Minority interest retained 50
227,027
Net cash inflow arising on disposal
Consideration received in cash and cash equivalents 226,977
Less: Cash equivalents disposed of (1,404)
225,573
There was no disposal of subsidiaries made in
2022.
35. DISCONTINUED OPERATIONS
As disclosed in Note 34 above, the Group
disposed of 95% of its interest in Grande-Combe SAS.
The combined results of the discontinued
operations included in the loss for the financial year is set out below:
Period ended 12 July 2023 Year ended 31 December 2022
€ €
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (1,448) (33,776)
Finance costs and income - -
Loss from discontinued operations before tax (1,448) (33,776)
Taxation - -
Loss for the financial period from discontinued operations (attributable to (1,448) (33,776)
owners of the Company)
Profit after tax on disposal of subsidiary (Note 34) 273,402 -
Profit for the year from discontinued operations 271,954 (33,776)
Cash flows generated by Grande-Combe SAS for the financial years under review
were as follows:
Period ended 12 July 2023 Year ended 31 December 2022
€ €
Operating activities (1,448) (33,776)
Investing activities - (50,000)
Financing activities - -
Net cash flows used in discontinued operations (1,448) (83,776)
36. RELATED PARTY TRANSACTIONS
The Group's related parties include Altair Group Investment Limited
("Altair"), who at 31 December 2023 held 18.19% (2022: 19.00%) 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 2023, Altair advanced €1,373,191
(2022: €1,157,520) to the Group by way of borrowings. During the financial
year ended 31 December 2023, the Group repaid borrowings of €1,707,919
(2022: €Nil) by way of cash and €1,296,226 (2022: €Nil) by way of
conversion into equity. Interest payable to Altair for the financial year
ended 31 December 2023 amounted to €455,686 (2022: €1,725) and is included
in interest on loans, bank facilities and overdrafts as set out in Note 11.
Included in the above figure was €320,474 (2022: €Nil) representing
redemption and commitment fees. Included in borrowings, net of amortisation
costs, at 31 December 2023 is an amount of €Nil (2022: €1,064,598) due to
Altair from the Group (See Note 30).
During the financial year ended 31 December 2023, Altair advanced €173,730
(2022: €Nil) to the Group as part of the new syndicated facility advanced by
a number of lenders. Interest payable to Altair as part of the new syndicated
facility amounted to €343 (2022: €Nil) and is included in interest on
loans, bank facilities and overdrafts as set out in Note 11. Included in
borrowings, net of amortisation costs, at 31 December 2023 is an amount of
€152,643 (2022: €Nil) due to Altair from the Group as part of the new
syndicated facility (See Note 30).
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 2023 Total 2022
retirement €'000s €'000s €'000s €'000s €'000s €000's €'000s Total
€'000s
Executive Directors
D Palumbo 259 - 13 7 - (83) - 196 419
J Vander Linden 259 - 13 10 - (83) - 199 422
Y Alemán 194 - - (55) - 139 276
Former Executive Directors
N Babar Resigned 17/11/2023 190 - 9 4 - (62) - 141 323
Non-Executive Directors
I Pearson - 69 - - - - - 69 71
T Quigley - 41 - - - - - 41 42
Total 2023 902 110 35 21 - (283) - 785 -
Total 2022 920 113 36 24 - 275 185 1,553
At 31 December 2023, directors' remuneration unpaid (including past directors)
amounted to €66,568 (31 December 2022: €274,917).
During the year, it was agreed to cancel the short term incentive payable to
executive directors accrued in 2022.
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 unconsolidated structured entities
During the year ended 31 December 2023, the Group generated sales of
€807,373 from Biogaz Gardanne SAS (2022: €Nil), an unconsolidated
structured entity as set out in Note 20. Included in trade and other
receivables at 31 December 2023 is €807,373 receivable from Biogaz Gardanne
SAS (2022: €Nil).
Transactions with associate undertakings and joint ventures
The following transactions were made with associate undertakings and joint
ventures for the year ended 31 December 2023:
North Fork Community Power LLC Synergy Belisce d.o.o. Synergy Karlovac d.o.o. EQTEC Italia MDC srl Eqtec Synergy Projects Limited Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
€ € € € € € € € € € € €
Loans to associated undertakings and joint ventures
At start of year - 1,891,842 2,247,366 551,808 1,170,612 585,251 1,656,573 492,406 100,000 100,000 5,174,551 3,621,307
Advanced during year - 528,085 4,600 1,706,258 11,100 618,356 334,750 - - - 350,450 2,852,699
Repaid in year - - - (8,694) (3,700) (31,324) (32,000) - - - (35,700) (40,018)
Acquisition of loans - - - - - - 623,234 - - - 623,234 -
Debtor reclassified as loan - - - - - - 554,067 1,161,000 - - 554,067 1,161,000
Payables reclassified - - - - - 279,000 - 279,000 -
Loans derecognised - - - - - - (252,500) - - - (252,500) -
Interest charged in year - 177,069 - - - - 71,562 19,119 - - 71,562 196,188
Loans reclassified as investment (see below) - (2,728,959) - - - - (487,545) (15,952) - - (487,545) (2,744,911)
Exchange differences - 131,963 756 (2,006) 394 (1,671) - - - - 1,150 128,286
At end of year - - 2,252,722 2,247,366 1,178,406 1,170,612 2,747,141 1,656,573 100,000 100,000 6,278,269 5,174,551
Sales of goods and services
Technology sales 20,341 - 75,000 1,000,000 75,000 - 149,263 3,500,000 - - 319,604 4,500,000
Development fees - - - 245,010 - 115,005 - - - - - 360,015
20,341 - 75,000 1,245,010 75,000 115,005 149,263 3,500,000 - - 319,604 4,860,015
Other income - - - - - - 108,932 - - - 108,932 -
Year-end balances
Included in trade receivables 20,341 - 2,292,836 2,217,523 2,320,428 2,245,191 68,341 609,000 - - 4,701,946 5,874,214
Included in other receivables - - - - 12,426 12,421 100 100 18,956 16,956 31,482 29,477
Included in other payables - - - - - - 129,737 - - - 129,737 -
As part of the financial restructurings of North Fork Community Power LLC
under Chapter 11 of the US Bankruptcy Code (see Note 21), borrowings and
accrued interest advanced to North Fork Community Power LLC amounting to
€2,728,959 have been reclassified as equity in North Fork Community Power
LLC in the year ended 31 December 2022. As set out in note 21, the Group has
made the decision to impair fully the investment in 2023, leading to an
impairment cost of €2,729,959 for the year ended 31 December 2023.
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.
37. EVENTS AFTER THE BALANCE SHEET DATE
Drawdown of Bank Refinance Approved for Italy Market Development Centre
On 16 January 2024, it was announced that Banca del Fucino S.p.A., a historic
private banking group based in Rome, (the "Lender") has approved the drawdown
of a loan facility of €2.9 million to provide financing to its associate
entity, EQTEC Italia MDC srl, which owns the Italy Market Development Centre,
located in Gallina, near Castiglione d'Orcia, Tuscany, Italy. The term of the
Facility is 48 months, with an annual interest rate of 2.5% over the six-month
Euro Interbank Offered Rate (Euribor), which is currently c. 3.9%. The loan is
guaranteed up to 80% by MedioCredito Centrale S.p.A., which is controlled by
the Italian Ministry of Economy. Italia MDC intends to draw down the Facility
in full imminently to support the Plant's business plan and to fund additional
performance improvements as Italia MDC pursues further operational efficiency
and commercial opportunities.
Settlement Agreement with Logik Developments
On 3 April 2024, it was announced that the Company has reached a settlement
agreement with Logik Developments Limited and its wholly-owned subsidiary
Logik WTE Limited (collectively, "Logik"). Pursuant to the Settlement
Agreement, the Company and its wholly-owned subsidiaries EQTEC UK Services
Limited and Deeside WTV Limited and Logik have agreed to the full and final
settlement of certain claims between them. In connection with this
settlement, subject to and conditional on the sale of a site at Weighbridge
Road in Deeside Industrial Park (the "Land") completing on or before 30 April
2024, Logik will pay the Company a settlement sum of £1.7 million within the
next business day following the date of completion. If the sale of the Land
completes between 1 May 2024 and 30 November 2024 Logik will pay the Company a
settlement sum of £2 million within the next business day following the date
of completion. If a sale of the Land does not complete by 1 December 2024,
Logik will be liable to pay to the Company £2,000,000 not conditional upon
any sale of the Land. Under the terms of the Settlement Agreement, EQTEC will
also receive interest at 4% above the Bank of England Base Rate on any part of
the settlement sum that is not paid in accordance with the terms of the
Settlement Agreement. The Company has received confirmation from Logik that
the Land is currently in the process of being sold and that the proposed
purchaser is funded by a global investment company. Further, the Company has
been informed that all elements of the transaction have now been agreed and
the funder is seeking final sign-off and confirmation at its internal
committee meeting in the coming days.
On 1 May 2024, it was announced that the Company has received written
confirmation from Logik that exchange for the sale of the Land to a proposed
purchaser, who is funded by a global investment company, has taken place.
Completion of the purchase of the Land and receipt of funds by EQTEC remains
conditional only upon the final legal execution of certain documents
pertaining to the project. The long stop date for completion has been set for
28 June 2024
Drawdown on Syndicated Facility
On 8 May 2024, the Company announced that it has received a further advance of
£340,000 pursuant to the terms of the New Syndicated Facility announced on 23
November 2023. The Drawdown is intended to provide working capital in advance
of the anticipated receipt of the proceeds from the settlement with Logik
Developments, In accordance with the terms of the New Syndicated Facility, the
Refinance Investors will be granted an aggregate of 7,359,671 warrants in the
Company with an exercise price of £0.02656 per Warrant (being 150% of the
average of the 5 daily VWAPs prior to execution) and a 48-month term from
grant.
Repayment and conversion for reduction of debt balances
On 8 May 2024, the Company announced that Riverfort Global Opportunities PCC
Limited and YA II PN Limited (the "Lenders") are party to a secured facility
of up to £10.0 million as detailed in the Company's announcement on 20
November 2023 (the "YA-RF Secured Facility"). No further funds have been
advanced pursuant to the YA-RF Secured Facility which currently stands with
£5.1 million drawn and no further fees have been accrued since that time.
Upon the anticipated receipt of funds pursuant to the Logik settlement, 20% of
the proceeds of the Logik settlement amounting to £400,000 will be paid to
the YA-RF Lenders to reduce the balances outstanding pursuant to the YA-RF
Secured Facility. In addition, Riverfort Global Opportunities PCC Limited has
agreed with the Company to convert part of the outstanding balances of the
YA-RF Secured Facility by subscribing £200,000 for 12,802,031 shares in the
Company at an issue price of 1.562p per share, representing a 5.3% discount to
the mid-market closing price of 3 May 2024.
Refinancing of existing secured loan facility
On 23 May 2024, the Company announced that they have secured a refinancing of
its existing secured facility, the YA-RF Secured Facility. The new funding
replaces the previous funding with a non-convertible secured term loan
facility with no scheduled repayments until 21 May 2026. the key terms of
which are:
· A 24-month term ("Term"), with repayment of the principal and
interest of each advance due at the expiry of the Term (subject to agreed
prepayments as detailed below).
· 9.5% fixed coupon of principal outstanding accruing on the
commencement of each 12-month period.
· No fixed monthly payment or conversion rights. Outstanding
amounts will only be converted into shares in the Company in the case of an
event of default.
· Arrangement fee of 5% for each advance.
· Maximum facility amount reduced to £5.5m.
· Repayment of principal and interest secured by the Debenture
previously granted (as detailed in the Refinance Announcement).
· Agreed prepayments, save as waived in full or part by the
Lenders, during the Term:
- 20% of net funds received by
the Company of any certain future equity fundraisings;
- 25% of any cash inflows excluding
operational turnover or equity placements. This will include the
anticipated proceeds of the Logik settlement, details of
which were announced by the Company on 3 April 2024; and
- 10% of net revenue (after costs
of sales) earned, paid quarterly in arrears.
· The above repayment terms supersede other repayment obligations
to the Lenders that were previously announced.
Equity placement
On 28 May 2024, the Company announced a fundraise of £852,425 (Gross),
achieved through the placing of 60,887,490 ordinary shares of €0.01 each in
the Company ("Shares") at£0.014 per share to the subscribers (the "Placing
Shares"). A further 2,435,499 new Shares are being issued in settlement of
certain fees in relation to the Placing ("Fee Shares").. The Placing
represents a new capital injection raised for cash proceeds. No portion of the
Placing will be used for repayments of the Term Loan with the lenders having
waived the rights to any prepayment arising from the Placing. The board
intends for the proceeds of the Placing to be used for the working capital for
the operations of the Company. On 31 May 2024, the Company confirmed receipt
of £350,000 in relation to the above placing and on 11 June 2024 confirmed
receipt of the balance of £502,425.
No other adjusting or significant non-adjusting events have occurred between
the 31 December reporting date and the date of authorisation.
38. 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:
2023 2022
€ €
Issue of shares in settlement of borrowings and other liabilities 3,876,990 290,429
39. 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 2023 was €33,492,877
(2022: €5,216,344).
40. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved by the Board of Directors on 27 June
2024.
ENQUIRIES
EQTEC plc +44 20 3883 7009
David Palumbo / Jeffrey Vander Linden
Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
James Harris / Richard Johnson
Global Investment Strategy UK Ltd - Broker +44 20 7048 9045
Samantha Esqulant
Fortified Securities - Broker +44 20 3411 7773
Guy Wheatley
About EQTEC plc
As one of the world's most experienced thermochemical conversion technology
and engineering companies, EQTEC delivers waste management and new energy
solutions through best-in-class innovation and infrastructure engineering and
value-added services to owner-operators. EQTEC is one of only a few technology
providers directly addressing the challenge of replacing fossil fuels for
reliable, baseload energy. 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, specifies and delivers clean, syngas production solutions in
the USA, EU and UK, with highly efficient equipment that is modular and
scalable from 1MW to 30MW. EQTEC's versatile solutions process 60 varieties of
feedstock, including forestry waste, agricultural waste, industrial waste 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 renewable 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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