REG - EQTEC PLC - Interim results
28/09/2023 07:00
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RNS Number : 9153N EQTEC PLC 28 September 2023
28 September 2023
EQTEC plc
("EQTEC", the "Company" or the "Group")
Interim results for the six months ended 30 June 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 unaudited, interim
results for the six months ended 30 June 2023 ("H1 2023"), with post-period
progress.
Financial highlights
· Revenue and other operating income: €0.145 million (H1 2022:
€2.98 million)
· Gross profit €0.036 million (H1 2022: €0.24 million)
· EBITDA loss before significant and non-recurring items: €1.92
million (H1 2022: €1.97 million)
· Capital raise of £3.5 million (€4.05 million) through the
placing of new shares
· Reprofiling of existing loan facilities including the conversion
of existing debt into equity and settlement of strategic supplier fees in new
Ordinary Shares
Financial performance over the first half of 2023 declined relative to
previous periods as the Company makes a strategic shift away from development
of high-risk, legacy projects, toward focus as a pure-play technology provider
on pre-funded, risk-mitigated projects owned and driven by credible
infrastructure owners and investors.
The Company views its H1 2023 financial underperformance as a consequence of
this transition, whilst it refocuses a majority of its business development
and engineering efforts on steady, reliable revenues from higher-probability
client projects.
As engineering work now underway across a number of client projects completes
in 2023 and early 2024, the Company anticipates further, greater revenues from
equipment sales, other engineering services and licensing & maintenance
support services, as well as additional revenue from front-end engineering on
new client projects.
Business strategy and strategic investment
The Company announced its business strategy of moving out of project
development and into pure-play technology licensing and innovation with its
2021 interim results and reaffirmed this strategy in its 2021 and 2022 annual
reports, at successive, annual general meetings (the "AGMs") and in other
public communications. The Company's strategy emphasises: (1) continuously
developing and leveraging its IP-rich engineering and innovation capabilities;
(2) de-risking its portfolio by occupying a narrow segment of the value chain,
collaborating with the world's best value chain partners; and (3) driving
higher margins through licensing its IP for use by owner-operators, deploying
its engineering and design capabilities to get its IP deployed into more
places, for the best-suited business models.
Despite the Company's well-publicised strategic focus, over the past six
months and particularly over the past week, the Company's market valuation has
declined dramatically. The Board regularly reviews the apparent disconnect
between the market's valuation of the Company and the intrinsic value of its
patented and proprietary technology, its pipeline, its partners and its
prospects for integrating its technology into the right projects, as its
business strategy gains traction.
In response, the Board is conducting a review of available options for
required investment, with a particular focus on long-term, strategic investors
of sufficient scale and resources to support the Company's growth and
execution of its strategic vision. To facilitate engagement with prospective
investors, the Company has, together with its advisors, including a major
investment bank announced by the Company in February 2023, established a
10-year business plan built around its declared strategy.
Ian Pearson, Chairman of EQTEC, commented:
"The Board is committed to the Company's business strategy and its leadership
as it negotiates a difficult transition out of EQTEC's project development
past into its future business model as a leading technology innovation
business. To add momentum behind execution of its strategy, the Company
requires the sort of funding that only one or more strategic investors can
bring. It is imperative that we respond to the AIM market's valuation of the
Company by finding investors of scale that understand and believe in EQTEC's
direction and full potential."
David Palumbo, CEO of EQTEC, commented:
"We remain committed to transitioning EQTEC from a broad-based project
developer, exposed to a wide range of commercial and delivery risks, into a
technology licensor and innovator focused on what we do best. We forecast that
2023 would be a pivotal year in that transition, and now we can begin to see
its impact: an increasing number of pre-funded projects held by larger, better
funded clients and co-delivered with a more reliable cadre of partners. At the
same time, and even after avoiding €18 million in costs last year, we are
having to make hard choices about making good on completion of legacy projects
or leaving them behind. Either way, the impact of managing through the legacy
work is painful in financial terms, as our revenue and profit figures
indicate. But it is also temporary. The engineering work we are undertaking
now on the renewed portfolio will gradually convert to equipment sales and
paid fees for engineering, licensing & maintenance support. As we strictly
qualify, select and contract new work, we expect increasingly smooth revenues
across a busy portfolio of client-led projects. The second half of 2023 is
focused on steady progression of our transition, including further clean-up of
legacy challenges and growing the depth and breadth of our engagement with
leading partners investing and building new energy infrastructure in Europe
and beyond."
Commercial and operational highlights, including post period
· Italy Market Development Centre ("MDC"): The Group's reference plant in
Tuscany, Italy was commissioned, made operational and handed over to Italian
operating company EQTEC Italia MDC Srl; the Group also carried out site visits
with prospective customers including large, European owner-operators. Post
period, the Group, which owns c. 20% of the operating company, announced bank
refinance of the plant worth €2.9 million, subject to specified performance
improvements due to be made by the end of 2023.
· Biogaz Gardanne feasibility: The Group was awarded feasibility work
funded by the France government toward a potential waste-to-renewable natural
gas ("RNG") facility at the site of a former coal-fired power station, with
Wood as the prospective methanation technology partner. Post period, the
Company announced successful completion of steam-oxygen gasification tests at
its R&D facility at the Université de Lorraine in Epinal, France ("UL"),
as part of the Gardanne feasibility work. More broadly, the tests confirmed
that similar results to those achieved with EQTEC steam-oxygen gasification
technology at the UL facility can be directly applied at commercial scale, for
production of advanced biofuels. The Group later announced completion of
feasibility work and progress toward paid engineering work, supported by the
French government and with emerging prospects for private-sector investment.
· Limoges project: In partnership with French utility company Idex,
the Group was awarded a project by the Limoges Métropole for a waste-to-RNG
facility; the project is due to order paid engineering work from EQTEC in late
2023 or early 2024, with Wood as prospective methanation technology partner.
· Colibrì projects: The Company announced a collaboration framework
agreement with Poseidon LNG Hub Srl of Italy toward deployment of EQTEC
technology in Italy for clean, waste-to-RNG plants, starting with a portfolio
of four projects in northern Italy backed by a consortium including Linde plc,
Wood, Alfa Laval AB and Chemprod Srl.
· France MDC: Post period, the Company announced the sale to Idex of
95% of the share capital of Grande-Combe SAS, the project company for the
France MDC and the second project for the partnership; the Group also
announced that it and Idex had signed a contract for front-end engineering
design ("FEED") work expected to start immediately and complete within 2023,
with the Group expected to receive revenues of €440,000 for engineering
services. However, subsequent rescheduling of the completion of FEED work to
December 2023 is expected to result in recognition of such revenues being
delayed to early 2024. The Group also confirmed that it anticipates by early
2025 invoicing the project for a total of €15 million for engineering
services, equipment, commissioning and licensing.
Current trading and outlook
The Company is accelerating its transition toward its target business model of
technology licensor and innovator, by recovering or releasing legacy projects,
qualifying and pursuing new opportunities in target markets, continuing its
programme of applied research and trials for client projects at the
Université de Lorraine and driving operational and organisational changes to
the Group itself.
The Company's transition efforts in 2023 have focused on four legacy projects,
driving to re-establish value, recover cash or exit them.
· At the North Fork project in California, USA, the Company and its
fellow NFCP shareholders, with the support of the project's bondholder, have
replaced the project manager and are in the process of exiting the lead
contractor for the project. The change follows restructuring of the project
achieved through the pre-packaged Chapter 11 bankruptcy announced by the
Company in October 2022 and a concerted push by shareholders and bondholder
for accelerated completion of construction, toward commissioning and live
operation of the intended 2.0 MWe forestry waste-to-power and biochar plant.
Additionally, NFCP has cancelled its contract with the prospective operations
and maintenance provider, transitioning North Fork Community Power LLC
("NFCP") from simply a shareholding entity to a full, operating company. NFCP
has appointed a highly experienced project management and consultancy company
to drive project progress and to support its ramp-up of the operational
capability.
· At the Deeside project in Flintshire, UK, the Company announced on
20 September 2023 that it had issued a legal claim against project development
partner Logik Developments Limited ("Logik Developments") and its wholly owned
subsidiary Logik WTE Limited (collectively, "Logik") in connection with
payments made by the Group and due to the Group, and for breach of the share
purchase agreement between Logik Developments and Deeside WTV, EQTEC's wholly
owned project company. The claim outlined a number of payments due to the
Group for reimbursement of loans made by the Group to Logik, for reimbursement
of direct payments made by the Group on Logik's behalf and for work undertaken
by EQTEC on behalf of Logik, originally in Logik's scope of work. The total
amounts claimed by the Group total c. £4 million.
· EQTEC commenced commissioning work in Larissa, Greece at the 0.5 MWe
plant owned and to be operated by Agrigas Energy SA. However, the Company is
owed outstanding fees of €400,000 and is unwilling to progress with
completion of commissioning until these are paid. The Company is actively
working with project EPC ewerGy GmbH to recover fees and proceed with
commissioning.
· The Company announced on 20 September 2023 that it would cease
activity on its Billingham project in Teesside, UK, given the difficulties and
costs past and future with developing the project through to financial close.
Recent withdrawals of private wire offtaker candidates for the prospective
plant, combined with the decision by the grid connection provider to cancel
the project's grid connection, made it unfeasible for the Company to
prioritise the project against its emerging portfolio of work in France, Italy
and elsewhere.
The Company has sought to limit its priority activities to a focused set of
opportunities and projects as outlined above. However, it has also kept in
touch with emerging opportunities in its go-to-markets and especially in
France, Croatia, Ireland and USA.
· In France, the Group has engaged with one of Europe's largest
utility companies for provision of tailored solutions for industrial clients.
The utility is designing, deploying and operating on-premise solutions for its
industrial clients and sees a range of opportunities for EQTEC's syngas
technology as part of its offering.
· In Croatia, the Group continues to engage investors interested in
funding the Croatia MDC in Belišće, Croatia toward full operation. The Group
had intended to see the plant recommissioned by the end of 2023, but the
prospective investors requested operational data from Italia MDC over an
extended period of stable operations, thus pushing out the original schedule
for Croatia MDC. As soon as EQTEC Italia MDC Srl is able to provide sufficient
data, the Company anticipates proceeding toward full funding of the Belišće
plant.
· In Ireland, the Company announced on 25 July 2023 a collaboration
framework agreement with Irish development and project management company Domi
Ost Limited, for deployment of EQTEC solutions into Ireland, especially for
RNG, hydrogen or other advanced applications such as ethanol or methanol. The
Company confirmed that the parties have identified four projects for joint
pursuit, one of which is now under active development.
· In the USA, the Company is looking beyond California, carefully
qualifying opportunities that it could support with its limited and
Europe-based capability. It is in discussions with two large owner-operators
with interest in decarbonisation and new energy infrastructure. Additionally,
and with a view to longer-term development of local engineering capability to
support the US market, the Company is in discussions with two top-tier, R1
research universities toward establishment of R&D facilities on their
premises, based on EQTEC technology.
The Group continued its programme of applied research and trials for client
projects with the Energy from Biomass and Wastes team, part of the Laboratoire
d'Etudes et de Recherche sur le Matériau Bois at UL. In July 2023, the Group
announced success with steam-oxygen gasification trials for advanced
applications such as RNG, hydrogen and other biofuels. In October 2023, the
Group will carry out additional trials in support of at least one client
seeking to convert refused-derived fuel ("RDF") from municipal solid waste
into power or biofuels.
Finally, and in support of redoubling its efforts in an efficient and
effective way toward accelerating its transition out of legacy work and into
target business, the Company is making targeted operational and organisational
changes:
· The Company and CFO Nauman Babar have come to mutual agreement for his
transition out of the business before the end of 2023. Mr Babar is departing
in light of family considerations that require him to relocate outside the UK.
The Board has commenced a search for Mr Babar's replacement, and he has
committed to support the Company with orderly handover of his
responsibilities. Mr. Babar's replacement will be announced in due course.
· Executive Directors have proposed, and the Board of Directors has
agreed that, in recognition of 2023 revenue underperformance and the near-term
requirement for cash preservation in the Company, the short-term incentive
bonus programme ("STI") and the long-term incentive share options programme
("LTIP") for all Executive Directors shall be suspended until further notice.
· On 04 April 2023, the Executive Directors agreed that 24% of their
remuneration payable in 2023 could be satisfied, at the discretion of the
Company's remuneration committee, by the issue of new Ordinary Shares. The
Executive Directors have now agreed to waive completely their entitlement to
receive 24% of their remuneration payable in 2023.
The principal, unaudited, condensed and consolidated financial statements for
the six months ended 30 June 2023 are set out below:
EQTEC plc and Group
Unaudited, condensed, consolidated statement of profit or loss
for the six months ended 30 June 2023
Notes 6 months ended 6 months ended
30 June 2023 30 June 2022
€ €
Revenue 6 145,293 2,981,006
Cost of sales (109,528) (2,742,168)
Gross profit 35,765 238,838
Operating income/(expenses)
Administrative expenses (2,124,280) (2,464,310)
Impairment of project costs - (1,872)
Other income 52,914 -
Other gains 7 182,833 -
Foreign currency (losses)/gains (68,897) 253,214
Operating loss (1,921,665) (1,974,130)
Share of loss from equity accounted investments (102,996) (7,322)
Gains from sales to equity accounted investments deferred - (83,504)
Gain/(loss) on revaluation of equity accounted investment 16,726 (488)
Change in fair value of investments (6,822) (249,120)
Finance income 39,451 233,953
Finance costs (449,300) (199,751)
Loss before taxation 6 (2,424,606) (2,280,362)
Income tax 8 - -
LOSS FOR THE FINANCIAL PERIOD (2,424,606) (2,280,362)
Loss/(Profit) attributable to:
Owners of the company (2,424,594) (2,280,379)
Non-controlling interest (12) 17
(2,424,606) (2,280,362)
6 months ended 6 months ended
30 June 2023 30 June 2022
€ per share € per share
Basic loss per share:
From continuing operations 9 (0.0002) (0.0003)
From continuing and discontinued operations 9 (0.0002) (0.0003)
Diluted loss per share:
From continuing operations 9 (0.0002) (0.0003)
From continuing and discontinued operations 9 (0.0002) (0.0003)
EQTEC plc and Group
Unaudited, condensed, consolidated statement of other comprehensive income
for the six months ended 30 June 2023
6 months ended 6 months ended
30 June 2023 30 June 2022
€ €
Loss for the financial period (2,424,606) (2,280,362)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Exchange differences arising on retranslation of foreign operations 229,958 (235,360)
229,958 (235,360)
Total comprehensive loss for the financial period (2,194,648) (2,515,722)
Attributable to:
Owners of the company (2,126,160) (2,574,813)
Non-controlling interests (68,488) 59,091
(2,194,648) (2,515,722)
EQTEC plc and Group
Unaudited, condensed, consolidated statement of financial position
at 30 June 2023
Notes 30 June 2023 31 December 2022
ASSETS € €
Non-current assets
Property, plant and equipment 10 537,187 133,053
Intangible assets 11 17,515,929 17,578,231
Investments accounted for using the equity method 12 7,758,573 7,619,514
Financial assets 3,838,754 3,728,434
Other financial investments 174,866 171,186
Total non-current assets 29,825,309 29,230,418
Current assets
Development costs 13 7,138,705 6,033,543
Loans receivable from project development 13 5,597,403 5,446,087
Trade and other receivables 14 7,083,640 7,221,046
Cash and cash equivalents 1,041,525 1,693,116
Total current assets 20,861,273 20,393,792
Total assets 50,686,582 49,624,210
EQUITY AND LIABILITIES € €
Equity
Share capital 15 28,906,359 26,799,584
Share premium 89,806,447 87,203,372
Other reserves 2,694,125 2,694,125
Accumulated deficit (79,432,079) (77,305,919)
Equity attributable to the owners of the company 41,974,852 39,391,162
Non-controlling interests (2,327,011) (2,258,523)
Total equity 39,647,841 37,132,639
Non-current liabilities
Borrowings 2,281,341 1,064,598
Lease liabilities 17 370,163 -
Total non-current liabilities 2,651,504 1,064,598
Current liabilities
Trade and other payables 18 5,711,017 6,264,404
Borrowings 16 2,583,243 5,106,038
Lease liabilities 17 92,977 56,531
Total current liabilities 8,387,237 11,426,973
Total equity and liabilities 50,686,582 49,624,210
EQTEC plc and Group
Unaudited, condensed, consolidated statement of changes in equity
for the six months ended 30 June 2023 and the six months ended 30 June 2022
Share Equity attributable to owners of the company Non-controlling interests
Capital Share premium Accumulated deficit Total
Other reserves
€ € € € € € €
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
Transactions with owners -
- - - - - -
Loss for the financial period - - (2,280,379) (2,280,379) 17 (2,280,362)
-
Unrealised foreign exchange gains/(losses) - - - (294,434) (294,434) 59,074 (235,360)
Total comprehensive loss for the financial period - - - (2,574,813) (2,574,813) 59,091 (2,515,722)
25,977,130 83,610,562 2,353,868 (68,751,885) 43,189,675 (2,325,098) 40,864,577
Balance at 30 June 2022
Balance at 1 January 2023 26,799,584 87,203,372 (77,305,919) 39,391,162 (2,258,523) 37,132,639
2,694,125
Issue of ordinary shares 1,596,560
2,399,413 - - 3,995,973 - 3,995,973
Issue of ordinary shares in lieu of debt 510,215
621,674 - - 1,131,889 - 1,131,889
Share issue costs -
(418,012) - - (418,012) - (418,012)
Transactions with owners 2,106,775
2,603,075 - - 4,709,850 - 4,709,850
Loss/(profit) for the financial period - - (12) (2,424,606)
- (2,424,594) (2,424,594)
Unrealised foreign exchange losses - - - 298,434 298,434 (68,476) 229,958
Total comprehensive loss for the financial period - - - (2,126,160) (2,126,160) (68,488) (2,194,648)
Balance at 30 June 2023 28,906,359 89,806,447 (79,432,079) 41,974,852 (2,327,011) 39,647,841
2,694,125
EQTEC plc and Group
Unaudited, condensed, consolidated statement of cash flows
for the six months ended 30 June 2023
Notes 6 months ended 6 months ended
30 June 2023 30 June 2022
€ €
Cash flows from operating activities
Loss for the financial period (2,424,606) (2,280,362)
Adjustments for:
Depreciation of property, plant and equipment 92,823 117,055
Amortisation of intangible assets 62,301 62,301
Share of loss from equity accounted investments 102,996 7,322
Gains from sales to equity accounted investments deferred - 83,504
(Gain)/loss on revaluation of equity accounted investment (16,726) 488
Change in fair value of investments 6,822 249,120
(Gain)/(loss) on debt for equity swap (182,833) -
Unrealised foreign exchange movements 332,389 (468,471)
Operating cash flows before working capital changes (2,026,834) (2,229,043)
(Increase)/decrease in:
Development costs (1,105,162) (1,444,134)
Trade and other receivables 102,061 (1,296,294)
Decrease in Trade and other payables (652,009) (186,641)
Cash used in operating activities - continuing operations (3,681,944) (5,156,112)
Income taxes repaid 22,746 -
Finance income (39,451) (233,953)
Finance costs 449,300 199,751
Cash used in operating activities (3,249,349) (5,190,314)
Cash flows from investing activities
Additions to property, plant and equipment (7,482) (26,465)
Additions to other investments (5,665) -
Deposit paid on land purchase - (593,799)
Investment in related undertakings - (356,279)
Loans advanced to equity accounted investments (225,250) (2,715,253)
Loans repaid by equity accounted investments 33,200
Other advances to equity accounted investments (2,000) -
Loans advanced to project development undertakings - (781,483)
Cash used in investing activities (207,197) (4,473,279)
Cash flows from financing activities
Proceeds from borrowings and lease liabilities 906,540 5,981,262
Repayment of borrowings and lease liabilities (2,006,943) (212,847)
Proceeds from issue of ordinary shares 4,051,609 -
Share issue costs (247,173) -
Loan issue costs (9,097) (328,769)
Interest paid (2,101) (608)
Net cash generated from financing activities 2,692,835 5,439,038
Net (decrease)/ increase in cash and cash equivalents (763,711) (4,224,555)
Cash and cash equivalents at the beginning of the financial period 1,693,116 6,446,217
Cash and cash equivalents at the end of the financial period 929,405 2,221,662
EQTEC plc and Group
Notes to the unaudited, condensed, consolidated financial statements
for the six months ended 30 June 2023
1. GENERAL INFORMATION
The unaudited interim condensed consolidated financial statements of EQTEC plc
("the Company") and its subsidiaries ("the Group") for the six months ended 30
June 2023 were authorised for issue in accordance with a resolution of the
directors on 27 September 2023.
EQTEC plc ("the Company") is a company domiciled in Ireland. The Company's
registered office is at Building 1000, City Gate, Mahon, Cork T12 W7CV,
Ireland. The Company's shares are quoted on the AIM market of the London Stock
Exchange plc.
The Group is a waste-to-value group, which uses its proven proprietary
Advanced Gasification Technology to generate safe, green energy from nearly 60
different kinds of feedstock such as municipal, agricultural and industrial
waste, biomass, and plastics. The Group collaborates with waste operators,
developers, technologists, EPC contractors and capital providers to build
sustainable waste elimination and green energy infrastructure.
Our income currently comes from the following streams: gasification technology
sales including software, engineering & design and other related services;
maintenance income from operating plants; and we receive development fees from
projects where we invest development capital. In the future we expect to
receive potential revenue from licensing opportunities and revenue from live
operations where EQTEC has an equity stake in a plant.
2. BASIS OF PREPERATION
The unaudited interim condensed consolidated financial statements are for the
six months ended 30 June 2023 and are presented in Euro, which is the
functional currency of the parent company. They have been prepared on a going
concern basis in accordance with International Accounting Standard (IAS) 34
Interim Financial Reporting.
The annual financial statements of the group are prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU. The
condensed set of financial statements has been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published consolidated financial statements for the financial
year ended 31 December 2022, except for the adoption of new standards
effective as of 1 January 2023. The Group has not early adopted any other
standard, interpretation or amendment that has been issued but is not yet
effective.
The financial information contained in this interim statement, which is
unaudited, does not constitute statutory accounts as defined by the Companies
Act, 2014. The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's financial
statements for the financial year ended 31 December 2022. The financial
statements of the Group were prepared in accordance with IFRSs as adopted by
the European Union and can be found on the Group's website at www.eqtec.com
(http://www.eqtec.com) .
The financial information for the six months ended 30 June 2023 and the
comparative financial information for the six months ended 30 June 2022 have
not been audited or reviewed by the Company's auditors pursuant to guidance
issued by the Auditing Practices Board. The comparative figures for the
financial year ended 31 December 2022 are not the Group's statutory accounts
for that financial year. Those accounts have been reported on by the Company's
auditor and will be delivered to the Company's Registration Office in due
course. The audit report on those statutory accounts was unqualified.
The Group incurred a loss on continuing operations of €2,424,606 (1H 2022:
€2,280,362) during the six-month period ended 30 June 2023 and had net
current assets of €12,474,036 (31 December 2022: €8,966,819) and net
assets of €39,647,841 (31 December 2022: €37,132,639) at 30 June 2023.
Going concern and future funding
These unaudited interim condensed consolidated financial statements have been
prepared on a going-concern basis, which assumes the Company will have
sufficient funds available to enable it to trade for not less than twelve
months from the date of announcing these unaudited interim condensed
consolidated financial statements.
The management team has prepared financial forecasts to estimate the likely
cash requirements of the Company over the next twelve months from the date of
announcing these unaudited interim condensed consolidated financial
statements. These forecasts show that the Company will require additional
external debt or equity funding going into the second half of 2024 to be able
to continue as a going concern.
The directors have assessed that there is a reasonable prospect that the
funding required for the Company to continue as a going concern will be
secured and therefore have prepared the unaudited interim condensed
consolidated financial statements on a going-concern basis. In the event that
additional funding is not secured, the Company would not be a going concern
and as a consequence there is a material uncertainty relating to the Company's
ability to continue as a going concern.
The unaudited interim condensed consolidated financial statements do not
include any adjustments that would arise if the Company were unable to
continue as a going concern.
3. BASIS OF CONSOLIDATION
The unaudited interim condensed consolidated financial statements include the
financial statements of the Group and all subsidiaries. The financial period
ends of all entities in the Group are coterminous.
4. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies used in preparing the unaudited interim
condensed consolidated financial information are consistent with those
disclosed in the Annual Report and Accounts of EQTEC plc for the financial
year ended 31 December 2022, except for the amendment to the development
assets policy and the adoption of new standards and interpretations and
revisions of existing standards as of 1 January 2023 noted below:
New/revised standards and interpretations adopted in 2023
The following amendments to existing standards and interpretations were
effective in the period to 30 June 2023, but were either not applicable or did
not have any material effect on the Group:
· IFRS 17: Insurance Contracts;
· Amendments to IAS 12: Income Taxes - International Tax Reform -
Pillar Two Model Rules;
· Amendments to IAS 12: Income Taxes - Deferred Taxes related to Assets
and Liabilities arising from a Single Transaction;
· Amendments to IAS 8: Accounting Polices, Changes in Accounting Estimates
and Errors-Definition of Accounting Estimates; and
· Amendments to IAS 1: Presentation of Financial Statements and IFRS
Practice Statement 2 Making Materiality Judgements - Disclosure of Accounting
Policies.
The directors do not expect the adoption of the above amendments and
interpretations to have a material effect on the interim condensed financial
statements in the period of initial application.
5. ESTIMATES
The preparation of the interim condensed consolidated financial statements
requires management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of certain assets,
liabilities, revenues and expenses together with disclosure of contingent
assets and liabilities. Estimates and underlying assumptions are reviewed on
an on-going basis. Revisions of accounting estimates are recognised in the
period in which the estimate is revised.
The judgements, estimations and assumptions applied in the interim financial
statements, including the key sources of estimation uncertainty, were the same
as those applied in the Group's last annual financial statements for the
financial year ended 31 December 2022.
6. 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; and
Power Generation: Being the development and operation of renewable energy
electricity and heat generating plants.
The chief operating decision maker is the Chief Executive Officer. Information
regarding the Group's current reportable segment is presented below. The
following is an analysis of the Group's revenue and results from continuing
operations by reportable segment:
Segment Revenue Segment Profit/(Loss)
6 months ended 6 months ended
30 June 2023 30 June 2022 30 June 2023 30 June 2022
€ € € €
Technology Sales 145,293 2,981,006 (781,496) (536,346)
Power Generation - - (99) (63)
Total from continuing operations
145,293 2,981,006 (781,595) (536,409)
Central administration costs and directors' salaries (1,306,920) (1,689,063)
Impairment of project costs - (1,872)
Other income 52,914
Other gains and losses 182,833 -
Foreign currency (losses)/gains (68,897) 253,214
Share of loss of equity accounted investments (102,996) (7,322)
Gains from sales to equity accounted investments deferred - (83,504)
Gain/(loss) on revaluation of equity accounted investment 16,726 (488)
Change in fair value of investments (6,822) (249,120)
Finance income 39,451 233,953
Finance costs (449,300) (199,751)
Loss before taxation (continuing operations) (2,424,606) (2,280,362)
Revenue reported above represents revenue generated from associated
undertakings and external customers. Inter-segment sales for the financial
period amounted to €Nil (2022: €Nil). Included in revenues in the
Technology Sales Segment are revenues of €Nil (2022: €2,550,000) which
arose from sales to associate undertakings and joint ventures of EQTEC plc.
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 losses of jointly controlled entities,
investment revenue and finance costs. This is the measure reported to the
chief operating decision maker for the purposes of resource allocation and
assessment of segment performance.
Other segment information: Depreciation and amortisation Additions to non-current assets
6 months ended 6 months ended
30 June 2023 30 June 2022 30 June 2023 30 June 2022
€ € € €
Technology sales 57,429 61,794 496,612 26,465
Power Generation - - - -
Head Office 97,695 117,563 - -
155,124 179,357 496,612 26,465
The Group operates in four principal geographical areas: Republic of Ireland
(country of domicile), the European Union, United States 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*
6 months ended 6 months
ended As at As at
30 June 2023 30 June 2022 30 June 2023 31 December 2022
€ € € €
Republic of Ireland - - - -
European Union 145,293 2,981,006 2,769,657 2,392,776
United States - - - -
United Kingdom - - - 35,049
145,293 2,981,006 2,769,657 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.
7. OTHER GAINS AND LOSSES
6 months ended 6 months ended
30 June 2023 30 June 2022
€ €
Gain on debt for equity swap 182,833 -
During the financial period, the Group extinguished some of its borrowings by
issuing equity instruments. In accordance with IFRIC 19 Extinguishing
Financial Liabilities with Equity Instruments, the gain recognised on these
transactions was €182,833 (H1 2022: €Nil).
8. INCOME TAX
6 months ended 6 months ended
30 June 2023 30 June 2022
€ €
Income tax expense comprises:
Current tax expense - -
Deferred tax credit - -
Adjustment for prior financial periods - -
Tax expense - -
An income tax charge does not arise for the six months ended 30 June 2023 or
30 June 2022 as the effective tax rate applicable to expected total annual
earnings is Nil as the Group has sufficient tax losses coming forward to
offset against any taxable profits. A deferred tax asset as not been
recognised for the losses coming forward.
9. LOSS PER SHARE
6 months ended 6 months ended
30 June 2023 30 June 2022
€ per share € per share
Basic loss per share
From continuing operations (0.0002) (0.0003)
From discontinued operations - -
Total basic loss per share (0.0002) (0.0003)
Diluted loss per share
From continuing operations (0.0002) (0.0003)
From discontinued operations - -
Total diluted loss per share (0.0002) (0.0003)
The loss and weighted average number of ordinary shares used in the
calculation of the basic and diluted loss per share are as follows:
6 months ended 6 months ended
30 June 2023 30 June 2022
€ €
Loss for period attributable to equity holders of the parent (2,424,594) (2,280,379)
Profit for the period from discontinued operations used in the calculation of
basic earnings per share from discontinued operations
- -
Losses used in the calculation of basic loss per share from continuing
operations
(2,424,594) (2,280,379)
No. No.
Weighted average number of ordinary shares for 10,474,682,261 8,599,024,945
the purposes of basic loss per share
Weighted average number of ordinary shares for 10,474,682,261 8,599,024,945
the purposes of diluted loss per share
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.
30 June 2023 30 June 2022
Share warrants in issue 2,053,846,832 462,472,488
Share options in issue 67,304,542 67,304,542
Convertible loans 276,698,306 93,457,944
LTIP Shares in issue 374,779,879 23,045,003
Total anti-dilutive shares 2,772,629,559 646,279,977
10. PROPERTY, PLANT AND EQUIPMENT
During the six-month period ended 30 June 2023, the Group acquired property,
plant and equipment to the value of €489,130 financed by new leases (H1 2022
- €Nil) and €7,482 financed by cash. (H1 2022: €26,465).
11. INTANGIBLE ASSETS
Included are the following amounts relating to goodwill in intangible assets:
Goodwill Patents Total Goodwill Patents Total
30-Jun-23 30-Jun-23 30-Jun-23 31-Dec-22 31-Dec-22 31-Dec-22
Cost € € € € € €
At start and at end of the financial period 16,710,497 2,492,059 19,202,556 16,710,497 2,492,059 19,202,556
Amortisation and impairment
At start of the financial period 1,427,038 197,287 1,624,325 1,427,038 72,685 1,499,723
Amortisation for the period 62,300 62,300 124,602 124,602
Impairment losses - -
At end of the financial period 1,427,038 259,587 1,686,625 1,427,038 197,287 1,624,325
Carrying value
At start and at end of the financial period 15,283,459 2,232,470 17,515,929 15,283,459 2,294,772 17,578,231
12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investments accounted for using the equity method are made up as follows:
30 June 2023 31 December 2022
€ €
Investment in associate undertakings 4,399,974 4,263,604
Investment in joint ventures 3,358,599 3,355,910
7,758,573 7,619,514
The carrying amount of equity-accounted investments has changed as follows in
the six months to June 2023:
Associate Joint
Undertakings Ventures
6 months ended 6 months ended
30 June 2023 30 June 2023
€ €
Beginning of the period 4,263,604 3,355,910
Loans advanced in period 218,750 6,500
Loans repaid in period (32,000) (1,200)
Interest accrued on loans in period 31,597 -
Share of loss on equity-accounted investments in period (99,241) (3,755)
Gain on revaluation of equity accounted investment 16,726 -
Exchange differences 538 1,144
4,399,974 3,358,599
13. DEVELOPMENT ASSETS
30 June 2023 31 December 2022
€ €
Costs associated with project development 7,138,705 6,033,543
Loan receivable from project development undertakings
- Convertible loans 2,908,147 2,824,572
- Other loans 2,689,256 2,621,515
5,597,403 5,446,087
The Group uses its expertise in engineering, project management, permitting,
planning and financing to develop waste to value projects. Once the projects
reach a certain level of maturity, third party investors are allowed invest in
the project SPV. The Group charges a premium to the project SPV for the
development services over and above the costs incurred in developing the
project.
Costs associated with project development, including loans advanced to project
undertakings (together "Total Project Costs") comprise expenses associated
with engineering, project management, permitting, planning, financing and
other services, incurred in furthering the development of a project towards
financial close. Total Project Costs set out above represent the cost of
delivery of project development services and are transferred to cost of sales
when the project SPV is invoiced by the Group for project development work.
Included in loans receivable from project development undertakings is an
amount of €450,000 which is receivable, along with accrued interest, 18
months from the date of drawdown. Interest is charged at 15% per annum. At 30
June 2023, the loan is valued at €605,177 (31 December 2022: €597,329).
Included in loans receivable is an amount of £2,500,000 (31 December 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. At 30
June 2023, the loan is valued at €2,908,147 (31 December 2022:
€2,824,572).
The remaining loans receivables were issued with no interest and no fixed
repayment date.
14. TRADE AND OTHER RECEIVABLES
Included in trade and other receivables is an amount of €884,077 (31
December 2022: €858,670) being a deposit towards the purchase of land on
which the proposed up to 25 MWe Billingham waste gasification and power plant
at Haverton Hill, Billingham, UK, will be constructed.
15. EQUITY
During the 6-month period ended 30 June 2023, 2,106,774,908 shares (6 months
ended 30 June 2022: Nil shares) were issued as follows:
Amounts of shares 6 months ended 6 months ended
30 June 2023 30 June 2022
Ordinary Shares of €0.001 each issued and fully paid
Beginning of the period 9,421,479,112 8,599,024,945
Issued in lieu of borrowings and settlement of payables 510,214,516 -
Share issue for cash - public and private placement 1,596,560,373 -
Total Ordinary shares of €0.001 each authorised, issued and fully paid at
the end of the period
11,528,254,001 8,599,024,945
16. BORROWINGS
During the six months ended 30 June 2023, the following occurred in relation
to debt securities:
Altair Facility
On 21 March 2023, it was announced that Altair Group Investments Limited
("Altair"), the largest shareholder of the Company, has agreed to subscribe
for £1.5 million pursuant to the Placing announced on that date. In addition,
the Company has an existing £2 million loan facility with Altair, as
announced on 9 December 2022 (the "Altair Facility"). The Company and Altair
entered into an agreement through which Altair's participation in the Placing
will be applied towards reducing the outstanding amount of £1.8 million under
the Altair Facility and to increase the maximum amount of such facility to
£3.5 million, with £1.7 million remaining available for drawdown following
the Altair Placing and intended repayment (the "Facility Extension"). All
other terms of the Altair Facility remain unchanged.
Lenders' Facility
On 21 March 2023, the Company announced that the Company had an existing £10
million loan facility with Riverfort Global Opportunities PCC Limited and YA
II PN Limited (the "Lenders" and the "Lenders Facility"). As at 21 March 2023,
the outstanding balance of the Lenders Facility is £5,137,500. The Lenders
agreed, conditional upon admission of the placing shares pursuant to the £3.5
million placing as announced on 21 March 2023, to convert £887,500 of the
current outstanding loan balance into 403,409,091 units at the placing price
comprising 403,409,091 new Ordinary Shares ("Lender Shares") and 201,704,540
share purchase warrants on the same terms as the Warrants.
The Lenders have also agreed to reprofile the monthly repayment schedule of
the Lenders' Facility for the period until 31 December 2024, with repayments
starting on 30 June 2023. A one-off reprofile fee of 3% of the Lenders'
Facility will be added to the outstanding balance. Following the reprofile,
the outstanding balance of the Lenders' Facility will be £4.25 million and a
fixed-interest monthly coupon of £31,875 will be payable when repayments
commence.
The Lenders will also receive warrants over 965,909,091 Ordinary Shares as
part of the debt reprofile, exercisable for a period of two years from the
date of grant at a 100 percent premium over the Placing Price ("Lender
Warrants"). However, the Lender Warrants will be exercisable only once the
mid-market closing price of the Ordinary Shares is equal to or exceeds 0.55
pence at the time of exercise.
17. LEASES
Lease liabilities are presented in the statement of financial position as
follows:
30 June 2023 31 December 2022
€ €
Current 92,977 56,531
Non-current 370,163 -
463,140 56,531
The Group has a lease for its offices in Iberia, Spain and London, United
Kingdom. The lease liabilities are secured by the related underlying asset.
Further minimum lease payments at 30 June 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
€ € € € € € €
30 June 2023
Lease payments 105,600 105,600 105,600 105,600 74,800 - 497,200
Finance charges (12,623) (9,795) (6,881) (3,878) (883) - (34,060)
Net Present Values 92,977 95,805 98,719 102,722 73,917 - 463,140
31 December 2022
Lease payments 56,849 - - - - - 56,849
Finance charges (318) - - - - - (318)
Net Present Values 56,531 - - - - - 56,531
18. TRADE AND OTHER PAYABLES
Included in trade and other payables at 30 June 2023 is an amount of
€2,559,169 (£2,200,000) (31 December 2022: €2,485,623 (£2,200,000))
relating to consideration payable under the share purchase contract to acquire
Logik WTE Limited.
19. RELATED PARTY TRANSACTIONS
The Group's related parties include Altair Group Investment Limited
("Altair"), who at 30 June 2023 held 15.91% of the shares in the Company, the
associate and joint venture companies and key management.
Transactions with Altair
During the six-month period ended 30 June 2023, Altair advanced €906,540 (H1
2022: €Nil) by way of borrowings and was repaid €1,707,919 (H1 2022:
€Nil) with respect to these loans. Interest payable to Altair for the
six-month period ended 30 June 2023 amounted to €42,295 (H1 2022: €Nil).
Included in borrowings, net of amortisation costs, at 31 December 2022 is an
amount of €372,130 (31 December 2022: €1,064,598) due to Altair from the
Group
Transactions with associate undertakings and joint ventures
The following aggregated transactions were made with associate undertakings
and joint ventures in the six months ended 30 June 2023:
6 months ended 6 months ended
30 June 2023 30 June 2022
Loans to associated undertakings and joint ventures € €
Beginning of the financial period 5,174,551 3,621,307
Loans advanced in period 225,250 2,715,253
Loans repaid in period (33,200) -
Reclassified as equity (254,470) -
Interest accrued on loans in period 31,597 186,251
Exchange differences 2,450 203,103
At end of the financial period 5,146,178 6,725,914
6 months ended 6 months ended
30 June 2023 30 June 2022
Sales of goods and services € €
Technology sales - 2,550,000
Other income 52,913 -
30 June 2023 31 December 2022
Period-end balances € €
Included in trade receivables 5,113,553 4,243,628
Re-charge of costs 31,482 27,508
Transactions with key management
Key management of the Group are the members of EQTEC plc's board of directors.
There have been no non-remuneration transactions with key management in the
six months ended 30 June 2023.
20. EVENTS AFTER THE BALANCE SHEET DATE
Sale of subsidiary
On 12 July 2023, the Company announced that it had agreed with French
infrastructure owner and utility company Idex to the sale of 95% of the share
capital of its 100% subsidiary, Grande-Combe SAS ("Grande-Combe"), the project
company for the Company's France Market Development Centre ("MDC") and the
project to construct and commission it ("France MDC"). Idex's acquisition of
Grande-Combe from the Company has been formalised through execution of a
share-purchase agreement (the "SPA") and a shareholders' agreement (together
with the SPA, the "Agreement"). Under the terms of the Agreement, Idex
acquires the project for construction and commissioning of France MDC and
EQTEC remains the integrator and licensor of core technology, also retaining
the right to utilise France MDC as an MDC.
The main elements of the Agreement are as follows:
· Under the SPA, Idex acquires 95% of the share capital in Grande-Combe,
with the Company retaining a 5% carried interest; EQTEC's carried interest
requires no financial investment by EQTEC;
· In respect of the acquired share capital, the Company receives a
fixed consideration of €750,000, payable at completion of the transaction
(the "Fixed Consideration");
· In addition to the Fixed Consideration, the Company is eligible to
receive additional payments up to full commissioning of the France MDC,
subject to achieving performance milestones and for a combined total of up to
€750,000;
· In addition, under the Agreement, EQTEC will receive fees for
engineering services, equipment, commissioning and licensing over the period
Q4 2023 - Q1 2025, estimated to amount in total c. €15 million; and
· Under the Agreement, the Company is entitled to utilise France MDC
for one prospective client visit per month, with more visits possible under
specific terms.
Discontinuation of Billingham Project
On 20 September 2023, the Company announced its intention to cease activity on
its Billingham project at Haverton Hill, Teesside, UK (the "Project"). The
Company's decision comes amidst challenging market conditions in the UK and
following recent setbacks with the project that make it increasingly
inappropriate for the Company to prioritise the Project against opportunities
elsewhere. Given its investments into development of the Project in recent
years and the likelihood the Company will be unable to recover all of them,
the Company anticipates writing some of them off. At 30 June 2023, the total
costs capitalised in the Project amounted to €4,721,316.
Legal claim against Logik Developments Limited and Logik WTE Limited re:
Deeside
On 20 September 2023, the Company initiated legal proceedings in the London
Circuit Commercial Court of the Business and Property Courts of England and
Wales by submitting a Particulars of Claim against Logik Developments Limited
and Logik WTE Limited. The Claim outlines the case against Logik for failure
to pay for the services rendered, costs incurred and loans made by EQTEC plc
and its subsidiaries to Logik and for breach of the share purchase agreement
between the two parties originally executed on 07 December 2020 and amended
several times since that date (the "SPA"). The amounts claimed by the Group
total c. £4 million.
In relation to the Deeside project, as at 30 June 2023 the full consideration
of €3,838,754 (or £3,454,878) (31 December 2022: €3,728,434 (or
£3,300,000)) has been recognised as an Investment in Related Undertakings and
the balance of consideration payable of €2,559,169 (£2,303,252) (31
December 2022: €2,485,623 (£2,200,000)) has been recognised as a liability
in Other Payables. In addition, the total costs capitalised in relation to the
Project amounted to €3,548,873 of which €1,464,794 was classified as
Development Costs and €2,084,079 as Loans Receivable from Project
Development Undertakings.
21. APPROVAL OF FINANCIAL STATEMENTS
The condensed consolidated financial statements for the six months ended 30
June 2023, which comply with IAS 34, were approved by the Board of Directors
on 27 September 2023.
This announcement contains inside information as defined in Article 7 of the
EU Market Abuse Regulation No 596/2014, as it forms part of United Kingdom
domestic law by virtue of the European Union (Withdrawal) Act 2018, as
amended, and has been announced in accordance with the Company's obligations
under Article 17 of that Regulation.
ENQUIRIES
EQTEC plc +44 20 3883 7009
David Palumbo / Nauman Babar
Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
James Harris / Richard Johnson
Panmure Gordon - Broker +44 20 7886 2500
John Prior / Hugh Rich
Instinctif - Media & investor relations enquiries EQTEC@instinctif.com (mailto:EQTEC@instinctif.com)
Guy Scarborough / Tim Field +44 791 717 8920 / +44 788 788 4794
About EQTEC plc
As one of the world's most experienced gasification technology and engineering
companies, with a growing track record of delivering operational and
commercial success for transforming waste-to-energy through best-in-class
technology innovation, engineering and project development, EQTEC brings
together design innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's proven,
proprietary and patented technology is at the centre of clean energy
projects, sourcing local waste, championing local businesses, creating local
jobs and supporting the transition to localised, decentralised and resilient
energy systems.
EQTEC designs, supplies and builds advanced gasification facilities in the UK,
EU and US, with highly efficient equipment that is modular and scalable from
1MW to 30MW. EQTEC's versatile solutions process over 50 varieties of
feedstock, including forestry wood waste, vegetation and other agricultural
waste from farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions. EQTEC's solutions produce a
pure, high-quality synthesis gas ("syngas") that can be used for the widest
range of applications, including the generation of electricity and heat,
production of synthetic natural gas (through methanation) or biofuels (through
Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen.
EQTEC's technology integration capabilities enable the Group to lead
collaborative ecosystems of qualified partners and to build sustainable waste
reduction and green energy infrastructure around the world.
The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange has
awarded EQTEC the Green Economy Mark, which recognises listed companies with
50% or more of revenues from environmental/green solutions.
Further information on the Company can be found at www.eqtec.com
(http://www.eqtec.com/) .
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