REG - EQTEC PLC - Trading Update

EQTECAnnouncement

01/02/2022 07:00

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RNS Number : 2304A  EQTEC PLC  01 February 2022

 

01 February 2022

EQTEC plc

("EQTEC", the "Company" or the "Group")

 

Q4 2021 Trading Update

 

EQTEC plc (AIM: EQT), a world-leading technology innovation company enabling
the Net Zero Future through advanced solutions for hydrogen, biofuels, SNG and
other energy production is pleased to provide the following trading update for
Q4 2021.

 

Highlights

 

 ·         Two Market Development Centres progressing toward commissioning in year

 ·         Three additional plants under construction with a growing set of projects
           under development
 ·         Review and feasibilities on several projects with a view to pursuing syngas to
           hydrogen or biofuels
 ·         Strategic collaborations support growth into new offtake applications
           including hydrogen and SNG
 ·         Successful 2021 R&D programme, with new agreement in France for
           contaminated plastics
 ·         Strong revenue growth over previous periods

 ·         2022 business planning completed with clear objectives for the year, including
           for ESG

 

David Palumbo, CEO of EQTEC, commented:

"The final quarter of 2021 was busy for us and rewarding as a result. The
foundations we set in 2020 and 2021 are now supporting targeted growth: joint
ventures in target markets, Market Development Centres and an ecosystem of
partners that take over more of the project lifecycle, toward an increasing
focus for EQTEC on licensing and innovating our technology. We are active now
in seven markets and have opened the door for more as we scale. Despite some
challenging market conditions, particularly raw materials shortages, higher
prices and increased shipping costs and times, we have delivered over four
times revenue growth and find ourselves in a strong position to grow even
faster. We will do this across both geographical and solutions markets,
driving innovation and better targeting of demand, together with our local and
some multinational partners. 2022 will see us commission more plants with more
operational availability and prove our case that EQTEC syngas is the future
for reliable, carbon-negative, baseload energy and biofuels."

 

Market Development Centres

The Company confirmed progress toward commissioning of Market Development
Centres ("MDCs") in Italy and Croatia. Both are expected to be commissioned in
H2 2022 and will be showcases of EQTEC technology in live, commercial
environments.

 

In October, the Company's work with partners on recommissioning of EQTEC
Italia MDC SRL in Tuscany, Italy ("Italia MDC") progressed with the site fully
cleaned and relevant components disassembled and cleared. In December, the
Company ordered core technology components and all deliveries were made on
schedule. The 1MWe plant will convert multiple types of biomass feedstock into
heat, power and/or fuel for local businesses and residents. Once operational,
Italia MDC is expected to generate annual plant revenues of c. €2,000,000,
with plant EBITDA of c. €750,000.

 

The Company currently owns 20% of Italia MDC, with an option to acquire
further equity in the Project. In January 2022, Company Directors visited the
site with fellow shareholders and reviewed progress with local construction
partner COS.M.I. SRL. The meeting also addressed the potential for further
commercial opportunities for the plant, including production of high-quality
biochar and construction of additional infrastructure to accommodate
higher-margin feedstock and further offtake alternatives. The Company is
undertaking feasibility assessments now and expects to complete them in Q1
2022.

 

In November, the Company confirmed financial close for the Belišće project
("Belišće") in Croatia, under development by Synergy Projects d.o.o., the
Company's joint venture with project development partner Sense ESCO d.o.o. The
Company further confirmed that it had completed detailed engineering and that
all main components had been ordered and are expected to be on site in Q1
2022. It reiterated that funding was secured for upgrade of the technology,
increasing plant capacity to 1.5MWe from the original 1.2MWe. Technology sales
for EQTEC over the life of the project are expected to be €2.0 million, of
which c. 60% was invoiced by EQTEC in Q4 2021.

 

Other plant construction

 

In addition to the two MDCs, three other plants are under construction in USA,
Greece and Croatia.

 

The Company in October announced investment of an additional c. US$2.8 million
(c. £2.1 million) in the North Fork Community Power project in California,
USA ("North Fork"). The additional investment increased the Company's equity
in the project to 49%. The Company also confirmed a US$4.5 million convertible
loan facility to fund the project. Following execution of the loan facility,
construction work continues. Foundations are laid, most civil works completed
and mechanical and electrical installation are set as next phases of work.

 

The Company announced in December a partnership between the Company, its
development partner Phoenix Energy Inc. ("Phoenix"), the North Fork Community
Development Council and Carbonfuture GmbH to help Sierra Nevada forests and
communities remove carbon from the atmosphere, reduce wildfire risk, generate
renewable energy, create jobs and support the local community whilst
generating carbon removal credits.

 

In Greece, remaining deliveries of EQTEC technology were made to the Larissa,
Thessaly project, which will result in commissioning of the country's first
advanced gasification waste-to-energy plant. Work with the Company's EPC
partner ewerGy GmbH ("ewerGy") on behalf of Agrigas Energy S.A. continues.

 

In Croatia, the Company in November confirmed first-phase funding for a
project in Karlovač ("Karlovač"). The Company clarified that the existing
plant will be retrofitted with EQTEC technology and new equipment in two
phases, with one of two 1.5MWe lines built during each phase, to take
advantage of existing infrastructure, grid connection and Power Purchase
Agreement. Partial funding for the first phase at Karlovač was confirmed
toward completion of detailed engineering design and ordering of main
equipment. Technology sales for EQTEC over the life of the project are
expected now to be €15m, of which c.10% was invoiced by EQTEC in Q4 2021.

 

Project development

 

The Company announced progress with a number of projects in the UK and Greece
and also progressed with development of projects in USA, France and Ireland.

 

In the UK, the Company in October announced successful planning consent for an
advanced gasification facility deploying EQTEC technology at its Deeside
refuse-derived fuel ("RDF") project in Flintshire, Wales ("Deeside").
Flintshire County Council's planning committee resolved to grant planning
permission for the proposed 9.9MWe plant to enable a complete and local
waste-to-energy solution that would combine a 182,000-tonne waste reception
plant with anaerobic digestion and EQTEC Advanced Gasification Technology. The
Company also announced it had entered into a cooperation agreement through
project SPV Logik WTE Limited with Anaergia Inc. to develop a proposal for
delivery of the multi-technology waste-to-energy project at Deeside. In
December, the Company announced entering into a Supplementary Agreement with
Logik Developments Limited ("Logik"). Through the new Agreement, Logik and
EQTEC are now acting in partnership to seek to develop additional
waste-to-value infrastructure on the Deeside site. The partners successfully
completed a design feasibility study for hydrogen production on site, which
indicated viability from planning and environmental points of view. The
partners expect to select a technology partner for syngas-to-hydrogen
development in Q1 2022.

 

Also in the UK, for its Southport Hybrid Energy Park project in Merseyside
("Southport"), the Company in November submitted a revised planning
application for the Phase 1 waste reception centre and anaerobic digestion
facility, following a previously approved application for the first phase and
as a precursor to the intended Phase 2 planning application for a facility
built around EQTEC Advanced Gasification Technology. The planned Phase 1
facility is designed to convert 80,000 tonnes of waste through anaerobic
digestion into six million cubic metres of biomethane, which in turn would
output 9MWe. The intended Phase 2 facility, once approved, could convert up to
25,000 tonnes of RDF into an estimated 2.5 - 3MWe of green electricity per
year. A pre-planning consultation has been carried out with the local
authority whereby Phase 1 and Phase 2 master plans were welcomed by the local
authority and given its support.

Also at Southport, the Company and its partners Rotunda Group Ltd. and
subsidiary Shankley Biogas Ltd. identified the potential for an additional
gasification facility near to the current Southport site. The additional site
would potentially allow for installation of an even larger, Phase 3 EQTEC
Advanced Gasification Technology facility that could transform waste into
synthetic natural gas ("SNG") and/or hydrogen. The Company and its partners
are incorporating investigation of this opportunity into its project
development activities. EQTEC expects to act as the project developer for all
aspects of the Southport project, providing the design and core Advanced
Gasification Technology and retaining a portion of the O&M contract upon
commissioning. As the project matures toward financial close, the Company
intends to sell a majority equity position on the project SPV and invoice that
SPV for development services provided.

 

For other UK projects, the Company announced in December that it was
investigating new offtake opportunities for both Deeside and its 25MWe
RDF-to-energy project at Billingham, Teesside ("Billingham"). EQTEC has
entered discussions with current and prospective technology and delivery
partners toward feasibility work at both sites and the Company looks forward
to providing further updates on the opportunities in due course. The Company
in December confirmed its decision to defer financial close for both Deeside
and Billingham to enable the feasibility work to progress.

 

The Company made visits to both Deeside and Billingham sites in December and
had constructive meetings. At Deeside, the Company met with Mr Mark Tami MP
and Mr Jack Sargeant MS. At Billingham, the Company met with Mr Alex
Cunningham MP.

 

The Company qualified a further two potential projects in the UK and is
directly engaged with project developers and funders to shape and define these
projects and looks forward to providing more specific updates on these in due
course.

 

In the USA, the Company and Phoenix appointed an owners' representative for
the Blue Mountain Electric Company LLC project opportunity in Wilseyville,
California ("BMEC") and engaged three candidate companies for selection as
Lead Contractor, toward start of front-end engineering design work in early
2022. The BMEC plant will, when operational, convert c. 24,000 tonnes of
forestry waste per year into c. 2,400 tonnes of high-quality biochar and 3MWe
of power for the local community, whilst contributing to prevention of forest
fires.

 

In addition, the Company and Phoenix have identified a significant pipeline of
forestry waste opportunities across California and in early 2022 will pursue a
third opportunity for a forestry biomass-to-energy plant in the state.

 

In France, the Company in December signed a Letter of Intent ("LoI") with SEPS
SAS of France ("SEPS"), a company specialising in the management and recycling
of industrial waste. The LoI will support the Company's pursuit of safe and
clean treatment of contaminated plastic, particularly polyethylene and
high-density polyethylene and its conversion into energy, hydrogen and
biofuels, which both partners view as a significant opportunity for EQTEC
Advanced Gasification Technology. Additionally, the Company and SEPS are
discussing a project for deployment of EQTEC technology at an on-premise,
industrial facility in Haute-Garonne, France.

 

Also in France, development of the Biomasse31 project continues with EQTEC
negotiating a development agreement with the project owners to take over the
final stages of the development to financial close.

 

The Company has identified and is pursuing an additional five project
opportunities in France for a range of biomass, RDF and other feedstock, as
well as a range of offtake applications. The Company looks forward to
providing more specific updates on these in due course.

 

In Greece, the Company in October announced that EQTEC Synergy Projects
Limited ("Synergy Aegean"), its joint venture with ewerGy and its local
partner ECO Hellas M IKE ("ECO Hellas") would acquire the rights to a project
in Nevrokopi, Drama. Through the project, Synergy Aegean will develop a
biomass-to-energy plant built around EQTEC technology that will generate 5MW
green electricity from locally and sustainably sourced forestry waste. The
announcement of the Drama project followed announcement earlier in the year
that Synergy Aegean had signed an agreement for acquisition of a 1MWe
waste-to-energy gasification project in Livadia, Kilkis and exclusivity for a
second 1MWe project nearby.

 

In Ireland, under the Collaboration Agreement with Carbon Sole Group Limited,
the planning application process for the projects in Shannon and Sligo is
progressing, with a planning application for a third project expected to be
made in 2022.

 

Solution development and innovation

 

In December, the Company successfully completed the last in a series of 2021
R&D projects at its technology innovation facility in France, through its
partnership with the Université de Lorraine. In addition to other biomass and
RDF tests earlier in the year, the final test was focused on contaminated
plastics. As part of 2022 business planning carried out in Q4 2021, EQTEC
outlined a three-year view for advanced R&D and solutions innovation
across a range of potential revenue streams, with a view to accelerating
development with current and new partners in 2022. The Company looks forward
to sharing updates and news on these developments.

 

In November, the Company announced it had signed a Strategic Collaboration
Agreement with Wood, a leading consulting and engineering company across
energy and the built environment ("Wood"). Under the terms of the Agreement,
the Company and Wood will jointly target and pursue market opportunities for
collaborative development and deployment of clean, waste-to-SNG and
waste-to-hydrogen solutions and delivery of related projects. The two partners
have held two planning meetings since the announcement and identified a
significant pipeline of opportunities for joint pursuit.

 

In November, the Company joined Wood at its COP26 sessions in Glasgow, UK. In
addition to attending a range of events focused on how to accelerate funding
and development of new technologies in support of energy transition, the
Company presented to Wood and several of its technology partners about the
unique positioning of EQTEC technology and its focus on growth and scale
through deployment of digital technologies and approaches to procurement,
construction and operations.

 

In December, the Company announced it had entered into a Collaboration
Framework Agreement ("CFA") with H2 Energy Solutions Ltd ("H2"), a hydrogen
technology investment and project development business headquartered in
Germany. Pursuant to the CFA, the Company and H2 will collaborate to develop
opportunities for deployment of waste-to-hydrogen capabilities and other
opportunities, particularly in Germany and Turkey.

 

Also in December, the Company announced an enhancement to its existing
Framework Partnership Agreement with MetalNRG plc (LON:MNRG) ("MetalNRG"). The
expanded arrangement strengthens ties between the partners, as MetalNRG
continues to invest, develop and deliver sustainable, shovel-ready green
energy projects with a specific focus on biomass and waste-to-energy projects
in the UK and Europe, with EQTEC as a leading technology and innovation
partner. MetalNRG was confirmed in June 2021 as a consortium partner with
EQTEC and two other investors for repowering, owning and operating Italia MDC.

 

In Q4 2021, the Company further solidified its relationship with project
engineering partner CT3 Ingeniería S.L. ("CT3"), a Madrid-based civil,
mechanical and electrical engineering company supporting design and
engineering efforts at Italia MDC, Billingham, Deeside, Croatia MDC (in
Belišće), Karlovač and other EQTEC projects. With EQTEC leading the process
engineering at the core of EQTEC's solutions, CT3 continues to provide
world-class design, development and construction advisory services across an
increasing number of EQTEC-enabled plants. CT3 employs more than 50 engineers
deployed to EQTEC and a range of other new energy and nuclear power businesses
and can scale rapidly based on its Europe-wide database of engineering talent
and its flexible contracting capabilities. CT3 is increasingly a core part of
EQTEC's platform for development, delivery and pipeline growth.

 

Also in Q4 2021, the Company engaged more closely with the UK Department for
Business, Energy and Industrial Strategy (BEIS) to follow up on its 2021
publication of a paper on advanced gasification technologies and toward review
of the Company's position with regard to the UK government's growing interest
in gasification as a core technology for hydrogen and biofuels.

 

Growth

 

In December, the Company confirmed that, notwithstanding its decision to defer
financial close for its two largest projects at Billingham and at Deeside, it
anticipated that its total revenues for 2021 would be in the range of €8 -
10 million (2020: €2.2 million), representing strong growth over previous
years. The Company continues to expect confirmation of 2021 revenues in this
range. It also indicated an anticipated 2021 EBITDA loss (adjusted for
one-off, share-based payments) in the range of €2.5 - 3.5 million.

 

2021 revenue and EBITDA are due to be finalised through the Company's annual
audit and reported in its annual results, which it expects to publish in April
2022.

 

2022 business plan

 

Business objectives for 2022 maintain a strong focus on revenue growth,
supported by disciplined project development and construction with an
increasing number of larger partners with qualified delivery track records
and, in many cases, multinational market access. In addition, the Company will
test and develop more, high-margin feedstock types and extend EQTEC technology
into new syngas applications such as waste-to-hydrogen, waste-to-SNG and
waste-to-biofuels. Together with the broader financial modelling and
commercial negotiation capabilities of the Company, these additional
capabilities co-developed with technology partners will support definition and
market testing of new EQTEC solutions targeted at growing demand in specific
markets.

 

In Q4 and in line with its annual business planning activities, the Company
outlined its Environmental, Social and Governance ("ESG") agenda, which it
announced in January 2022. In addition to outlining a direction of travel for
the coming years, the Company's ESG Statement specifies objectives for 2022
including establishment of a clear approach and baseline assessment of carbon
and other emissions. As a cleantech business, the Company intends to report on
and exercise active accountability for its ESG work.

 

Investor Presentation

CEO David Palumbo, CFO Nauman Babar and COO Jeffrey Vander Linden will make a
live presentation in respect of the Company's Q4 2021 activities via the
Investor Meet Company platform, on Wednesday, 2 February 2021 at 1200 GMT.

The presentation is open to all existing and prospective shareholders.
Questions can be submitted at any time during the live presentation.

Investors may sign up to Investor Meet Company for free and attend the event
at:

https://www.investormeetcompany.com/eqtec-plc/register-investor
(https://www.investormeetcompany.com/eqtec-plc/register-investor)

Investors who already follow EQTEC plc on the Investor Meet Company platform
will automatically be invited.

 

This announcement contains inside information as defined in Article 7 of the
EU Market Abuse Regulation No 596/2014 and has been announced in accordance
with the Company's obligations under Article 17 of that Regulation.

 

ENQUIRIES

 EQTEC plc                                                     +44 203 883 7009
 David Palumbo / Nauman Babar

 Strand Hanson - Nomad & Financial Adviser                     +44 20 7409 3494
 James Harris / James Dance

 Arden Partners - Joint Broker                                 +44 20 7614 5900
 Paul Shackleton (Corporate) / Simon Johnson (Sales)

 Canaccord Genuity - Joint Broker                              +44 20 7523 8000
 Henry Fitzgerald-O'Connor / James Asensio / Patrick Dolaghan

 Alma PR - Financial Media & Investor Relations                +44 20 3405 0205
 Josh Royston / Sam Modlin                                     EQTEC@almapr.co.uk (mailto:EQTEC@almapr.co.uk)

 BECG - General Media Enquiries                                +44 7554 014 188 / +44 7867 452 269
 Carrie Lowe / Tom Gosschalk                                   EQTEC@BECG.com (mailto:EQTEC@BECG.com)

 

About EQTEC plc

As one of the world's most experienced gasification technology and engineering
companies, with a growing track record of delivering operational and
commercial success for transforming waste-to-energy through best-in-class
technology innovation, engineering and project development, EQTEC brings
together design innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's proven,
proprietary and patented technology is at the centre of clean energy projects,
sourcing local waste, championing local businesses, creating local jobs and
supporting the transition to localised, decentralised and resilient energy
systems.

 

EQTEC designs, supplies and builds advanced gasification facilities in the UK,
EU and US, with highly efficient equipment that is modular and scalable from
1MW to 30MW. EQTEC's versatile solutions process over 50 varieties of
feedstock, including forestry wood waste, vegetation and other agricultural
waste from farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions. EQTEC's solutions produce a
pure, high-quality synthesis gas ("syngas") that can be used for the widest
range of applications, including the generation of electricity and heat,
production of synthetic natural gas (through methanation) or biofuels (through
Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen.

 

EQTEC's technology integration capabilities enable the Group to lead
collaborative ecosystems of qualified partners and to build sustainable waste
reduction and green energy infrastructure around the world.

 

The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange has
awarded EQTEC the Green Economy Mark, which recognises listed companies with
50% or more of revenues from environmental/green solutions.

 

Further information on the Company can be found at www.eqtec.com
(http://www.eqtec.com/) .

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