TIDMEQT
RNS Number : 0840C
EQTEC PLC
27 September 2018
27 September 2018
EQTEC plc
("EQTEC", the "Company" or the "Group")
Half Year 2018 Results and Increased Loan Facility
EQTEC plc (AIM:EQT), the technology solution company for waste
gasification to energy projects, announces its unaudited interim
results for the six months ended 30 June 2018.
Ian Price, Chief Executive Officer, commented:
"EQTEC enters the second half of the year with a focused
pipeline and with the agreement of an increased loan facility the
Company has the potential to create significant shareholder
value.
"I am looking forward to the challenge of the role of CEO at
EQTEC at a time of tremendous opportunity. The issue of increased
global consumption leading to more and more waste, coupled with an
increasing need for sustainable energy, is creating a highly
receptive environment for our waste conversion technology. I look
forward to driving the strategic development of the business
including adding value and synergies through a number of potential
acquisitions with the support of all of our stakeholders.
"My review of the needs of the business has highlighted an
immediate requirement for more engineering resource to support our
current deal flow. This, coupled with cost reductions in other
areas of the business, are key elements of the Company's Growth
Optimisation Plan in the near term. We intend to change what EQTEC
does and how we do it and we have set out clear commitments against
which our progress can be measured. Our goal is to make EQTEC the
preferred supplier of energy recovery from waste technology and the
plan that we set out today is pivotal to delivering that goal and
executing on our extensive pipeline of projects.
"We are delighted to have agreed an increased facility with our
lenders and increased drawdowns over the coming six months. As
such, we believe that we are well capitalised and do not foresee a
need for a placing in the near future. The increased facility will
underpin our shift to a near-term focus from business development
to pipeline execution to ensure delivery on customer requirements
for immediate pipeline opportunities.
"We look forward to updating the market further as we continue
to develop and consolidate our position in the waste to energy
sector."
H1 2018 Operational Highlights
Pipeline of projects
-- Brooke Energy UK
The Usk Project (previously known as Zebec Energy project)
located in the municipality of Usk, Wales is for a facility which
will have a capacity to process ca. 42,000 tonnes of wood waste per
year and a power output of 6.4 MWe. The financial close of the
project is expected in Q1 of 2019 with the purchase contract
executed shortly thereafter.
EQTEC, together with its partners RAFAKO and EXERGON, is also
working to deliver a solution for a second project in Brooke
Energy's pipeline. The Company will update the market as
appropriate on developments regarding this second project.
-- PT CITRA Vietnam
MOU with PT. CITRA METRO JAYA ENERGI ("CITRA"), which is part of
the Energy division of the Citra Metro Group, a leading group of
companies headquartered in Indonesia involved in Energy, Technology
and Telecommunications, to supply its EQTEC Gasifier Technology
("EGT") for a 12 MWe power plant in Hanoi, Vietnam. The customer
has envisaged the signature of the Power Purchase Agreement ("PPA")
and issue of permits by authorities in Q2 2019, with the purchase
contract executed shortly thereafter.
Expected turnover for EQTEC is in the range of EUR20 million -
EUR22 million for the Gasification plant from an estimated EUR70
million total investment by the customer in this waste-to-energy
facility.
-- Polygen
The Company also expects to see the commencement of the
construction of its ongoing project in Poland, where together with
its partners at the POLYGEN Consortium, EQTEC aims to produce bio -
Synthetic Natural Gas (bio-SNG) in 2019. This will open a
significant new market opportunity for the Company's EGT which will
be used not only to produce syngas on a power and heat basis but to
produce clean and renewable fuels as bio-SNG which will be supplied
to a nearby industrial user.
-- Reliable Energy
Following the strategy review recently completed by the new CEO,
it has become clear that these projects are unlikely to proceed and
so will no longer form part of the project pipeline.
-- Serbia and Croatia
The Company has previously stated that it had been approached
with proposals for a number of projects in Serbia and together with
a local partner in the region had developed an advanced project
pipeline in Croatia. The Company has reviewed its allocation of
resources to these potential projects and has decided to develop
them at a slower pace for the time being to focus on more immediate
opportunities.
-- South East Asia
The Company had previously notified that it was developing a
pipeline of projects in Thailand. The Company has recently expanded
its vision to include all of South East Asia.
-- Catfoss projects
Looking to the future, EQTEC has two earlier stage projects,
Catfoss Newcastle and Renewables (Catfoss) Hull, in the pipeline in
conjunction with Energy China.
H1 2018 Financial Highlights
-- Group revenue of EUR0.55 million (H1 2017: EUR0.20 million)
-- Operating expenses of EUR1.3 million (H1 2017: EUR0.8 million)
-- Loss for the period from continuing operations of EUR1.9
million (H1 2017: Loss for period EUR1.0 million)
Post June 30 Events
-- On 24 September 2018 the Company announced that it has signed
a Memorandum of Understanding with US energy company Phoenix
Biomass Energy to exclusively supply its EGT for two power plants
in California, USA, with contracts expected to be valued in the
region of EUR10 million in total. Financial close is expected in
late Q4 2018 and the purchase contracts executed shortly
thereafter.
-- Discussions as to the provision of further funding with
EBIOSS Energy AD, now a 41.47% shareholder of the Company, have
terminated. The Company secured a funding facility from
institutional investors and has renewed support from its main
larger investors to deliver on the new focused business plan.
Whilst EBIOSS remains a significant shareholder, the Company as it
stands is independently financed and pursuing its own strategy.
-- Board changes: Ian Price appointed as the new CEO of the
Company. As part of an agreed restructuring Mr. Neil O'Brien
stepped down from the Board and Mr. Luis Sánchez stepped down as
CEO. As announced previously, further board changes will occur with
EBIOSS representation to be reduced to one board member.
-- New CEO on appointment conducted a strategic review which concluded:
Ø The Company to exert greater direct control over its strategic
business unit and will restructure it to shift the near-term focus
from business development to pipeline execution to ensure delivery
on customer requirements for immediate pipeline opportunities;
Ø EQTEC Iberia to continue to respond to Requests for Tender in
order to identify core opportunities in energy recovery from
waste;
Ø A new strategic alliance with CT3 Ingeniería is being entered
into to provide further technical and engineering support to
facilitate the Growth Optimisation Plan;
Ø Headcount of skilled engineering staff to be increased over
the coming weeks and months; and
Ø Yoel Alemán, currently Chief Technology Officer, to separately
head up the new engineering function and report directly to the
Board of EQTEC plc.
Post Financing Events
-- Concluded an agreement with existing funders to increase the
existing July 2018 facility from US$3.2 million to US$10 million
with agreed drawdowns totalling US$2 million over the next six
months.
Outlook
Following the appointment of Ian Price as CEO and the completion
of a strategic review in August, EQTEC is very well placed to
deliver on its plans. With clear stakeholder endorsement of the
Group's strategy to exploit its pipeline, the Board is optimistic
about the prospects both for EQTEC and the overall Waste to Energy
sector. The Group remains both determined and uniquely positioned
to lead the industry in identifying and realising the significant
potential that exists in eliminating waste and recovering
energy.
Increased Loan facility
On 5 July 2018 the Company entered into a loan agreement with
Cuart Investments Fund and associates (the "Lenders"), a consortium
put together by Origen Capital LLP, (the "Loan Agreement") for the
provision of a secured loan facility of up to US$3.2 million
(approximately GBP2.4 million) (the "Loan Facility"). The Loan
Facility was to be drawn down in two equal instalments with the
first instalment of US$1.6 million being drawn down by the Company
in July 2018.
Subject to final legal documentation, the Company and the
Lenders have now agreed to amend the existing Loan Agreement such
that the secured loan facility is increased by up to US$10 million
(approximately GBP7.6 million) with three further instalments as
follows:
-- Tranche 1: US$864,000 upon completion of legal documents in relation to the amendment;
-- Tranche 2: US$864,000 at the end of Month 3 from Tranche 1 draw down;
-- Tranche 3: US$272,000 at the end of Month 6 from Tranche 1 draw down.
The Company will grant warrants to the Lenders over Ordinary
Shares valued at US$680,000 at an exercise price of 125% of the
average of (a) the daily Volume Weighted Average Prices ("VWAPs")
for each of the five trading days preceding the drawdown of the
initial instalment of the Loan Facility and (b) the daily Volume
Weighted Average Prices for each of the five trading days
subsequent to the drawdown of the initial instalment of the Loan
Facility.
The Company can elect to redeem at any time the outstanding
amount of an advance at a price equal to 105% of the principal
amount together with all accrued and unpaid interest, subject to
giving the Lenders four business days' notice.
The Company shall pay interest on any instalments of the Loan
Facility at the rate of 10% per annum. Each instalment of the Loan
Facility will have a maturity date of 18 months from the date of
advance (the "Advance Date"). No repayments of the Loan Facility
will be made by the Company in the first three months following the
Advance Date, following which repayments shall be made as follows:
(i) US$67,500 shall be paid at the end of the fourth month
following the Advance Date; (ii) 70% of the principal and interest
shall be repaid over the following seven months; and (iii) the
balance paid on the maturity date.
The Company's obligations under the Loan Agreement are subject
to the existing security granted by the Company and its
subsidiaries in favour of Altair and Ecofinance.
The Company will receive net approximately US$0.8 million after
expenses from the first Tranche.
- Ends -
For further information:
EQTEC plc +353 (0)21 2409 056
Ian Price - Chief Executive Officer
Gerry Madden - Finance Director
Northland Capital Partners Limited
- Nomad and Joint Broker +44 (0)20 3861 6625
Tom Price / Dugald J. Carlean
VSA Capital Limited - Joint Broker +44 (0)20 3005 5000
Andrew Monk / Andrew Raca
Luther Pendragon - Financial PR +44 (0)20 7618 9100
Harry Chathli / Alexis Gore / Joe Quinlan
About EQTEC:
EQTEC plc is a company with a proprietary advanced gasification
technology used in industrial size power plants to convert waste
into synthetic gas to generate electricity.
The Company is quoted on AIM and trades as EQT. Further
information on the Company can be found at www.eqtecplc.com.
EQTEC plc
Unaudited Condensed Consolidated Income Statement
for the six months ended 30 June 2018
6 months ended 6 months ended
Notes 30 Jun 2018 30 Jun 2017
Continuing operations: EUR EUR
Revenue 6 546,288 20,418
Cost of sales (432,774) -
--------------- ---------------
Gross profit 113,514 20,418
Operating expenses
Administrative expenses (1,432,541) (613,505)
Other operating income 121,226 -
Other operating expenses (928) -
Gain on disposal of property,
plant and equipment 3,139 -
Impairment of property, plant
and equipment - (180,640)
Impairment of amounts due under
construction costs - (102,595)
(Losses)/gains on foreign exchange (21,472) 97,480
--------------- ---------------
Operating loss (1,217,062) (778,842)
Finance income 42 -
Finance costs (681,149) (282,455)
Loss before taxation 6 (1,898,169) (1,061,297)
Income tax expense 7 - -
--------------- ---------------
Loss for the period from continuing
operations (1,898,169) (1,061,297)
Profit for the period from discontinued
operations 14 23,233 17,030
--------------- ---------------
Loss for the period (1,874,936) (1,044,267)
=============== ===============
(Loss)/Profit attributable to:
Owners of the Company (1,801,599) (947,253)
Non-controlling interests (73,337) (97,014)
--------------- ---------------
(1,874,936) (1,044,267)
=============== ===============
6 months ended 6 months ended
30 June 2018 30 June 2017
EUR per share EUR per share
Basic earnings/(loss) per share:
From continuing and discontinued
operations 8 (0.001) (0.006)
=============== ===============
From continuing operations 8 (0.001) (0.006)
=============== ===============
Diluted earnings/(loss) per
share:
From continuing and discontinued
operations 8 (0.001) (0.006)
=============== ===============
From continuing operations 8 (0.001) (0.006)
=============== ===============
EQTEC plc
Unaudited Condensed Consolidated Statement of Comprehensive
Income
for the six months ended 30 June 2018
6 months ended 6 months ended
30 Jun 2018 30 Jun 2017
EUR EUR
Loss for the period (1,874,936) (1,044,267)
Other comprehensive income
and expense
Exchange differences arising
on retranslation
of foreign operations 15,481 (280,395)
--------------- ---------------
Total comprehensive income
and expense
for the period (1,859,455) (1,324,662)
=============== ===============
Attributable to:
Owners of the company (1,792,013) (1,107,922)
Non-controlling interests (67,442) (216,740)
--------------- ---------------
(1,859,455) (1,324,662)
=============== ===============
EQTEC plc
Unaudited Condensed Consolidated Statement of Financial
Position
As at 30 June 2018
As at As at
Notes 30 Jun 2018 31 Dec 2017
ASSETS EUR EUR
Non-current assets
Property, plant and equipment 4,478,594 4,468,180
Intangible fixed assets 10 15,936,876 16,051,766
Other financial investments 18,934 18,934
Deferred taxation 658,731 658,731
------------- -------------
Total non-current assets 21,093,135 21,197,611
------------- -------------
Current assets
Inventories 269,269 167,124
Trade and other receivables 557,817 499,264
Cash and cash equivalents 185,152 1,804,943
------------- -------------
1,012,238 2,471,331
Assets included in disposal group classified
as held for resale 14 1,277,390 1,309,633
------------- -------------
Total current assets 2,289,628 3,780,694
------------- -------------
TOTAL ASSETS 23,382,763 24,978,575
============= =============
EQUITY AND LIABILITIES
Equity
Share capital 11 18,861,004 18,724,196
Share premium 44,961,570 44,574,164
Retained earnings - deficit (47,127,463) (45,335,750)
------------- -------------
Total deficit attributable to equity
holders of the parent 16,694,811 17,962,610
Non-controlling interests (1,403,226) (1,335,784)
------------- -------------
Total equity 15,291,585 16,626,826
------------- -------------
Non-current liabilities
Borrowings 12 3,753,807 3,891,080
Deferred taxation 33 33
------------- -------------
Total non-current liabilities 3,753,840 3,379,621
------------- -------------
Current liabilities
Trade and other payables 1,837,222 2,766,985
Borrowings 12 1,540,742 646,857
------------- -------------
3,377,964 3,413,842
Liabilities included in disposal group
classified as held for resale 14 959,374 1,046,794
------------- -------------
Total current liabilities 4,337,338 4,460,636
------------- -------------
TOTAL EQUITY AND LIABILITIES 23,382,763 24,978.575
============= =============
EQTEC plc
Unaudited Condensed Consolidated Statement of Changes in
Equity
for the six months ended 30 June 2018 and the six months ended
30 June 2017
Attributable
to equity
holders of Non-controlling
Share capital Share premium Retained earnings the parent interests Total
EUR EUR EUR EUR EUR EUR
Balance at 1
January
2017 17,453,246 21,863,190 (40,846,516) (1,530,080) 1,489,687 (40,393)
Issue of ordinary
shares
in EQTEC plc 17,461 1,125,288 - 1,142,749 - 1,142,749
Change of
ownership
interest
without loss of
control - - - - 105,000 105,000
Conversion of debt
into
equity 92,702 5,978,242 - 6,070,944 - 6,070,944
Share issue costs - (287,807) - (287,807) - (287,807)
Loss for the
financial
period - - (947,253) (947,253) (97,014) (1,044,267)
Unrealised foreign
exchange
loss - - (160,669) (160,669) (119,726) (280,395)
-------------- -------------- ------------------ ------------- ---------------- ------------
Balance at 30 June
2017 17,563,409 28,678,913 (41,954,438) 4,287,884 1,377,947 5,665,831
============== ============== ================== ============= ================ ============
Balance at 1
January
2018 18,724,196 44,574,164 (45,335,750) 17,962,610 (1,335,784) 16,626,826
Conversion of debt
into
equity 136,808 420,548 - 557,356 - 557,356
Share issue costs - (33,142) - (33,142) - (33,142)
Loss for the
financial
period - - (1,801,599) (1,801,599) (73,337) (1,874,936)
Unrealised foreign
exchange
gain - - 9,586 9,586 5,895 15,481
-------------- -------------- ------------------ ------------- ---------------- ------------
Balance at 30 June
2018 18,861,004 44,961,570 (47,127,463) 16,694,811 (1,403,226) 15,291,585
============== ============== ================== ============= ================ ============
EQTEC plc
Unaudited Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2018
Notes 6 months 6 months
Ended Ended
30 Jun 30 Jun
2018 2017
Cash flows from operating activities EUR EUR
(Loss)/Profit before taxation (1,898,169) (1,061,297)
Adjustments for:
Depreciation of property, plant and equipment 9,438 -
Amortisation of intangible assets 114,889 -
Gains on disposal of property, plant and
equipment (3,139) -
Impairment of property, plant and equipment - 180,640
Impairment of amounts due from customers
under construction contracts - 102,595
Unrealised foreign exchange gains (39,400) (63,358)
------------ ------------
Operating cash flows before working capital
changes (1,816,381) (841,420)
(Increase)/decrease in:
Amounts due from construction contracts - (875)
Inventories (102,145) -
Trade and other receivables (61,185) 20,721
Decrease in:
Trade and other payables (285,119) (85,657)
------------ ------------
Cash used in operating activities - continuing
operations (2,264,830) (907,231)
Income taxes repaid 1,141 -
Finance income (42) -
Finance costs 681,149 282,455
------------ ------------
Net cash used in operating activities
- continuing operations (1,582,582) (624,776)
Net cash generated from operating activities
- discontinued operations 87,135 72,484
------------ ------------
Cash used in operating activities (1,495,447) (510,038)
------------ ------------
Cash flows from investing activities
Payments for property, plant and equipment (57,341) -
Receipts from disposals of property, plant
and equipment 3,139 -
Repayments from related parties 1,283 -
Interest income received 42 -
------------ ------------
Net cash used in investing activities
- continuing operations (52,877) -
Net cash (used in)/generated from investing
activities - discontinued operations (907) 8
------------ ------------
Cash (used in)/generated from investing
activities (53,784) 8
------------ ------------
Cash flows from financing activities
Proceeds from borrowings 1,623,891 68,000
Repayments of borrowings (876,213) -
Proceeds from issue of ordinary shares - 1,142,690
Payments for share issue costs (561,343) (259,351)
Payment for loan issue costs (71,402) (33,750)
Interest paid (99,695) (90,091)
------------ ------------
Net cash generated from financing activities
- continuing operations 15,238 827,498
Net cash used in financing activities
- discontinued operations (60,418) (62,203)
------------ ------------
Cash (Used in)/ generated from financing
activities (45,180) 765,295
------------ ------------
Net (decrease)/increase in cash and cash
equivalents (1,594,411) 213,006
Cash and cash equivalents at the beginning
of the financial period 1,908,463 189,396
------------ ------------
Cash and cash equivalents at the end of
the financial period 314,052 402,402
Cash and cash equivalents included in
disposal group (130,948) (116,899)
------------ ------------
Cash and cash equivalents for continuing
operations 183,104 285,503
============ ============
EQTEC plc
Notes to the Unaudited Condensed Consolidated Financial
Statements
for the six months ended 30 June 2018
1. CORPORATE INFORMATION
The interim condensed consolidated financial statements of EQTEC
plc ("the Company") and its subsidiaries ("the Group") for the six
months ended 30 June 2018 were authorised for issue in accordance
with a resolution of the directors on [.] September 2018.
EQTEC plc is domiciled in the Republic of 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 principal activities of the Company and the Group involve
sourcing and providing assistance in developing waste elimination
projects to which it will ultimately sell its technology and
O&M services. The Group sources projects that have a local
supply of waste in need of conversion. It builds relationships and
bring together the developers, the waste owners, the building
contractors and funders and provides the technology and engineering
services to the projects. Furthermore, the Group provides O&M
services to the operating projects generating recurring revenues
over the life of the projects.
2. BASIS OF PREPARATION
The interim condensed consolidated financial statements are for
the six months ended 30 June 2018 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 six months ended 31
December 2017, with the exception of the application of IFRS 15
Revenue from Contracts with Customers and IFRS 9 Financial
Instruments. This is the first set of the Group's financial
statements where IFRS 15 and IFRS 9 have been applied. Changes to
significant accounting policies are described in note 4.
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 six months ended 31 December 2017. 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.eqtecplc.com.
The financial information for the six months ended 30 June 2018
and the comparative financial information for the six months ended
30 June 2017 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 period ended 31
December 2017 are not the Company's statutory accounts for that
financial period. Those accounts have been reported on by the
Company's auditor. The audit report on those statutory accounts was
unqualified with an emphasis of matter paragraph on going
concern.
The Group incurred a loss on continuing operations of
EUR1,898,169 (6 months ended 30 June 2017: EUR1,061,297) during the
period ended 30 June 2018, and it had net current liabilities of
EUR2,047,710 (31 December 2017: EUR679,942) at 30 June 2018.
On 5 July 2018 the Company entered into a loan agreement with
Cuart Investments Fund and associates (the "Lenders"), a consortium
put together by Origen Capital LLP, (the "Loan Agreement") for the
provision of a secured loan facility of up to US$3.2 million
(approximately GBP2.4 million) (the "Loan Facility"). The Loan
Facility was to be drawn down in two equal instalments with the
first instalment of US$1.6 million being drawn down by the Company
in July 2018. Subject to final legal documentation, the Company and
the Lenders have now agreed to amend the existing Loan Agreement
such that the secured loan facility is increased by up to US$10
million (approximately GBP7.6 million) with three further
instalments totalling US$2 million over the coming six months.
The Directors have considered carefully the financial position
of the Group and, in that context, have prepared and reviewed
financial forecasts to estimate the likely cash requirements of the
Group over the next 12 months. The Group continues to invest
capital in developing and expanding its pipeline of waste to energy
projects. The nature of the Group's business model means that the
sales and project pipeline depend upon counterparties commissioning
and financing major projects, the timing of which is subject to
many uncertainties and is not under the Company's control. This
implies that the timing of funds generated from projects can be
difficult to predict. The forecasts which Management have prepared
include certain assumptions with regard to future funding from
third parties the costs of business development, overheads and the
timing and amount of any funds generated from developments. The
forecasts indicate that during this period the Group will have
funds to continue with its activities and its planned development
program.
3. BASIS OF CONSOLIDATION
The 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 interim
condensed consolidated financial information are consistent with
those disclosed in the Annual Report and Accounts of EQTEC plc for
the six months ended 31 December 2017, except for the adoption of
new standards and interpretations and revisions of existing
standards as of 1 January 2018 noted below.
New/revised standards and interpretations adopted in 2018
The following amendments to existing standards and
interpretations were effective in the period to 30 June 2018, but
were either not applicable or did not have any material effect on
the Group:
-- Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions;
-- Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts;
-- Amendments to IAS 40 Transfer of Investment Properties;
-- Annual Improvements to IFRS Standards 2014-2016 Cycle - minor
amendments to IFRS 1 and IAS 28;
-- IFRIS Interpretation 22 Foreign Currency Transactions and Advance Consideration
The directors do not expect the adoption of the above Standards
and interpretations to have a material effect on the interim
condensed financial statements in the period of initial
application.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 provides a single, principle-based, five-step model to
be applied to all sales contracts, based on the transfer of control
of goods and services to customers. It replaced IAS 18 Revenue, IAS
11 Construction Contracts and related interpretations.
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured.
Sale of goods
The Group has concluded that it is the principal in its revenue
arrangements as it is the primary obligor in these revenue
arrangements, has pricing latitude and is also exposed to inventory
and credit risks.
As such, revenue from the sale of goods is recognised when
control is transferred to the customer. i.e. when all the following
conditions are satisfied:
-- the Group has transferred to the buyer the significant risks
and rewards of ownership of the goods; in general this is deemed to
occur when customers take delivery of the goods;
-- the Group retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective
control over the goods sold;
-- the amount of revenue can be measured reliably;
-- it is probable that the economic benefits associated with the
transaction will flow to the entity; and
-- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined
terms of payment and excluding taxes or duty which are generally
recognised at the point of sale.
Revenue is reduced for estimated customer returns, rebates and
other similar allowances to customers, the measurement of which is
determined by contractual arrangements with customers. Sales
incentives are recognised in the same period as the related revenue
is recorded, and comprise:
-- Discounts and rebates - which are sales incentives to
customers to encourage them to purchase increased volumes and are
related to total volumes purchased and sales growth;
-- Marketing services - which include merchandising, slotting and listing fees; and
-- Sales support for promotional activities - which include
payments to customers, distributors and external agencies.
The Group has adopted IFRS 15 using the cumulative effect
method. Accordingly, the information presented for 2017 has not
been restated, i.e. it is presented, as previously reported, under
IAS 18 Revenue.
The introduction of IFRS 15 did not result in changes to the
Group's significant accounting policies, except to update them for
new terminology introduced by the new standard for contract costs
(previously known as deferred acquisition costs for non-insurance
contracts), contract assets (previously known as accrued income
from contracts with customers), and contract liabilities
(previously known as deferred fee income from contracts with
customers).
IFRS 9 Financial Instruments
This standard replaces IAS 39 Financial Instruments: Recognition
and Measurement. IFRS 9 sets out requirements for recognising and
measuring financial assets and financial liabilities.
The adoption of IFRS 9 has not impacted the Group's accounting
policies related to financial liabilities, however financial assets
classified as loans and receivables under IAS 39 are now measured
at amortised cost. These include cash and cash equivalents, trade
and other receivables and customs deposits.
Financial assets are measured at amortised cost using the
effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or
loss on derecognition is recognised in profit or loss.
The effect of adopting IFRS 9 on the carrying amounts of
financial assets relates solely to the new impairment requirements,
as described further below. The requirements of IFRS 9 have been
adopted without restating comparative information, but are
recognised in the opening balance sheet at 1 January 2018.
IFRS 9 replaces the 'incurred loss' model in IAS 39 with a
forward looking 'expected credit loss' (ECL) model.
ECLs are based on the difference between the contractual
cashflows due in accordance with the contract and all the cashflows
that the Group expects to receive. The shortfall is then discounted
at an approximation to the asset's original effective interest
rate.
For Trade and other receivables, the Group has applied the
standard's simplified approach and has calculated ECLs based on
lifetime expected credit losses. The Group has established a
provision matrix that is based on the Group's historical credit
loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment.
There has not been a material impact to the Group's interim
condensed consolidated financial statements as a consequence of
adopting IFRS 9.
The provision for bad debts is not considered to be a critical
accounting judgement or key source of estimation uncertainty. While
the actual level of debt collected may differ from the estimated
levels of recovery this is not expected to be by a material amount.
In addition to applying the ECL model, each subsidiary evaluates
the collectability of trade receivables at each balance sheet date
and makes any specific provisions where there is objective evidence
of impairment.
Presentation of impairment
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
Impairment losses related to trade and other receivables are
presented separately in the statement of profit and loss and other
comprehensive income.
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 period ended 31
December 2017.
6. SEGMENT REPORTING
Information reported to the chief operating decision maker for
the purposes of resource allocation and assessment of segment
performance focuses on the products sold to customers. The Group's
reportable segments under IFRS8 Operating Segments are as
follows:
Power Generation: Being the development and operation of
renewable energy electricity and heat generation plants; and
Technology: Being the sale of Gasification Technology and
associated Engineering and Design Services. This reportable segment
came into effect on 28 December 2017 from the acquisition of Eqtec
Iberia SL.
The Chief Operating Decision maker is defined as the Board of
Directors.
Information regarding the Group's reportable segments is
presented below.
The following is an analysis of the Group's revenue and results
from continuing operations by reportable segment:
Segment Revenue Segment (Loss)/Profit
6 months ended 6 months ended
30 June 30 June 30 June 30 June
2018 2017 2018 2017
EUR EUR EUR EUR
Technology 525,591 - (691,715) -
Power Generation 20,697 20,418 (143,871) (77,147)
-------- -------- ------------ ------------
Total from continuing operations 546,288 20,418 (835,586) (77,147)
======== ========
Central administration
costs and directors' salaries (483,441) (515,940)
Other operating income 121,226 -
Other operating expenses (928) -
Gain on disposal of property,
plant and equipment 3,139 -
Impairment of property,
plant and equipment - (180,640)
Impairment of amounts due
under construction costs - (102,595)
(Losses)/gains on foreign
exchange (21,472) 97,480
Interest income 42 -
Interest costs (681,149) (282,455)
------------ ------------
Loss before taxation (continuing
operations) (1,898,169) (1,061,297)
============ ============
Revenue reported above represents revenue generated from
external customers. Inter-segment sales for the six months ended 30
June 2018 amounted to EURNil (2017: EURNil). Included in revenues
arising from sales in the Power Generation segment is EUR20,697
(2017: EUR20,418) arising from sales to an associated undertaking,
GG Eco Energy Limited.
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:
Additions to non-current
Depreciation and amortisation assets
6 months ended 6 months ended
30 June 2018 30 June 2017 30 June 2018 30 June 2017
EUR EUR EUR EUR
Head Office 103 - 1,233 -
Technology 124,225 - - -
Power Generation - - - -
In addition to the depreciation and amortisation reported above,
impairment losses of EURNil (2017: EUR180,640) were recognised in
respect of property, plant and equipment. These impairment losses
were attributable in full to the Power Generation segment.
The Group operates in three principal geographical areas:
Republic of Ireland (country of domicile), Spain 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 Jointly Controlled
Entities and External Non-current assets*
Customers
6 months to 6 months to
30 June 2018 30 June 2017 As at 30 June As at 31 Dec
2018 2017
EUR EUR EUR EUR
Republic of Ireland - - 1,130 -
Spain 525,591 - 780,988 905,213
United Kingdom 20,697 20,418 4,385,918 4,367,299
---------------- ---------------- ---------------- ---------------
546,288 20,418 5,168,036 5,272,512
================ ================ ================ ===============
* Non-current assets excluding goodwill, deferred tax, financial
instruments and investment in jointly controlled entities.
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. INCOME TAX EXPENSE
6 months ended 6 months ended
30 June 2018 30 June 2017
Income tax expense comprises: EUR EUR
Current tax - -
Deferred tax - -
--------------- ---------------
Income tax expense recognised in profit - -
or loss
=============== ===============
An income tax charge does not arise for the six months ended 30
June 2018 or 30 June 2017 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 has not been recognised for the losses coming
forward.
8. LOSS/(EARNINGS) PER SHARE
6 months ended 6 months ended
30 June 2018 30 June 2017
EUR EUR
Basic and diluted (loss)/earnings per
share
From continuing operations (0.001) (0.006)
From discontinued operations - -
--------------- ---------------
Total basic earnings/(loss) per share (0.001) (0.006)
=============== ===============
The loss and weighted average number of ordinary shares used in
the calculation of the basic and diluted (loss)/earnings per share
are as follows:
6 months ended 6 months ended
30 June 2018 30 June 2017
EUR EUR
(Loss)/profit for period attributable
to equity holders of the parent (1,801,599) (947,253)
--------------- ---------------
Profit for period from discontinued
operations used in the calculation of
basic earnings per share from discontinued
operations 23,233 17,030
--------------- ---------------
Losses used in the calculation of basic
loss per share from continuing operations (1,824,832) (964,283)
--------------- ---------------
Weighted average number of ordinary
shares for
the purposes of basic (loss)/earnings
per share 75,140,494 64,228,665
--------------- ---------------
Anti-dilutive Potential Ordinary Shares
The following potential ordinary shares are anti-dilutive and
are therefore excluded from the weighted average number of ordinary
shares for the purpose of diluted loss per share:
6 months ended 6 months ended
30 June 2018 30 June 2017
Share warrants in issue 223,316,839 39,088,960
Share options in issue 67,304,542 -
Convertible loans in issue 170,940,171 10,000,000
--------------- ----------------
Total anti-dilutive shares 461,561,552 49,088,960
--------------- ----------------
As set out in note 14 below, 307,194,667 ordinary shares were
issued after the period end. If these shares were in issue prior to
30 June 2018, they would have affected the calculation of the
weighted average number of shares in issue for the purposes of
calculating both the basic loss per share and diluted loss per
share by 51,199,111 (assuming the shares were issued in June
2018).
9. INVESTMENT IN ASSOCIATE UNDERTAKINGS
Details of the Group's interests in associated undertakings at
30 June 2018 are as follows:
Name of jointly Country of Shareholding Principal activity
controlled entity incorporation
GG Eco Energy Limited England 30% Operator of biomass
heat generating
projects
Summarised financial information in respect of the group's
interests in associate undertakings is as follows:
30 June 2018 31 Dec 2017
EUR EUR
Non-current assets 1,197,421 1,235,265
Current Assets 225,037 181,559
Non-current liabilities (1,425,458) (1,459,030)
Current liabilities (963,901) (757,094)
------------- ------------
Net liabilities (966,901) (799,300)
============= ============
Group's share of net assets of associated - -
undertakings
============= ============
6 months ended
30 June 2018 30 June 2017
EUR EUR
Total revenue 269,897 350,857
Total expenses (435,420) (492,475)
------------- -------------
Total loss for the period (165,523) (141,618)
============= =============
Group's share of losses of jointly controlled - -
entities
============= =============
The investment in GG Eco Energy Limited is accounted for using
the equity method in accordance with IAS 28.
10. GOODWILL
Included in intangible assets are the following amounts relating
to goodwill:
30 June 31 Dec 2017
2018
Cost EUR EUR
At start of period 15,247,434 -
Additional amounts recognised from business
combinations occurring during the period - 15,247,424
At end of period 15,247,434 15,247,434
Accumulated impairment losses
At start and at end of period - -
Net book value 15,247,434 15,247,434
11. SHARE CAPITAL
During the six-month period to 30 June 2018 136,808,333 shares
were issued to satisfy conversion options granted under various
borrowing arrangements.
Amounts in thousands of shares 30 June 2018
Ordinary Shares of EUR0.001 each issued
and fully paid
-Beginning of the period 1,346,091
-Issued on conversion of debt 136,808
-------------
Total Ordinary shares of EUR0.001 each
authorised, issued and fully paid at
the end of the period 1,482,899
-------------
12. BORROWINGS
During the six months ended 30 June 2018, the following occurred
in relation to debt securities:
-- a repayment of GBP378,882 was made on the companies Secured Loan Facility ("SLF")
-- the Company executed a drawdown of GBP1,350,000 an Unsecured
Convertible Loan Note ("UCLN") facility. Each Loan Note had a
subscription price of GBP23,500 and a redemption at par value,
being GBP25,000, five years from the date of issue unless converted
or redeemed at an earlier date. Repayments totaling GBP407,500 were
made on the UCLN facility during the period through conversions and
early redemption
-- the existing Convertible Secured Loan Note ("CLSN") was
amended such that (i) the maturity date of the CSLN is extended to
14 July 2020 (ii) the interest rate applicable to the CSLN was
varied to 15% p.a. (subject to a reduction in the interest rate for
early repayment of the CSLN) and (iii) the price at which the CSLN
converts was amended to 0.585 pence per share.
13. COMMITMENTS AND CONTINGENCIES
There have been no other changes in commitments and contingent
liabilities since the end of the previous reporting period, 31
December 2017.
14. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE AND DISCONTINUED OPERATIONS
The Group is in negotiations with certain parties with respect
to the sale of its subsidiary, Pluckanes Windfarm Limited, which is
involved in the generation of electricity through wind. The
disposal is consistent with the Group's long-term policy to focus
its activities as a technology solution company for waste
gasification to energy projects. The disposal is expected to be
complete in Q4 2018.
Consequently, assets and liabilities allocable to Pluckanes
Windfarm Limited were classified as a disposal group. Revenues and
expenses, gains and losses relating to the discontinuation of this
subgroup have been eliminated from profit or loss from the Group's
continuing activities and are shown as a single line item on the
face of the statement of profit or loss. The combined results of
the discontinued operations included in the loss for the financial
period are set out below.
6 months ended
30 June 2018 30 June 2017
Profit for the period from discontinued EUR EUR
operations
Revenue 96,539 93,742
Administrative expenses (55,934) (57,877)
------------- -------------
Operating profit 40,605 35,865
Finance costs (17,375) (18,838)
Finance income 3 3
------------- -------------
Profit for the period before tax 23,233 17,030
Income tax - -
----------------- -------------
Profit for the period from discontinued
operations
(attributable to the owners of the
Company) 23,233 17,030
================= =============
Cash flows generated by Pluckanes Windfarm Limited for the
periods under review are as follows:
6 months ended
30 June 2018 30 June 2017
Cash flows from discontinued operations EUR EUR
Operating activities 87,135 72,484
Investing activities (907) 8
Financing activities (60,418) (62,203)
------------- -------------
Net cash flows used in continuing
operations 25,810 10,289
================= =============
The carrying amount of assets and liabilities in this disposal
group are summarised as follows:
30 June 2018 31 Dec 2017
Assets classified as held for EUR EUR
resale:
Non-current assets
Property, plant and equipment 1,127,519 1,166,679
Current assets:
Trade and other receivables 18,923 37,816
Cash and cash equivalents 130,948 105,138
------------- ------------
Assets classified as held for
resale 1,277,390 1,309,633
============= ============
30 June 2018 31 Dec 2017
Liabilities classified as held EUR EUR
for resale:
Current liabilities:
Trade and other payables 15,124 59,544
Borrowings 944,250 987,250
------------- ------------
Liabilities classified as held
for resale 959,374 1,046,794
============= ============
15. BUSINESS COMBINATIONS
Information on prior period acquisition
On 28 December 2017, the Group acquired 100% of the voting
shares of Eqtec Iberia SL, an unlisted company based in Spain,
specialising in the provision of technical engineering services.
Details of the acquisition are set out in Note 28 of the
consolidated financial statements of the Group for the 6 month
period ended 31 December 2017.
16. RELATED PARTY TRANSACTIONS
During the period ended 30 June 2018, the Group realised
EUR20,687 (2017: EUR20,418) from its associated undertaking, GG Eco
Energy Limited, on consultancy fees associated with the generation
of heat. Included in trade and other receivables at 30 June 2018 is
EURNil due from GG Eco Energy Limited (31 December 2017:
EURNil).
17. 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.
Management uses valuation techniques to determine the fair value
of financial instruments (where active market quotes are not
available) and non-financial assets. This involves developing
estimates and assumptions consistent with how market participants
would price the instrument. Management bases its assumptions on
observable data as far as possible but this is not always
available. In that case management uses the best information
available. Estimated fair values may vary from the actual prices
that would be achieved in an arm's length transaction at the
reporting date. The following table shows the Levels within the
hierarchy of financial assets and liabilities measured at fair
value on a recurring basis at period-end.
Level Level 2 Level Total
1 3
30 June 2018 EUR EUR EUR EUR
----------------------------- -------- ------------ ------ ------------
Financial assets
Trade and other receivables - 557,817 - 557,817
Cash and cash equivalents 185,152 - - 185,152
Financial liabilities
Trade and other payables - (1,837,222) - (1,837,222)
Investor loans - (4,652,465) - (4,652,465)
Bank overdrafts (2,048) - - (2,048)
Bank loans - (640,036) - (640,036)
----------------------------- -------- ------------ ------ ------------
183,104 (6,571,906) - (6,388,802)
============================= ======== ============ ====== ============
Level Level 2 Level Total
1 3
31 December 2017 EUR EUR EUR EUR
----------------------------- ---------- ------------ ------ ------------
Financial assets
Trade and other receivables - 499,264 - 499,264
Cash and cash equivalents 1,804,943 - - 1,804,943
Financial liabilities
Trade and other payables - (2,766,985) - (2,766,985)
Investor loans - (3,657,399) - (3,657,399)
Bank overdrafts (1,618) - - (1,618)
Bank loans - (878,920) - (878,920)
----------------------------- ---------- ------------ ------ --------------
1,803,325 (6,804,040) - (5,000,715)
============================= ========== ============ ====== ==============
The carrying amount of the following financial assets and
liabilities is considered a reasonable approximation of fair
value:
-- trade and other receivables;
-- cash and cash equivalents;
-- trade and other payables; and
-- borrowings.
18. EVENTS AFTER THE REPORTING DATE
-- On 5 July 2018, the Company entered into a loan agreement for
the provision of a secured loan facility of up to US$3.2 million
(approximately GBP2.4 million) (the "Loan Facility"). The Loan
Facility can be drawn down in two equal instalments with the first
instalment of US$1.6 million having been advanced to the Company.
Certain conditions subsequent in relation to the Loan Facility have
been satisfied by the Company.
The Company has also granted warrants to the lenders of the Loan
Facility over 81,296,134 Ordinary Shares at an exercise price of
1.19 pence per share which can be exercised at any time up to July
2023.
Interest on the Loan Facility is at the rate of 10 % per annum.
Each instalment of the Loan Facility will have a maturity date of
12 months from the date of advance (the "Advance Date"). No
repayments of the Loan Facility will be made by the Company in the
first three months following the Advance Date, following which
repayments shall be made as follows: (i) US$67,500 shall be paid at
the end of the fourth month following the Advance Date; (ii) 70% of
the principal and interest shall be repaid over the following seven
months; and (iii) the balance paid on the maturity date.
The Company's obligations under the Loan Agreement are subject
to the existing security granted by the Company and its
subsidiaries in favor of the holders of the SLF and the CSLN.
-- The Company used the proceeds of the first instalment of the
Loan Facility to redeem the amount outstanding under the
convertible loan facility of GBP1.15 million entered into by the
Company on 28 February 2018.
-- On 5 July 2018, the Company also entered into arrangements
with the holders of the SLF and the CSLN to capitalise accrued and
future interest payments totaling GBP693,168 due to them under
their existing debt facilities through the issue of 115,528,000
Ordinary Shares
-- On 6 August 2018 the Company issued 307,194,667 Ordinary
Shares, which include the 115,528,000 to the holders of the SLF and
CSLN, arising from the conversion of loan notes entered into on 5
July 2018. Warrants to subscribe for 57,764,000 Ordinary Shares
were granted to the holders of the SLF and CSLN and warrants to
subscribe for 95,833,333 Ordinary Shares were granted to the other
convertible loan note holders. All warrants relating to these
conversions are at an exercise price of 0.75p per share and are
exercisable for two years.
-- The Company concluded an agreement with existing funders to
increase the existing 5 July 2018 facility from US$3.2m to US$10m
with agreed drawdowns totalling US$2m over the six months from the
revised agreement.
19. APPROVAL OF FINANCIAL STATEMENTS
The condensed consolidated financial statements for the six
months ended 30 June 2018, which comply with IAS 34, were approved
by the Board of Directors on 27th September 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BQLLLVKFFBBV
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