TIDMEQT
RNS Number : 8080V
EQTEC PLC
19 April 2021
19 April 2021
EQTEC plc
("EQTEC", the "Company" or the "Group")
Final Results for the year ended 31 December 2020
EQTEC plc (AIM: EQT), a world leading gasification technology
solutions company for sustainable waste-to-energy projects,
announces its final audited results for the year ended 31 December
2020.
Operational and commercial highlights
-- Accelerated pipeline growth through strategic partners: An
additional 17 opportunities added in H2 2020, bringing the total
pipeline to 58 at the end of 2020 (a further 17 were added post
period, between January and March 2021). The 58 in pipeline at the
end of 2020 represent non-contracted tender opportunities worth a
potential aggregate EUR559 million, amongst which we sent full
commercial offers in 2020 worth a total of EUR334 million.
-- Gasification into Greece scaling rapidly: The Company signed
an agreement for the construction of a 0.5 MWe project in Larissa
with Greek project developer, Agrigas Energy SA ("Agrigas"), via
German EPC partners, ewerGy GmbH ("ewerGy"). In March 2020, a
Collaboration Framework Agreement was completed with ewerGy for 13
potential new projects in the Balkan region (notably, Greece and
Bulgaria), with exclusivity. In August, EQTEC signed an equipment
sales and services contract worth EUR2 million with ewerGy for the
project.
-- Forestry waste in USA: The Company reached financial close in
January on 2 MWe the North Fork Community Power ("NFCP") project in
California, USA, including sale of equipment and engineering and
design services worth EUR2.2 million, concurrent with the
acquisition of a 19.99% interest in NFCP. This project and a
pipeline of others of similar size are being developed with US
partners, Phoenix Biomass Energy LLC ("Phoenix") and a full
planning permit is progressing for a second project with Phoenix in
Napa, California. Technology due diligence has been completed
successfully for a third project with Phoenix, in Wilseyville,
California and has already received indicative non-binding terms
for funding.
-- RDF Billingham Project in UK: Following a Memorandum of
Understanding, EQTEC signed an Option Agreement to acquire the
project. Post period, the project received amended planning
approval and EQTEC signed a conditional Land Purchase Agreement.
The project includes a plant with capacity of up to 25 MWe. The
project is under review for funding by Idex Group ("Idex"), an
established European owner-operator of waste-to-energy
infrastructure with over 40 energy-from-waste ("EfW") plants in
France.
-- RDF Deeside Project in UK: An exclusivity agreement was
signed in July 2020 with Logik Developments Limited ("Logik") for a
20 MWe recycling and anaerobic digestion project in Wales. A
planning application for deployment of EQTEC's advanced
gasification technology has been made and a decision is expected by
Q3 2021. EQTEC signed an agreement to acquire the project SPV from
Logik Developments in December. Post period end, in February 2021,
the Company signed a Collaboration Agreement with Logik to jointly
develop other projects in the UK, with two currently under
review.
-- Southport Hybrid Energy Park Project in UK: The Company is
co-developing and has an option agreement with Rotunda Group
Limited ("Rotunda") for a waste management project in Southport,
Merseyside for which EQTEC would seek additional planning
permission for the deployment of its advanced gasification
technologies. The proposed plant could convert over 55,000 tonnes
of RDF annually for an estimated 6 MWe to 8 MWe of 'green'
electricity.
-- Collaboration with Carbon Sole Group, Ireland: A framework
agreement was completed with Carbon Sole Group Limited ("Carbon
Sole") for joint participation in projects in Ireland involving
biogas and district heating, biomass-to-energy and advanced
biofuels, applying EQTEC's technology. With an immediate pipeline
of three deals, planning application for the first deal in Shannon
has been submitted and a decision is expected in Q3 2021.
-- Innovation, Research and Development: In January 2020, the
Company received approval to carry out tests utilising Refuse
Derived Fuel ("RDF") at the Research and Demonstration Plant
located at the University of Lorraine ("U of L"), in France. The
plant was built in collaboration between U of L and EQTEC and
should accelerate technology validation tests of different types of
RDF to satisfy adoption by key stakeholders. The Company signed a
contract in February 2020 for upgrade of existing syngas research
and development facility at the University of Extremadura ("U of
E") in Spain. Installation of a Fischer-Tropsch unit supports the
production of sustainable biofuels utilising high quality syngas
produced from EQTEC's advanced gasification process, in use at the
university since 2010. In October, a Technology Review and
potential collaboration with Wood Group UK Limited commenced.
-- Other strategic sales: In January 2020, the sale of
EUR300,000 worth of equipment and spare parts to Mostos Vinos y
Alcoholes S.A. ("Movialsa") was completed. As part of the contract,
the Group is able to arrange visits to Movialsa's plant in Spain to
showcase the Group's technology, which has been fully operational
on the site for nearly a decade, to potential future stakeholders
in the Group's projects. In August, the sale of Pluckanes Windfarm
Limited took place for maximum net proceeds of up to EUR383,503
(dependent on certain milestones relating to planning
permission).
-- Appointment of Chief Operating Officer: The Company hired
Jeffrey Vander Linden as Operations Director to lead strategic and
business planning and to drive operational and delivery excellence.
Having worked with the Company as an advisor since July, Jeff
joined the company in December as an Executive Director, COO and
Board Member.
Financial highlights
-- Revenue: For the period through to 31 December 2020, the
Company recognised revenue of EUR2.2 million (FY 2019: EUR1.7
million).
-- Loss for the financial year: For the period, the Group
incurred losses of EUR5.8 million (FY 2019: EUR3.6 million),
principally the result of recognition of share-based payment costs
of EUR1.8 million and an increase in administrative expenses over
the period.
-- Assets: The net assets of the Company increased to EUR25.3
million at 31 December 2020 (31 December 2019: EUR15.5
million).
-- Placing: In July, the Company raised GBP10 million gross in
an oversubscribed placing and PrimaryBid offer at 0.45 pence per
share.
-- Cash: The cash balances of the Company at 31 December 2020
stood at EUR6.4 million (31 December 2019: EUR0.5 million).
-- Debt: Total debt repaid during the period amounted to EUR1.4
million. Agreed a reprofiling of existing debt plus interest of
EUR2.6 million due to mature on 31 July 2020, with a new maturity
on 30 June 2021. In December agreed new loan facility with Altair
to fully repay existing debt with a new maturity on 31 December
2021 and a lower interest rate.
-- Warrants: All executed from placings in 2019 and 2020, with
the Company receiving EUR1.5 million from the exercise of warrants
during the period.
Post period highlights
-- January 2021: Biomass gasification in Greece: Option
Agreement to acquire a project for Nobilis Pro Energy S.A.
("Nobilis"). The second in a growing pipeline of opportunities
pursued with ewerGy, the plant will apply EQTEC's advanced
gasification to waste from olive mills and wineries at a 0.9 MWe
gasification plant in Almyros, Greece. The project agreement is
based on an MoU signed with Nobilis for more general development of
biomass gasification plants based on EQTEC technology.
-- February 2021: Long-term Incentive Plan. Adoption of the
EQTEC All Employee Long-term Incentive Plan (the "LTIP") as a core
part of the Company's new approach to business planning,
performance management and employee incentives. The LTIP is
designed to drive individual and team performance in line with
Company performance, thereby creating value for shareholders while
minimising cash outlay. All Company Executive Directors and
employees are eligible to participate in the LTIP.
-- March 2021: Collaboration Agreement with Toyota: The Company
has agreed to collaborate to explore an innovative, circular and
sustainable waste-to-energy solution for Toyota's engine
manufacturing plant in Deeside. Subject to Financial Close,
construction is expected to commence at Deeside in 2022.
-- March 2021: Dismissal of patent infringement claim in USA:
Aries Clean Energy LLC ("Aries") of Franklin, Tennessee, USA
withdrew its patent infringement complaint, stipulating the action
be dismissed 'with prejudice', forbidding Aries from filing another
lawsuit on the same grounds and indicating EQTEC's continued right
to produce, use, and sell technology without further harassment
from Aries, either directly or through EQTEC customers.
Outlook
The Company is focused on the following objectives, all of which
are supported by EQTEC advanced gasification technology innovation
and engineering, the strength of partner relationships and ability
to deliver sustainable waste-to-energy projects. The Company aims
to build more advanced gasification plants in more markets with a
greater, cleaner impact on local communities and greater returns
for investors.
1. Biomass-to-Energy. The Company is pursuing multiple deals in
Europe, predominantly in Greece, Croatia and other central and
southern countries, as well as in the USA. It anticipates the
closure in 2021 of five to eight deals with contract values to the
Group totalling EUR20-40 million.
2. RDF to Energy. The Company will apply its expertise with the
capabilities of local teams to begin construction at the
Billingham, Teesside, UK plant, a 25 MWe plant that will produce
electricity and heat. The project is anticipated to have a contract
value in excess of EUR30 million to the Group, and to lead the way
for the two more similarly-sized UK RDF facilities in 2022, in
Deeside, Flintshire and Southport, Merseyside.
3. Biomass-to-Bioenergy. The Company intends to close the first of several potential deals for biomass-to-bioenergy plant construction in Ireland, with local partner Carbon Sole. Working with them and one or more methanation technology partners, EQTEC will pursue at least one deal in 2021, worth EUR15 million to the Group, for production of biofuels and potentially other clean, bioenergy, with similar deals to follow in successive years.
4. Recommissioning EQTEC technology. Two plants are expected to
be recovered for lack of technical integration capabilities. EQTEC
will lead a consortium to acquire, repower, own and operate its
technology in target markets in Italy, a 1.0 MWe plant for
converting local, agricultural waste to electricity and heat. In
Croatia, EQTEC will work with local partner Sense ESCO d.o.o.
("Sense ESCO") to recommission a 1.2 MWe plant transforming local
forestry waste wood to provide electricity and heat. The two plants
are both expected to be acquired in 2021, with the first
acquisition nearing contract completion.
In 2021, revenues from both current and new projects and gradual
growth from maintenance and consulting contracts are forecast to
generate revenues of approximately EUR15 million in 2021. These
revenues, together with an expected contribution from EQTEC
Capital, are forecast to generate positive EBITDA, making 2021
EQTEC's first year of profitability.
David Palumbo, CEO of EQTEC, commented: "2020 was a year in
which we advanced and embedded our business strategy, significantly
added to our pipeline, strengthened our management team, increased
the depth and number of our partner relationships and expanded our
platform for growth. In the first half of the year, we achieved
financial close on two ground-breaking projects, each with an
additional pipeline attached to them and we concentrated on
maturing our relationships with our go-to-market partners. In the
second half of the year, we built further discipline into our
business operations and project execution capabilities, toward
mitigating risks and accelerating delivery of business cases and
measurable value.
"I look forward to our delivery of further growth and
profitability in 2021 and beyond."
The 2020 Annual Report and Accounts will shortly be available on
the Company's website at www.eqtec.com .
ENQUIRIES
EQTEC plc +353 21 2409 056
David Palumbo / Gerry Madden
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Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
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James Harris / James Dance
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Arden Partners - Joint Broker +44 20 7614 5900
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Paul Shackleton (Corporate) / Simon Johnson
(Sales)
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Canaccord Genuity - Joint Broker +44 20 7523 8000
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Henry Fitzgerald-O'Connor / James Asensio
/ Patrick Dolaghan
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Maitland/AMO - Communications & PR/IR adviser +44 20 7379 5151
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James Benjamin / Rhys Jones EQTEC-maitland@maitland.co.uk
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About EQTEC plc
As the world's leading experts in gasification for sustainable
waste-to-energy projects, EQTEC is building the future of the
sector, combining its technology innovation and engineering with
expert plant construction and project deliveries, to help drive the
global energy transition. EQTEC's proven, proprietary and patented
technology is at the centre of projects that aim to enhance local
communities and champion local businesses with an improved
environmental impact.
EQTEC designs and supplies advanced gasification solutions that
have a higher efficiency product offering and are modular and
scalable from 1MW to 30MW. EQTEC's versatile solutions are
independently proven to process over 50 different types of
feedstock, including municipal waste, agricultural waste, biomass
and plastics with no hazardous waste or toxic emissions . EQTEC's
solutions produce a uniquely pure high-quality synthesis gas
(syngas), that is capable of being used for the widest applications
in the creation of energy, hydrogen and biofuels.
EQTEC's proprietary technology design together with deployment
and maintenance capabilities mitigate the risks when using third
party equipment. EQTEC's Technology Integration capabilities enable
the Group to lead collaborative ecosystems that build sustainable
waste elimination and green energy infrastructure.
The Company is quoted on AIM (ticker: EQT) and the London Stock
Exchange awarded EQTEC the Green Economy Mark that 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
.
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Chairman's Statement
I am very pleased to introduce EQTEC plc's Annual Report and
Accounts for 2020 and share my perspective on the prospects of an
international company that is building the future of the
sustainable waste-to-energy sector.
It is especially pleasing to start this report by stating my
belief that EQTEC's capabilities have never been stronger and that
its prospects at addressing various market needs have never been
greater, even despite some challenges presented to the business
during the year.
Against a backdrop of home-working, restrictions preventing
travel to sites and delays with approvals at government agencies
and financial institutions, EQTEC worked with agility and speed to
respond productively. The team further invested in relationships
with partners, advancing deals with intensive collaboration in
particular in Greece, Croatia and the UK. The leadership focused on
strengthening EQTEC's platform for growth, attracting and hiring
new talent for key positions and building improved, robust
standards for business management and project delivery. More than
ever, EQTEC is now well prepared for the increasing growth and
demand for new and more sustainable solutions to the world's waste
management challenges and well positioned to play its role in
accelerating the energy transition.
The markets for those challenges have themselves gained
increased attention and commitment from consumers, local
government, policymakers and investors in 2020 and into 2021. Not
only did the pandemic give consumers time for pause and reflection
about a world that was, for a time, noticeably freer from
pollutants due to decreased economic activity and social movement,
but it also created a realisation that alternatives were becoming
increasingly available thanks to interest from the news media and
the stock markets.
The European Union ramped up its European Green Deal to drive a
range of actions, including:
-- investing in environmentally-friendly technologies;
-- supporting industry to innovate; and
-- decarbonising the energy sector.
All three of these efforts support EQTEC's advancement in EU
economies and as a business with operations, partners and strong
pipeline in the EU.
The UK started the year by leaving the EU and ended with a raft
of environmental and energy pledges, papers, policies and plans
from the Government, as it looked ahead to hosting the next United
Nations Climate Change conference, COP26, in Glasgow this November.
As a former Science and Climate Change Minister I am excited at the
progress that can be made. In my view the UK has reinforced its
commitment to decarbonisation and there is much potential for
innovation in better waste management to support the energy
transition. EQTEC's progress with building RDF-to-energy plants in
the UK is strong, enhancing local communities and championing local
businesses. The team is focused on creating localised solutions
that can offer the next best option after reduction, reuse and
recycling, with a low environmental and emissions impact and high
efficiency amongst the very best of waste-to-energy approaches.
By the end of 2020, we saw confirmation from the newly elected
Administration that the USA would re-join the Paris Climate Accord
and put the country back on the path to Net Zero emissions by 2050,
something made official in February 2021. It is my belief that this
will create additional momentum, even in California where support
of cleantech is arguably greatest. EQTEC is already progressing
projects there, growing its partner relationships to support
construction of plants to address waste forestry materials with its
Advanced Gasification Technology.
EQTEC remains uniquely well-placed to address future waste
market potential. As an innovator at the leading edge of advanced
gasification technologies combining engineering with expert
construction and project delivery capabilities, EQTEC has been
building a solid business platform, partner ecosystem and team. All
of these elements will allow it to successfully pursue and deliver
on international opportunities in line with the Company's focused
strategy.
To complement its long-standing Technical Centre in Barcelona,
EQTEC has now designed and formally implemented a Corporate Centre
across Cork and London. This includes bringing in a small number of
top professionals to drive standards, methods and support for rapid
scale of business development, project delivery and partnering.
With the operational disciplines brought in through 2020, the
business is clearly positioning itself to move quickly to convert a
sizeable, stress-tested pipeline into solid growth in 2021 and
beyond.
Looking ahead, I confidently expect EQTEC's growth to be strong
and sustained across markets as the world recovers from the
pandemic and countries look to build back better and greener. 2020
delivered a global shock, and for EQTEC some hurdles and delays,
but it also brought the opportunity for further clarity of the
Company's mission alongside an increased determination and
readiness to seize opportunities in the immediate years to
come.
Ian Pearson
Non-Executive Chairman
16 April 2021
Chief Executive's Report
Our vision is a world where, through technology innovation,
waste of all types is transformed into a valuable resource just as
Nature repurposes its own surplus materials. Our contribution to
realising this vision continues to be transformation of waste into
clean energy and biofuels.
Even despite the global pandemic and ensuing economic slowdown,
EQTEC's business platform has proven resilient. In 2020 we pushed
on with our business strategy, significantly adding to our
pipeline, strengthening and increasing our partner relationships
and expanding our platform for growth. In the first half of the
year, we closed two ground-breaking deals, each with additional
pipeline attached to them - and we concentrated on maturing our
relationships with our go-to-market partners. In the second half of
the year, we built further discipline into our business operations
and project execution capabilities, toward mitigating risks and
accelerating delivery of business cases and measurable value.
Our pipeline grew with greater pace than we expected and it
shows no signs of slowing. With that growth comes greater
commitment to our strengths with biomass-to-energy solutions, new
focus on RDF-to-energy solutions and emerging expectations for
biomass-to-bioenergy and other solutions. At the core of EQTEC's
market attractiveness remains our technology leadership with
production of the world's purest synthesis gas, a vital source of
clean, efficient energy and biofuels. Supplementing our technology
is our commercial know-how with defining attractive business models
for sustainable, waste-to-energy operations and project delivery
capabilities to ensure plants become operational on time and to the
expectations of investors, partners and local communities.
Two biomass-to-energy projects reached financial close in 2020.
Two projects were delayed into the next financial year as a result
of slowdowns in planning, approvals, home working and alignment of
financial institutions in key markets, primarily through the impact
of Covid-19 restrictions. Our current project in California with
North Fork Community Power ("NFCP") was delayed during construction
due to Covid-related delays but also to the forest fires that
spread right up to the border of the site. But given our technology
leadership and the enduring attractiveness of our proposition, no
deals were lost in 2020.
To mitigate the risk to revenue impact from delays to Financial
Close, we ramped up application of our own development capital
programme (EQTEC Capital), and plan to invest up to EUR4 million to
deploy dedicated, professional teams for pre-Financial Close
business development, engineering and delivery readiness. We
defined Financial Close milestones and instilled team disciplines
and oversight to support qualified and timely delivery of projects
ready for construction and commissioning. This approach is now our
preferred one for most opportunities in our pipeline, as we expect
it to deliver a healthy return on investment and generate
additional development finance whilst contributing to EBITDA.
We also followed through on our commitment to further strengthen
our team, bringing key roles in house and decreasing reliance on
external contractors. In our Technical Centre, we went to market
for specific, new Engineering roles. We formalised our Corporate
Centre in London and Cork, adding a Strategy & Operations
Director (COO) to the executive team and Board of Directors, along
with critical roles in Marketing and Communications, Analytics and
Business Development. The enhanced and experienced team evidences
our dedication to high quality work at pace, in qualifying deals,
developing opportunities, delivering projects and supporting high
quality operations of commercial plants with EQTEC's Advanced
Gasification Technology at the centre.
Our go-to-market approach with qualified strategic partners is
proving its value, with 57% of new opportunities coming through
these relationships. We signed eight collaboration agreements in
three countries and are in the process of formalising these project
and operational agreements through joint ventures or other
vehicles.
Operational, Commercial and Corporate Highlights
-- Accelerated pipeline growth through strategic partners: An
additional 17 opportunities were added to our pipeline in H2 2020,
bringing the total pipeline to 58 at the end of 2020 (a further 17
were added post period, between January and March 2021).
Critically, over half of the opportunities added have come through
only six of our maturing strategic partnerships, indicating the
strength of that go-to-market approach. The 58 in pipeline at the
end of 2020 represent non-contracted tender opportunities worth a
potential EUR559 million, amongst which we sent full commercial
offers in 2020 worth a total of EUR334 million.
-- Gasification into Greece scaling rapidly: We signed an
agreement for the construction of a 0.5 MWe project in Larissa with
Greek project developer, Agrigas Energy SA ("Agrigas"), via German
EPC partners, ewerGy GmbH ("ewerGy"). In March, a Collaboration
Framework Agreement was completed with ewerGy for 13 potential new
projects in the Balkan region (notably, Greece and Bulgaria), with
exclusivity. In August, we signed an equipment sales and services
contract worth EUR2 million with ewerGy for the project. Post
period, seven new projects are under review in the context of the
Collaboration Agreement with ewerGy.
-- Forestry waste in USA: We reached financial close in January
on a 2 MWe the North Fork Community Power project in California,
USA, including sale of equipment and engineering and design
services worth EUR2.2 million, concurrent with the acquisition of a
19.99% interest in NFCP. This project and a pipeline of others of
similar size is being developed with US partners, Phoenix Biomass
Energy LLC ("Phoenix") and a full planning permit is progressing
for a second project with Phoenix in Napa, California. Technology
due diligence has been completed successfully for the third project
with Phoenix, in Wilseyville, California and has already received
indicative terms for funding.
-- RDF Billingham Project in UK: Following a Memorandum of
Understanding, EQTEC signed an Option Agreement to acquire the
project. Post period, the project received amended planning
approval and EQTEC signed a conditional Land Purchase Agreement.
The project includes a plant with capacity of up to 25 MWe. The
project is under review for funding by Idex Group, an established
European owner-operator of waste-to-energy infrastructure with over
40 EfW plants in France.
-- RDF Deeside Project in UK: An exclusivity agreement was
signed in July with Logik Developments Limited for a 20 MWe
recycling and anaerobic digestion project in Wales. A planning
application for deployment of EQTEC's Advanced Gasification
Technology has been made and a decision is expected by Q3 2021.
EQTEC signed an agreement to acquire the project SPV from Logik
Developments in December. Post period, in February 2021, the
Company signed a Collaboration Agreement with Logik to jointly
develop other projects in the UK, with two currently under
review.
-- Southport Hybrid Energy Park Project in UK: We are
co-developing and have an option agreement with Rotunda Group
Limited for a waste management project in Southport, Merseyside for
which EQTEC would seek additional planning permission for the
deployment of its Advanced Gasification Technologies. The proposed
plant could convert over 55,000 tonnes of RDF annually for an
estimated 6 MWe to 8 MWe of 'green' electricity.
-- Collaboration with Carbon Sole Group, Ireland: A framework
agreement was completed with Carbon Sole Group Limited for joint
participation in projects in Ireland involving biogas and district
heating, biomass-to-energy and advanced biofuels, applying EQTEC's
technology. With an immediate pipeline of three deals, planning
application for the first deal in Shannon has been submitted and a
decision is expected in Q3 2021.
-- Innovation, Research and Development: In January, we achieved
approval to carry out tests utilising Refuse Derived Fuel ("RDF")
at the Research and Demonstration Plant located at the University
of Lorraine ("U of L"), in France. The plant was built in
collaboration between U of L and EQTEC and should accelerate
technology validation tests of different types of RDF to satisfy
adoption by key stakeholders. We signed a contract in February for
upgrade of existing syngas research and development facility at the
University of Extremadura ("U of E") in Spain. Installation of a
Fisher-Tropsch unit supports the production of sustainable biofuels
utilising high quality syngas produced from EQTEC's advanced
gasification process, in use at the university since 2010. In
October, a Technology Review and potential collaboration with Wood
Group UK Limited commenced.
-- Cashing in non-core assets whilst strengthening strategic
relationships: In January, the sale of EUR300,000 worth of
equipment and spare parts to Mostos Vinos y Alcoholes S.A.
("Movialsa") was completed. As part of the contract, the Group is
able to arrange visits to Movialsa's plant in Spain to showcase the
Group's technology, which has been fully operational on the site
for nearly a decade, to potential future stakeholders in the
Group's projects. In August, the sale of Pluckanes Windfarm Limited
took place for maximum net proceeds of EUR383,503 (dependent on
certain milestones relating to planning permission).
-- Appointment of broker: We appointed Arden Partners PLC as the
Company's Broker, with analyst research produced.
-- Appointment of Chief Operating Officer and consolidation of
Corporate Centre: In December, the Company hired Jeffrey Vander
Linden as Operations Director to drive operational and delivery
excellence. Having worked with the company as a Contracted Advisor
since July, Jeff joined the Company in December as an Executive
Director and Board Member. Shortly thereafter, the Company went to
market and filled a number of critical roles including for Head of
Marketing & Communications, Head of Analytics and two
additional Business Development Managers.
-- Dismissal of patent infringement claim in USA: Aries Clean
Energy LLC ("Aries") of Franklin, Tennessee, USA withdrew its
patent infringement complaint, stipulating the action be dismissed
'with prejudice', forbidding Aries from filing another lawsuit on
the same grounds and indicating EQTEC's continued right to produce,
use, and sell technology without further harassment from Aries,
either directly or through EQTEC customers. Aries made its
complaint in July 2020, which EQTEC immediately rejected on grounds
that the Company's technology does not infringe Aries' patents,
especially as the technology accused was actually prior art to
every patent claim that Aries asserted. Aries capitulated in March
2021, prior to the Court's ruling on a Motion to Dismiss filed by
EQTEC in December 2020. Aries' only response to the December motion
admitted their case was speculative and that they had no
information about the project they claimed would implement
technology that infringed their patents. Having attempted through
the second half of 2020 to seek review of EQTEC intellectual
property by its own engineers and even its CTO, Aries finally
agreed in January 2021 to have its outside counsel review EQTEC's
IP under a strict nondisclosure agreement, a review completed in
February. Aries' offer to dismiss followed in March and EQTEC
accepted. EQTEC does not expect to give any further attention to
the matter.
Financial Highlights
-- Revenue: For the period through to 31 December 2020, the
Group recognised revenue of EUR2.2 million (FY 2019: EUR1.7
million).
-- Loss for the financial year: For the period, the Group
incurred losses of EUR5.8 million (FY 2019: EUR3.6 million),
principally the result of recognition of share-based payment costs
of EUR1.8 million and an increase in administrative expenses over
the period.
-- Assets: The net assets of the Group increased to EUR25.3
million at 31 December 2020 (31 December 2019: EUR15.5
million).
-- Placing: In July, the Company raised GBP10 million gross in
an oversubscribed placing and PrimaryBid offer at 0.45 pence per
share.
-- Cash: The cash balances of the Group at 31 December 2020
stood at EUR6.4 million (31 December 2019: EUR0.5 million).
-- Debt: Total debt repaid during the period amounted to EUR1.4
million. Agreed a reprofiling of existing debt plus interest of
EUR2.6 million due to mature on 31 July 2020, with a new maturity
on 30 June 2021. In January 2021 agreed new loan facility with
Altair to fully repay existing debt with a new maturity on 31
December 2021 and a lower interest rate.
-- Warrants: All executed from placings in 2019 and 2020, with
the Company receiving EUR1.5 million from the exercise of warrants
during the period.
Outlook and Future Plans
Looking ahead, we are focused on three objectives, all supported
by our world-leading technology innovation and engineering, the
strength of our partner network and our devotion to delivery
excellence.
First, we will reaffirm our core capabilities with waste
biomass-to-energy gasification through multiple deals in Europe and
the USA. We anticipate closure of five to eight deals with EQTEC
contract values totalling EUR20 - 40 million, which will be
recognised as revenue over the life of the contract of between one
to two years. We will pursue opportunities in Greece with ewerGy,
in Croatia through a joint venture with local developer Sense ESCO
d.o.o. ("Sense ESCO") and in California, USA with a range of local
partners including developer Phoenix.
Second, we expect to recover two plants built with core EQTEC
technology where operations were suspended by their owner-operators
due to lack of technical integration capabilities. In Italy, we
expect to lead a consortium to acquire, repower and operate a 1.0
MW plant for converting local, agricultural waste to electricity
and heat for the local community. In Croatia, we expect to work
through our local joint venture to acquire, repower and operate a
1.2 MW plant for gasification of forestry waste and provision of
electricity and heat for the local community there. In each case we
will have an option to acquire majority ownership and consolidate
revenues from operations. We then expect to use these plants to
showcase EQTEC technology in action to stakeholders and to
undertake innovation work in a commercially active setting. The
local teams we develop and mobilise to recommission and operate
these will be leveraged for other work in their local markets and
across the EU.
Along with recommissioning facilities containing EQTEC
technology, we will pursue other decommissioned facilities with
other technology. We see this as an opportunity to leverage
existing infrastructure to rapidly deploy our capabilities,
increase our operational footprint and further our company's
mission.
Third, we will apply our expertise with the capabilities of
local teams to begin construction at the Billingham, UK plant, a 25
MW plant that will produce electricity and heat. We anticipate the
project will have a contract value in excess of EUR30 million,
which will be recognised as revenue over the life of the contract
and lead the way for the two more similarly sized UK RDF facilities
in 2022.
Additionally, toward the end of 2021 we intend to close the
first of several potential deals for biomass-to-bioenergy in
Ireland, with partner Carbon Sole. Working with them and one or
more methanation technology partners, we will pursue at least one
deal in 2021 worth EUR15 million toward production of biofuels and
potentially other clean energy, with similar deals to follow in
successive years. Overall, for 2021, the Group is forecasting
revenues from current projects, new projects and gradual growth
from maintenance and consulting contracts of approximately EUR15
million in 2021, with positive EBITDA, which would make 2021
EQTEC's first year of profitability.
Finally, but importantly for the business, in 2021 we expect to
invest in five significant innovation projects with existing
R&D partners and with private sector companies with whom we
have collaboration agreements. These will accumulate more data
utilising our core technology for new types of feedstock, including
all variations of RDF, sludge and plastics; as well as a range of
joint technologies for applications in biofuel, bio-SNG and 'green'
hydrogen.
Looking further out to 2022 and 2023, we have already identified
significant growth in biomass-to-energy plant construction in
Greece and the Aegean, Croatia, Italy, France, Spain, Portugal and
gradually, Northern and Eastern Europe. We see further opportunity
in California and possibly other parts of the USA. For
RDF-to-energy and biomass-to-bioenergy opportunities, there are
more opportunities identified in the UK and Ireland. Our
strengthened business development team will build relationships and
qualify partners in Asia so that we can pursue waste biomass and
RDF opportunities and we will work with partners and potentially
new staff to assess the opportunities becoming visible in the
Middle East. We have identified and will target potential contract
values for 2022-23 in excess of EUR200 million.
At our heart, we are a technology and engineering company and
will maintain our leadership in innovation, to apply advanced
gasification and grow our commercial impact further.
David Palumbo
Chief Executive Officer
16 April 2021
Consolidated statement of profit or loss
for the financial year ended 31 December 2020
Notes 2020 2019
EUR EUR
Revenue 2,234,727 1,686,312
Cost of sales (1,978,987) (1,598,250)
Gross profit 255,740 88,062
Operating income/(expenses)
Administrative expenses (3,694,217) (2,677,995)
Other income 61,922 195,152
Reversal of impairment of
property, plant and equipment
and intangible assets - 94,985
Impairment of inventories - (98,851)
Impairment of investments (17,250) -
Other (losses)/gains (170,059) 128,235
Employee share-based compensation (1,297,309) -
Foreign currency gains/(losses) 211,337 (187,249)
Operating loss (4,649,836) (2,457,661)
Finance income 17,329 -
Finance costs (1,206,392) (1,125,312)
Loss before taxation (5,838,899) (3,582,973)
Income tax - -
Loss for the financial year
f rom continuing operations (5,838,899) (3,582,973)
Profit for the financial year
from discontinued operations 71,084 21,684
LOSS FOR THE FINANCIAL YEAR (5,767,815) (3,561,289)
Loss attributable to:
Owners of the Company (5,762,733) (3,764,519)
Non-controlling interest (5,082) 203,230
(5,767,815) (3,561,289)
2020 2019
EUR per share EUR per share
Basic loss per share:
From continuing operations (0.001) (0.001)
From continuing and discontinued
operations (0.001) (0.001)
Diluted loss per share:
From continuing operations (0.001) (0.001)
From continuing and discontinued
operations (0.001) (0.001)
Consolidated statement of other comprehensive income
for the financial year ended 31 December 2020
Notes 2020 2019
EUR EUR
Loss for the financial year (5,767,815) (3,561,289)
Other comprehensive income/(loss)
Items that may be reclassified
subsequently to profit or loss
Exchange differences arising on
retranslation
of foreign operations 6,080 118,066
6,080 118,066
Total comprehensive loss for the
financial year (5,761,735) (3,443,223)
Attributable to:
Owners of the company (5,848,045) (3,669,812)
Non-controlling interests 86,310 226,589
(5,761,735) (3,443,223)
Consolidated statement of financial position
At 31 December 2020
Notes 2020 2019
ASSETS EUR EUR
Non-current assets
Property, plant and equipment 187,792 271,255
Intangible assets 7 15,283,459 15,283,459
Financial assets 8 5,950,513 2,229,006
Other financial investments - 17,324
Total non-current assets 21,421,764 17,801,044
Current assets
Development costs 9 503,653 -
Loan receivable from project
development undertakings 9 482,537 -
Trade and other receivables 894,531 728,587
Cash and cash equivalents 6,394,791 482,392
8,275,512 1,210,979
Assets included in disposal
group classified as held for
resale - 1,198,074
Total current assets 8,275,512 2,409,053
Total assets 29,697,276 20,210,097
Consolidated statement of financial position
At 31 December 2020 - continued
Notes 2020 2019
EQUITY AND LIABILITIES EUR EUR
Equity
Share capital 24,355,545 21,317,482
Share premium 62,896,521 52,487,278
Other reserves 2,148,220 -
Accumulated deficit (61,875,561) (56,011,538)
Equity attributable to the owners
of the Company 27,524,725 17,793,222
Non-controlling interests (2,223,986) (2,326,274)
Total equity 25,300,739 15,466,948
Non-current liabilities
Borrowings - 188,729
Lease liabilities 106,465 191,708
Total non-current liabilities 106,465 380,437
Current liabilities
Trade and other payables 3,183,979 876,071
Borrowings 1,020,851 2,556,960
Lease liabilities 85,242 82,726
4,290,072 3,515,757
Liabilities included in disposal
group classified as held for
resale - 846,955
Total current liabilities 4,290,072 4,362,712
Total equity and liabilities 29,697,276 20,210,097
Consolidated statement of changes in equity
for the financial year ended 31 December 2020
Share Other reserves Accumulated Equity Non-controlling
Capital Share premium deficit attributable interests Total
to owners
of the company
EUR EUR EUR EUR EUR EUR EUR
Balance at 1
January
2019 19,182,850 47,582,446 - (52,341,726) 14,423,570 (2,552,863) 11,870,707
Issue of
ordinary
shares
in EQTEC plc 1,157,100 2,529,382 - - 3,686,482 - 3,686,482
Conversion of
debt into
equity 977,532 2,645,675 - - 3,623,207 - 3,623,207
Share issue
costs (Note
27) - (270,225) - - (270,225) - (270,225)
Transactions
with owners 2,134,632 4,904,832 - - 7,039,464 - 7,039,464
Loss for the
financial
year - - - (3,764,519) (3,764,519) 203,230 (3,561,289)
Unrealised
foreign
exchange
losses - - - 94,707 94,707 23,359 118,066
Total
comprehensive
loss
for the
financial year - - - (3,669,812) (3,669,812) 226,589 (3,443,223)
Balance at 31
December
2019 21,317,482 52,487,278 - (56,011,538) 17,793,222 (2,326,274) 15,466,948
Issue of
ordinary
shares
in EQTEC plc
(Note 27) 2,658,622 9,841,484 - - 12,500,106 - 12,500,106
Conversion of
debt into
equity (Notes
27 and
29) 379,441 1,536,252 - - 1,915,693 - 1,915,693
Share issue
costs (Note
27) - (639,931) - - (639,931) - (639,931)
Employee
share-based
compensation
(Notes 13
& 27) - - 1,297,309 - 1,297,309 - 1,297,309
Recognition of
equity
element of
debt (Notes
14 & 27) - - 522,349 - 522,349 - 522,349
Warrants issued
on placing
of shares - (328,562) 328,562 - - - -
Change in the
ownership
interest - - - (15,978) (15,978) 15,978 -
Transactions
with owners 3,038,063 10,409,243 2,148,220 (15,978) 15,579,548 15,978 15,595,526
Loss for the
financial
year - - - (5,762,733) (5,762,733) (5,082) (5,767,815)
Unrealised
foreign
exchange
losses - - - (85,312) (85,312) 91,392 6,080
Total
comprehensive
loss
for the
financial year - - - (5,848,045) (5,848,045) 86,310 (5,761,735)
Balance at 31
December
2020 24,355,545 62,896,521 2,148,220 (61,875,561) 27,524,725 (2,223,986) 25,300,739
Consolidated statement of cash flows
for the financial year ended 31 December 2020
2020 2019
EUR EUR
Cash flows from operating
activities
Loss for the financial year (5,838,899) (3,582,973)
Adjustments for:
Depreciation of property,
plant and equipment 83,463 100,261
Loss on disposal of investments 1,275 -
Gain on disposal of investment - (3,078)
Reversal of Impairment of
property, plant and equipment - (94,985)
Impairment of other financial 17,250 -
investments
Employee share-based compensation 1,297,309 -
Impairment of inventories - 98,851
Impairment of trade receivables 19,016 150,379
Impairment of other receivables - 60,000
Bad debt expense - 3,255
Loss/(gain) on debt for equity
swap 170,059 (128,235)
Unrealised foreign exchange
movements (201,723) 70,439
Operating cash flows before
working capital changes (4,452,250) (3,326,086)
Decrease/(increase) in:
Development cost (503,653) -
Loan receivable from project (482,537) -
development undertakings
Trade and other receivables (475,783) 204,097
Increase/(decrease) in trade
and other payables 264,141 (453,854)
Cash used in operating activities
- continuing operations (4,685,008) (3,575,843)
Finance income (17,329) -
Finance costs 1,206,392 1,125,312
Net cash used in operating
activities - continuing operations (3,495,945) (2,450,531)
Net cash (used in)/generated
from operating activities
- discontinued operations (47,741) 110,184
Cash used in operating activities (3,543,686) (2,340,347)
Cash flows from investing
activities
Additions to property, plant
and equipment - (10,272)
Proceeds from the disposal 300,000 -
of property, plant and equipment
Cash inflow from disposal 218,635 -
of subsidiary
Selling expenses on disposal (65,261) -
of subsidiary
Loans advanced to project (469,769) -
development undertakings
Proceeds from the disposal 84 -
of other investments
Investment in associate undertaking (1,150,619) -
Investment in related undertaking (333,882) -
Proceeds from the sale of
other investments - 1,610
Proceeds from the sale of
interest in associates - 3,078
Net cash used in investing
activities - continuing operations (1,500,812) (5,584)
Net cash (used in)/ generated
from investing activities
- discontinued operations (19,997) 6
Net cash used in investing
activities (1,520,809) (5,578)
Consolidated statement of cash flows
for the financial year ended 31 December 2020 - continued
2020 2019
EUR EUR
Cash flows from financing activities
Proceeds from borrowings and
lease liabilities 107,000 301,584
Repayment of borrowings and
lease liabilities (1,363,348) (1,019,978)
Loan issue costs (30,944) -
Proceeds from issue of ordinary
shares 12,735,236 3,451,697
Share issue costs (635,911) (223,556)
Interest paid (21,955) (32,091)
Net cash generated from financing
activities - continuing operations 10,790,078 2,477,656
Net cash used in financing activities
- discontinued operations (63,196) (111,106)
Net cash generated from financing
activities 10,726,882 2,366,550
Net increase in cash and cash
equivalents 5,662,387 20,625
Cash and cash equivalents at
the beginning of the financial
period 608,194 587,569
Cash and cash equivalents at
the end of the financial period 6,270,581 608,194
Cash and cash equivalents included
in disposal group - (125,802)
Cash and cash equivalents for
continuing operations 6,270,581 482,392
Company statement of financial position
At 31 December 2020
Notes 2020 2019
ASSETS EUR EUR
Non-current assets
Investment in subsidiary
undertakings 21,249,255 17,440,929
Total non-current assets 21,249,255 17,440,929
Current assets
Development costs 9 9,275 -
Loan receivable from project
development undertakings 9 243,598 -
Trade and other receivables 2,703,491 1,334,004
Cash and bank balances 6,111,864 448,619
Total current assets 9,068,228 1,782,623
Total assets 30,317,483 19,223,552
EQUITY AND LIABILITIES
Equity
Share capital 24,355,545 21,317,482
Share premium 81,830,601 71,421,358
Other reserves 2,148,220 -
Accumulated deficit (79,661,097) (76,390,202)
Total equity 28,673,269 16,348,638
Total non-current liabilities - -
Current liabilities
Borrowings 896,641 2,426,045
Trade and other payables 747,573 448,869
Total current liabilities 1,644,214 2,874,914
Total equity and liabilities 30,317,483 19,223,552
The Group is availing of the exemption in Section 304 of the
Companies Act 2014 from filing its Company Statement of
Comprehensive Income. The loss for the financial year incurred by
the Company was EUR3,270,895 (2019: EUR4,674,802).
Company statement of changes in equity
for the financial year ended 31 December 2020
Share Other Accumulated
capital Share premium reserves deficit Total
EUR EUR EUR EUR EUR
Balance at 1
January
2019 19,182,850 66,516,526 - (71,715,400) 13,983,976
Issue of
ordinary
shares in
EQTEC plc 1,157,100 2,529,382 - - 3,686,482
Conversion of
debt
into equity 977,532 2,645,675 - - 3,623,207
Share issue
costs - (270,225) - - (270,225)
Transactions
with
owners 2,134,632 4,904,832 - - 7,039,464
Loss for the
financial
year (Note 37) - - - (4,674,802) (4,674,802)
Total
comprehensive
loss for the
financial
year - - - (4,674,802) (4,674,802)
Balance at 31
December
2019 21,317,482 71,421,358 - (76,390,202) 16,348,638
Issue of
ordinary
shares in
EQTEC plc
(Note 27) 2,658,622 9,841,484 - - 12,500,106
Conversion of
debt
into equity
(Notes
27 and 29) 379,441 1,536,252 - - 1,915,693
Share issue
costs
(Note 27) - (639,931) - - (639,931)
Employee
share-based
compensation
(Notes
13 and 27) - - 1,297,309 - 1,297,309
Recognition of
equity
element of
debt (Notes
14 and 27) - - 522,349 - 522,349
Warrants issued
on
placing of
shares
(Note 27) - (328,562) 328,562 - -
Transactions
with
owners 3,038,063 10,409,243 2,148,220 - 15,595,526
Loss for the
financial
year (Note 37) - - - (3,270,895) (3,270,895)
Total
comprehensive
loss for the
financial
year - - - (3,270,895) (3,270,895)
Balance at 31
December
2020 24,355,545 81,830,601 2,148,220 (79,661,097) 28,673,269
Company statement of cash flows
for the financial year ended 31 December 2020
2020 2019
EUR EUR
Cash flows from operating activities
Loss before taxation (3,270,895) (4,674,802)
Adjustments for:
Depreciation of property, plant
and equipment - 616
Impairment of property, plant
and equipment - 206
Employee share-based compensation 1,297,309 -
Reversal of impairment of intercompany (1,720,704) -
loans
Finance costs 1,177,335 1,083,703
Finance income (13,397) -
Provision for impairment of investment
in subsidiaries - 1,427,038
Provision for impairment of trade
and other receivables - 30,000
Provision for impairment of intercompany
balances 140,678 489,689
Provision for impairment of other
receivables - 60,000
Bad debt expense - 3,255
Loss/(gain) on debt for equity
swap 170,059 (128,235)
Foreign currency losses/(gains)
arising from retranslation of
borrowings 235,968 (36,110)
Operating cash flows before working
capital changes (1,983,647) (1,744,640)
Funds advanced to inter-company
accounts (2,112,285) (1,376,852)
Repayment of inter-company balances 689,637 79,251
(Increase) in development costs (9,275) -
(Increase) in loan receivable
from project development undertakings (243,598) -
Decrease/(increase) in trade
and other receivables 135,825 (10,826)
Increase in trade and other payables 352,350 323,096
Net cash used in operating activities (3,170,993) (2,729,971)
Cash flows from investing activities
Investment in associate undertakings (1,150,619) -
Investment in subsidiary (1,000,000) -
Loans advanced to project development (230,957) -
undertakings
Net cash generated from/(used (2,381,576) -
in) investing activities
Cash flows from financing activities
Proceeds from borrowings - 301,584
Repayment of borrowings (852,567) (732,794)
Proceeds from issue of ordinary
shares 12,735,236 3,451,697
Share issue costs (635,911) (223,556)
Loan issue costs (30,944) -
Interest paid - (482)
Net cash generated from financing
activities 11,215,814 2,796,449
Net increase in cash and cash
equivalents 5,663,245 66,478
Cash and cash equivalents at
the beginning of the financial
year 448,619 382,141
Cash and cash equivalents at
the end of the financial year 6,111,864 448,619
Notes
1. Report and accounts
The statutory accounts for the year ended 31 December 2020 which
were approved by the Board of Directors on 16 April 2021, will be
sent to shareholders of the Company in due course and will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The Annual Report and accounts will also be
made available on the Company's website: www.eqtec.com
2. General Information
EQTEC plc ("the Company") is a company domiciled in Ireland.
These financial statements for the financial year ended 31 December
2020 consolidate the individual financial statements of the Company
and its subsidiaries (together referred to as 'the Group').
The Group is a waste-to-value group, which uses its proven
proprietary Advanced Gasification Technology to generate safe,
green energy from over 50 different kinds of feedstock such as
municipal, agricultural and industrial waste, biomass, and
plastics. The Group collaborates with waste operators, developers,
technologists, EPC contractors and capital providers to build
sustainable waste elimination and green energy infrastructure.
The Company's principal activity is the management of holding
companies.
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.
3. Statement of compliance, basis of preparation and going concern
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union ('EU') and effective at 31
December 2020 for all years presented as issued by the
International Accounting Standards Board.
The financial statements of the parent company, EQTEC plc have
been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union ('EU') effective
at 31 December 2020 for all years presented as issued by the
International Accounting Standards Board and Irish Statute
comprising the Companies Act 2014.
The consolidated financial statements are prepared under the
historical cost convention except for certain financial assets and
financial liabilities which are measured at fair value. The
principal accounting policies set out below have been applied
consistently by the parent company and by all of the Company's
subsidiaries to all years presented in these consolidated financial
statements.
Comparative amounts have been represented where necessary, to
present the financial statements on a consistent basis.
The financial statements are presented in euros and all values
are not rounded, except when otherwise indicated.
The Group incurred a loss of EUR5,767,815 (2019: EUR3,561,289)
during the financial year ended 31 December 2020 and had net
current assets of EUR3,985,440 (2019: net current liabilities of
EUR1,953,659) and net assets of EUR25,300,739 (31 December 2019:
EUR15,466,948) at 31 December 2020.
The financial statements have been prepared on a going concern
basis. The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Chairman's Statement and Chief Executive's
Report. The principal risks and uncertainties are set out in the
Directors' Report.
Management have produced forecasts for the period up to April
2022 taking account of reasonably plausible changes in trading
performance and market conditions, which have been reviewed by the
Directors. These reasonably plausible changes include the continued
impact of the Covid-19 pandemic and any related operational and
execution delays caused by it. The forecasts demonstrate that the
Group and Company is forecast to generate profits and cash in
2021/2022 and beyond and that the Group has sufficient cash
reserves to enable the Group and Company to meet its obligations as
they fall due for a period of at least 12 months from the date when
these financial statements have been signed.
After undertaking the assessments and considering the
uncertainties set out above, the Directors have a reasonable
expectation that the Group and Company has adequate resources to
continue to operate for the foreseeable future and for these
reasons they continue to adopt the going concern basis in preparing
the financial statements.
4. COVID-19
There remains significant uncertainty and concern as to the
duration and impact of the Covid-19 crisis going forward.
Whilst the waste-to-energy sector has been at a macroeconomic
level unaffected by the pandemic, operationally there have been
delays surrounding logistics, administration and execution of
projects caused by national lockdowns and impacts from domestic and
international travel restrictions. At this point in time, it is
unclear as to how quickly or otherwise restrictions will be
lifted.
We are closely monitoring the coronavirus situation, are
following Government guidelines in all jurisdictions in which we
operate and are sharing these with colleagues. We have taken and
are prepared to take further action to deal with this situation as
it changes. We have considered the impact, actual and potential, of
Covid-19 in our scenario analysis and forecasting.
5. Brexit
The end of the transition period on 31 December 2020 following
the withdrawal of the United Kingdom from the EU (commonly referred
to as "Brexit") and the regulations associated with the EU-UK Trade
and Cooperation Agreement ("TCA") which has been applied
provisionally since 1 January 2021 has reduced the uncertainty
surrounding Brexit. Following the conclusion of the TCA Brexit is
no longer considered as a standalone principal risk for the Group
and any ongoing issues with regard to the movement of goods are
considered as part of either global macro-environment risk or
operational and supply chain risk.
6. Estimation uncertainty
Information about estimates and assumptions that have the most
significant effect on recognition and measurement of assets,
liabilities, income and expenses is provided below. Actual results
may be substantially different.
Impairment of goodwill and non-financial assets
Determining whether goodwill and non-financial assets are
impaired requires an estimation of the value in use of the cash
generating units to which the assets have been allocated. The value
in use calculation requires the directors to estimate the future
cash flows to arise from the cash-generating unit and a suitable
discount rate in order to calculate present value. Where the actual
cash flows are less than expected, a material impairment may arise.
The estimate for future cash flows includes consideration of
possible delays due to Covid-19. The total property, plant and
equipment reversal of impairment charges during the financial year
amounted to EURNil (2019: Reversal of Impairment cost of
EUR94,985), while the impairment for goodwill during the financial
year amounted to EURNil (2019: EURNil).
Provision for impairment of financial assets
Determining whether the carrying value of financial assets has
been impaired requires an estimation of the value in use of the
investment in subsidiaries and joint venture vehicles. The value in
use calculation requires the directors to estimate the future cash
flows expected to arrive from these vehicles and a suitable
discount rate in order to calculate present value. After reviewing
these calculations, the directors are satisfied that a net
impairment cost of EURNil (2019: EURNil) be recognised in the Group
accounts and EURNil (2019: EUR1,427,038) be recognised in the
Company accounts of EQTEC plc.
Allowances for impairment of trade receivables
The Group estimates the allowance for doubtful trade receivables
based on assessment of specific accounts where the Group has
objective evidence comprising default in payment terms or
significant financial difficulty that certain customers are unable
to meet their financial obligations. In these cases, judgment used
was based on the best available facts and circumstances including
but not limited to, the length of relationship. The Group and
Company measure expected credit losses of a financial instrument in
a way that reflects an unbiased and probability-weighted amount
that is determined by evaluating a range of possible outcomes, the
time value of money and information about past events, current
conditions and forecasts of future economic conditions. When
measuring ECL the Group and Company use reasonable and supportable
forward-looking information, which is based on assumptions for the
future movement of different economic drivers and how these drivers
will affect each other. At 31 December 2020, provisions for
doubtful debts amounted to EUR475,687 which represents 74% of trade
receivables at that date (31 December 2019: EUR456,671- 57%).
Fair value measurement
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.
Share based payments and warrants
The calculation of the fair value of equity-settled share-based
awards and warrants issued in connection with share issues and the
resulting charge to the consolidated statement of profit or loss or
share-based payment reserve requires assumptions to be made
regarding future events and market conditions. These assumptions
include the future volatility of the Company's share price. These
assumptions are then applied to a recognised valuation model in
order to calculate the fair value of the awards at the date of
grant.
Estimating impairment of development assets
Management estimates the net realisable values of development
assets, taking into account the most reliable evidence available at
each reporting date. The future realisation of these development
assets may be affected by market-driven changes that may reduce
future prices/premiums.
7. Intangible assets
Goodwill
Cost EUR
As at 1 January
2019, 31 December
2019 and 31 December
2020 16,710,497
Impairment
As at 1 January
2019 1,427,038
Impairment -
losses
As at 31 December
2019 1,427,038
Impairment losses -
As at 31 December
2020 1,427,038
Carrying
value
As at 31 December
2019 15,283,459
As at 31 December
2020 15,283,459
Cash-generating units
Goodwill acquired in business combinations is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination. A CGU is the smallest
identifiable group of assets that generate cash inflows that are
largely independent of the cash inflows from other assets or group
of assets. The CGUs represent the lowest level within the Group at
which the associated goodwill is assessed for internal management
purposes and are not larger than the operating segments determined
in accordance with IFRS 8 Operating Segments. A total of 1 CGUs
(2019: 1) have been identified and these are all associated with
the Technology Sales Segment. The carrying value of the goodwill
within the Technology Sales Segment is EUR15,283,459 (2019:
EUR15,283,459).
In accordance with IAS 36 Impairment of Assets, the CGUs to
which significant amounts of goodwill have been allocated are as
follows:
2020 2019
EUR EUR
Eqtec Iberia SLU 15,283,459 15,283,459
For the purpose of impairment testing, the discount rates
applied to this CGU to which significant amounts of goodwill have
been allocated was 14% (2019: 14%) for the Eqtec Iberia CGU.
Annual test for impairment
Goodwill acquired through business combinations has been
allocated to the above CGU for the purpose of impairment testing.
Impairment of goodwill occurs when the carrying value of the CGU is
greater than the present value of the cash that it is expected to
generate (i.e. the recoverable amount). The Group reviews the
carrying value of each CGU at least annually or more frequently if
there is an indication that a CGU may be impaired.
The recoverable amount of each CGU is determined from
value-in-use calculations. The forecasts used in these calculations
are based on a financial plan approved by the Board of Directors,
plus 5-year projections forecasted by management, and specifically
excludes any future acquisition activity.
The value in use calculation represents the present value of the
future cash flows, including the terminal value, discounted at a
rate appropriate to each CGU. The real pre-tax discount rates used
is 14% (2019: 14%). These rates are based on the Group's estimated
weighted average cost of capital, adjusted for risk, and are
consistent with external sources of information.
The cash flows and the key assumptions used in the value in use
calculations are determined based on management's knowledge and
expectation of future trends in the industry. Expected future cash
flows are, however, inherently uncertain and are therefore liable
to material change over time. The key assumptions used in the value
in use calculations are subjective and include projected EBITDA
margins, net cash flows, discount rates used and the duration of
the discounted cash flow model. The estimate for future cash flows
includes consideration of possible delays due to Covid-19.
The directors performed sensitivity analysis to account for
changes in value in use calculation due to potential delays in
commencement of the projects. The following are the sensitivities
performed:
-- 1% increase in discount rate
-- 1 project delayed in 2021, 2 projects delayed in 2022, 3 projects delayed in 2023
-- Zero percentage long term growth rate (year 6 onwards)
-- 1 major anticipated project delayed until 2022
All of these sensitivity analysis resulted to no impairment. An
impairment loss of EURNil (2019: EURNil) has been calculated for
the financial year ended 31 December 2020.
8. Financial assets
Group
2020 2019
Investment in associate undertakings EUR EUR
At beginning of financial year 2,229,006 -
Reversal of impairment of investment
in GG Eco Energy Limited - 3,078
Disposal of investment in GG Eco Energy
Limited - (3,078)
Investment in shares in North Fork Community
Power LLC - 2,229,006
Loans to North Fork Community Power LLC 1,150,619 -
At end of financial year 3,379,625 2,229,006
Investment in related undertaking
At beginning of financial year - -
Investment in shares in Logik WTE Limited 2,570,888 -
At end of financial year 2,570,888 -
Total financial assets 5,950,513 2,229,006
Investment in associate
Details of the Group's interests in associated undertakings at
31 December 2020 is as follows:
Name of associated Country of Shareholding Principal activity
undertaking incorporation
North Fork Community United States 19.99% Operator of biomass
Power LLC of America gasification power project
For the first five years of operation the share of profits
from the associate is limited to 0.1999% rising to 19.99%
thereafter.
During the financial year, the Group advanced loans of EUR1,150,609
to North Fork Community Power LLC. These loans which are
the subject of commercial negotiation were interest free
with no fixed repayment terms at year end. Since the year
end the shareholders of North Fork Community Power LLC,
including the Company, have agreed that these loans are
to be converted into 15% of the equity of North Fork Community
Power LLC subject to the completion of formal legal documentation.
Previously, the investment was recorded in the books of
a subsidiary; it has been transferred to EQTEC plc in the
current financial year.
Summarised financial information in respect of the Group's
interests in associated undertakings is as follows:
2020 2019
EUR EUR
Non-current assets 44,552 1,339,413
Current assets 17,686,647 17,993,577
Non-current liabilities (16,213,836) (18,721,867)
Current liabilities (263,150) (34,885)
Net assets/(liabilities) 1,254,213 576,238
Group's share of net assets of associated
entities 250,717 115,190
2020 2019
EUR EUR
Total revenues 22,047 257,440
Total expenses (16,506) (495,346)
Total profit/(loss) for the financial
year 5,541 (237,906)
Group's share of profits of associated - -
entities
Investment in related undertaking
On 8 December 2020, it was announced that the Company's wholly
owned subsidiary, Deeside WTV Limited (the Buyer), had signed a
share purchase agreement with Logik Developments Limited to acquire
full ownership of the Deeside Refuse Derived Fuel project through
the acquisition of Logik WTE Limited, a company incorporated in the
United Kingdom.
The key terms of the share purchase agreement (SPA) are as
follows:
-- Initial consideration of EUR2,570,888 (GBP2,310,000) of which
a deposit amount of EUR333,882 (GBP300,000), from which the
existing exclusivity payment of GBP100,000 will be deducted, is
payable on the signing of the agreement and the balance of
EUR2,237,006 (GBP2,010,000) payable on or before 12 months from 8
December 2020 (and which sum shall be netted off the existing debts
of Logik WTE Limited);
-- Additional deferred conditional consideration of EUR2,548,630
(GBP2,290,000) payable on the achievement of certain conditions
precedent related to development milestones of the Project.
-- The issue of a fixed dividend share in the Buyer to Logik
Developments Limited, which gives Logik Developments Limited the
right to 5% of distributable profits in Deeside WTV Limited. This
share carries no voting rights in Deeside WTV Limited.
-- An additional development premium or overage payment, subject
to a maximum further amount of EUR6.01 million (GBP5.4 million),
calculated in accordance with an agreed formula payable on the
achievement of each of the following:
Financial close on the funding for the Waste Reception &
Anaerobic Digestion plant on the site for which planning and the
necessary permits have been obtained ("Project Phase I").
Financial close as defined on the funding for the Advanced
Gasification plant on the site for which planning and the necessary
permits have been obtained ("Project Phase II").
Contracts have been exchanged but completion as defined in the
share purchase agreement had not occurred at the year-end, and as a
result Logik WTE Limited is not considered a subsidiary of the
Group at 31 December 2020.
In these financial statements the full initial consideration of
EUR2,570,888 (GBP2,310,000) has been recognised as an investment in
a related undertaking and the balance of consideration payable of
EUR2,237,006 (GBP2,010,000) has been recognised as a payable in
other payables.
Company
2020 2019
Investment in subsidiary EUR EUR
undertakings
At beginning of financial
year 16,869,625 16,796,663
Reclassification of inter-company
balance as contribution
to capital in Eqtec Iberia 1,000,000 1,500,000
Investment in other subsidiaries 5 -
Provision for impairment
in investment in subsidiaries - (1,427,038)
At end of financial year 17,869,630 16,869,625
Loans to subsidiary undertakings
At beginning of financial
year 571,304 571,304
Provision for impairment (571,304) -
of investment in subsidiaries
At end of financial year - 571,304
Investment in associate
undertakings
At beginning of financial - -
year
Transfer of investment in
North Fork Community Power 2,229,006 -
LLC from subsidiary to Company
Additional loans to North
Fork Community Power LLC 1,150,619 -
At end of financial year 3,379,625 -
Total 21,249,255 17,440,929
9. Development assets
2020 2019
EUR EUR
Group
Costs associated with project development 503,653 -
Loan receivable from project development 482,537 -
undertakings
The Group invests capital in assisting in the development of
waste to value projects which can deploy its technology and
expertise and make a profit from the realisation of the development
costs at the financial close, when project financing is in place so
that the project undertaking can commence construction. Cost
comprises direct materials and overheads that have been incurred in
furthering the development of a project towards financial
close.
For the financial year ended 31 December 2020, EURNil (2019:
EURNil) of development assets was included in consolidated
statement of profit or loss as an expense and EURNil (2019:
EUR98,581) was impaired resulting from write down of development
assets.
Included in loans receivable from project development
undertakings is an amount of EUR200,000 which is receivable, along
with accrued interest, 12 months from the date of drawdown.
Interest is charged at 15% per annum. At 31 December 2020, the loan
is valued at EUR213,297 (2019: Nil).
The remaining loans receivables were issued with no interest and
no fixed repayment date.
2020 2019
EUR EUR
Company
Costs associated with project development 9,275 -
Loan receivable from project development 243,598 -
undertakings
Included in loans receivable from project development
undertakings is an amount of EUR200,000 which is receivable, along
with accrued interest, 12 months from the date of drawdown.
Interest is charged at 15% per annum. At 31 December 2020, the loan
is valued at EUR213,297 (2019: Nil).
The remaining loans receivables were issued with no interest and
no fixed repayment date.
10. Related party transactions
The Group's related parties include Altair Group Investment
Limited ("Altair"),who at 31 December 2020 held 19.66% (2019:
28.87%) of the shares in the Company. Other Group related parties
include the associate companies and key management.
Transactions with Altair
During the financial year ended 31 December 2020, Altair
advanced EURNil (2019: EUR301,584) to the Group by way of
borrowings. During the financial year ended 31 December 2020, the
Group repaid borrowings of EUR1,175,839 (2019: EUR2,562,329) by way
of conversion into equity. Interest payable to Altair for the
financial year ended 31 December 2020 amounted to EUR170,084 (2019:
EUR397,356); this includes a redemption fee of EUR114,583 (2019:
EUR114,583) with respect to a redemption fee for the early
settlement of the loan and a reprofiling fee of EUR106,321 (2019:
EURNil) with respect to the reprofiling of the debt.
Included in borrowings, net of amortisation costs, at 31
December 2020 is an amount of EURNil (2019: EUR1,070,915) due to
Altair from the Group.
Transactions with key management personnel
Key management of the Group are the members of EQTEC plc's board
of directors. Key management personnel remuneration includes the
following:
Fees/Salaries Other Pension 2020 2019
/Expenses Termination
Directors EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
I Pearson 68 - - - 68 68
O Leiva
(Resigned
28/6/2020) - - - - - 12
T Quigley 41 - - - 41 42
I Price
(Resigned
16/9/19) - - - - - 176
G Madden 250 - 24 - 274 262
Y Alemán
(Appointed
28/8/19) 241 - - - 241 92
D Palumbo
(Appointed
28/8/19) 281 - - - 281 85
J Vander
Linden (Appointed
1/12/20) 14 - - - 14 -
Total 895 - 24 - 919 737
At 31 December 2020, directors' remuneration unpaid (including
past directors) amounted to EUR260,875 (31 December 2019:
EUR185,347). As announced by the Company on 9 July 2020, these
unpaid remuneration is to be applied (net of any required tax
deductions) in subscribing for new ordinary shares of EUR0.001 each
in the capital of the Company at a price of 0.45 pence per share.
These shares were issued on 1 February 2021.
Prior to becoming a director, Mr D Palumbo provided advisory
services to the Company. The cost of these services amounted to
EURNil (2019: EUR103,201) for the financial year ended 31 December
2020. In addition, a company controlled by Mr. Palumbo provided
office space to the Group in London. The cost of these services
amounted to EUR21,843 (2019: EURNil). At 31 December 2020, an
amount of EUR3,172 is included in trade and other payable with
respect to payments due to this company (2019: EURNil).
Prior to becoming a director, Mr J Vander Linden provided
advisory services to the Company. The cost of these services
amounted to EUR144,148 (2019: EURNil) for the financial year ended
31 December 2020. At 31 December 2020, an amount of EUR63,883 is
included in trade and other payable with respect to payments due to
this company (2019: EURNil). This balance was settled through the
issue of new ordinary shares of EUR0.001 each in the capital of the
Company on 1 February 2021.
The following directors also received the benefit of share-based
payments during the year through the granting and vesting of
warrants and options (Note 27).
Share based
payments
Directors EUR'000
T Quigley 28
G Madden 673
Y Alemán 142
D Palumbo 284
Total 1,127
Details of each director's interests in shares and equity
related instruments that were in office at the year-end are shown
in the Directors' Report.
Transactions with associate undertakings
During the financial year ended 31 December 2020, sales of
EUR1,980,000 were made to associate undertakings (2019:
EUR21,438).
During the financial year ended 31 December 2020, the Group
advanced $37,040 to its associated undertaking. Included in trade
and other receivables at 31 December 2020 is an amount of EUR30,201
with respect to this advance (2019: EURNil).
Unless otherwise stated, none of the transactions incorporate
special terms and conditions and no guarantees were given or
received. Outstanding balances are usually settled in cash.
11. Events after the balance sheet date
New Unsecured Loan Facility and Full Redemption of Secured Loan
Facility
On 4 January 2021, the Group announced that it had agreed an
unsecured term loan facility of GBP1.25 million with Altair Group
Investment Limited, a substantial shareholder in the Company. The
facility is for a term of 12 months and the principal and any
accrued interest are repayable in full on 31 December 2021 but the
company can repay the loan early without penalty. The facility is
unsecured and has a coupon of 6% per annum, payable quarterly in
arrears. The facility was used to pay all sums due under the
secured loan facility in full and final settlement of amounts owed
to them, releasing and discharging any secured assets and
obligations under any previous agreements with the lenders.
Exercise of warrants
On 5 January 2021, the Group announced that warrants over
12,000,000 New Ordinary Shares at a price of 0.25 pence per share
and warrants over 30,773,543 New Ordinary Shares at a price of 0.33
pence per share had been exercised. The aggregate gross proceeds of
these exercises received by the Company amount to GBP131,553.
Directors' Dealings and Issue of equity to Strategic
Suppliers
On 1 February 2021, the Group announced that it had issued, in
aggregate, 37,980,000 New Ordinary Shares to certain Directors to
satisfy the unpaid remuneration (net of tax where relevant), owed
to them for the six months ended 31 December 2020 under the 2020
Director Remuneration Arrangements announced previously on 9 July
2020 at a price of 0.45 pence per share.
The Group also announced that it has issued, in aggregate,
28,446,341 New Ordinary Shares to certain strategic service
providers who have provided business development and advisory
services to the Group, and who previously agreed to receive such
shares in satisfaction of fees due to them, such number of shares
being determined by reference to the share price at certain points
in time. The issue of these shares had reduced the Group's
creditors by GBP136,500. Included in the shares issued are
12,844,444 New Ordinary Shares issued to Morichella Associates
Limited, a company owned and controlled by one of the Executive
Directors of the Company.
Exercise of warrants
On 1 March 2021, the Group announced that it had received a
Notice to exercise warrants over 114,000,000 New Ordinary Shares at
a price of 0.25 pence per share from Altair Group Investment
Limited. The aggregate gross proceeds of the exercise receivable by
the Company amounted to GBP285,000. These warrants were issued as
part of the equity fundraise completed by the Company on 2 December
2019 and represent a full exercise of the remaining warrants issued
to Altair as a result of their equity subscription at that time.
The proceeds from the exercise of the warrants was used to repay a
portion of the GBP1,250,000 loan drawn down by the Company from
Altair, announced on 4 January 2021. Following the repayment of
GBP285,000 the loan balance together with accrued interest amounted
to GBP976,096 on 1 March 2021.
No other adjusting or significant non-adjusting events have
occurred between the 31 December reporting date and the date of
authorisation.
12. Contingent liabilities
On 13 July 2020, the Group announced that lawyers acting for
Aries Clean Energy LLC of Franklin, Tennessee, USA ("Aries") filed
a complaint in a Californian court on 9 July 2020 against the
Company and others, alleging patent infringement through the use of
the Group's Advanced Gasification Technology in the North Fork
Community Power plant in California USA.
On 22 March 2021 the Company announced the Aries had withdrawn
its patent infringement complaint. The joint stipulation that the
action be voluntarily dismissed with prejudice was filed in the
United States District Court Eastern District of California on 19
March 2021 and operates as a final determination on the merits of
the case, forbidding Aries from filing another lawsuit on the same
grounds.
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END
FR EANLPFLLFEFA
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