TIDMEQT
RNS Number : 5849F
EQTEC PLC
19 July 2021
Embargoed until 19 July 2021
EQTEC plc
("EQTEC", the "Company" or the "Group")
Q2 Trading Update
EQTEC plc (AIM: EQT), a world-leading gasification solutions
company that is building the future of a cleaner waste-to-energy
industry, is pleased to provide the following trading update for Q2
2021.
Highlights
-- Increase in pipeline opportunities moving into project development
-- Financial close of Market Development Centre in Italy with second targeted in Croatia
-- Billingham RDF project completes concept design and progresses toward financial close
-- Revenue and EBITDA on track for 2021
-- GBP16 million capital raise fuels strategic growth from project development business
-- Finance Director search completed and transition underway
Plant construction and project development
-- Plant construction. Two biomass-to-energy plants under
construction by EQTEC and its partners are progressing despite
pandemic-related challenges. The Agrigas 1 agricultural waste
project in Larissa, Greece, the country's first advanced
gasification waste-to-energy plant, is progressing to plan with EPC
partner ewerGy GmbH ("ewerGy") and local partner ECO Hellas ("ECO
Hellas"). The first of three planned batches of EQTEC equipment has
been manufactured, shipped and received on site, on time, with the
remaining two shipments on track. The feedstock line is expected to
be commissioned and operational in July.
Construction at the North Fork Community Power ("NFCP") forestry
waste project in California, USA has progressed with installation
of the gasification reactor and associated equipment, inside the
primary steel structures. The site was attended for three weeks in
May by CTO Dr. Yoel Alemán and another EQTEC expert engineer,
following relaxation of Covid-19 travel restrictions. The Company
and its partners are refining plans to accelerate work in light of
previously reported delays as a result of Covid-19 and local forest
fires. The Company has also made a non-binding proposal to provide
requisite funding, as a convertible loan facility, to take the
Project to completion ("the Proposal"). The proposed facility, if
fully drawn down and converted, would result in the Company's
increasing its current minority stake to take a controlling
interest in NFCP and the project. The Proposal has been signed by
all Managing Members of NFCP including Phoenix Biomass Energy Inc.
("Phoenix Energy") and the North Fork Community Development Council
("NFCDC"). Parties to the agreement are finalising negotiation of
terms for legal execution, which the Company anticipates will
conclude shortly, so that the project may move to completion at
pace.
-- Financial close. On 21 June, the Company announced financial
close on the Italia MDC Project, the first of a small number of
Market Development Centres ("MDCs") to be co-owned and operated by
the Company and used to showcase EQTEC technology in 'live'
commercial environments. Working with a consortium of co-investors,
the Company will recommission the 1 MWe biomass-to-energy plant in
Tuscany, Italy. The plant will transform straw and forestry wood
waste from local farms and forests into green electricity and heat
for the local community. It is expected that the Company will earn
technology sales of EUR1,750,000 as well as the recurring revenue
and profits from the plant, once operational. Orders for the
manufacture of equipment have been placed and the Company has
invoiced for the first payment of technology sales. The EQTEC
technical team is on site, completing engineering surveys, meeting
EPC partners and local stakeholders. Other potential MDCs are being
identified in Croatia, Greece and other key markets.
-- Project development . The Company has established Synergy
Projects d.o.o. ("Synergy Projects"), a joint venture ("JV")
between EQTEC and its Croatian project development partner Sense
ESCO d.o.o. ("Sense ESCO"). The Company will be the majority
shareholder in the JV and will provide development capital to
support the entity in qualifying and pursuing deals, with Sense
ESCO providing a Managing Director, development team and local
relationships to generate pipeline and drive projects to financial
close and beyond. The JV is already pursuing two deals in Croatia,
subject to due diligence and financing, including a second EQTEC
MDC through recommissioning of a 1.2 MWe plant in Belišće, which
has existing EQTEC Advanced Gasification Technology inside, and it
is targeting a 1.2 MWe plant in Karlovac. Similar JVs will be
established by the Company with partners in other target
markets.
The Company is proceeding with development of three
biomass-to-energy opportunities in Greece, through the Company's
partnership with ewerGy and ECO Hellas. The first plant at Almyros,
Thessalia, where the lease agreement for land and for a state grid
connection have been established with Nobilis Pro Energy S.A.
("Nobilis") for construction of a 0.9 MWe gasification plant using
local, agricultural waste as feedstock. The second is a new
opportunity in North Central Greece , with a signed letter of
intent with exclusivity to carry out due diligence for a new 5 MWe
plant using locally sourced forestry waste as feedstock. The third
is a new opportunity , with a signed letter of intent with
exclusivity to carry out due diligence for a new 1 MWe plant using
locally sourced agricultural waste as feedstock.
Three RDF-to-energy projects in the UK are making good progress
toward financial close. The Billingham, Teesside project
development and associated engineering work, led by an EQTEC team,
has produced a detailed design for the core gasification process
and equipment and a concept design for the full plant. In July it
is expected that this will be reviewed with potential funders,
including French waste-to-energy owner-operator, Groupe Idex
("Idex"). Additionally, the project team is selecting delivery
partners, including Tier 1 EPC companies. The Company will make
further announcements about both funding and delivery partners.
In June the Company submitted a planning application for a Phase
2 gasification facility deploying EQTEC technology at the Deeside,
Flintshire site where Phase 1 recycling and anaerobic digestion
facilities are already approved for development. As most planning
conditions have been satisfied for Phase 1, the project is on track
for financial close. The development project is being pursued in
partnership with Logik Developments Limited ("Logik"), with active
engagement with local authorities throughout the planning
process.
The Southport, Merseyside project is similar to the Deeside
project with permission for a pre-existing Phase 1 anaerobic
digestion facility and the intended Phase 2 addition of an advanced
gasification facility. The Company will submit a revised planning
application for Phase 1 in early August 2021, in advance of the
intended Phase 2 planning submission that will be submitted later
in the year. A pre-planning consultation has been carried out with
the local authority whereby Phase 1 and Phase 2 master plans were
welcomed by the local authority and given their support. The
development project is being pursued by the Company with
development partner Rotunda Group Limited ("Rotunda").
-- New markets. Although the Company's business development
efforts in Q2 have focused primarily on biomass-to-energy and
RDF-to-energy opportunities, progress continues in Ireland on two
opportunities for biomass-to-bioenergy, led by partner Carbon Sole
Group Limited ("Carbon Sole"). For the Shannon site, Carbon Sole
responded in May to the local authority's Further Information
Request ("FIR") by filing environmental studies that confirm the
proposed plant would have low-tier environmental impacts. A
decision on planning approval at local level is anticipated in late
July. For the Sligo site, all planning documentation is being
finalised and is expected to be submitted by the end of July.
Carbon Sole has signed letters of intent ("LoI") for feedstock
supply for sustainable forestry waste for the proposed plants.
Additionally, Carbon Sole is in the process of securing a third
site, with the intention of securing exclusivity by Q4.
-- Covid-19. With Covid-19 risks being closely managed in most
developing markets, the ongoing external impacts of restrictions
from the pandemic continue to be felt. In addition to issues with
timing of shipments and a slower speed of administrative work by
financial institutions and government authorities, the availability
of commodities such as steel and cement has declined and as a
result, commodity prices have increased. The Company is
experiencing delays in a small number of specific orders as well as
an increase in prices for some components and it continues to find
travel to key sites difficult and less frequent. The management
team expects to see the impact on travel lessen in Q3 and Q4 but
with a longer recovery period for availability, pricing and
delivery of some key components.
Strategic capital deployment
-- Raise of new capital to accelerate growth. On 28 May, the
Company successfully completed a Placing that raised GBP16 million
(before expenses) in new investment capital aimed at accelerating
the Company's growth strategy. The Placing generated new interest
in the Company and was oversubscribed.
-- Project development. The Company's success with growth of its
technology sales is dependent on timely and high-quality
development of complex projects for construction and commissioning
of waste-to-energy plants with EQTEC technology at their core. Over
the past year, the Company and its partners have increasingly taken
a leadership role with a majority of projects under development and
believe that both the speed and quality of development and
construction readiness will benefit from this approach. This
includes assessing, qualifying and progressing the opportunities
that meet its stringent qualification criteria, confirming expert
design specifications, securing feedstock supply, offtake
agreements, funding and delivery control. The EQTEC team has
defined these and more as a series of milestones for each project
as it progresses towards financial close and subsequently through
to commissioning, securing on-time, on-budget delivery, every
time.
The capital raised through the recent Placing is being deployed
to three key areas: (1) project development of MDCs in existing
markets; (2) project development of larger, RDF-to-energy deals in
the UK; and (3) growth in the Company's capability and capacity to
take on more deals in more places. The first MDC is the 1 MWe
biomass-to-energy plant in Tuscany, Italy. In addition to
generating healthy revenue, profitability and IRR, the plant is
expected to be a valuable showcase of EQTEC technology in a 'live'
commercial environment. Additional MDCs are targeted in Croatia and
other markets. The RDF-to-energy deals in Billingham and Deeside
represent opportunities for meaningful returns, and the capital
investment will safeguard financial close and de-risk the
investment through securing the sites for Billingham and Deeside.
Finally, EQTEC will expand its engineering capacity and business
development capabilities to pursue more opportunities more
rapidly.
Financial performance
The Company's revenue forecast of approximately EUR15 million
for the financial year ending 31 December 2021 remains in line with
forecasts previously announced. Those forecasts anticipated a
heavily back-loaded year for financial close of key opportunities
and deal closure remains the primary focus of the Company.
Financial close is critical both for receipt of fees for project
development led by the Company and its partners throughout the
months leading to financial close, as well as for beginning to take
payment for sales of technology through the construction and
commissioning work that follows.
Subject to timely closure of target opportunities and timely
receipt of development fees and initial payment for technology
equipment and services, the Company still expects to see its first
year of profitability in 2021.
New Finance Director
Following the announcement on 28 May that Finance Director Gerry
Madden will retire in 2021, the Company can confirm that it has
appointed his successor.
The Board of Directors is pleased to announce the appointment of
Nauman Babar as Finance Director with immediate effect, subsequent
to the Board's acceptance of Gerry Madden's resignation of that
role. Nauman Babar brings both breadth and depth of expertise to
EQTEC's Finance and Corporate Governance activities. His background
features nearly 20 years in Finance-related roles, including at
private equity-backed companies, accountancy and transaction
services at PwC and EY, Finance transformation services at
Accenture and a range of business leadership roles at Woodlands
Energy Services. He is a UK national with director-level experience
in the Energy and Utilities sectors across Europe and the Middle
East.
The incoming and outgoing directors are working together and
with the leadership team on a structured handover, with Gerry
Madden continuing to support the transition through the end of
August. The EQTEC Board of Directors express their thanks to Gerry
Madden for his efforts and many years of service, as the Company
has shifted and transitioned to where it is today.
Innovation
As announced on 22 March, the Company is progressing a number of
significant R&D projects with its partners, to prepare its
technology for application to a wider range of opportunities. The
Company is working with leading certifications agency TÜV to
achieve a certification for hydrogen-linked technologies. In Q3,
the Company's technical team expects to test several types of RDF
material with its partners at the Université de Lorraine in France
and then carry out Fischer-Tropsch gas-to-liquid tests in Q4,
subject to pending health and safety approvals for the laboratory,
which are expected in Q3. The Company is also developing
relationships with a number of new technology partners, which it
expects to announce in the coming months.
Wood and EQTEC collaborated on and completed gasification
technology and market reviews in Q1 2021. Throughout Q2, the
Company and Wood have explored opportunities for technology and
other collaboration and have progressed discussions with a view to
identifying and pursuing new capabilities and solutions for the
global, waste-to-energy market. The Company looks forward to
working together to identify and pursue future opportunities with
Wood.
The Company will update shareholders in its next planned
quarterly update at publication of its Interim Results for
2021.
David Palumbo, CEO of EQTEC, commented:
"In our interim results for H1 2020 and again in our 2020 annual
report, we committed to building beyond our technology and
innovation excellence to establish a solid, sustainable platform
for growth. Throughout 2021, and accelerating in Q2, the team has
been building that platform, one founded on reliable, repeatable
delivery excellence, in partnership with qualified, dependable
partners. For EQTEC, delivery excellence starts with project
development toward financial close and we have been converting our
rapidly expanding pipeline into a growing set of prioritised
development projects, with project plans and managed timelines. We
believe that very few companies in waste-to-energy or even in
large-scale infrastructure pursue the rigour and discipline we are
embedding. These efforts are inspired by our ambition to be known
not only as the best technology in our class but also, the most
reliable development partner in waste-to-value."
Directors' dealings
As announced by the Company on 9 July 2020, certain Directors
agreed cash reductions to their remuneration for the 12 month
period from 1 July 2020 to 30 June 2021 (the "2020 Director
Remuneration Arrangements"), which would be satisfied by the issue
of shares, at the end of each six month period dated 31 December
2020 and 30 June 2021, at the issue price of 0.45 pence per
share.
Shares were issued by the Company to the relevant Directors on 1
February 2021 to satisfy the unpaid remuneration (net of tax where
relevant) owed to them for the six months ended 31 December
2020.
On 11 February 2021 the Company announced the adoption of the
EQTEC All Employee Long-term Incentive Plan (the "LTIP") as part of
which David Palumbo and Yoel Alemán, Directors of the Company,
agreed that the Company's obligation to issue them new Ordinary
Shares pursuant to the 2020 Director Remuneration Arrangements,
applicable to the six months ended 30 June 2021, would be replaced
by Incentive Shares.
Accordingly, the Company announces that it has issued, in
aggregate, 8,380,000 New Ordinary Shares to a current Director,
Thomas Quigley and, as of 16 July 2021, a former Director Gerry
Madden, to satisfy the unpaid remuneration (net of tax where
relevant) owed to them for the six months ended 30 June 2021 under
the 2020 Director Remuneration Arrangements.
On Admission (as defined below), the relevant Director interests
will be as follows:
Director No. of New Ordinary Resultant holding Percentage of
Shares of Ordinary Shares total voting
on Admission rights on Admission
Thomas Quigley 1,600,000 34,654,154 0.41%
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Admission and total voting rights
The Company will make an application to London Stock Exchange
plc for the 8,380,000 New Ordinary Shares to be admitted to trading
on AIM ("Admission"). It is expected that Admission will become
effective and dealings will commence on or around 23 July 2021. The
New Ordinary Shares will rank pari passu with the existing Ordinary
Shares.
Following Admission, there will be 8,443,424,926 Ordinary Shares
in issue. This number may be used by shareholders as the
denominator for the calculation by which they will determine if
they are required to notify their interest in, or a change in their
interest in, the share capital of the Company.
Further details regarding Nauman Babar's appointment
The following details in relation to the appointment of Nauman
Babar are disclosed in accordance with AIM Rule 17 and Schedule
2(g) of the AIM Rules:
Nauman Babar (aged 39) has not held any directorships and/or
partnerships in the past five years.
There is no further information to be disclosed in relation to
Nauman Babar's appointment pursuant to AIM Rule 17 or Schedule Two,
paragraph (g) (i)-(viii) of the AIM Rules for Companies.
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation.
ENQUIRIES
EQTEC plc +44 203 883 7009
David Palumbo / N auman Babar
-----------------------
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
-----------------------
Paul Shackleton (Corporate) / Simon Johnson
(Sales)
-----------------------
Canaccord Genuity - Joint Broker +44 20 7523 8000
-----------------------
Henry Fitzgerald-O'Connor / James Asensio
/ Patrick Dolaghan
-----------------------
Alma PR - Financial Media & Investor Relations +44 20 3405 0205
-----------------------
Josh Royston / Sam Modlin EQTEC@almapr.co.uk
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+44 7554 014 188 / +44
BECG - General Media Enquiries 7867 452 269
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Carrie Lowe / Tom Gosschalk EQTEC@BECG.com
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About EQTEC plc
As one of the world's most experienced gasification technology
and engineering companies, with a growing track record of
delivering operational and commercial success for transforming
waste-to-energy through best-in-class technology innovation,
engineering and project development , EQTEC brings together design
innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's
proven, proprietary and patented technology is at the centre of
clean energy projects, sourcing local waste, championing local
businesses, creating local jobs and supporting the transition to
localised, decentralised and resilient energy systems.
EQTEC designs, supplies and builds advanced gasification
facilities in the UK, EU and US, with highly efficient equipment
that is modular and scalable from 1MW to 30MW. EQTEC's versatile
solutions process over 50 varieties of feedstock, including
forestry wood waste, vegetation and other agricultural waste from
farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions . EQTEC's solutions
produce a pure, high-quality synthesis gas ("syngas") that can be
used for the widest range of applications, including the generation
of electricity and heat, production of synthetic natural gas
(through methanation) or biofuels (through Fischer-Tropsch,
gas-to-liquid processing) and reforming of hydrogen.
EQTEC's technology integration capabilities enable the Group to
lead collaborative ecosystems of qualified partners and to build
sustainable waste reduction and green energy infrastructure around
the world.
The Company is quoted on AIM (ticker: EQT) and the London Stock
Exchange has awarded EQTEC the Green Economy Mark, which recognises
listed companies with 50% or more of revenues from
environmental/green solutions.
Further information on the Company can be found at www.eqtec.com
.
PDMR Notification Form :
The notification below is made in accordance with the
requirements of UK MAR:
1. Details of the person discharging managerial responsibilities
/ person closely associated
a) Name 1. Thomas Quigley
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2. Reason for the Notification
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a) Position/status 1. NED
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b) Initial notification/amendment Initial notification
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3. Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
------------------------------------------------------------------
a) Name EQTEC plc
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b) LEI 63540085VSYVDEINJO04
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4. Details of the transaction(s): section to be repeated for (i)
each type of instrument; (ii) each type of transaction; (iii)
each date; and (iv)each place where transactions have been
conducted
------------------------------------------------------------------
a) Description of the Financial Ordinary Shares of EUR0.001 each
instrument, type of
instrument
------------------------------- ---------------------------------
Identification code IE00BH3XCL94
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b) Nature of the Transaction Issue of shares
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c) Price(s) and volume(s) Price(s) Volume(s)
0.45 pence 1. 1,600,000
-------------
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d) Aggregated information N/A (Single transaction)
Aggregated volume Price
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e) Date of the transaction 19 July 2021
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f) Place of the transaction AIM (LSE)
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END
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