2020
Annual Report
EQTEC biomass waste-to-energy plant,
Karlovo, Stroevo, Bulgaria
Building the future of the
waste-to-energy sector
EQTEC plc
TABLE OF CONTENTS
Directors and Advisers
Chairman’s Statement
Chief Executive’s Report
Corporate Governance Statement
Directors’ Report
Financial Statements
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the Financial Statements
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Independed Auditor’s report to the members of EQTEC plc 91
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EQTEC PLC
DIRECTORS AND
ADVISERS
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
GERRY MADDEN
Finance Director & Company
Secretary
JEFFREY VANDER LINDEN
Chief Operating Officer
DR. YOEL ALEMÁN
Chief Technical Officer
THOMAS QUIGLEY
Non-Executive Director
REGISTERED OFFICE:
Building 1000, City Gate, Mahon, Cork T12 W7CV, Ireland
NOMINATED ADVISER:
Strand Hanson Limited, 26 Mount Row, Mayfair, London W1K 3SQ, United Kingdom
BROKERS:
Arden Partners plc, 125 Old Broad St, London EC2N 1AR, United Kingdom
Canaccord Genuity Limited, 88 Wood Street, London EC2V 7QR, United Kingdom
LEGAL ADVISERS:
Philip Lee, 7-8 Wilton Terrace, Dublin D2, Ireland
Fieldfisher LLP, Riverbank House, 2 Swan Lane, London EC4R 3TT, United Kingdom
Fieldfisher Jausas, Passeig de Gràcia, 103, Planta 7. 08008 Barcelona, Spain
AUDITOR:
Grant Thornton, 13-18 City Quay, Dublin 2, D02 ED70, Ireland
REGISTRAR:
Link Asset Services, 2 Grand Canal Square, Dublin 2, D02 A342, Ireland
The Company is incorporated in Ireland with registration number: 462861
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EQTEC PLC
2020 AT
A GLANCE
EQTEC plc: Sustainably reducing the world’s waste
and playing a key role in the energy transition
GROWTH:
Continuation of growth strategy in Europe, UK and with global opportunities:
Three times pipeline growth from Q1 to Q4
Local partner advantage: average of two to three near-term opportunities per partner; many more over long term
Non-contracted tender opportunities worth a total potential of €559 million
Full commercial offers sent worth a total of €334 million
PROJECTS:
Construction underway at two, sustainable biomass-to-energy plants in Larissa, Greece and in California, USA
Development in progress for multiple biomass-to-energy and biomass-to-bioenergy deals across Europe and the US as
well as three RDF-to-energy deals in UK
Strong ecosystem in place including strategic and project delivery partners
FINANCIAL OVERVIEW:
Revenue €2.2 million (FY 2019: €1.7 million)
Loss €5.8 million (FY 2019: €3.6 million)
Cash at 31 December 2020 €6.4 million (31 December 2019: €0.5 million)
Net assets €25.3 million (FY 2019: €15.5 million)
DELIVERY PLATFORM:
Appointment of expert Chief Operating Officer to drive scale
Consolidation of Corporate Centre, with addition of key roles to support business development and growth
Enhanced Technical & Engineering Centre
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REPORTS
Annual Repor t 2020
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EQTEC biomass waste-to-energy plant,
Movialsa, Ciudad Real, Spain
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
CHAIRMAN’S
STATEMENT
IAN PEARSON
Non-Executive Chairman
16 April 2021
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
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The team is focused on creating localised solutions
that 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.
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.
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
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CHIEF
EXECUTIVE’S REPORT
DAVID PALUMBO
Chief Executive Officer
16 April 2021
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 €4 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
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Supplementing our technology leadership is our commercial
know-how and 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.
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
€559 million, amongst which we sent
full commercial offers in 2020 worth a
total of €334 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 €2
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
€2.2 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.
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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 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.
Cashing in non-core assets
whilst strengthening strategic
relationships:
In January, the sale of €300,000
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 €383,503
(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 €2.2 million (FY
2019: €1.7 million).
Loss for the financial year:
For the period, the Group incurred
losses of €5.8 million (FY 2019: €3.6
million), principally the result of
recognition of share-based payment
costs of €1.8 million and an increase
in administrative expenses over the
period.
Assets:
The net assets of the Group increased
to €25.3 million at 31 December 2020
(31 December 2019: €15.5 million).
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Placing:
In July, the Company raised £10
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 €6.4 million
(31 December 2019: €0.5 million).
Debt:
Total debt repaid during the period
amounted to €1.4 million. Agreed
a reprofiling of existing debt plus
interest of €2.6 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
€1.5 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 €20 – 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.
plant, a 25 MW plant that will produce
electricity and heat. We anticipate the
project will have a contract value in
excess of €30 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 €15 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 €15 million in 2021,
with positive EBITDA, which would
make 2021 EQTEC’s first year of
profitability.
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
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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 €200 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.
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GOVERNANCE
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EQTEC biomass waste-to-energy plant,
Movialsa, Ciudad Real, Spain
STRATEGIC REPORTS
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CORPORATE GOVERNANCE
STATEMENT
The Board is committed to the highest standards of corporate
governance and considers the Quoted Companies Alliance’s
Corporate Governance Code (“the QCA Code”) to be the most
appropriate framework for the Company to adopt. The Directors
have adopted the QCA Code and the following sections explain
how this is done. Where the Board adopts a different path from the
QCA Principles to the extent they consider it appropriate having
regard to the size and resources of the Company, an explanation is
provided.
In his capacity as independent Chairman, Ian Pearson has
responsibility for ensuring that the Group has appropriate
corporate governance standards in place and the 10 principles in
the QCA Code are applied within the Group as a whole.
STRATEGY AND BUSINESS MODEL
The Company is focused on delivering shareholder value over
the medium to long term by placing its proprietary, proven and
patented Advanced Gasification Technology at the heart of
leading-edge, waste-to-energy plants across Europe and in North
America with emerging opportunities in Asia and the Middle East.
We are a waste-to-value company, using our proven proprietary
Advanced Gasification Technology to generate safe, sustainable
and clean energy, including electricity, heat, biofuels, synthetic
natural gas and green hydrogen, from over 50 different kinds
of feedstock, focusing on municipal, agricultural and industrial
waste, biomass, and plastics. We collaborate with waste operators,
developers, technologists, EPC contractors and capital providers to
build sustainable energy from waste infrastructure projects.
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.
We are quoted on the AIM market of the London Stock Exchange,
bear the Green Economy Mark awarded by the London Stock
Exchange, and trade as LSE:EQT. The Board believes that EQTEC is
an ideal investment for Impact Investors who want to generate a
measurable environmental impact alongside potential financial
returns.
The Board is focused on growing the business organically and
where synergistic opportunities arise through acquisition.
The identification and management of risk in relation to the
achievement of our strategic objectives and business model is
dealt with in “Managing and mitigating risk” below.
ENGAGING AND COMMUNICATING WITH
SHAREHOLDERS
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders. Institutional
shareholders and analysts have the opportunity to discuss issues
and provide feedback at meetings with the Company. In addition,
all shareholders are encouraged to attend the Company’s Annual
General Meeting. Investors also have access to current information
on the Company though its website, www.eqtec.com and via
David Palumbo, CEO, who is available to answer investor relations
enquiries.
STAKEHOLDER RESPONSIBILITIES
The Board recognises that the long-term success of the Group
is reliant upon the efforts of the employees of the Group, its
contractors and suppliers and on the Group’s relationships with
these and other stakeholders such as customers and regulators.
The Board has put in place a range of processes and systems to
ensure that there is close Board oversight and contact with its key
resources and relationships.
It is the Company’s intention that, over the coming year, all
employees of the Group participate in a structured Group-wide
annual assessment process. This is designed to ensure there is an
open and confidential dialogue with each person in the Group to
help ensure successful two-way communication with agreement
on goals, targets and aspirations of the employee and the Group.
These feedback processes will help to ensure that the Group can
respond to new issues and opportunities that arise to further
the success of employees and the Group. In addition, the Board
ensures that all key relationships with, for example, customers and
suppliers are the responsibility of, or are closely supervised by, one
of the directors.
Our technology and services have a positive impact on society
and the environment. Through taking waste which cannot be
recycled and turning it into energy we reduce the need for less
environmentally-friendly methods such as incineration and
landfill and contribute towards reducing carbon emissions and
meeting renewable energy targets. We are passionate about using
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our technology to deliver sustainable, local outcomes for local
businesses and the communities who are customers of the power
plants that use our technology, and to always deliver to the highest
environmental standards.
MANAGING AND MITIGATING RISK
Effective risk management is critical to the achievement of our
strategic objectives. Controls are integrated into all levels of our
business. As a board we continually assess our exposure to risk and
seek to mitigate risks wherever possible.
The directors have established procedures for the purpose of
providing a system of internal control. In addition, there are a range
of Group policies that are reviewed at least annually by the Board.
These group policies cover matters such as share dealing and
KEY AREAS FOR ON-GOING RISK MANAGEMENT ARE:
insider trading legislation.
The Board currently takes the view that an internal audit function
is not considered necessary or practical due to the size of the
Group and the close day to day control exercised by the executive
directors. However, the Board will continue to monitor the need for
an internal audit function.
Identified principal risks to the achievement of our strategic
business objectives are outlined below, together with their
potential impact and the mitigation measures in place. The Board
believe these risks to be currently the most significant with the
potential to impact our strategy, our financial and operational
performance and ultimately, our reputation. The board reviews
its risk register, identifying new risks and updating on an ongoing
basis.
KEY AREAS
MITIGATION
Winning and delivering contracts
Central to achieving our strategy is winning and successfully
delivering our contract portfolio. Our continuing financial health
relies on our ability to successfully tender, mobilise, operate,
and manage such contracts. Winning new and retaining existing
contracts continues to be critical for the future success of our
business.
Our tender, mobilisation and contract management processes
operate under strict delegated authorities and are subject
to rigorous executive management oversight and approval.
These contracts are supported by teams of experienced tender,
mobilisation and operational delivery specialists to mitigate the
risk of failure at any stage. Ongoing contract assurance occurs
together with regular dialogue to ensure service delivery is
consistent with customer expectations.
Reputational risk
Maintaining a strong reputation is vital to our success as a
business. Significant impact to our reputation could be caused by
an incident involving major harm to one of our people or clients/
partners, inadequate financial control processes, or failure to
comply with regulatory requirements. Impacts of this type would
potentially result in financial penalties, losses of key contracts, an
inability to win new business and challenges in retaining key staff
and recruiting new staff.
Attracting and retaining skilled people
Attracting and retaining the best skilled people at all levels of
the business is critical. This is particularly the case in ensuring we
have access to a diverse range of views and experience, and in
attracting specific expertise at both managerial and operational
levels where the market may be highly competitive. Failure
to attract new talent, or to develop and retain our existing
employees, could impact our ability to achieve our strategic
growth objectives. As we continue to grow and diversify into new
areas, this risk will continue to be a focus for the Board.
Strong corporate governance and dedicated senior management
remain the key elements of effective reputation management.
Senior management provides a model of best practice and
guidance to ensure our values and expected behaviours are
clear and understood by everyone. As our business continues to
grow and develop we will remain strongly focused on protecting
the strength of our reputation through effective governance
and leadership, and through cultivating open and transparent
relationships with all stakeholders.
Our business model has created a pipeline of opportunities for
staff at every level of the business. This will continue to be the
case as the Group develops. Additionally, to ensure a talent pool
is identified, developed and ready for succession if needed, a
succession plan will be put in place over the coming year for
key management. Our focus on competency at all levels of the
business continues to ensure that we develop our people and
enable them to successfully manage the changing profile of our
business. Incentive programmes are also in place to ensure key
individuals are retained.
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KEY AREAS
MITIGATION
System process or control failure
We produce highly sophisticated and specialised engineering
and design services leading to products that incorporate
or use leading-edge technology, including hardware and
software. Many of our products and services involve complex
energy infrastructure projects and accordingly the impact of a
catastrophic product failure or similar event could be significant.
Any inability to deliver on time, to budget and to the right quality
could result in financial loss or reputational damage.
Ability to grow the business and cash generation
Our financial strength makes us an attractive partner to our
customers and suppliers. Our ability to grow our business
organically and by acquisition will be impacted if our financial
performance deteriorates, limiting our ability to access diverse
sources of funding on competitive terms. This may cause an
increase in the cost of borrowing or cash flow issues which could,
in turn, further affect our financial performance. As a people
business, our staff costs remain our most significant area of
expenditure. Our ability to pay our people and suppliers regularly
and at specific times relies not only on funding being available
but also upon effective cash conversion.
Reliance on material counterparties
We depend on a number of significant counterparties such
as EPC contractors, insurers, banks, clients, and suppliers to
maintain our business activities. The failure of a key business
partner, supplier, subcontractor, financer or other provider could
materially affect the operational and financial effectiveness of our
business and our ability to trade. Ensuring ongoing relationships
with our material counterparties will underpin the Group’s ability
to meet its strategic objectives.
The basis of our governance framework is provided by our core
policies, which are subject to continual review and enhancement
to manage our growing and diversifying business requirements
in line with sound governance practice. We have built extensive
operational processes to ensure that our product design,
engineering, and other services we provide meet the most
rigorous quality standards. Our internal control procedures
continue to be reviewed formally. We are in the process of
introducing interdependent operational and finance systems to
achieve operational efficiencies and transparent reporting.
We have developed and continue to enhance financial control
procedures to oversee and monitor financial performance
and cash conversion. These include daily monitoring of bank
balances, weekly cash flow reporting, and regular financial
performance and balance sheet reviews, which include detailed
working capital reviews and forecasts. We believe we have strong
banking, debt finance and equity relationships, and appropriate
levels of gearing for our business.
We have developed, through strategic partnerships, relationships
with a number of EPC contractors and also a pool of suppliers
and providers to ensure limited dependency on any one
provider, in turn limiting the impact of any potential failure.
The Board reviews and monitors material counterparty risk and
ensures that concentration levels are kept to a minimum.
Political and regulatory risk
Our technology can be deployed in a wide number of
international markets and as such we are exposed to different
political and regulatory regimes with different risk profiles.
We monitor and evaluate political and regulatory risk at board
level. Decisions on the balance of our project pipeline are taken
to ensure we are not over-reliant on one particular market over
time.
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BOARD OF DIRECTORS
The Board comprises four full time executive directors: the CEO David Palumbo, the FD Gerry Madden, the COO Jeffrey Vander Linden and
the CTO Dr. Yoel Alemán; and two independent non-executive directors: Ian Pearson, who acts as the Chairman, and Thomas Quigley. Each
non-executive director devotes as much time as is required to carry out the roles and responsibilities that the director has agreed to take on.
The biographies of the Directors, who we consider to be the key managers of the business, are set out below:
IAN PEARSON, NON-EXECUTIVE CHAIRMAN
Ian was the chairman of AIM-listed OVCT2 for five years. OVCT2 invested in a variety of renewal energy companies and was successfully
merged into Apollo VCT plc in 2019. He is currently a Non-Executive Director of Thames Water Utilities Limited, the UK’s biggest water
company. He is also a senior adviser to BAI Communications plc and has previously been a member of the UK Advisory Board of the
accountants PwC. Between 2001 and 2010, Ian held a number of ministerial positions in the UK government, including Minister for Trade &
Foreign Affairs, Minister of State for Climate Change and the Environment, Minister for Science, and Economic Secretary to the Treasury. He
graduated from Balliol College, Oxford and has a Master’s degree and a Doctorate in Industrial and Business Studies from the University of
Warwick.
DAVID PALUMBO, CHIEF EXECUTIVE OFFICER
David Palumbo is an experienced entrepreneur with over 20 years of experience in private equity, venture capital and asset management.
Since 2006, he has founded and co-founded a number of companies in various industries such as cleantech, digital technology and real
estate. David is also the Founding and Managing Partner of Origen Capital LLP, a private investment firm representing family offices and
private consortia in Europe, CIS and Latin America. He holds a BSc and an MSc in Electrical Engineering.
GERRY MADDEN, FINANCE DIRECTOR AND COMPANY SECRETARY
Gerry Madden joined EQTEC plc in May 2007 as Finance Director, and was Chief Executive from 2011 to 2017. He previously founded and
operated a corporate finance practice between 1998 and 2007, advising UK and Irish companies on corporate finance activities and business
strategy. During this period he also acted as a Non-Executive director for companies in the technology, healthcare, retail and renewable
energy sectors. He originally worked for 16 years with international accountants KPMG and was auditor and adviser to listed companies,
multinationals and private companies operating in Ireland and internationally. He is a Fellow of the Institute of Chartered Accountants in
Ireland, a graduate of University College Cork and a Member of the Institute of Directors.
JEFFREY VANDER LINDEN, CHIEF OPERATING OFFICER
Jeff’s 25-year career in operational performance and organisational change includes five years building global scale in leading, consumer
products businesses and 16 years designing and delivering business strategy, process and technology transformation as a business
consultant and programme director at PwC, IBM and Capgemini. He has worked with both private- and public-sector leaders on matters
of business strategy, operations strategy, organisation design and large-scale execution of major projects. His dozens of clients include
NTT, NEC, AT&T, Motorola, BAE Systems and National Grid. Jeff spent 10 years based in Japan, also working in Korea, Taiwan, Hong Kong
and Singapore; he has worked predominantly in the UK and Europe since 2001. He received a Bachelor of Arts in Social Studies (Economics,
Politics, History, Philosophy) from Wesleyan University in Connecticut, USA.
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DR. YOEL ALEMÁN , CHIEF TECHNOLOGY OFFICER
Yoel Alemán Méndez is an experienced chemical engineer with over 20 years’ experience in biomass gasification. He has designed, built
and operated gasification facilities of various industrial capacities. He is the author of three technology patents related to specialty power
generation, has been a University Associated Professor and researcher at three universities, and holds a PhD in chemical engineering. Prior to
his appointment to the senior management of the company in June 2019, Yoel was Chief Technical Officer of EQTEC Iberia SLU from April 2010.
THOMAS QUIGLEY, NON-EXECUTIVE DIRECTOR
Tom Quigley has had an executive career spanning over 25 years, mainly at board level, as Managing Director, CFO and CIO. This included
being a Managing Director of Close Brothers Corporate Finance; a Managing Director and Head of the Retail, Hospitality and Leisure
sector investment banking at ING Barings, London; and a Director of Terra Firma Capital Partners. Tom originally qualified as a Chartered
Accountant at Price Waterhouse in London and has amassed considerable financial and management experience across multiple sectors.
Through his executive and non-executive positions, Tom has worked in real estate, financial services, healthcare and banking, and across a
number of jurisdictions.
Executive and Non-Executive Directors are subject to re-election
intervals as prescribed in the Company’s Articles of Association. At
each Annual General Meeting one-third of the Directors who are
subject to retirement by rotation shall retire from office. They can
then offer themselves for re-election. The letters of appointment
of all directors are available for inspection at the Company’s
registered office during normal business hours.
The Executive Directors are employed under service contracts
requiring three to six months’ notice by either party. The Non-
Executive Directors and the Chairman receive payments under
appointment letters which are terminable by three months’ notice
by either party.
The Board encourages the ownership of shares in the Company
by Executive and Non-Executive Directors alike and in normal
circumstances does not expect Directors to undertake dealings of
a short-term nature. The Board considers ownership of Company
shares by Non-Executive Directors as a positive alignment of their
interest with shareholders. The Board will periodically review the
shareholdings of the independent Non-Executive Directors and will
seek guidance from its advisors if, at any time, it is concerned that
the shareholding of any independent Non-Executive Director may,
or could appear to, conflict with their duties as an independent
Non-Executive Director of the Company or their independence
itself. Directors’ emoluments, including Directors’ interest in share
options over the Group’s share capital, are set out in the Annual
Report.
The Board meets at least eight times a year. It has established an
Audit Committee and a Remuneration Committee. The Board has
agreed that appointments to the Board are made by the Board as
a whole and so has decided a separate Nominations Committee is
unnecessary at this time.
SKILLS, CAPABILITIES AND BOARD PERFORMANCE
The Board of Directors has a strong mix of financial, operational,
renewable energy, waste infrastructure, regulatory and political
experience. The Board recognises that it currently has limited
diversity and this will form a part of any future recruitment
consideration if the Board concludes that replacement or
additional directors are required.
The Company currently has two independent non-executive
directors, Ian Pearson and Thomas Quigley. The Company is
satisfied that the Company’s Board composition is appropriate
given the Company’s size and stage of development. The Board will
keep this matter under regular review and to the extent additional
independence is felt to be required on the Board, it shall be sought.
Internal evaluation of the Board, the Committee and individual
directors is seen as an important next step in the development
of the board and one that will be addressed during the coming
year. The aim is that this will be undertaken on an annual basis
in the form of peer appraisal, questionnaires and discussions to
determine the effectiveness and performance in various areas as
well as the directors’ continued independence.
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In accordance with the Companies Act 2014 of Ireland, the Board
complies with the following duties:
to act in good faith in what the director considers to be the
interests of the Company;
to act honestly and responsibly in relation to the conduct of
the affairs of the Company;
to act in accordance with the Company’s constitution and
exercise powers only for the purposes allowed by law;
not to use the Company’s property, information or
opportunities for the Director’s own or anyone else’s benefit;
not to agree to a restriction of the exercise of independent
judgement;
to avoid any conflicts of interest;
to exercise the care, skill and diligence which would be
exercised in the same circumstances by a reasonable person;
to have regard to the interests of the members of the
Company, in addition to the duty to have regard to the
interests of the Company’s employees in general.
COMPANY SECRETARY
At present the Finance Director also acts as the Company Secretary.
The Company has plans in place to separate the role from an
executive director at the appropriate time.
AUDIT COMMITTEE
The Audit Committee comprises Thomas Quigley (Chairman) and
Ian Pearson. Meetings are also attended by the Finance Director
as appropriate. It meets as required and specifically to review the
Interim Report and Annual Report, and to consider the suitability
and monitor the effectiveness of internal control processes.
The Audit Committee also reviews the findings of the external
auditor and reviews accounting policies and material accounting
judgements. The Audit Committee normally meets at least three
times in each financial year and has unrestricted access to the
Group’s external auditor.
CORPORATE CULTURE
The Board recognises that their decisions regarding strategy and
risk will impact the corporate culture of the Group as a whole and
that this will impact the performance of the Group. The Board is
very aware that the tone and culture set by the Board will greatly
impact all aspects of the Group as a whole and the way that
employees behave.
A large part of the Group’s activities is centred upon addressing
customer and market needs. Therefore, the importance of sound
ethical values and behaviours is crucial to the ability of the Group
to successfully achieve its corporate objectives. The Board places
great importance on this aspect of corporate life and seeks to
ensure that this flows through all that the Group does. The Board
assessment of the culture within the Group at the present time
is one where there is respect for all individuals, there is open
dialogue within the Group, and there is a commitment to provide
the best service possible to all the Group’s customers.
The Company has adopted a code for directors’ and employees’
dealings in securities which is appropriate for a company whose
securities are traded on AIM and is in accordance with Rule 21 of
the AIM Rules and the Market Abuse Regulation.
GOVERNANCE STRUCTURES AND PROCESSES
Authority for all aspects of the Group’s activities rests with the
Board. The respective responsibilities of the Chairman and Chief
Executive Officer arise as a consequence of delegation by the
Board. The Board has adopted two statements; the first sets
out matters which are reserved to the Board and the second
establishes the policy on delegation of authority. The Chairman is
responsible for the effectiveness of the Board, while management
of the Group’s business and primary contact with shareholders has
been delegated by the Board to the Chief Executive Officer.
NON-EXECUTIVE DIRECTORS
The Board has adopted guidelines for the appointment of non-
executive directors which have been in place and which have
been observed throughout the year. These provide for the orderly
and constructive succession and rotation of the Chairman and
non-executive directors insofar as both the Chairman and non-
executive directors will be appointed for an initial term of three
years and may, at the Board’s discretion believing it to be in the
best interests of the Company, be appointed for subsequent
terms. The Chairman may serve as a non-executive director before
commencing a first term as Chairman.
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REMUNERATION COMMITTEE
The Remuneration Committee comprises Ian Pearson (Chairman)
and Thomas Quigley. The Remuneration Committee reviews
the performance of the Executive Directors and makes
recommendations to the Board on matters relating to their
remuneration and terms of service. The Remuneration Committee
also makes recommendations to the Board on proposals for the
granting of share options and other equity incentives pursuant to
any employee share option scheme or equity incentive plans in
operation from time to time. The Remuneration Committee meets
at least annually. In exercising this role, the Directors have regard to
the recommendations put forward by the QCA Guidelines.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
2020
BOARD
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
Number of Meetings
Ian Pearson
David Palumbo
Gerry Madden
Yoel Alemán
Thomas Quigley
Jeffrey Vander Linden
(since 1 Dec 2020)
16
15
16
16
16
14
3
3
3
-
-
-
3
-
3
3
-
-
-
3
-
The Company’s external auditor attends the Audit Committee to
present its findings on the audit and to provide a direct line of
communication with the Directors.
IAN PEARSON
Chairman
16 April 2021
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DIRECTORS’
REPORT
The Directors present their annual report and the audited financial
statements of the Company and its subsidiaries, collectively known
as ‘the Group’ for the financial year ended 31 December 2020.
risk, liquidity risk and market risk, is disclosed in Note 5 of the notes
to the consolidated financial statements.
PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE
DEVELOPMENTS
The Company is focused on delivering shareholder value over
the medium to long term by placing its proprietary, proven and
patented Advanced Gasification Technology at the heart of
leading-edge, waste-to-energy plants across Europe and in North
America with emerging opportunities in Asia and the Middle East.
We are a waste-to-value company, using our proven proprietary
Advanced Gasification Technology to generate safe, sustainable
and clean energy, including electricity, heat, biofuels, synthetic
natural gas and green hydrogen, from over 50 different kinds
of feedstock, focusing on municipal, agricultural and industrial
waste, biomass, and plastics. We collaborate with waste operators,
developers, technologists, EPC contractors and capital providers to
build sustainable energy from waste infrastructure projects.
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.
A review of the Group’s business and future developments is
contained in the Chairman’s Statement and the Chief Executive’s
Report on pages 6 to 12.
RESULTS AND DIVIDENDS
The results for the financial year are set out on page 27. No
dividends have been proposed by the Directors in the current
financial year (2019: €Nil).
Principal Risks and Uncertainties
The Group has a risk management structure in place, which is
designed to identify, manage and mitigate business risk. Risk
assessment and evaluation is an essential part of the Group’s
internal control system.
Information about the financial risk management objectives and
policies of the Group, along with exposure of the Group to credit
The Group is exposed to a number of other risks and uncertainties.
These break into certain important strategic and operational risks
which we describe below. Our risk framework operates at the
business and functional levels and is designed to identify, evaluate
and mitigate risks within each of the risk categories. Our reactions
to material future developments as well as our competitors’
reactions to those developments will affect our future results.
Strategic Risks
Strategic risk relates to the Company’s future business plans
and strategies, including the risks associated with the global
macro-environment in which we operate, strategic partnerships;
intellectual property; and other risks, including the demand for
our products and services, competitive threats, the success of
investments in our technology and other product and service
innovations, and public policy.
Global Macro-environment
Our operations and the execution of our business plans and
strategies are subject to the effects of global competition and
geopolitical risks. They are also affected by local economic
environments, including low interest rates, inflation, recession,
currency volatility, currency controls and actual or anticipated
default on sovereign debt. Political changes and trends such
as populism, economic nationalism and sentiment toward
multinational companies and resulting changes to trade, tax or
other laws and policies may be disruptive, and can interfere with
our global operating model, our supply chain, our customers
and all of our activities in a particular location. While some global
economic and political risks can be hedged using derivatives or
other financial instruments and some are insurable, such attempts
to mitigate these risks are costly and not always successful.
Strategic Partnerships
The success of our business depends on achieving our strategic
objectives, including through entering into strategic partnerships
with significant construction entities and groups where we may
have a lesser degree of control over the business operations,
which may expose us to additional operational, financial, legal or
compliance risks.
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Intellectual Property
Operational Risks
Our intellectual property portfolio may not prevent competitors
from independently developing products and services similar to or
duplicative to ours, and the value of our intellectual property may
be negatively impacted by external dependencies. Our patents
and other intellectual property may not prevent competitors from
independently developing or selling products and services similar
to or duplicative of ours, and there can be no assurance that the
resources invested by us to protect our intellectual property will be
sufficient or that our intellectual property portfolio will adequately
deter misappropriation or improper use of our technology. If we
are not able to protect our intellectual property, the value of our
brand and other intangible assets may be diminished, and our
business may be adversely affected.
Impact of 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.
Impact of 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.
Operational risk relates to risks arising from systems, processes,
people and external events that affect the operation of our
businesses. It includes product life cycle and execution; product
safety and performance; information management and data
protection and security, including cybersecurity; supply chain and
business disruption; and other risks, including human resources
and reputation.
We may face operational challenges that could have a material
adverse effect on our business, reputation, financial position and
results of operations, and we are dependent on the maintenance
of existing product lines, market acceptance of new product and
service introductions and product and service innovations for
continued revenue and earnings growth.
We produce highly sophisticated products and provide specialised
services for both our and third-party products that incorporate
or use leading-edge technology, including both hardware and
software. Many of our products and services involve complex
industrial machinery or infrastructure projects, such as waste-to-
energy plants that use our gasification technology, and accordingly
the impact of a catastrophic product failure or similar event could
be significant. While we have built extensive operational processes
to ensure that our product design, manufacture and servicing, and
other services that we provide, meet the most rigorous quality
standards, there can be no assurance that we or our customers
or other third parties will not experience operational process
failures or other problems that could result in potential product,
safety, regulatory or environmental risks. Despite the existence
of crisis management or business continuity plans, operational
failures or quality issues, including as a result of organisational
changes, attrition or labour relations, could have a material adverse
effect on our business, reputation, financial position and results
of operations. For a number of limited projects where we take
on the full scope of engineering, procurement, construction or
other services, the potential risk is greater that operational, quality
or other issues at particular projects could adversely affect the
Group’s results of operations.
The Group invests capital in developing and expanding its pipeline
of waste-to-energy projects. The nature of the Group’s business
model means that the sales and project pipeline depend upon
counterparties commissioning and financing major projects, the
timing of which is subject to many uncertainties and is not under
the Group’s control. This implies that the timing of funds generated
from projects can be difficult to predict and could adversely affect
the Group’s results of operations.
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Supply Chain
Significant raw material shortages, supplier capacity constraints,
supplier production disruptions, supplier quality and sourcing
issues or price increases could increase our operating costs and
adversely impact the competitive positions of our products. Our
reliance on third-party suppliers, contract manufacturers and
service providers, and commodity markets to secure raw materials,
parts, components and sub-systems used in our products exposes
us to volatility in the prices and availability of these materials,
parts, components, systems and services. A disruption in deliveries
from our third-party suppliers, contract manufacturers or
service providers, capacity constraints, production disruptions,
price increases, or decreased availability of raw materials or
commodities, including as a result of catastrophic events, could
have an adverse effect on our ability to meet our commitments
to customers or increase our operating costs. Quality, capability
and sourcing issues experienced by third-party providers can
also adversely affect our costs, margin rates and the quality and
effectiveness of our products and services and result in liability and
reputational harm.
Liquidity
The cash requirements of the Group are forecast by the Board
annually in advance and reviewed monthly by management,
enabling the Group’s cash requirements to be anticipated. The
cash forecast includes assumptions with respect to working capital,
development spend and the timing of planning consents and
financial close of projects. Significant delays in these expected
timings may lead to a requirement for additional cash and impinge
on going concern.
GOING CONCERN
The financial statements have been prepared on a going concern
basis. The Group and Company’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
above.
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 and
Company 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.
DIRECTORS
The following Directors held office during the financial year and to
the date of this report:
Gerry Madden
Ian Pearson
Thomas Quigley
David Palumbo
Yoel Alemán
Jeffrey Vander Linden (appointed 1 Dec 2020)
DIRECTORS’ AND SECRETARY’S INTERESTS IN SHARES
The Directors and secretary of EQTEC plc who held office at 31
December 2020 had the following interests in the Ordinary Shares
(€0.001 each) of the Company:
DIRECTORS
AT 31 DECEMBER
2020
AT 31 DECEMBER
2019
Ian Pearson
David Palumbo
Gerry Madden
(also the Company’s secretary)
Yoel Alemán
Thomas Quigley
537,634
23,659,090
537,634
204,545
18,730,039
1,386,817
78,209,666
67,310,508
26,254,154
15,345,063
Jeffrey Vander Linden
2,633,288
-
23
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Gerry Madden had an interest in 14,926,161 “A” Ordinary Shares
(€0.010 each) and 817,140 Deferred B Ordinary Shares (€0.099 each)
at the beginning and end of the financial year. The holders of the
A and Deferred B Ordinary Shares are not entitled to participate in
the profits or assets of the Company and are not entitled to receive
notice, attend, speak and vote at general meetings of the Company.
requirements of Sections 281 to 285 of the Companies Act 2014
with regard to the keeping of accounting records by employing
persons with appropriate expertise and by providing adequate
resources to the financial function. The accounting records are held
at the Company’s business address at Building 1000, City Gate,
Mahon, Cork T12 W7CV, Ireland.
The Directors who held office at 31 December 2020 had the
following interests in warrant and option instruments issued by the
Company:
DIRECTORS
EMPLOYEE
WARRANTS
EMPLOYEE
OPTIONS
David Palumbo
Gerry Madden
Yoel Alemán
Thomas Quigley
196,968,812
-
157,575,049
67,304,542
98,484,406
19,696,881
-
-
The exercise price of the share warrants is 0.25p with a contractual
life of three years. The exercise price of the share options is 0.65p
with a contractual life of four years. At 31 December 2020 all
warrants and options had fully vested. The directors did not hold
any interest in warrant and option instruments issued by the
Company at 31 December 2019.
The directors and secretary who held office at 31 December
2020 did not have any interests in the share capital of any of the
subsidiaries of the Company.
REMUNERATION COMMITTEE REPORT
The Group’s policy on senior executive remuneration is designed to
attract and retain people of the highest calibre who can bring their
experience and independent views to the policy, strategic decisions
and governance of the Group.
In setting remuneration levels, the Remuneration Committee takes
into consideration the remuneration practices of other companies
of similar size and scope. A key philosophy is that staff must be
properly rewarded and motivated to perform in the best interests of
the shareholders. Details of Directors’ remuneration are included in
Note 34 of the notes to the financial statements.
ACCOUNTING RECORDS
The Directors believe that they have complied with the
IMPORTANT EVENTS SINCE THE YEAR END
Details of events occurring since 31 December 2020 which impact
on the Group are included in Note 35 of the notes to the financial
statements.
DISCLOSURE OF INFORMATION TO AUDITORS
Each of the persons who are Directors at the time when this
Directors’ report is approved has confirmed that:
so far as that Director is aware, there is no relevant audit
information of which the Company’s auditors are unaware, and
that Director has taken all the steps that ought to have been
taken as a Director in order to be aware of any relevant audit
information and to establish that the Company’s auditors are
aware of that information
DIRECTORS’ COMPLIANCE STATEMENT
To ensure that the Company achieved material compliance with its
relevant obligations, the Directors confirm that they have:
drawn up a compliance policy statement setting out the
Company’s policies respecting compliance by the Company
with its relevant obligations.
put in place appropriate arrangements and structures that are
designed to secure material compliance with the Company’s
relevant obligations.
conduct a review, during the financial year, of the
arrangements and structures, referred to above.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Directors’ Report
and the financial statements in accordance with applicable laws
and regulations and the AIM Rules for Companies.
Irish company law requires the directors to prepare financial
statements for each financial year giving a true and fair view of the
assets, liabilities and financial position and the profit or loss for the
Group and the Company. Under that law the Directors have elected
to prepare the financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union. Under company law, the Directors must not approve the
24
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
financial statements unless they are satisfied that they give a true
and fair view of the assets, liabilities and financial position of the
Group and the Company as at the financial year end date and of the
profit or loss of the Group and Company for the financial year and
otherwise comply with the Companies Act 2014.
In preparing these financial statements, the Directors are required
to:
select suitable accounting policies and then apply them
consistently;
make judgments and accounting estimates that are reasonable
and prudent;
state whether the financial statements have been prepared
in accordance with applicable accounting standards, identify
those standards, and note the effect and the reasons for any
material departure from those standards; and
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The Directors are responsible for ensuring that the Group and the
Company keeps or causes to be kept adequate accounting records
which correctly explain and record the transactions of the Group
and the Company, enable at all times the assets, liabilities, financial
position and profit or loss of the Group and the Company to be
determined with reasonable accuracy, enable them to ensure that
the financial statements and Directors’ Report comply with the
Companies Act 2014 and enable the financial statements to be
audited. They are also responsible for safeguarding the assets of
the Group and the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Legislation in Ireland governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
AUDITORS
The auditors, Grant Thornton, Chartered Accountants and Statutory
Audit Firm, continue in office in accordance with Section 383(2) of
the Companies Act 2014.
On behalf of the Board
IAN PEARSON
Chairman
DAVID PALUMBO
Chief Executive Officer
16 April 2021
25
EQTEC PLC
FINANCIAL
STATEMENTS
Annual Repor t 2020
26
EQTEC biomass waste-to-energy plant,
Movialsa, Ciudad Real, Spain
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of profit or loss
for the financial year ended 31 December 2020
Revenue
Cost of sales
Gross profit
Operating income / (expenses)
Administrative expenses
Other income
Reversal of impairment of property, plant and equipment
and intangible assets
Impairment of inventories
Impairment of investments
Other (losses)/gains
Employee share-based compensation
Foreign currency gains/(losses)
Operating loss
Finance income
Finance costs
Loss before taxation
Income tax
Loss for the financial year from continuing operations
Profit for the financial year from discontinued operations
Loss for the financial year
Loss attributable to:
Owners of the Company
Non-controlling interest
Basic loss per share:
From continuing operations
From continuing and discontinued operations
Diluted loss per share:
From continuing operations
From continuing and discontinued operations
NOTES
2020 €
2019 €
8
9
10
11
19
22
12
13
14
14
16
17
32
18
18
18
18
2,234,727
1,686,312
(1,978,987)
(1,598,250)
255,740
88,062
(3,694,217)
(2,677,995)
61,922
-
-
(17,250)
(170,059)
(1,297,309)
195,152
94,985
(98,851)
-
128,235
-
211,337
(187,249)
(4,649,836)
(2,457,661)
17,329
-
(1,206,392)
(1,125,312)
(5,838,899)
(3,582,973)
-
-
(5,838,899)
(3,582,973)
71,084
21,684
(5,767,815)
(3,561,289)
(5,762,733)
(3,764,519)
(5,082)
203,230
(5,767,815)
(3,561,289)
2020 € per share
2019 € per share
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
The notes on pages 39 to 89 form part of these financial statements.
27
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of other comprehensive income
for the financial year ended 31 December 2020
Loss for the financial year
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Exchange differences arising on retranslation of foreign operations
2020 €
2019 €
(5,767,815)
(3,561,289)
6,080
6,080
118,066
118,066
Total comprehensive loss for the financial year
(5,761,735)
(3,443,223)
Attributable to:
Owners of the Company
Non-controlling interests
The notes on pages 39 to 89 form part of these financial statements.
(5,848,045)
(3,669,812)
86,310
226,589
(5,761,735)
(3,443,223)
28
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of financial position
at 31 December 2020
ASSETS
NOTES
2020 €
2019 €
Non-current assets
Property, plant and equipment
Intangible assets
Financial assets
Other financial investments
Total non-current assets
Current assets
Development costs
Loan receivable from project development
Trade and other receivables
Cash and cash equivalents
Assets included in disposal group classified as held for resale
Total current assets
Total assets
19
20
21
22
24
24
25
26
32
187,792
271,255
15,283,459
15,283,459
5,950,513
2,229,006
-
17,324
21,421,764
17,801,044
503,653
482,537
894,531
6,394,791
-
-
728,587
482,392
8,275,512
1,210,979
-
1,198,074
8,275,512
2,409,053
29,697,276
20,210,097
29
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of financial position
at 31 December 2020
EQUITY AND LIABILITIES
NOTES
2020 €
2019 €
Equity
Share capital
Share premium
Other reserves
Accumulated deficit
27
27
24,355,545
21,317,482
62,896,521
52,487,278
2,148,220
-
(61,875,561)
(56,011,538)
Equity attributable to the owners of the Company
27,524,725
17,793,222
Non-controlling interests
28
(2,223,986)
(2,326,274)
Total equity
25,300,739
15,466,948
Non-current liabilities
Borrowings
Lease liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Liabilities included in disposal group
classified as held for resale
29
30
31
29
30
32
-
106,465
188,729
191,708
106,465
380,437
3,183,979
1,020,851
85,242
876,071
2,556,960
82,726
4,290,072
3,515,757
-
846,955
Total current liabilities
4,290,072
4,362,712
Total equity and liabilities
29,697,276
20,210,097
The financial statements were approved by the Board of Directors on 16 April 2021 and signed on its behalf by:
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
The notes on pages 39 to 89 form part of these financial statements.
30
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of changes in equity
for the financial year ended 31 December 2020
SHARE
CAPITAL €
SHARE
PREMIUM €
OTHER
RESERVES
€
ACCUMULATED
DEFICIT €
EQUITY AT-
TRIBUTABLE
TO OWNERS
OF THE
COMPANY €
NON-CON-
TROLLING
INTERESTS €
TOTAL €
Balance at 1 January 2019
19,182,850
47,582,446
Issue of ordinary shares in
EQTEC plc (Note 27)
Conversion of debt into
equity (Notes 27 and 29)
1,157,100
2,529,382
977,532
2,645,675
Share issue costs (Note 27)
-
(270,225)
Transactions with owners
2,134,632
4,904,832
Loss for the financial year
Unrealised foreign exchange
losses
Total comprehensive loss
for the financial year
-
-
-
-
-
-
Balance at 31 December 2019
21,317,482
52,487,278
Issue of ordinary shares in
EQTEC plc (Note 27)
Conversion of debt into
equity (Notes 27 and 29)
Share issue costs (Note 27)
Employee share-based
compensation
(Notes 13 & 27)
Recognition of equity
element of debt
(Notes 14 & 27)
Warrants issued on placing of
shares
Change in the ownership
interest
2,658,622
9,841,484
379,441
1,536,252
(639,931)
-
-
-
-
-
-
-
1,297,309
522,349
(328,562)
328,562
-
-
-
-
-
-
-
-
-
-
-
-
(52,341,726)
14,423,570
(2,552,863)
11,870,707
-
-
-
-
3,686,482
3,623,207
(270,225)
7,039,464
-
-
-
-
3,686,482
3,623,207
(270,225)
7,039,464
(3,764,519)
(3,764,519)
203,230
(3,561,289)
94,707
94,707
23,359
118,066
(3,669,812)
(3,669,812)
226,589
(3,443,223)
(56,011,538)
17,793,222
(2,326,274)
15,466,948
-
-
-
-
-
-
12,500,106
1,915,693
(639,931)
1,297,309
522,349
-
-
-
-
-
-
-
12,500,106
1,915,693
(639,931)
1,297,309
522,349
-
-
-
-
(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
Unrealised foreign
exchange losses
Total comprehensive
loss for the financial year
Balance at
31 December 2020
-
-
-
-
-
-
-
-
-
(5,762,733)
(5,762,733)
(5,082)
(5,767,815)
(85,312)
(85,312)
91,392
6,080
(5,848,045)
(5,848,045)
86,310
(5,761,735)
24,355,545
62,896,521
2,148,220
(61,875,561)
27,524,725
(2,223,986)
25,300,739
The notes on pages 39 to 89 form part of these financial statements.
31
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of cash flows
for the financial year ended 31 December 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES
2020 €
2019 €
Cash flows from operating activities
Loss for the financial year
Adjustments for:
Depreciation of property, plant and equipment
Loss on disposal of property, plant & equipment
Gain on disposal of investment
Reversal of impairment of property, plant and equipment
Impairment of other financial investments
Employee share-based compensation
Impairment of inventories
Impairment of trade receivables
Impairment of other receivables
Bad debt expense
Loss/(gain) on debt for equity swap
Unrealised foreign exchange movements
Operating cash flows before working capital changes
Decrease/(increase) in:
Development cost
Loan receivable from project development undertakings
Trade and other receivables
Increase/(decrease) in trade and other payables
19
20
19
22
13
24
25
25
12
(5,838,899)
(3,582,973)
83,463
1,275
-
-
17,250
1,297,309
100,261
-
(3,078)
(94,985)
-
-
-
98,851
19,016
150,379
-
-
60,000
3,255
170,059
(128,235)
(201,723)
70,439
(4,452,250)
(3,326,086)
(503,653)
(482,537)
-
-
(475,783)
204,097
264,141
(453,854)
Cash used in operating activities – continuing operations
(4,685,008)
(3,575,843)
Finance income
Finance costs
Net cash used in operating activities – continuing operations
Net cash (used in)/generated from operating activities – discontinued operations
Cash used in operating activities
14
14
32
(17,329)
-
1,206,392
1,125,312
(3,495,945)
(2,450,531)
(47,741)
110,184
(3,543,686)
(2,340,347)
32
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of cash flows
for the financial year ended 31 December 2020 - continued
CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
NOTES
2020 €
2019 €
Cash flows from investing activities
Additions to property, plant and equipment
Proceeds from the disposal of property, plant and equipment
Cash inflow from disposal of subsidiary
Selling expenses on disposal of subsidiary
Loans advanced to project development undertakings
Proceeds from the disposal of other investments
Investment in associate undertaking
Investment in related undertaking
Proceeds from the sale of other investments
Proceeds from the sale of interest in associates
Net cash used in investing activities – continuing operations
Net cash (used in)/ generated from investing activities – discontinued operations
Net cash used in investing activities
-
(10,272)
-
-
-
-
-
-
-
1,610
3,078
33
33
300,000
218,635
(65,261)
(469,769)
84
21
(1,150,619)
(333,882)
-
-
21
32
(1,500,812)
(5,584)
(19,997)
6
(1,520,809)
(5,578)
33
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Consolidated statement of cash flows
for the financial year ended 31 December 2020 - continued
CONSLOLIDATED STATEMENT OF CASH FLOWS CONTINUED
NOTES
2020 €
2019 €
Cash flows from financing activities
Proceeds from borrowings and lease liabilities
Repayment of borrowings and lease liabilities
Loan issue costs
Proceeds from issue of ordinary shares
Share issue costs
Interest paid
29
29
29
107,000
301,584
(1,363,348)
(1,019,978)
(30,944)
-
12,735,236
3,451,697
(635,911)
(223,556)
(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
32
(63,196)
(111,106)
Net cash generated from financing activities
10,726,882
2,366,550
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Cash and cash equivalents at the end of the financial period
Cash and cash equivalents included in disposal group
Cash and cash equivalents for continuing operations
5,662,387
608,194
20,625
587,569
6,270,581
608,194
-
(125,802)
6,270,581
482,392
26
32
26
Details of non-cash transactions are set out in Note 36 of the financial statements.
The notes on pages 39 to 89 form part of these financial statements.
34
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Company statement of financial position
at 31 December 2020
ASSETS
Non-current assets
Investment in subsidiary undertakings
Total non-current assets
Current assets
Development costs
Loan receivable from project development undertakings
Trade and other receivables
Cash and bank balances
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Other reserves
Accumulated deficit
Total equity
Total non-current liabilities
Current liabilities
Borrowings
Trade and other payables
Total current liabilities
Total equity and liabilities
NOTES
2020 €
2019 €
21
24
24
25
26
27
27
29
31
21,249,255
17,440,929
21,249,255
17,440,929
9,275
243,598
2,703,491
6,111,864
-
-
1,334,004
448,619
9,068,228
1,782,623
30,317,483
19,223,552
24,355,545
81,830,601
2,148,220
21,317,482
71,421,358
-
(79,661,097)
(76,390,202)
28,673,269
16,348,638
-
-
896,641
747,573
2,426,045
448,869
1,644,214
2,874,914
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 €3,270,895 (2019: €4,674,802).
The financial statements were approved by the Board of Directors on 16 April 2021 and signed on its behalf by:
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
The notes on pages 39 to 89 form part of these financial statements.
35
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Company statement of changes in equity
for the financial year ended 31 December 2020
SHARE
CAPITAL €
SHARE
PREMIUM €
OTHER
RESERVES €
ACCUMULATED
DEFICIT €
TOTAL €
Balance at 1 January 2019
19,182,850
66,516,526
Issue of ordinary shares in EQTEC plc
1,157,100
2,529,382
Conversion of debt into equity
977,532
2,645,675
Share issue costs
-
(270,225)
Transactions with owners
2,134,632
4,904,832
Loss for the financial year (Note 37)
Total comprehensive loss for the financial year
-
-
-
-
Balance at 31 December 2019
21,317,482
71,421,358
Issue of ordinary shares in EQTEC plc (Note 27)
2,658,622
9,841,484
Conversion of debt into equity (Notes 27 and 29)
379,441
1,536,252
Share issue costs (Note 27)
Employee share-based compensation
(Notes 13 and 27)
Recognition of equity element of debt
(Notes 14 and 27)
Warrants issued on placing of shares (Note 27)
-
-
-
-
(639,931)
-
-
1,297,309
522,349
(328,562)
328,562
Transactions with owners
3,038,063
10,409,243
2,148,220
-
-
-
-
-
-
-
-
-
-
-
(71,715,400)
13,983,976
-
-
-
-
3,686,482
3,623,207
(270,225)
7,039,464
(4,674,802)
(4,674,802)
(4,674,802)
(4,674,802)
(76,390,202)
16,348,638
-
-
-
-
-
-
-
12,500,106
1,915,693
(639,931)
1,297,309
522,349
-
15,595,526
Loss for the financial year (Note 37)
Total comprehensive loss for the financial year
-
-
-
-
-
-
(3,270,895)
(3,270,895)
(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
The notes on pages 39 to 89 form part of these financial statements.
36
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Company statement of cash flows
for the financial year ended 31 December 2020
COMPANY STATEMENT OF CASH FLOWS
NOTES
2020 €
2019 €
Cash flows from operating activities
Loss before taxation
Adjustments for:
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Employee share-based compensation
Reversal of impairment of intercompany loans
Finance costs
Finance income
Provision for impairment of investment in subsidiaries
Provision for impairment of trade and other receivables
Provision for impairment of intercompany balances
Provision for impairment of other receivables
Bad debt expense
Loss/(gain) on debt for equity swap
Foreign currency losses/(gains) arising from retranslation of borrowings
Operating cash flows before working capital changes
Funds advanced to inter-company accounts
Repayment of inter-company balances
(Increase) in development costs
(Increase) in loans receivable from project development undertakings
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Investment in associate undertakings
Investment in subsidiary
Loans advanced to project development undertakings
Net cash generated from/(used in) investing activities
The notes on pages 39 to 89 form part of these financial statements.
13
21
25
25
12
21
21
(3,270,895)
(4,674,802)
-
-
1,297,309
(1,720,704)
616
206
-
-
1,177,335
1,083,703
(13,397)
-
-
140,678
-
-
170,059
235,968
-
1,427,038
30,000
489,689
60,000
3,255
(128,235)
(36,110)
(1,983,647)
(1,744,640)
(2,112,285)
(1,376,852)
689,637
(9,275)
(243,598)
135,825
352,350
79,251
-
-
(10,826)
323,096
(3,170,993)
(2,729,971)
(1,150,619)
(1,000,000)
(230,957)
(2,381,576)
-
-
-
-
37
EQTEC PLC
Company statement of cash flows
for the financial year ended 31 December 2020 - continued
COMPANY STATEMENT OF CASH FLOWS CONTINUED
NOTES
2019 €
2020 €
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of ordinary shares
Share issue costs
Loan issue costs
Interest paid
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
29
29
29
-
301,584
(852,567)
(732,794)
12,735,236
3,451,697
(635,911)
(223,556)
(30,944)
-
-
(482)
11,215,814
2,796,449
5,663,245
448,619
66,478
382,141
Cash and cash equivalents at the end of the financial year
26
6,111,864
448,619
The notes on pages 39 to 89 form part of these financial statements.
38
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
1. 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.
2. APPLICATION OF NEW AND REVISED
INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRSs)
New/revised standards and interpretations adopted in
2020
In the current financial year, the Group has applied a number of
amendments to IFRS Standards and Interpretations issued by the
International Accounting Standards Board (IASB), as adopted by the
European Union, that are effective for an annual period that begins
on or after 1 January 2020. Their adoption has not had any impact
on the disclosures or on the amounts reported in these financial
statements.
Amendments to IFRS 3 Definition of a business;
Amendments to IAS 1 and IAS 8 Definition of material;
Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate
Benchmark Reform;
Conceptual Framework Amendments to References to the
Conceptual Framework in IFRS Standards; and
Amendments to IFRS 16 COVID-19 Rent Related Concessions.
and interpretations are:
IFRS 17 Insurance Contracts;
IFRS 10 and IAS 28 (amendments) Sale of Contribution of
Assets between an Investor and its Associate or Joint Venture;
Amendments to IAS 1 Classification of Liabilities as Current or
Non-current;
Amendments to IFRS 3 Reference to the Conceptual
Framework;
Amendments to IAS 16 Property, Plant and Equipment—
Proceeds before Intended Use;
Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling
a Contract;
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform – Phase 2; and
Annual improvements to IFRS Standards 2018-2020 cycle
Amendments to IFRS 1 First time adoption of International
Financial Reporting Standards, IFRS 9 Financial Instruments,
IFRS 16 Leases and IAS41 Agriculture.
The Directors do not expect that the adoption of the Standards
listed above will have a material impact on the financial statements
of the Group in future periods.
3. STATEMENT OF ACCOUNTING POLICIES
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.
New and revised IFRS Standards in issue but not yet
effective
The financial statements are presented in euros and all values are
not rounded, except when otherwise indicated.
The following new and revised Standards and Interpretations
have not been adopted by the Group, whether endorsed by the
European Union or not. The Group is currently analysing the
practical consequences of the new Standards and the effects of
applying them to the financial statements. The related standards
The Group incurred a loss of €5,767,815 (2019: €3,561,289) during
the financial year ended 31 December 2020 and had net current
assets of €3,985,440 (2019: net current liabilities of €1,953,659) and
net assets of €25,300,739 (31 December 2019: €15,466,948) at 31
December 2020.
39
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
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.
Basis of consolidation
The Group financial statements consolidate those of the parent
company and all of its subsidiaries as of 31 December 2020. All
subsidiaries have a reporting date of 31 December.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Where unrealised
losses on intra-group asset sales are reversed on consolidation,
the underlying asset is also tested for impairment from a Group
perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the financial year are recognised
from the effective date of acquisition, or up to the effective date of
disposal, as applicable. The Group attributes total comprehensive
income or loss of subsidiaries between the owners of the parent
and the non-controlling interests based on their respective
ownership interests.
A change in the ownership interest of a subsidiary, without a loss of
control, is accounted for as an equity transaction.
Business combinations
The Group applies the acquisition method in accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities incurred,
and the equity interests issued by the Group, which includes
the fair value of any asset or liability arising from a contingent
consideration arrangement. Acquisition costs are expensed as
incurred. Assets acquired and liabilities assumed are generally
measured at their acquisition-date fair values.
Step acquisitions
Business combination achieved in stages is accounted for using
acquisition method at acquisition date. The components of a
business combination, including previously held investments are
remeasured at fair value at acquisition date and a gain or loss is
recognised in the consolidated statement of profit or loss.
Profit or loss from discontinued operations
A discontinued operation is a component of the Group that either
has been disposed of or is classified as held for sale. Profit or loss
from discontinued operations comprises the post-tax profit or loss
of discontinued operations and the post-tax gain or loss resulting
from the measurement and disposal of assets classified as held for
sale (see also policy on non-current assets and liabilities classified as
held for sale and discontinued operations below and Note 32).
Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for
using the equity method. The carrying amount of the investment in
associates and joint ventures is increased or decreased to recognise
the Group’s share of the profit or loss and other comprehensive
income of the associate and joint venture, adjusted where
necessary to ensure consistency with the accounting policies of
the Group. When the Group’s share of losses on an associate or a
joint venture exceeds the Group’s interest in that associate or joint
venture (which includes any long-term interests that, in substance,
form part of the Group’s net investment in the associate or joint
venture), the Group discontinues recognising its share of future
losses. Additional losses are recognised only to the extent that
the Group has incurred legal or constructive obligations or made
payments on behalf of the associate or joint venture.
Unrealised gains and losses on transactions between the Group
and its associates and joint ventures are eliminated to the extent of
the Group’s interest in those entities. Where unrealised losses are
eliminated, the underlying asset is also tested for impairment.
Investments in subsidiaries
Investments in subsidiaries in the Company’s statement of financial
position are measured at cost less accumulated impairment. When
necessary, the entire carrying amount of the investment is tested
for impairment by comparing its recoverable amount (higher
of value in use and fair value less costs to sell) with its carrying
amount, any impairment loss recognised forms part of the carrying
amount of the investment. Any reversal of that impairment loss
is recognised to the extent that the recoverable amount of the
investment subsequently increases.
40
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Euro, which
is also the functional and presentation currency of the parent
company. The Group has subsidiaries in the United Kingdom,
whose functional currency is the GBP £.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional
currency of the respective Group entity, using the exchange rates
prevailing at the dates of the transactions (spot exchange rate).
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the remeasurement of monetary items
denominated in foreign currency at year-end exchange rates are
recognised in consolidated statement of profit or loss.
Non-monetary items are not retranslated at year-end and are
measured at historical cost (translated using the exchange rates at
the transaction date), except for non-monetary items measured at
fair value which are translated using the exchange rates at the date
when fair value was determined.
Foreign operations
In the Group’s financial statements, all assets, liabilities and
transactions of Group entities with a functional currency other than
Euro are translated into Euro upon consolidation. The functional
currency of the entities in the Group has remained unchanged
during the reporting financial year.
On consolidation, assets and liabilities have been translated into
Euro at the closing rate at the reporting date. Goodwill and fair
value adjustments arising on the acquisition of a foreign entity
have been treated as assets and liabilities of the foreign entity and
translated into Euro at the closing rate. Income and expenses have
been translated into Euro at the average rate over the reporting
financial year. Exchange differences are charged or credited to
consolidated statements of other comprehensive income and
recognised in the accumulated deficit reserve in equity. On
disposal of a foreign operation, the related cumulative translation
differences recognised in equity are reclassified to profit or loss and
are recognised as part of the gain or loss on disposal.
Segment reporting
The Group has two operating segments: the power generation
segment and the technology sales segment. In identifying these
operating segments, management generally follows the Group’s
service lines representing its main products and services.
Each operating segment is managed separately as each requires
different technologies, marketing approaches and other resources.
All inter-segment transfers are carried out at arm’s length prices
based on prices charged to unrelated customers in standalone
sales of identical goods or services.
For management purposes, the Group uses the same measurement
policies as those used in its financial statements. In addition,
corporate assets which are not directly attributable to the business
activities of any operating segment are not allocated to a segment.
This primarily applies to the Group’s central administration costs
and directors’ salaries.
Revenue
Revenue arises from the rendering of services. Revenue is measured
based on the consideration to which the Group expects to be
entitled in a contract with a customer and excludes amounts
collected on behalf of third parties. The Group recognises revenue
when it transfers control of a product or service to a customer. To
determine whether to recognise revenue, the Group follows a five-
step process:
Identifying the contract with a customer;
Identifying the performance obligations;
1.
2.
3. Determining the transaction price;
4. Allocating the transaction price to the performance
obligations; and
5. Recognising revenue when/as performance obligation(s) are
satisfied.
The Group applies the revenue recognition criteria set out below
to each separately identifiable component of the sales transaction.
The consideration received from these multiple-component
transactions is allocated to each separately identifiable component
in proportion to its relative fair value. Revenue is recognised
either at a point in time or over time, when the Group satisfies
performance obligations by transferring the promised goods or
services to its customers.
Rendering of services
The Group generates revenues from after-sales service and
maintenance, consulting, and construction contracts for renewable
energy systems. Consideration received for these services is initially
deferred, included in other payables, and is recognised as revenue
in the financial year when the performance obligation is satisfied.
In recognising after-sales service and maintenance revenues, the
Group determines the stage of completion by considering both
the nature and timing of the services provided and its customer’s
pattern of consumption of those services, based on historical
experience. Where the promised services are characterised by an
indeterminate number of acts over a specified year of time, revenue
is recognised over time.
Revenue from consulting services is recognised when the services
are provided by reference to the contract’s stage of completion at
the reporting date in the same way as construction contracts for
renewable energy systems described below.
Construction contracts for renewable energy systems
Construction contracts for renewable energy systems specify a
fixed price for the design, development and installation of biomass
systems. When the outcome can be assessed reliably, contract
41
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
revenue and associated costs are recognised by reference to the
stage of completion of the contract activity at the reporting date.
Contract revenue is measured at the fair value of consideration
received or receivable and recognised over time on a cost-to-
cost method. When the Group cannot measure the outcome
of a contract reliably, revenue is recognised only to the extent
of contract costs that have been incurred and are recoverable.
Contract costs are recognised in the financial year in which they are
incurred. In either situation, when it is probable that total contract
costs will exceed total contract revenue, the expected loss is
recognised immediately in consolidated statement of profit or loss.
A construction contract’s stage of completion is assessed by
management by comparing costs incurred to date with the total
costs estimated for the contract (a procedure sometimes referred
to as the cost-to-cost method). Only those costs that reflect work
performed are included in costs incurred to date. The gross amount
due from customers for contract work is presented within trade
and other receivables for all contracts in progress for which costs
incurred plus recognised profits (less recognised losses) exceeds
progress billings. The gross amount due to customers for contract
work is presented within other liabilities for all contracts in progress
for which progress billings exceed costs incurred plus recognised
profits (less recognised losses).
Interest and dividends
Interest income and expenses are reported on an accrual basis
using the effective interest method. Dividends, other than those
from investments in associates and joint ventures, are recognised at
the time the right to receive payment is established.
Operating expenses
Operating expenses are recognised in consolidated statement
of profit or loss upon utilisation of the service or as incurred.
Expenditure for warranties is recognised when the Group incurs an
obligation, which is typically when the related goods are sold.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
profit or loss in the period in which they are incurred.
Goodwill
Goodwill represents the future economic benefits arising from
a business combination that are not individually identified and
separately recognised. Goodwill is carried at cost less accumulated
impairment losses. Goodwill is not amortised but is reviewed
for impairment at least annually. Refer below for a description of
impairment testing procedures.
Non-controlling interests
Non-controlling interests that are present ownership interest and
entitle their holders to a proportionate share of the entity’s net
assets in the event of a liquidation may be initially measured either
at fair value of at the non-controlling interests’ proportionate share
of the recognised amounts of the acquiree’s identifiable net assets.
Other types of non-controlling interests are measured at fair value,
or, when applicable, on the basis specified in another IFRS.
Property, plant and equipment
Property, plant and equipment are initially recognised at acquisition
cost or manufacturing cost, including any costs directly attributable
to bringing the assets to the location and condition necessary
for them to be capable of operating in the manner intended by
the Group’s management. Property, plant and equipment, are
subsequently measured at cost less accumulated depreciation
and impairment losses. Depreciation is recognised on a straight-
line basis to write down the cost less estimated residual value of
leasehold buildings. The following useful lives are applied:
Leasehold buildings: 5-50 years
Office equipment: 2-5 years
Material residual value estimates and estimates of useful life are
updated as required, but at least annually. Gains or losses arising on
the disposal of leasehold buildings are determined as the difference
between the disposal proceeds and the carrying amount of the
assets and are recognised in profit or loss within other income or
other expenses.
Construction in progress is stated at cost less any accumulated
impairment loss. Cost comprises direct costs of construction as well
as interest expense and exchange differences capitalised during the
year of construction and installation. Capitalisation of these costs
ceases and the asset in course of construction is transferred to fixed
assets when substantially all the activities necessary to prepare
the assets for their intended use are completed. No depreciation is
provided in respect of payments on account and asset in course of
construction until it is fully completed and ready for its intended
use.
Leased assets
The Group as a lessee
The Group makes the use of leasing arrangements principally for
the provision of the main office space. The rental contract for offices
are typically negotiated for terms of between 3 and 10 years and
some of these have extension terms. The Group does not enter into
sale and leaseback arrangements. All the leases are negotiated on
an individual basis and contain a wide variety of different terms and
conditions such as purchase options and escalation clauses.
The Group assesses whether a contract is or contains a lease at
inception of the contract. A lease conveys the right to direct the
use and obtain substantially all of the economic benefits of an
42
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
identified asset for a period of time in exchange for consideration.
Some lease contracts contain both lease and non-lease
components. The Group has elected to not separate its leases for
offices into lease and non-lease components and instead accounts
for these contracts as a single lease component.
Measurement and recognition of leases
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the consolidated statement of financial
position. The right-of-use asset is measured at cost, which is made
up of the initial measurement of the lease liability, any initial direct
costs incurred by the Group, an estimate of any costs to dismantle
and remove the asset at the end of the lease, and any lease
payments made in advance of the lease commencement date (net
of any incentives received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end
of the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the Group’s incremental borrowing rate because
as the lease contracts are negotiated with third parties it is not
possible to determine the interest rate that is implicit in the lease.
The incremental borrowing rate is the estimated rate that the Group
would have to pay to borrow the same amount over a similar term,
and with similar security to obtain an asset of equivalent value. This
rate is adjusted should the lessee entity have a different risk profile
to that of the Group.
Lease payments included in the measurement of the lease liability
are made up of fixed payments (including in substance fixed),
variable payments based on an index or rate, amounts expected to
be payable under a residual value guarantee and payments arising
from options reasonably certain to be exercised. Subsequent to
initial measurement, the liability will be reduced by lease payments
that are allocated between repayments of principal and finance
costs. The finance cost is the amount that produces a constant
periodic rate of interest on the remaining balance of the lease
liability.
The lease liability is reassessed when there is a change in the lease
payments. Changes in lease payments arising from a change in the
lease term or a change in the assessment of an option to purchase
a leased asset. The revised lease payments are discounted using
the Group’s incremental borrowing rate at the date of reassessment
when the rate implicit in the lease cannot be readily determined.
The amount of the remeasurement of the lease liability is reflected
as an adjustment to the carrying amount of the right-of-use asset.
The exception being when the carrying amount of the right-of-use
asset has been reduced to zero then any excess is recognised in
consolidated statement profit or loss.
Payments under leases can also change when there is either a
change in the amounts expected to be paid under residual value
guarantees or when future payments change through an index
or a rate used to determine those payments, including changes in
market rental rates following a market rent review. The lease liability
is remeasured only when the adjustment to lease payments takes
effect and the revised contractual payments for the remainder of
the lease term are discounted using an unchanged discount rate.
Except for where the change in lease payments results from a
change in floating interest rates, in which case the discount rate is
amended to reflect the change in interest rates.
The remeasurement of the lease liability is dealt with by a reduction
in the carrying amount of the right-of-use asset to reflect the full or
partial termination of the lease for lease modifications that reduce
the scope of the lease. Any gain or loss relating to the partial or full
termination of the lease is recognised in profit or loss. The right-of-
use asset is adjusted for all other lease modifications.
The Group has elected to account for short-term leases and leases
of low-value assets using the practical expedients. Instead of
recognising a right-of-use asset and lease liability, the payments
in relation to these are recognised as an expense in consolidated
statement of profit or loss on a straight-line basis over the lease
term.
On the consolidated statement of financial position, right-of-use
assets have been included in property, plant and equipment and
lease liabilities have been included in trade and other payables.
Impairment testing of goodwill and property, plant and
equipment
For impairment assessment purposes, assets are grouped at
the lowest levels for which there are largely independent cash
inflows (cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Goodwill is allocated to those cash-generating units
that are expected to benefit from synergies of a related business
combination and represent the lowest level within the Group at
which management monitors goodwill. Cash-generating units to
which goodwill has been allocated (determined by the Group’s
management as equivalent to its operating segments) are tested for
impairment at least annually. All other individual assets or cash-
generating units are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may
not be recoverable.
An impairment loss is recognised for the amount by which the
asset’s (or cash-generating unit’s) carrying amount exceeds its
recoverable amount, which is the higher of fair value less costs
of disposal and value-in-use. To determine the value-in-use,
management estimates expected future cash flows from each cash-
generating unit and determines a suitable discount rate in order to
calculate the present value of those cash flows. The data used for
impairment testing procedures are directly linked to the Group’s
latest approved budget, adjusted as necessary to exclude the
effects of future reorganisations and asset enhancements. Discount
factors are determined individually for each cash-generating unit
and reflect current market assessments of the time value of money
and asset-specific risk factors.
Impairment losses for cash-generating units reduce first the
43
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
carrying amount of any goodwill allocated to that cash-generating
unit. Any remaining impairment loss is charged pro rata to the
other assets in the cash-generating unit. With the exception of
goodwill, all assets are subsequently reassessed for indications that
an impairment loss previously recognised may no longer exist. An
impairment loss is reversed if the asset’s or cash-generating unit’s
recoverable amount exceeds its carrying amount.
Development assets
Development assets are composed of stated at the lower of cost
and net realisable value. Cost comprises direct materials and
overheads that have been incurred in furthering the development
of a project towards financial close, when project financing is in
place so that the project undertaking can commence construction.
Net realisable value represents the costs plus an estimated
development premium to be earned on the costs at financial close
of a project.
Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value adjusted
for transaction costs, except for those carried at fair value through
profit or loss which are measured initially at fair value, and trade
receivables that do not contain a significant financing component,
which are measured at the transaction price in accordance with
IFRS 15. Subsequent measurement of financial assets and financial
liabilities is described below.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the financial
asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement financial assets, other
than those designated and effective as hedging instruments, are
classified into the following categories upon initial recognition:
amortised cost
fair value through profit or loss (FVTPL)
fair value through other comprehensive income (FVOCI)
In the periods presented, the Group does not have any financial
assets categorised as FVTPL or FVOCI.
The classification is determined by both:
the Group’s business model for managing the financial asset;
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are
recognised in consolidated statement of profit or loss are
presented within finance costs or finance income, except for
impairment of trade receivables which is presented within
administrative expenses.
Financial assets at amortised cost and impairment
Financial assets are measured at amortised cost if the assets meet
the following conditions (and are not designated at FVTPL):
they are held within the business model whose objective is to
hold the financial asset and collect its contractual cash flows;
the contractual terms of the financial assets give rise to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, they are measured at amortised cost using
the effective interest method. Discounting is omitted where the
effect of discounting is immaterial. The Group and Company’s cash
and cash equivalents, trade and most other receivables fall into this
category of financial instruments.
The Group and Company makes use of a simplified approach in
accounting for trade and other receivables and records the loss
allowance as lifetime expected credit losses. These are the expected
shortfalls in contractual cash flows, considering the potential for
default at any point during the life of the financial instrument.
In calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the
expected credit losses.
Individually significant receivables are considered for impairment
when they are past due or when other objective evidence is
received that a specific counterparty will default. Receivables that
are not considered to be individually impaired are reviewed for
impairment in groups, which are determined by reference to the
industry and region of the counterparty and other shared credit
risk characteristics. The impairment loss estimate is then based
on recent historical counterparty default rates for each identified
group.
In measuring the expected credit losses, the trade receivables have
been assessed on a collective basis as they possess shared credit
risk characteristics. They have been grouped based on the days past
due and also according to the geographical location of customers.
The expected loss rates are based on the payment profile for sales
over the past 48 months before 31 December 2020 and 1 January
respectively as well as the corresponding historical credit losses
during that period. The historical rates are adjusted to reflect
current and forward-looking macroeconomic factors affecting the
customer’s ability to settle the amount outstanding. The Group has
identified gross domestic product (GDP) and unemployment rates
in the countries in which the customers are domiciled to be the
most relevant factors and accordingly adjusts historical loss rates for
expected changes in these factors. However, given the short period
exposed to credit risk, the impact of these macroeconomic factors
has not been considered significant within the reporting period.
Classification and subsequent measurement of financial liabilities
The Group and Company’s financial liabilities include borrowings,
44
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FINANCIAL STATEMENTS
Notes to the Financial Statements
trade and other payables and derivative financial instruments.
Financial liabilities are measured subsequently at amortised
cost using the effective interest method except for derivatives
and financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in
profit or loss (other than derivative financial instruments that are
designated and effective as hedging instruments). All interest-
related charges and, if applicable, changes in an instrument’s fair
value that are reported in profit or loss are included within finance
costs or finance income.
Derivative financial instruments and hedge accounting
Derivative financial instruments are accounted for at FVTPL except
for derivatives designated as hedging instruments in cash flow
hedge relationships, which require a specific accounting treatment.
To qualify for hedge accounting, the hedging relationship must
meet several strict conditions with respect to documentation,
probability of occurrence of the hedged transaction and hedge
effectiveness.
All derivative financial instruments used for hedge accounting are
recognised initially at fair value and reported subsequently at fair
value in the statement of financial position.
To the extent that the hedge is effective, changes in the fair
value of derivatives designated as hedging instruments in cash
flow hedges are recognised in other comprehensive income
and included within the cash flow hedge reserve in equity. Any
ineffectiveness in the hedge relationship is recognised immediately
in profit or loss.
At the time the hedged item affects profit or loss, any gain or
loss previously recognised in other comprehensive income
is reclassified from equity to profit or loss and presented as a
reclassification adjustment within other comprehensive income.
However, if a non-financial asset or liability is recognised as a
result of the hedged transaction, the gains and losses previously
recognised in other comprehensive income are included in the
initial measurement of the hedged item.
If a forecast transaction is no longer expected to occur, any
related gain or loss recognised in other comprehensive income is
transferred immediately to profit or loss. If the hedging relationship
ceases to meet the effectiveness conditions, hedge accounting
is discontinued, and the related gain or loss is held in the equity
reserve until the forecast transaction occurs.
Fair values
For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which inputs
to the fair value measurements are observable and the significance
of the inputs to the fair value measurement in its entirety, which are
described as follows:
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities
Level 2: valuation techniques for which the lowest level of inputs
which have a significant effect on the recorded fair value are
observable, either directly or indirectly
Level 3: valuation techniques for which the lowest level of inputs
that have a significant effect on the recorded fair value are not
based on observable market data
Income taxes
Tax expense recognised in consolidated statement of profit or loss
comprises the sum of deferred tax and current tax not recognised
in consolidated statement of other comprehensive income or
directly in equity.
Calculation of current tax is based on tax rates and tax laws that
have been enacted or substantively enacted by the end of the
reporting financial year. Deferred income taxes are calculated using
the liability method.
Deferred tax assets are recognised to the extent that it is probable
that the underlying tax loss or deductible temporary difference will
be utilised against future taxable income. This is assessed based
on the Group’s forecast of future operating results, adjusted for
significant non-taxable income and expenses and specific limits on
the use of any unused tax loss or credit.
Deferred tax liabilities are generally recognised in full, although
IAS 12 ‘Income Taxes’ specifies limited exemptions. As a result of
these exemptions the Group does not recognise deferred tax on
temporary differences relating to goodwill, or to its investments in
subsidiaries.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
maturing within 90 days from the date of acquisition that are
readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Non-current assets and liabilities classified as held for
sale and discontinued operations
Non-current assets classified as held for sale are presented
separately and measured at the lower of their carrying amounts
immediately prior to their classification as held for sale and their fair
value less costs to sell. However, some held for sale assets such as
financial assets or deferred tax assets, continue to be measured in
accordance with the Group’s relevant accounting policy for those
assets. Once classified as held for sale, the assets are not subject to
depreciation or amortisation.
Any profit or loss arising from the sale or remeasurement of
discontinued operations is presented as part of a single line item,
profit or loss from discontinued operations (see also policy on profit
or loss from discontinued operations above).
Equity, reserves and dividend payments
Share capital represents the nominal (par) value of shares that have
been issued. Share premium includes any premiums received on
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EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
issue of share capital. Any transaction costs associated with the
issuing of shares are deducted from share premium, net of any
related income tax benefits.
Accumulated deficit include all current and prior financial year
retained losses. All transactions with owners of the parent are
recorded separately within equity. Dividend distributions payable
to equity shareholders are included in other liabilities when the
dividends have been approved in a general meeting prior to the
reporting date.
Share-based payments
All goods and services received in exchange for the grant of
any share-based payment are measured at their fair values. The
Company issues equity- settled share-based payments in the form
of share options and warrants to certain Directors, employees and
advisers.
capital issues are measured at fair value at the date of issue and
treated as a separate component of equity, in Other Reserves. Fair
value is determined at the grant date and is estimated using the
Black-Scholes valuation model. Share warrants issued separately to
Directors, employees and advisers are accounted for in accordance
with the policy on share-based payments.
Short-term employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and sick leave in
the period the related service is rendered at the undiscounted
amount of the benefits expected to be paid in exchange for that
service. Liabilities recognised in respect of short-term employee
benefits are measured at the undiscounted amount of the benefits
expected to be paid in exchange for the related service.
Provisions, contingent assets and contingent liabilities
Equity-settled share-based payments are made in settlement of
professional and other costs. These payments are measured at the
fair value of the services provided which will normally equate to the
invoiced fees and charged to the consolidated statement of profit
or loss, share premium account or are capitalised according to the
nature of the fees incurred.
Provisions for legal disputes, onerous contracts or other claims are
recognised when the Group has a present legal or constructive
obligation as a result of a past event, it is probable that an
outflow of economic resources will be required from the Group
and amounts can be estimated reliably. Timing or amount of the
outflow may still be uncertain.
Where employees are rewarded using share-based payments,
the fair value of employees’ services is determined indirectly by
reference to the fair value of the equity instruments granted. This
fair value is appraised at the grant date and excludes the impact of
non-market vesting conditions (for example profitability and sales
growth targets and performance conditions). Fair value is estimated
using the Black-Scholes valuation model. The expected life used in
the model has been adjusted on the basis of management’s best
estimate for the effects of non- transferability, exercise restrictions
and behavioural considerations. All share-based remuneration
is ultimately recognised as an expense in profit or loss with a
corresponding credit to retained earnings. If vesting years or other
vesting conditions apply, the expense is allocated over the vesting
year, based on the best available estimate of the number of share
options expected to vest.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication
that the number of share options expected to vest differs from
previous estimates. Any adjustment to cumulative share-based
compensation resulting from a revision is recognised in the current
financial year. The number of vested options ultimately exercised by
holders does not impact the expense recorded in any financial year.
Upon exercise of share options, the proceeds received, net of any
directly attributable transaction costs, are allocated to share capital
up to the nominal (or par) value of the shares issued with any excess
being recorded as share premium.
Warrants
Share warrants issued to shareholders in connection with share
Restructuring provisions are recognised only if a detailed formal
plan for the restructuring exists and management has either
communicated the plan’s main features to those affected or started
implementation. Provisions are not recognised for future operating
losses.
Any reimbursement that the Group is virtually certain to collect
from a third party with respect to the obligation is recognised as a
separate asset. However, this asset may not exceed the amount of
the related provision.
No liability is recognised if an outflow of economic resources as a
result of present obligations is not probable. Such situations are
disclosed as contingent liabilities unless the outflow of resources is
remote.
4. SIGNIFICANT MANAGEMENT JUDGEMENT IN
APPLYING ACCOUNTING POLICIES AND ESTIMATION
UNCERTAINTY
When preparing the financial statements, management makes
a number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and
expenses.
Significant management judgements
The following are significant management judgements in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
46
EQTEC PLC
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FINANCIAL STATEMENTS
Notes to the Financial Statements
Going concern
Impairment of goodwill and non-financial assets
As described in the basis of preparation and going concern in
Note 3 above, the validity of the going concern basis is dependent
upon the achievement of management forecasts taking account
of reasonably plausible changes in trading performance and
market conditions, which include the continued impact of the
Covid-19 pandemic and any related operational and execution
delays caused by it. After undertaking the assessments and
considering the uncertainties set out above, the Directors have
a reasonable expectation that the Group and the Company has
adequate resources to continue to operate for the foreseeable
future. Furthermore, the Directors are not aware of any material
uncertainties that may cast significant doubt upon the Group and
Company’s ability to continue as a going concern.
Control assessment in a business combination.
As disclosed in Note 21, the Group owns 50.02% of the voting rights
in Newry Biomass Limited. One other company owns the remaining
voting rights. Management has reassessed its involvement in
Newry Biomass Limited in accordance with IFRS 10’s revised control
definition and guidance and has concluded that it has control of
Newry Biomass Limited.
Financial Instruments
The Group classifies a financial instrument, or its component
parts, on initial recognition as a financial asset, a financial liability
or an equity instrument in accordance with the substance of
the contractual agreement and the definitions of a financial
asset, a financial liability or an equity instrument. The substance
of a financial instrument, rather than its legal form, governs its
classification in the financial statements.
Revenue
As revenue from construction contracts is recognised over time,
the amount of revenue recognised in a reporting period depends
on the extent to which the performance obligation has been
satisfied. It also requires significant judgment in determining the
estimated costs required to complete the promised work when
applying the cost-to-cost method.
Deferred tax assets
Deferred tax is recognised based on differences between the
carrying value of assets and liabilities and the tax value of assets
and liabilities. Deferred tax assets are only recognised to the extent
that the Group estimates that future taxable profits will be available
to offset them. The Group and Company has not recognised any
deferred tax assets in the current or prior financial years.
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.
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 as included in Note 19 amounted to €Nil (2019: Reversal of
Impairment cost of €94,985), while the impairment for goodwill
during the financial year as included in Note 20 amounted to €Nil
(2019: €Nil).
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 €Nil (2019: €Nil) be recognised in the Group accounts and
€Nil (2019: €1,427,038) be recognised in the Company accounts of
EQTEC plc. Details of this impairment are set out in Note 21.
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 €475,687 which
represents 74% of trade receivables at that date (31 December
2019: €456,671– 57%) (see Note 25).
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
47
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
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 (see Notes 13, 14 and 27).
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 (see Note 24).
Loans receivable from
project development
undertakings
2020 €
2019 €
482,537
-
Trade and other receivables
894,531
639,028
Cash and cash equivalents
6,394,791
482,392
The Company’s maximum exposure to credit risk is represented by
the balance sheet amount of each financial asset:
2020 €
2019 €
Loans receivable from
project development
undertakings
243,598
-
Trade and other receivables
2,703,491
1,334,004
5. FINANCIAL RISK MANAGEMENT
Cash and cash equivalents
6,111,864
448,619
Financial risk management objectives and policies
The Group and Company’s activities expose it to a variety of
financial risks: credit risk, liquidity risk, interest rate risk and foreign
currency exchange risk.
The Group and Company’s financial risk management programme
aims to manage the Group’s exposure to the aforementioned risks
in order to minimise the potential adverse effects on the financial
performance of the Group and Company. The Group and Company
seeks to minimise the effects of these risks by monitoring the
working capital position, cash flows and interest rate exposure of
the Group and Company. There is close involvement by members
of the Board of Directors in the day-to-day running of the business.
Many of the Group and Company’s transactions are carried out in
Pounds Sterling. The Group and Company’s exposure to price risk
is not a significant risk as the Company does not currently hold
a portfolio of securities which may be materially impacted by a
decline in market values.
Credit risk
Credit risk is the risk that a counterparty fails to discharge an
obligation to the Group and Company. The Group and Company is
exposed to credit risk from financial assets including cash and cash
equivalents held at banks, trade and other receivables and loans
receivable from project development undertakings.
The Group’s maximum exposure to credit risk is represented by the
balance sheet amount of each financial asset:
The Group and Company’s credit risk is primarily attributable to its
loans receivable from project development undertakings and trade
and other receivables.
The Group has adopted procedures in extending credit terms to
customers and in monitoring its credit risk. The Group’s exposure
to credit risk arises from defaulting customers, with a maximum
exposure equal to the carrying amount of the related receivables.
Provisions are made for impairment of trade receivables when
there is default of payment terms and significant financial
difficulty. On-going credit evaluation is performed on the financial
condition of accounts receivable at operating unit level at least on
a monthly basis. Refer to Note 2 for a detailed analysis of how the
impairments requirements of IFRS 9 are applied.
The Group does not have significant risk exposure to any
single counterparty. Concentration of credit risk to any other
counterparty did not exceed 5% of gross monetary assets at any
time during the financial year. The Group defines counterparties as
having similar characteristics if they are related parties.
Exposure to credit risk on cash deposits and liquid funds is
monitored by directors. Cash held on deposit is with financial
institutions in the Ba rating category of Moody’s (2019: Ba). The
directors are of the opinion that the likelihood of default by a
counter party leading to material loss is minimal. The reconciliation
of loss allowance is included in Note 25.
48
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Liquidity risk
The Group and Company’s liquidity is managed by ensuring that
sufficient facilities are available for the Group and Company’s
operations from diverse funding sources. The Group uses cash flow
forecasts to regularly monitor the funding requirements of the
Group. The Group’s operations are funded by cash generated
from financing activities, borrowings from banks and investors and
proceeds from the issuance of ordinary share capital.
The table below details the maturity of the Group’s liabilities as at
31 December 2020:
NOTES
UP TO 1 YEAR €
1-5 YEARS €
AFTER 5 YEARS €
TOTAL €
Trade and other payables
Lease liabilities
Investor loans
Bank overdraft
31
30
29
29
3,183,980
-
85,242
`106,465
896,641
124,210
-
-
4,290,073
106,465
-
-
-
-
-
3,183,980
191,707
896,641
124,210
4,396,538
The table below details the maturity of the Group’s liabilities as at 31 December 2019:
NOTES
UP TO 1 YEAR €
1-5 YEARS €
AFTER 5 YEARS €
TOTAL €
Trade and other payables
Lease liabilities
Investor loans
Bank borrowings
31
30
29
29
876,071
82,726
2,431,736
-
191,708
-
125,224
188,729
3,515,757
380,437
-
-
-
-
-
876,071
274,434
2,431,736
313,953
3,896,194
Maturity of all Company’s liabilities as at 31 December 2020 and
31 December 2019 are up to 1 year. Refer to Note 29 and 31 for the
outstanding balance.
Interest rate risk
The primary source of the Group’s interest rate risk relates to bank
loans and other debt instruments while the Company’s interest
rate risk relates to debt instruments. The interest rates on these
liabilities are disclosed in Note 29.
The Group’s bank borrowings and other debt instruments
(excluding amounts in the disposal group) amounted to €1,020,851
and €2,745,689 in 31 December 2020 and 31 December 2019,
respectively. The Company’s debt instruments amounted to
€896,641 and €2,426,045 in 31 December 2020 and 31 December
2019, respectively.
The interest rate risk is managed by the Group and Company
by maintaining an appropriate mix of fixed and floating rate
borrowings. The Group and Company does not engage in hedging
activities. Bank borrowings and certain debt instruments are
arranged at floating rates which are mainly based upon EURIBOR
and the prime lending rate of financial institutions thus exposing
the Group and Company to cash flow interest rate risk. The other
remaining debt instruments were arranged at fixed interest rates
and expose the Group and Company to a fixed cash outflow.
These bank borrowings and debt instruments are mostly medium-
term to long-term in nature. Interest rates on loans received from
investors and shareholders are fixed in some cases while others
are a fixed percentage greater than current prime lending rates.
‘Medium-term’ refers to bank borrowings and debt instruments
repayable between 2 and 5 years and ‘long-term’ to bank
borrowings repayable after more than 5 years.
The sensitivity analysis below has been determined based on the
exposure to interest rates for non-derivative instruments at the end
of the reporting financial year which are applicable to the Group.
For floating rate liabilities, the analysis is prepared assuming that
49
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
the amount of the liability outstanding at the end of the financial
year was outstanding for the whole year. A 50-basis point increase
or decrease is used when reporting interest rate risk internally
to key management personnel and represents management’s
assessment of the reasonably possible changes in interest rates.
If interest rates have been 50 basis points higher/lower and
all other variables were held constant, the Group’s loss for the
financial year ended 31 December 2020 would increase/decrease
by €621 (2019: increase/decrease by €5,646) with a corresponding
decrease/increase in equity. This is mainly attributable to the
Group’s exposure to interest rates on its variable rate borrowings,
which are primarily included in Eqtec Iberia SLU and in the disposal
group.
The Group’s sensitivity to interest rates has decreased during
the current financial year mainly due to the repayment of bank
borrowings in Eqtec Iberia SLU and the disposal of the disposal
group in the financial year.
The Company’s exposure to interest rates for non-derivative
instruments is not significant.
Foreign exchange risk
The Group and Company is mainly exposed to future changes
in the Sterling and the US Dollar relative to the Euro. These
risks are managed by monthly review of Sterling and US Dollar
denominated monetary assets and monetary liabilities and
assessment of the potential exchange rate fluctuation exposure.
The Group and Company’s exposure to foreign exchange risk is
not actively managed. Management will reassess their strategy to
foreign exchange risk in the future.
The carrying amount of the Group’s foreign currency denominated
monetary assets and monetary liabilities at the end of the
reporting financial year are as follows:
LIABILITIES
ASSETS
2020 €
2019 €
2020 €
2019 €
Sterling
US Dollar
2,722,298
984,906
1,345,407
1,418,028
6,441,771
38,354
720,511
-
The carrying amount of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting
financial year are as follows:
LIABILITIES
ASSETS
2020 €
2019 €
2020 €
2019 €
Sterling
US Dollar
461,909
984,906
1,220,494
1,418,028
7,221,106
54,661
718,773
-
The following table details the Group and Company’s sensitivity
to a 10% increase and decrease in the Euro against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting
foreign currency risk internally to key management personnel and
represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items
and adjusts their translation at the year-end for a 10% change in
foreign currency rates. The sensitivity analysis includes external
loans as well as loans to foreign operations within the Group where
the denomination of the loan is in the currency other than the
currency of the lender or the borrower. A positive number below
indicates an increase in profit where the Euro strengthens 10%
against the relevant currency. For a 10% weakening of the Euro
against the relative currency, there would be a comparable impact
on the loss, and the balances below will be negative.
STERLING IMPACT
US DOLLAR IMPACT
2020 €
2019 €
2020 €
2019 €
Group: Profit and loss/equity
Company: Profit and loss/equity
375,704
682,747
63,121
50,679
95,611
93,964
143,235
143,235
The Group and Company’s sensitivity to foreign currency has increased during the current financial year mainly due to the placing of equity
for sterling in the financial year.
50
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
6. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
Market risk
The Group’s activities expose it primarily to the financial risks of
changes in foreign currency exchange rates and interest rates,
which are detailed above. There has been no change to the Group’s
exposure to market risks or the manner in which it manages and
measures the risk.
The Group manages its capital to ensure that the Group is able
to continue as a going concern while maximising the return to
shareholders through the optimisation of the debt and equity
balance.
The capital structure of the company consists of financial liabilities,
cash and cash equivalents and equity attributable to the equity
holders of the parent company.
The Group’s management reviews the capital structure on a yearly
basis. As part of the review, management considers the cost of
capital and risks associated with it. The Group’s overall strategy on
capital risk management is to continue to improve the ratio of debt
to equity.
The Group manages the capital structure and makes adjustments
to it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or
adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
No changes were made in the objectives, policies or processes for
managing capital during the years ended 31 December 2020 and
2019.
The gearing ratio of the Group for the financial year presented is as
follows:
Borrowings
Lease liabilities
Cash and bank balances
Net debt
Equity
Net debt to equity ratio
31 DEC 2020 €
31 DEC 2019 €
1,020,851
191,707
(6,394,791)
(5,182,233)
27,524,725
(19%)
2,745,689
274,434
(482,392)
2,537,731
17,793,222
14%
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EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
7. SEGMENT INFORMATION
Information reported to the chief operating decision maker
for the purposes of resource allocation and assessment of
segment performance focuses on the products and services sold
to customers. The Group’s reportable segments under IFRS 8
Operating Segments are as follows:
Technology Sales: Being the sale of Gasification Technology and
associated Engineering and Design Services;
Power Generation: Being the development and operation of
renewable energy electricity and heat generating plants.
The chief operating decision maker is the Chief Executive Officer.
Information regarding the Group’s current reportable segment is
presented below. The following is an analysis of the Group’s revenue
and results from continuing operations by reportable segment:
Technology Sales
Power Generation
SEGMENT REVENUE
SEGMENT PROFIT/(LOSS)
2020 €
2019 €
2020 €
2019 €
2,234,727
1,664,874
(878,877)
(1,206,736)
-
21,438
(11,094)
235,305
Total from continuing operations
2,234,727
1,686,312
(889,971)
(971,431)
Central administration costs and
directors’ salaries
Reversal of Impairment of property,
plant and equipment and intangible assets
Impairment of inventories
Impairment of investments
Other income
Other gains and losses
Foreign currency gains /(losses)
Employee share-based compensation
Finance income
Finance costs
Loss before taxation (continuing operations)
(2,548,506)
(1,618,502)
-
-
(17,250)
61,922
(170,059)
94,985
(98,851)
-
195,152
128,235
211,337
(187,249)
(1,297,309)
17,329
-
-
(1,206,392)
(1,125,312)
(5,838,899)
(3,582,973)
Revenue reported above represents revenue generated from
jointly controlled entities and external customers. Inter-segment
sales for the financial year amounted to €Nil (2019: €Nil). Included
in revenues in the Technology Sales Segment are revenues of
€1,980,000 (2019: €Nil) which arose from sales to North Fork
Community Power LLC, an associate undertaking of EQTEC plc.
This represents 89% (2019: 0%) of total revenues in the financial
year. Included in revenues in the Power Generation Segment are
revenues of €Nil (2019: €21,438) which arose from sales to GG
Eco Energy Limited, an associate undertaking of EQTEC plc. This
represents 0% (2019: 1%) of total revenues in the financial year.
The accounting policies of the reportable segments are the same
as the Group’s accounting policies described in Note 3. Segment
profit or loss represents the profit or loss earned by each segment
without allocation of central administration costs and directors’
salaries, other operating income, share of profit or loss of jointly
controlled entities, profit on disposal of jointly controlled entities,
interest costs, interest income and income tax expense. This is
the measure reported to the chief operating decision maker for
the purpose of resource allocation and assessment of segment
performance.
52
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Other segment information:
Technology Sales
Power Generation
Head Office
DEPRECIATION AND AMORTISATION
ADDITIONS TO NON-CURRENT ASSETS
2020 €
2019 €
2020 €
2019 €
83,463
-
-
99,644
-
617
83,463
100,261
-
-
-
-
10,272
-
-
10,272
In addition to the depreciation and amortisation reported above,
reversal of impairment losses of €Nil (2019: reversal of impairment
losses of €94,985) were recognised in respect of property, plant,
equipment and intangible assets and goodwill respectively.
These reversal of impairment losses and impairment losses were
attributable as follows: Power Generation Segment, Reversal of
impairment losses €Nil (2019: reversal of impairment losses of
€173,516); Technology Sales Impairment losses €Nil (2019: loss of
€78,326); Head Office Impairment losses €Nil (2019: €206).
The Group operates in four principal geographical areas: Republic
of Ireland (country of domicile), Spain, the United States of America
and the United Kingdom. The Group’s revenue from continuing
operations from external customers and information about its non-
current assets by geographical location are detailed below:
Republic of Ireland
Spain
United States of America
United Kingdom
REVENUE FROM ASSOCIATES AND
EXTERNAL CUSTOMERS
NON-CURRENT ASSETS*
2020 €
2019 €
2020 €
2019 €
-
-
-
254,727
1,664,874
187,792
1,980,000
-
-
21,438
-
-
-
271,255
-
-
2,234,727
1,686,312
187,792
271,255
*Non-current assets excluding goodwill, financial instruments,
deferred tax and investment in jointly controlled entities and
associates.
The management information provided to the chief operating
decision maker does not include an analysis by reportable segment
of assets and liabilities and accordingly no analysis by reportable
segment of total assets or total liabilities is disclosed.
53
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
8. REVENUE
An analysis of the Group’s revenue for the financial year (excluding
interest revenue), from continuing and discontinued operations, is
as follows:
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
Revenue from technology sales
2,234,727
1,664,874
-
-
Revenue from the generation of
energy from wind
Revenue from consultancy fees
associated with the generation of heat
-
-
-
135,644
193,614
21,438
-
-
2,234,727
1,686,312
135,644
193,614
9. COST OF SALES
Materials purchased
ISEM trading fees
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
1,978,987
1,598,250
-
-
1,978,987
1,598,250
-
663
663
-
955
955
54
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
10. ADMINISTRATIVE EXPENSES
Employee expenses
Office and operating expenses
Marketing expenses
Professional fees
Depreciation of property, plant & equipment (Note 19)
Loss on disposal of investments
Reversal of impairment of investments (Note 21)
Impairment of trade and other receivables (Note 25)
Bad debts
Travel and subsistence
Other miscellaneous expenses
Regulatory expenses
11. OTHER INCOME
Income from lease arrangements
Income from other services
Operating grants
Reimbursement of wind development costs
Other income
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
1,694,651
1,591,198
-
-
129,918
78,644
848,651
83,463
1,275
-
19,016
-
158,013
24,923
655,663
(65,634)
37,548
54,579
1,962
424,292
100,261
-
(3,078)
210,379
3,255
104,414
13,979
296,967
-
4,995
48,578
-
-
-
-
-
112
-
-
11,908
73,245
-
-
-
-
-
104
-
3,694,217
2,677,995
91,233
139,836
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
-
-
39,782
16,449
5,691
24,157
13,144
157,851
-
-
61,922
195,152
-
-
-
-
-
-
-
-
-
-
-
-
55
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
12. OTHER GAINS AND LOSSES
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
(Loss)/Gain on debt for equity swap
(170,059)
128,235
-
-
During the financial year the Group extinguished some of its
borrowings by issuing equity instruments. In accordance with IFRIC
19 Extinguishing Financial Liabilities with Equity Instruments, the
loss recognised on these transactions was €170,059 (2019: gain of
€128,235).
13. EMPLOYEE SHARE-BASED PAYMENTS
Expensed in the year
1,297,309
-
-
-
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
The share-based payment expense includes the cost of employee
warrants and options granted and vested in the year (Note 27).
14. FINANCE COSTS AND INCOME
FINANCE COSTS
CONTINUING
DISCONTINUED
2020 €
2019 €
2020 €
2019 €
Interest on loans, bank facilities and overdrafts
1,199,290
1,105,768
18,382
31,145
Interest expense for leasing arrangements
Other interest
Finance Income
Interest receivable on loans advanced
Interest receivable on deferred consideration
Interest receivable on bank deposits
7,102
-
9,544
10,000
-
-
-
-
1,206,392
1,125,312
18,382
31,145
13,397
3,932
-
17,329
-
-
-
-
-
-
3
3
-
-
6
6
Included in finance costs under continuing activities is an amount
of €522,349 (2019: €Nil) with respect to lender warrants granted
during the year (see Note 27).
56
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
15. EMPLOYEE DATA
EMPLOYEE COSTS (INCLUDING EXECUTIVE DIRECTORS)
2020 €
2019 €
Salaries
Social insurance costs
Equity settled share-based payments (see Note 13)
Pension costs
Average number of employees (including executive directors)
Company
Average number of employees (including executive directors)
Capitalised employee costs in the financial year amounted to €Nil (2019 €Nil).
16. LOSS BEFORE TAXATION
858,915
163,423
1,297,309
(16,932)
2,302,715
No.
13
2
LOSS BEFORE TAXATION ON CONTINUING OPERATIONS IS
STATED AFTER CHARGING/(CREDITING)
2020 €
2019 €
Depreciation of property, plant and equipment (Note 19)
Impairment of investments
(Gain)/Loss on foreign exchange
Directors’ remuneration: for services as directors (Note 34)
Directors’ remuneration: for other services (Note 34)
Directors’ remuneration: share-based payments (Note 34)
Impairment of inventories (Note 24)
Reversal of impairment losses of property, plant and equipment
charged to profit and loss (Note 19)
83,463
17,250
(211,337)
486,122
408,948
1,127,141
-
-
AUDITOR’S REMUNERATION
2020 €
2019 €
Audit of Group accounts
Tax advisory services
60,000
11,000
71,000
1,017,471
196,616
-
17,635
1,231,722
No.
12
3
100,261
-
187,249
227,025
462,515
-
98,851
(94,985)
50,000
10,700
60,700
57
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
17. INCOME TAX
Income tax expense comprises:
Current tax expense
Deferred tax credit
Adjustment for prior financial years
Tax expense
2020 €
2019 €
-
-
-
-
2020 €
2019 €
Loss before taxation
Applicable tax 12.50% (2019: 12.50%)
Effects of:
Amortisation & depreciation in excess of capital allowances
Expenses not deductible for tax purposes
Losses carried forward
Movement in deferred tax
Actual tax expense
(5,767,815)
(720,977)
17,130
248,715
455,132
-
-
-
-
-
-
(3,561,289)
(445,161)
21,688
(27,902)
451,375
-
-
The tax rate used for the reconciliation above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under
tax law in that jurisdiction.
58
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
18. LOSS PER SHARE
Basic loss per share
From continuing operations
From discontinued operations
Total basic loss per share
Diluted loss per share
From continuing operations
From discontinued operations
Total diluted loss per share
2020 PER SHARE €
2019 PER SHARE €
(0.001)
-
(0.001)
(0.001)
-
(0.001)
(0.001)
-
(0.001)
(0.001)
-
(0.001)
The loss and weighted average number of ordinary shares used in
the calculation of the basic and diluted loss per share are as follows:
Loss for period attributable to equity holders of the parent
(5,762,733)
(3,764,519)
Profit for the period from discontinued operations used in the calculation
of basic earnings per share from discontinued operations
71,084
21,684
Losses used in the calculation of basic loss per share from continuing operations
(5,833,817)
(3,786,203)
2020 €
2019 €
Weighted average number of ordinary shares for the purposes of
basic loss per share
Weighted average number of ordinary shares for the
purposes of diluted loss per share
Dilutive and anti-dilutive potential ordinary shares
The following potential ordinary shares were excluded in the
diluted earnings per share calculation as they were anti-dilutive.
Share warrants in issue
Convertible loans in issue
Total anti-dilutive shares
Details of share warrants in issue outstanding at year-end are set
out in Note 27.
No.
No.
5,435,107,932
2,576,585,384
5,435,107,932
2,576,585,384
2020 PER SHARE €
2019 PER SHARE €
651,936,876
-
297,800,062
331,566,767
651,936,876
629,366,829
59
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Events after the year-end
As disclosed in Note 35, 42,773,543 were issued on 5 January
2021 as part of an exercise of warrants held. If these shares were
in issue prior to 31 December 2020, they would have affected the
calculation of the weighted average number of shares in issue for
the purposes of calculating both the basic and diluted loss per
share by 3,564,462 (assuming the shares were issued in December
2020).
As disclosed in Note 35, 114,000,000 were issued on 1 March
2021 as part of an exercise of warrants held. If these shares were
in issue prior to 31 December 2020, they would have affected the
calculation of the weighted average number of shares in issue for
the purposes of calculating both the basic and diluted loss per
share by 9,500,000 (assuming the shares were issued in December
2020).
As disclosed in Note 35, 66,426,341 were issued on 1 February 2021
pursuant to existing Director remuneration arrangements and
in satisfaction of fees owed to certain strategic suppliers. If these
shares were in issue prior to 31 December 2020, they would have
affected the calculation of the weighted average number of shares
in issue for the purposes of calculating both the basic and diluted
loss per share by 5,535,528 (assuming the shares were issued in
December 2020).
60
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
19. PROPERTY, PLANT & EQUIPMENT
GROUP
LEASEHOLD
BUILDINGS €
OFFICE
EQUIPMENT €
CONSTRUCTION
IN PROGRESS €
TOTAL €
Cost
At 1 January 2019
Adjustment on transition to IFRS 16
Additions
Disposals
Consideration for acquisition of associate
(Note 21)
Foreign currency adjustment
At 31 December 2019
Disposals
Derecognition of assets
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Charge for the financial year
Charge on disposal
Consideration for acquisition of associate
(Note 21)
Impairment/Reversal of impairment
Foreign currency adjustment
At 31 December 2019
Charge for the financial year
Charge on disposal
Derecognition of assets
At 31 December 2020
Carrying amount
At 31 December 2019
At 31 December 2020
-
354,718
-
354,718
-
-
171,829
-
10,272
(840)
-
3
181,264
(117,922)
11,806,557
11,978,386
-
-
354,718
10,272
(294,960)
(295,800)
(9,745,158)
(9,745,158)
698,664
698,667
2,465,103
3,001,085
-
(117,922)
-
(2,465,103)
(2,465,103)
354,718
63,342
-
418,060
-
83,463
-
-
-
-
83,463
83,463
-
-
86,773
16,798
(840)
9,578,182
9,664,955
-
-
100,261
(840)
-
(7,516,152)
(7,516,152)
78,531
2
(173,516)
576,589
(94,985)
576,591
181,264
2,465,103
2,729,830
-
(117,922)
-
-
83,463
(117,922)
-
(2,465,103)
(2,465,103)
166,926
63,342
271,255
187,792
-
-
-
-
-
230,268
271,255
187,792
61
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
On 4 June 2019, the Group announced that it had entered into a
legally binding agreement to acquire a 19.99% interest in NFCP
on financial close of the proposed construction and operation of
a 2MW biomass plant (the “Project”) by North Fork Community
Power LLC and this acquisition was completed on 31 December
2019. The consideration for the Company’s investment is being
solely satisfied by the supply of construction in progress currently
held at EQTEC’s Newry site, valued at US$2.5 million (€2,229,006)
(see Note 21). The Group carried out a review of the recoverable
amount of property held by the Power Generation and Technology
Sales operating segments and by Head Office in 2019. The review
led to recognition of a reversal of an impairment loss in 2019
of €94,985, which has been recognised in profit or loss. The
net reversal of the impairment charge represents €300,000 of
impairment charges reversed arising from the sale of equipment
that had been previously impaired in full, less additional
impairment charges of €205,015 recorded in 2019.
Included in the net carrying amount of property, plant and
equipment are right-of-use assets as follows:
Leasehold buildings
187,792
271,255
2020 €
2019 €
The impairment losses have been shown separately in the consolidated statement of profit or loss.
COMPANY
OFFICE EQUIPMENT €
TOTAL €
Cost
At 1 January 2019, at 31 December 2019 and at 31 December 2020
1,233
1,233
Accumulated depreciation
At 1 January 2019
Charge for the financial year
Impairment
At 31 December 2019 and at 31 December 2020
Carrying amount
At 1 January 2020
At 31 December 2020
411
616
206
1,233
-
-
411
616
206
1,233
-
-
62
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
20. INTANGIBLE ASSETS
Cost
GOODWILL €
As at 1 January 2019, 31 December 2019 and 31 December 2020
16,710,497
Impairment
As at 1 January 2019
Impairment losses
As at 31 December 2019
Impairment losses
As at 31 December 2020
Carrying value
As at 31 December 2019
As at 31 December 2020
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
1,427,038
-
1,427,038
-
1,427,038
15,283,459
15,283,459
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 €15,283,459
(2019: €15,283,459).
In accordance with IAS 36 Impairment of Assets, the CGUs to which
significant amounts of goodwill have been allocated are as follows:
2020 €
2019 €
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.
63
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
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:
All of these sensitivity analysis resulted to no impairment. An
impairment loss of €Nil (2019: €Nil) has been calculated for the
financial year ended 31 December 2020.
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
21. FINANCIAL ASSETS
GROUP
2020 €
2019 €
Investment in associate undertakings
At beginning of financial year
Reversal of impairment of investment in GG Eco Energy Limited
Disposal of investment in GG Eco Energy Limited
Investment in shares in North Fork Community Power LLC
Additional investment in North Fork Community Power LLC
At end of financial year
Investment in related undertaking
At beginning of financial year
Investment in shares in Logik WTE Limited
At end of financial year
Total financial assets
Investment in associate
Details of the Group’s interests in associated undertakings at 31
December 2020 is as follows:
2,229,006
-
-
-
1,150,619
3,379,625
-
2,570,888
2,570,888
5,950,513
-
3,078
(3,078)
2,229,006
-
2,229,006
-
-
-
2,229,006
NAME OF ASSOCIATED UNDERTAKING
COUNTRY OF INCORPORATION
SHAREHOLDING
PRINCIPAL ACTIVITY
North Fork Community Power LLC
United States of America
19.99%
Operator of biomass
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 €1,150,609
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.
64
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Summarised financial information in respect of the Group’s
interests in associated undertakings is as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets/(liabilities)
Group’s share of net assets of associated entities
Total revenues
Total expenses
Total profit/(loss) for the financial year
Group’s share of profits of associated entities
Investment in related undertaking
2020 €
2019 €
44,552
17,686,647
(16,213,836)
(263,150)
1,254,213
250,717
1,339,413
17,993,577
(18,721,867)
(34,885)
576,238
115,190
2020 €
2019 €
22,047
(16,506)
5,541
-
257,440
(495,346)
(237,906)
-
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.
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
€2,570,888 (£2,310,000) has been recognised as an investment in
a related undertaking and the balance of consideration payable of
€2,237,006 (£2,010,000) has been recognised as a payable in other
payables (see Note 31).
The key terms of the share purchase agreement (SPA) are as
follows:
Initial consideration of €2,570,888 (£2,310,000) of which
a deposit amount of €333,882 (£300,000), from which the
existing exclusivity payment of £100,000 will be deducted,
is payable on the signing of the agreement and the balance
of €2,237,006 (£2,010,000) 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 €2,548,630
(£2,290,000) 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 €6.01 million (£5.4
million), calculated in accordance with an agreed formula
payable on the achievement of each of the following:
65
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
COMPANY
2020 €
2019 €
Investment in subsidiary undertakings
At beginning of financial year
Reclassification of inter-company balance as contribution
to capital in Eqtec Iberia
Investment in other subsidiaries
Provision for impairment in investment in subsidiaries
At end of financial year
Loans to subsidiary undertakings
At beginning of financial year
Provision for impairment of investment in subsidiaries
At end of financial year
Investment in associate undertakings
At beginning of financial year
Transfer on investment in North Fork Community
Power LLC from subsidiary
Additional investment in North Fork Community Power LLC
At end of financial year
Total
16,869,625
16,796,663
1,000,000
1,500,000
5
-
17,869,630
571,304
(571,304)
-
-
2,229,006
1,150,619
3,379,625
21,249,255
-
(1,427,038)
16,869,625
571,304
-
571,304
-
-
-
-
17,440,929
66
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Details of EQTEC plc subsidiaries at 31 December 2020 are as follows:
NAME
COUNTRY OF INCORPORATION
SHAREHOLDING
PRINCIPAL ACTIVITY
Eqtec Iberia SLU
Spain
EQTEC Holdings Limited
Republic of Ireland
EQTEC Holdings (UK) Limited
United Kingdom
Haverton WTV Limited
United Kingdom
Deeside WTV Limited
United Kingdom
Souhport WTV Limited
(formerly Humber Gate WTV
Limited)
United Kingdom
Newry Biomass No. 1 Limited
Republic of Ireland
React Biomass Limited
Republic of Ireland
Reforce Energy Limited
Republic of Ireland
Grass Door Limited
United Kingdom
Newry Biomass Limited
Northern Ireland
Enfield Biomass Limited
United Kingdom
Moneygorm Wind Turbine Limited
Republic of Ireland
Eqtec No. 1 Limited
Republic of Ireland
Eqtec Strategic Project Finance
Limited
United Kingdom
Clay Cross Biomass Limited
United Kingdom
Altilow Wind Turbine Limited
Republic of Ireland
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50.2%
100%
100%
100%
100%
100%
100%
Provision of technical
engineering services
Investment holding company
Investment holding company
Waste-to-energy developer
Waste-to-energy developer
Waste-to-energy developer
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
Dormant company
The shareholding in each company above is equivalent to the
proportion of voting power held.
The registered office for all of the above companies is Building
1000, City Gate, Mahon, Cork, except for EQTEC Holdings (UK)
Limited, Haverton WTV Limited, Deeside WTV Limited, Southport
WTV Limited, Enfield Biomass Limited, Eqtec Strategic Project
Finance Limited, Clay Cross Biomass Limited and Grass Door
Limited, whose registered office is 3 Stucley Place, London NW1
8NS, England; Newry Biomass Limited, whose registered office is
68 Cloughanramer Road, Carnmeen, Newry, Co. Down BT34 1QG,
Northern Ireland; and Eqtec Iberia SLU, whose registered office is
Rosa Sensat nº 9-11 Planta 5ª, 08005 Barcelona, Spain.
67
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
The table below shows details of non-wholly owned subsidiaries of the Group that have material, non-controlling interests:
NAME OF SUBSIDIARY
PRINCIPAL PLACE
OF BUSINESS AND
PLACE OF
INCORPORATION
PROPORTION OF
OWNERSHIP INTERESTS
AND VOTING RIGHTS HELD
BY NON-CO TROLLING
INTERESTS
PROFIT/(LOSS) ALLOCATED
TO NON-CONTROLLING
INTERESTS FOR THE PERIOD
NON-CONTROLLING
INTERESTS
2020 %
2019 %
2020 €
2019 €
2020 €
2019 €
Newry Biomass Limited
Northern Ireland
49.98
49.98
(5,080)
203,252
(2,328,986)
(2,414,398)
0.00
10.00
(2)
(22)
105,000
88,124
Individually immaterial
subsidiaries with non-con-
trolling interests
Total
EQTEC plc owns 50.02% of the voting rights in Newry Biomass
Limited. One other company owns the remaining voting rights.
Management has reassessed its involvement in Newry Biomass
Limited in accordance with IFRS 10’s revised control definition and
guidance and has concluded that it has control of Newry Biomass
Limited. The activities of Newry Biomass Limited are not considered
material to the Group as a whole.
22. OTHER FINANCIAL INVESTMENTS
Bonds and Debentures
Less: Provision against investment in Bonds
Investment in Shares
Other investments
Less: Provisions against other investments
23. DEFERRED TAXATION
(5,082)
203,230
(2,223,986)
(2,326,274)
No dividends were paid to the non-controlling interests during the
years ended 31 December 2020 and 2019.
2020 €
2019 €
402,644
(402,644)
1,832
15,418
(17,250)
-
402,644
(402,644)
1,832
15,492
-
17,324
A deferred tax asset has not been recognised at the consolidated
statement of financial position date in respect of trading tax losses
arising from the Irish and UK subsidiaries. Due to the history of
past losses, the Group has not recognised any deferred tax asset in
respect of tax losses to be carried forward which are approximately
€21.5 million at 31 December 2020 (2019: €17.8 million).
68
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
24. DEVELOPMENT ASSETS
GROUP
2020 €
2019 €
Costs associated with project development
Loan receivable from project development undertakings
503,653
482,537
-
-
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, €Nil (2019: €Nil)
of development assets was included in consolidated statement of
profit or loss as an expense and €Nil (2019: €98,581) was impaired
resulting from write down of development assets.
Included in loans receivable from project development
undertakings is an amount of €200,000 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 €213,297 (2019: Nil).
The remaining loans receivables were issued with no interest and
no fixed repayment date.
COMPANY
2020 €
2019 €
Costs associated with project development
Loan receivable from project development undertakings
9,275
243,598
-
-
Included in loans receivable from project development
undertakings is an amount of €200,000 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 €213,297 (2019: Nil).
The remaining loans receivables were issued with no interest and
no fixed repayment date.
69
EQTEC PLC
Notes to the Financial Statements
25. TRADE AND OTHER RECEIVABLES
GROUP
2020 €
2019 €
Trade receivables gross
Allowance for credit losses
Trade receivables net
VAT receivable
Deferred consideration for the disposal of Pluckanes Windfarm
(see Note 33)
Advances to related undertakings
Allowance for credit losses
Prepayments
Receipts from share fundraise
Corporation tax
Payments on account
Other receivables
638,602
(475,687)
162,915
172,405
120,424
60,000
(60,000)
133,403
-
6,841
120,798
177,745
894,531
805,425
(456,671)
348,754
18,226
-
60,000
(60,000)
66,773
235,130
4,560
-
55,144
728,587
All amounts are short-term. The net carrying value of trade
receivables is considered a reasonable approximation of fair value.
The following table shows an analysis of trade receivables split
between past due and within terms accounts. Past due is when an
account exceeds the agreed terms of trade, which are typically 60
days.
Within terms
Past due more than one month but less than two months
Past due more than two months
2020 €
2019 €
10,579
149,925
478,098
638,602
311,438
9,813
484,174
805,425
Included in the Group’s trade receivables balance are debtors with
carrying amount of €2,411 (2019: €27,503) which are past due at
year end and for which the Group has not provided.
The Group does not hold any collateral over these balances. No
interest is charged on overdue receivables. The quality of past due
not impaired trade receivables is considered good. The carrying
amount of trade receivables approximates to their fair values.
The Group’s policy is to recognise an allowance for doubtful debts
of 100% against all receivables over 120 days because historical
experience has been that trade receivables that are past due
beyond 120 days are not recoverable. Allowances for doubtful debts
are recognised against trade receivables between 60 days and 120
days based on estimated irrecoverable amounts determined by
reference to past default experience of the counterparty and an
analysis of the counterparty’s current financial position. The review
on these balances shows that all of the above amounts, with the
exception of €4,754 (2019: €2,039) are considered recoverable.
In determining the recoverability of a trade receivable, the Group
considers any changes in the credit quality of the trade receivable
from the date credit was initially granted up to the end of the
current reporting financial year. The concentration of the credit risk
is limited due to the customer base being large and unrelated, and
the fact that no one customer holds balances that exceeds 10% of
the gross assets of the Group. The maximum exposure risk to trade
and other receivables at the reporting date by geographic region,
ignoring provisions, is as follows:
70
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Ireland
Spain
United Kingdom
The aged analysis of other receivables is within terms.
The closing balance of the trade receivables loss allowance as at 31
December 2020 reconciles with the trade receivables loss allowance
opening balance as follows:
Opening loss allowance as at 1 January 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
The closing balance of the advances to related undertakings loss
allowance as at 31 December 2020 reconciles with the advances to
related undertakings loss allowance opening balance as follows:
Opening loss allowance as at 1 January 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
2020 €
2019 €
30,000
608,602
-
638,602
€
€
30,000
475,425
300,000
805,425
306,292
150,379
456,671
19,016
475,687
-
60,000
60,000
-
60,000
There is no concentration of credit risk with respect to receivables as disclosed in Note 5 under credit risk.
71
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
COMPANY
2020 €
2019 €
Amounts due from subsidiary undertakings
Allowance for impairment of balances
Trade receivables
Allowance for credit losses
Advances to related undertakings
Allowance for credit losses
Prepayments
Receipts from share fundraise
Corporation Tax
VAT Receivable
Other receivables
The concentration of credit risk in the individual financial
statements of EQTEC plc relates to amounts due from subsidiary
undertakings. The directors have reviewed these balances in the
light of the impairment review carried out on the investments by
EQTEC plc in its subsidiaries.
The directors considered the future cash flows arising from
subsidiaries and are satisfied that the appropriate impairment has
been applied to these balances. All amounts are short-term. The net
Opening loss allowance as at 1 January 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
The closing balance of the advances to related undertakings loss
allowance as at 31 December 2020 reconciles with the advances to
related undertakings loss allowance opening balance as follows:
2,567,624
-
2,567,624
30,000
(30,000)
60,000
(60,000)
124,582
-
96
8,429
2,760
1,699,272
(665,771)
1,033,501
30,000
(30,000)
60,000
(60,000)
57,165
235,130
96
5,498
2,614
2,703,491
1,334,004
carrying values of amounts due from subsidiary undertakings, trade
and loans receivables are considered a reasonable approximation of
their fair values.
The closing balance of the trade receivables loss allowance as at 31
December 2020 reconciles with the trade receivables loss allowance
opening balance as follows:
€
-
30,000
30,000
-
30,000
72
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Opening loss allowance as at 1 January 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2019
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
26. CASH AND CASH EQUIVALENTS
€
-
60,000
60,000
-
60,000
For the purposes of the cash flow statement, cash and cash
equivalents include cash on hand and in banks and bank
overdrafts. Cash and cash equivalents at the end of
the financial year as shown in the cash flow statement can
be reconciled to the related items in the balance sheet as
follows:
Group
Cash and bank balances
Bank overdrafts (Note 29)
Sub-total
Cash and cash equivalents included in a disposal group held for resale (Note 32)
Company
Cash and bank balances
Bank overdrafts (Note 29)
The carrying amount of the cash and cash equivalents is
considered a reasonable approximation of its fair value.
2020 €
2019 €
6,394,791
(124,210)
6,270,581
-
6,270,581
6,111,864
-
6,111,864
482,392
-
482,392
125,802
608,194
448,619
-
448,619
73
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
27. EQUITY
Share Capital
AT 31 DECEMBER 2019
AUTHORISED
NUMBER
ALLOTTED AND CALLED
UP NUMBER
AUTHORISED
€
ALLOTTED AND
CALLED UP €
Ordinary shares of €0.001 each
12,561,091,094
3,939,376,266
12,561,091
Deferred ordinary shares of €0.40 each
200,000,000
22,370,042
80,000,000
3,939,376
8,948,017
Deferred “B” Ordinary Shares
of €0.099 each
Deferred convertible “A” ordinary
shares of €0.01 each
75,140,494
75,140,494
7,438,909
7,438,909
10,000,000,000
99,117,952
100,000,000
991,180
200,000,000
21,317,482
AT 31 DECEMBER 2020
AUTHORISED
NUMBER
ALLOTTED AND CALLED
UP NUMBER
AUTHORISED €
ALLOTTED AND
CALLED UP €
Ordinary shares of €0.001 each
12,561,091,094
6,977,439,598
12,561,091
Deferred ordinary shares of €0.40 each
200,000,000
22,370,042
80,000,000
6,977,439
8,948,017
Deferred “B” Ordinary Shares
of €0.099 each
Deferred convertible “A” ordinary
shares of €0.01 each
75,140,494
75,140,494
7,438,909
7,438,909
10,000,000,000
99,117,952
100,000,000
991,180
200,000,000
24,355,545
Share Premium
Proceeds received in excess of the nominal value of the shares
issued during the financial year have been included in share
premium, less registration and other regulatory fees. Costs of new
shares charged to equity amounted to €639,931 (2019: €270,255).
Company Share Premium
The share premium included in the consolidated and company
statement of financial position is different by €18,934,080 due to
the reverse acquisition of the Group which occurred on 13 October
2008. The reverse acquisition resulted to a reverse acquisition
reserve which has been netted off against the share premium in
the consolidated statement of financial position.
The holders of the ordinary shares are entitled to participate in
the profits or assets of the Company (by way of payment of any
dividends, on a winding up or otherwise) and are entitled to
receive notice, attend, speak and vote at general meetings of the
Company. Each ordinary share equates to one vote at meetings of
the Company.
The holders of the deferred convertible “A” ordinary shares are
entitled to participate pari passu with ordinary shareholders in the
profits or assets of the Company on a winding-up, up to an amount
equal to the par value paid in respect of such deferred convertible
“A” ordinary shares but are not entitled to participate in the profits
or assets of the Company (by way of payment of any dividends or
otherwise). The holders of the deferred convertible “A” ordinary
shares are not entitled to receive notice, attend, speak and vote at
general meetings of the Company.
The holders of the deferred ordinary shares and the deferred “B”
ordinary shares are not entitled to participate in the profits or
assets of the Company (by way of payment of any dividends, on
a winding up or otherwise) and are not entitled to receive notice,
attend, speak and vote at general meetings of the Company.
74
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Movements in the financial year to 31 December 2020
AMOUNT OF SHARES
2020
2019
Ordinary Shares of €0.001 each issued and fully paid
- Beginning of the period
- Issued on exercise of warrants
- Issued in lieu of borrowings and settlement of payables
- Share issue placement
Total Ordinary shares of €0.001 each authorised,
issued and fully paid at the end of the financial year
Share Warrants
3,939,376,266
1,804,744,243
436,400,000
379,441,112
2,222,222,220
163,027,158
977,532,138
994,072,727
6,977,439,598
3,939,376,266
As at 31 December 2020 the Company had 799,663,485 warrants outstanding (2019: 664,636,833).
NO OF WARRANTS
EXERCISE PRICE (PENCE)
FINAL EXERCISE DATE
138,000,000
1,533,505
38,450,000
590,906,437
30,773,543
799,663,485
0.25
5.53
10.0
0.25
0.33
11/12/2021
05/02/2022
15/07/2022
31/03/2023
28/06/2024
75
EQTEC PLC
Notes to the Financial Statements
Details of warrants granted
DETAILS OF
WARRANT
GRANTED
PLACING
WARRANTS
EMPLOYEE WARRANTS
EMPLOYEE OPTIONS
ADVISOR
WARRANTS
LENDER
WARRANTS
NO.
EXERCISE
PRICE
(PENCE)
NO.
EXERCISE
PRICE
(PENCE)
NO.
EXERCISE
PRICE
(PENCE)
NO.
EXERCISE
PRICE
(PENCE)
NO.
EXERCISE
PRICE
(PENCE)
At 1 January 2020
383,400,000
0.25
-
-
-
-
30,773,543
0.33
114,646,542
1.3
Issued/vested in year
Cancelled or expired
in year
-
-
-
-
Exercised in year
245,400,000
0.25
590,906,437
0.25
67,304,542
0.65
-
-
-
-
-
-
-
-
-
-
-
191,000,000
0.375
114,646,542
1.3
191,000,000
0.375
At 31 December 2020
138,000,000
0.25
590,906,437
0.25
67,304,542
0.65
30,773,543
0.33
Exercisable at 31
December 2020
Average life remaining
at 31 December 2020
138,000,000
0.25
590,906,437
0.25
67,304,542
0.65
30,773,543
0.33
0.91 years
2.25 years
3.58 years
3.5 years
-
-
DETAILS OF WARRANT GRANTED
ADVISOR
WARRANTS
ADVISOR
WARRANTS
NO.
EXERCISE
PRICE (PENCE)
NO.
EXERCISE
PRICE (PENCE)
At 1 January 2020 and 31 December 2020
Exercisable at 31 December 2020
1,533,505
1,533,505
5.53
5.53
Average life remaining at 31 December 2020
1.08 years
38,450,000
38,450,000
1.54 years
10.0
10.0
76
EQTEC PLC
Notes to the Financial Statements
Placing warrants totalling 126,000,000 were exercised post year
end leaving a balance of 12,000,000 currently exercisable. Advisor
warrants of 30,773,543 were also totally exercised post year end
leaving a NIL balance.
warrants and the options that vested have been charged to the
statement of profit and loss as share-based payments. The fair
value of the warrants were determined using the Black Scholes
pricing model.
The warrants issued during the financial year related to an
employee incentive program and a lender restructuring. The
The significant inputs to the model were as follows:
Grant/vesting date
31 March 2020
1 July 2020
1 June 2020
EMPLOYEE WARRANTS
SHARE OPTIONS
LENDER WARRANTS
Share price at date of vesting
Exercise price per share
No of warrants/options
granted/vested
Risk free rate
Annualised volatility
Life of warrant/option
Calculated fair value of share
warrant/option
0.18p
0.25p
0.73p
0.65p
0.34p
0.375p
590,906,437
67,304,542
191,000,000
1.1%
133%
3 years
0.128
1.1%
130%
4 years
0.60
1.1%
128%
3 years
0.246
The Group recognised total expenses of €1,819,658 and €Nil related
to equity-settled share-based payment transactions in 2020 and
2019 respectively (see Notes 13 and 14).
28. NON-CONTROLLING INTERESTS
Balance at beginning of financial year
Share of (loss)/profit for the financial year
Release of non-controlling interest
Unrealised foreign exchange gains
Balance at end of financial year
During the financial year, the non-controlling interest of an
immaterial subsidiary released its non-controlling interest back to
the Group.
2020 €
2019 €
(2,326,274)
(2,552,863)
(5,082)
15,978
91,392
203,230
-
23,359
(2,223,986)
(2,326,274)
77
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
29. BORROWINGS
GROUP
2020 €
2019 €
Current liabilities at amortised cost
Bank overdrafts
Bank borrowings
Convertible secured loan note (CSLN)
Other loans
Convertible secured loan facility (CSLF)
Non-current liabilities at amortised cost
Bank borrowings
COMPANY
2020 €
Current liabilities
Convertible secured loan (CSLN)
Convertible secured loan facility (CSLF)
Non-current liabilities
Borrowings at amortised cost
124,210
-
-
-
896,641
1,020,851
-
-
-
896,641
896,641
-
-
125,224
1,008,017
5,691
1,418,028
2,556,960
188,729
188,729
1,008,017
1,418,028
2,426,045
-
2019 €
The secured loan facility (SLF) was secured through an intercreditor
deed by mortgage debentures, cross guarantees and share pledges
over the Group. The interest rate on the loan is fixed at 10%
(2019: 12.5%) and the loan matures on 30 June 2021. All amounts
outstanding under the loan are to be repaid as follows:
The convertible secured loan note (CSLN) was at a fixed rate of 10%
paid in arrears. The principal, together with any accrued interest
and reprofiling fee, was repaid through the issue of 235,991,940
shares in the Company at an agreed price of 0.45 pence per share
in July 2020.
US$555,000 (plus accrued interest and cash redemption fee
of 8 per cent on the sum due for payment) to be repaid on 29
January 2021; and
The remaining balance, plus accrued interest and cash
redemption fee of 8 per cent on the sum due for payment, to
be repaid on 30 June 2021.a single payment of principal and
accrued interest on 30 June 2021.
The face value of the secured loan facility and accrued interest at
31 December 2020 was €908,699 (31 December 2019: €1,501,825).
On 4 January 2021 the Company agreed an unsecured term loan
facility of €1.39 million (£1.25 million) (ULF) with Altair Group
Investment Limited a substantial shareholder in the Company.
The ULF 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 ULF early without penalty. The ULF is
unsecured and has a coupon of 6% per annum, payable quarterly
in arrears. The ULF was used to pay all sums due under the SLF
releasing and discharging any secured assets and obligations
under the SLF.
78
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Reconciliation of liabilities arising from financing
activities
The table below details changes in the Group’s liabilities arising
from financing activities, including both cash and non–cash
Group’s consolidated statement of cash flows as cash flows from
financing activities.
changes. Liabilities arising from financing activities are those for
which cash flows were, or future cash flows will be, classified in the
NCSLF €
CSLN €
SLF €
OTHER
LOANS €
BANK
BORROW-
INGS €
BANK
OVERDRAFT €
LEASE
LIABILITIES €
TOTAL €
Balance at 1
January 2019
702,319
2,216,604
2,526,327
5,691
520,989
2,563
-
5,974,493
Adoption of IFRS 16
-
-
-
-
-
-
354,718
354,718
702,319
2,216,604
2,526,327
5,691
520,989
2,563
354,718
6,329,211
Revised balance at
1 January 2019
Financing Cash Flows
Proceeds from
borrowings
Repayment of
borrowings
Total from financing
cash flows
Non-cash changes
Effect of changes in
foreign exchange rates
Amortisation oloan
issue costs
Deferral fee levied
Redemption fee levied
Change in bank
overdraft
Other changes
Total non-cash
changes
Balance at 31
December 2020
Reclassification
(835,301)
835,301
-
Conversion into equity
(156,084)
(2,406,245)
(1,027,431)
226,212
75,372
-
-
-
(732,794)
226,212
75,372
(732,794)
17,119
72,744
53,909
45,735
42,113
248,962
-
-
-
-
-
92,374
114,583
35,870
-
-
57,545
220,811
(928,531)
(1,283,959)
(375,505)
-
-
-
-
-
-
-
-
-
-
-
-
-
(206,900)
(206,900)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,486)
(136)
923
(136)
(2,563)
-
301,584
(80,284)
(1,019,978)
(80,284)
(718,394)
-
-
-
-
-
-
-
-
-
-
(3,589,760)
143,772
336,810
92,374
150,453
(3,486)
279,143
(2,590,694)
-
1,008,017
1,418,028
5,691
313,953
-
274,434
3,020,123
Other changes include interest accruals and payments.
79
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
CSLN €
CSLF €
OTHER
LOANS €
BANK
BORROWINGS €
BANK
OVERDRAFT €
LEASE
LIABILITIES €
TOTAL €
Balance at 1 January 2020
1,008,017
1,418,028
5,691
313,953
Financing Cash Flows
Proceeds from borrowings
Repayment of borrowings
-
-
-
(852,567)
Loan issue costs
(11,489)
(19,455)
Total from financing
cash flows
Non-cash changes
(11,489)
(872,022)
Conversion into equity
(1,165,809)
-
Effect of changes in foreign
exchange rates
(72,470)
(82,502)
Amortisation of loan issue cost
50,022
89,921
Reprofiling fee levied
104,989
157,341
Redemption fee levied
Change in bank overdraft
-
-
50,149
-
-
-
-
-
-
-
-
-
-
-
Other changes
86,740
135,726
(5,691)
Total non-cash changes
(996,528)
350,635
(5,691)
Balance at 31 December 2020
-
896,641
-
Other changes include interest accruals and payments.
30. LEASES
Lease liabilities are presented in the statement of financial position
as follows:
107,000
(420,953)
-
(313,953)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
124,210
274,434
3,020,123
-
107,000
(89,828)
(1,363,348)
-
(30,944)
(87,828)
(1,287,292)
-
-
-
-
-
-
(1,165,809)
(154,972)
139,943
262,330
50,149
124,210
-
7,101
223,876
124,210
7,101
(520,273)
124,210
191,707
1,212,558
GROUP
2020 €
2019 €
Current
Non-current
85,242
106,465
191,707
82,726
191,708
274,434
80
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
The Group has a lease for its office in Iberia, Spain. With the
exception of short-term leases and leases of low-value underlying
assets, each lease is reflected on the statement of financial position
as a right-of-use asset and a lease liability. The Group classifies its
right-of-use assets in a consistent manner to its property, plant and
equipment (see Note 19).
as security. For leases over office buildings, the Group must keep
those properties in a good state of repair and return the premises
in their original condition at the end of the lease. Further, the
Group must insure items of property, plant and equipment and
incur maintenance fees on such items in accordance with the lease
contracts.
Each lease generally imposes a restriction that, unless there is
a contractual right for the Group to sublet the asset to another
party, the right-of-use asset can only be used by the Group. Leases
are either non-cancellable or may only be cancelled by incurring
a substantive termination fee. Some leases contain an option
to purchase the underlying leased asset outright at the end of
the lease, or to extend the lease for a further term. The Group is
prohibited from selling or pledging the underlying leased assets
The table below describes the nature of the Group’s leasing
activities by type of right-of-use asset recognized in the statement
of financial position:
RIGHT-OF-
USE ASSET
NO. OF
RIGHT-OF-
USE ASSETS
LEASED
RANGE OF
REMAINING
TERM
AVERAGE
REMAINING
LEASE TERM
NO. OF
LEASES
WITH
EXTENSION
OPTIONS
NO. OF
LEASES
WITH
OPTIONS TO
PURCHASE
NO. OF
LEASES WITH
VARIABLE
PAYMENTS
LINKED TO
AN INDEX
NO. OF
LEASES WITH
TERMINATION
OPTIONS
Leasehold
Building
1
2.25 years
2.25 years
0
0
0
0
The lease liabilities are secured by the related underlying asset.
Further minimum lease payments at 31 December 2020 were as follows:
Minimum lease payments due
WITHIN 1
YEAR €
1-2
YEARS €
2-3
YEARS €
3-4
YEARS €
4-5
YEARS €
AFTER 5
YEARS €
TOTAL €
2020
Lease payments
Finance charges
89,828
89,828
18,714
(4,586)
(1,993)
(84)
Net Present Values
85,242
87,835
18,630
-
-
-
2019
Lease payments
Finance charges
89,828
89,828
89,828
18,714
(7,102)
(4,585)
(1,993)
(84)
Net Present Values
82,726
85,243
87,835
18,630
-
-
-
-
-
-
-
-
-
-
-
-
198,370
(6,663)
191,707
288,198
(13,764)
274,434
81
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short-
term leases (leases with an expected term of 12 months or less) or
for leases of low value assets. Payments made under such leases
are expensed on a straight-line basis. The expense related to
payments not included in the measurement of the lease liability is
as follows:
Short term leases
Leases of low-value assets
2020 €
2019 €
37,406
14,594
52,000
20,216
10,863
31,079
At 31 December 2020, the Group was committed to short-term
leases and the total commitment at that date was €53,287 (2019:
€18,060).
Total cash outflow for lease liabilities for the financial year ended 31
December 2020 was €87,727 (2019: €80,284).
Additional information on the right-to-use assets by class of assets
is as follows:
CARRYING AMOUNT (NOTE 18) €
DEPRECIATION EXPENSE €
IMPAIRMENT €
Leasehold Buildings
Total Right-of-use assets
187,792
187,792
83,463
83,463
-
-
The right-of-use assets are included in the same line item as where
the corresponding underlying assets would be presented if they
were owned.
31. TRADE AND OTHER PAYABLES
GROUP
2020 €
2019 €
VAT payable
Trade payables
Other payables
Accruals
PAYE & social welfare
-
146,091
2,243,257
716,473
78,158
3,183,979
25,214
196,221
69,075
517,139
68,422
876,071
82
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
The carrying amount of trade and other payables approximates fair
value. All trade and other payables fall due within one year.
Trade and other creditors are payable at various dates in
accordance with the suppliers’ usual and customary credit terms.
Included in other payables is an amount of €2,237,006 (£2,010,000)
relating to consideration payable under the share purchase
contract to acquire Logik WTE Limited (see Note 21).
Corporation tax and other taxes including social insurance are
repayable at various dates over the coming months in accordance
with the applicable statutory provisions.
COMPANY
2020 €
2019 €
Trade payables
Other creditors
Amounts payable to subsidiary undertakings
PAYE & social welfare
Accruals
91,390
1,250
3
12,022
642,908
747,573
17,120
1,250
17,880
13,095
399,524
448,869
The carrying amount of trade and other payables approximates its
fair value. All trade and other payables fall due within one year.
Trade and other creditors are payable at various dates in
accordance with the suppliers’ usual and customary credit terms.
Corporation tax and other taxes including social insurance are
repayable at various dates over the coming months in accordance
with the applicable statutory provisions.
83
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
32. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE
AND DISCONTINUED OPERATIONS
In 2017, the Group made the decision to sell its subsidiary,
Pluckanes Windfarm Limited, which is involved in the generation
of electricity through wind. The disposal is consistent with the
Group’s long-term policy to focus its activities as a technology
solution company for waste gasification to energy projects.
Consequently, assets and liabilities allocable to Pluckanes
Windfarm Limited were classified as a disposal group. Revenues
and expenses, gains and losses relating to the discontinuation of
this subgroup have been eliminated from profit or loss from the
Group’s continuing activities and are shown as a single line item on
the face of the consolidated statement of profit or loss.
On 24 August 2020, the Group announced that it had entered into
a sales purchase agreement to dispose of its shares in Pluckanes
Windfarm Limited on a debt free/cash free basis. Details of the
assets and liabilities disposed of, and the calculation of the profit
or loss on disposal, are disclosed in Note 33.
The combined results of the discontinued operations included in
the loss for the financial year are set out below.
PROFIT FOR THE FINANCIAL YEAR FROM
DISCONTINUED OPERATIONS
PERIOD ENDED 24
AUGUST 2020 €
YEAR ENDED 31
DECEMBER 2019 €
Revenue (Note 8)
Cost of sales (Note 9)
Administrative Expenses (Note 10)
Operating Profit
Finance Costs (Note 14)
Finance Income (Note 14)
Profit from discontinued operations before tax
Tax Expenses
Profit for the financial period from discontinued operations
(attributable to owners of the Company)
Profit after tax on disposal of subsidiary (Note 33)
Profit for the year from discontinued operations
135,644
(663)
134,981
(91,233)
43,748
(18,381)
3
25,370
-
25,370
45,714
71,084
193,614
(955)
192,659
(139,836)
52,823
(31,145)
6
21,684
-
21,684
-
21,684
84
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
Cash flows generated by Pluckanes Windfarm Limited for the
financial years under review are as follows:
CASH FLOWS FROM DISCONTINUED OPERATIONS
PERIOD ENDED 24 AUGUST
2020 €
YEAR ENDED 31
DECEMBER 2019 €
Operating activities
Investing activities
Financing activities
Net cash flows used in discontinued operations
The carrying amount of assets and liabilities in this disposal group
are summarised as follows:
(47,741)
(19,997)
(63,196)
(130,934)
ASSETS CLASSIFIED AS HELD FOR RESALE
2020 €
2019 €
Non-current assets:
Property, plant and equipment
Current assets:
Trade and other receivables
Cash and cash equivalents (Note 26)
Assets classified as held for resale
LIABILITIES CLASSIFIED AS HELD FOR RESALE
2020 €
Current liabilities:
Borrowings
Trade and other payables
Liabilities classified as held for resale
-
-
-
-
-
-
-
2019 €
110,184
6
(111,106)
(916)
1,017,613
54,659
125,802
1,198,074
821,634
25,321
846,955
85
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
33. DISPOSAL OF SUBSIDIARY
As referred to in Note 32, on 24 August 2020, the Group disposed of
its interest in Pluckanes Windfarm Limited.
The net assets of Pluckanes Windfarm Limited at the date of
disposal were as follows:
24 AUGUST 2020 €
Property, Plant & Equipment
Financial non-current assets
Trade and other receivables
Trade and other payables
Bank overdraft
Bank borrowings
Net assets disposed of
Selling expenses
Gain on disposal
Total consideration
Satisfied by:
Cash and cash equivalents
Fair value of deferred consideration
Net cash inflow arising on disposal
Consideration received in cash and cash equivalents
Add: negative cash equivalents disposed of
969,035
20,000
22,622
(8,740)
(5,132)
(778,765)
219,020
65,261
45,714
329,995
213,503
116,492
329,995
213,503
5,132
218,635
There was no disposals of subsidiaries made in 2019.
Per the sales purchase agreement, €170,000 is being deferred and
held in escrow subject to the following conditions:
(i) the Buyer obtaining a planning extension to Pluckanes
Windfarm Limited’s existing planning permission on its property,
in order to extend the term of the wind turbine activity, within two
years of the date of the requisite planning application which must
be submitted by the Buyer within three months of completion of
the sale;
(ii) the Group procuring the transfer of the substation between the
landlord and ESB Networks; and
(iii) the Group procuring a letter from the relevant local authority
confirming compliance with a certain customary condition of the
existing planning permission.
If all three conditions are satisfied on or before the first anniversary
of the date of planning application (as set out in condition (i)
above) then the total deferred consideration of €170,000 shall
become immediately due and payable to the Group. The deferred
consideration will reduce to:
(a) €159,000 if the planning extension is obtained between 12 and
18 months from the date of planning application; and
(b) €152,000 if the planning extension is obtained between 18 and
24 months from the date of planning application.
86
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
In the event that the conditions listed above are not obtained
within 24 months from the date of planning application, the entire
deferred consideration element will fall away.
The fair value of the deferred consideration was calculated as
€116,492 on the date of disposal. At 31 December 2020, the fair
value of the deferred consideration was valued at €120,424 and is
included in trade and other receivables (see Note 25).
The impact of Pluckanes Windfarm Limited on the Group’s results
in the current and prior years is disclosed in Note 32.
The gain on disposal was included in the profit for the year from
discontinued operations (see Note 32).
34. RELATED PARTY TRANSACTIONS
Transactions with Altair
During the financial year ended 31 December 2020, Altair advanced
€Nil (2019: €301,584) to the Group by way of borrowings. During
the financial year ended 31 December 2020, the Group repaid
borrowings of €1,175,839 (2019: €2,562,329) by way of conversion
into equity. Interest payable to Altair for the financial year ended
31 December 2020 amounted to €170,084 (2019: €397,356); this
includes a redemption fee of €114,583 (2019: €114,583) with
respect to a redemption fee for the early settlement of the loan
and a reprofiling fee of €106,321 (2019: €Nil) with respect to the
reprofiling of the debt.
Included in borrowings, net of amortisation costs, at 31 December
2020 is an amount of €Nil (2019: €1,070,915) due to Altair from the
Group.
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 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:
DIRECTORS
FEES/SALARIES
/EXPENSES
€’000s
TERMINATION
€’000s
OTHER
€’000s
PENSION
€’000s
2020
€’000s
2019
€’000s
I Pearson
O Leiva
(Resigned 28/6/2020)
T Quigley
I Price
(Resigned 16/9/19)
G Madden
Y Alemán
(Appointed 28/8/19)
D Palumbo
(Appointed 28/8/19)
J Vander Linden
(Appointed 1/12/20)
Total
68
-
41
-
250
241
281
14
895
-
-
-
-
-
-
-
-
-
-
-
-
-
24
-
-
-
24
-
-
-
-
-
-
-
-
-
68
-
41
-
274
241
281
14
919
68
12
42
176
262
92
85
-
737
87
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
At 31 December 2020, directors’ remuneration unpaid (including
past directors) amounted to €260,875 (31 December 2019:
€185,347). 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 €0.001 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 €Nil (2019: €103,201) 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 €21,843 (2019: €Nil). At 31 December 2020, an amount
of €3,172 is included in trade and other payable with respect to
payments due to this company (2019: €Nil).
Prior to becoming a director, Mr J Vander Linden provided advisory
services to the Company. The cost of these services amounted to
€144,148 (2019: €Nil) for the financial year ended 31 December
2020. At 31 December 2020, an amount of €63,883 is included
in trade and other payable with respect to payments due to this
company (2019: €Nil). This balance was settled through the issue of
new ordinary shares of €0.001 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).
DIRECTORS
SHARE BASED PAYMENTS €’000s
T Quigley
G Madden
Y Alemán
D Palumbo
Total
28
673
142
284
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
€1,980,000 were made to associate undertakings (2019: €21,438).
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
€30,201 with respect to this advance (2019: €Nil).
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.
35. 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 £1.25 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
£131,553.
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 £136,500. 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 £285,000. 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 £1,250,000 loan drawn down by the
Company from Altair, announced on 4 January 2021. Following the
repayment of £285,000 the loan balance together with accrued
interest amounted to £976,096 on 1 March 2021.
88
EQTEC PLC
STRATEGIC REPORTS
GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Financial Statements
No other adjusting or significant non-adjusting events have
occurred between the 31 December reporting date and the date of
authorisation.
36. NON-CASH TRANSACTIONS
During the financial year, the Group entered into the following
non-cash investing and financing activities which are not reflected
in the consolidated statement of cash flows:
Issue of shares in settlement of borrowings and other liabilities
1,915,693
3,623,207
2020 €
2019 €
37. COMPANY PROFIT AND LOSS
As a consolidated group income statement is published, a separate
income statement for the parent company is omitted from the
Group’s financial statements by virtue of section 304(2) of the
Companies Act, 2014. The Company’s loss for the financial year
ended 31 December 2020 was €3,270,895 (2019: €4,674,802).
38. 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.
39. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved by the Board of
Directors on 16 April 2021.
89
EQTEC PLC
INDEPENDENT AUDITOR’S
REPORT
Annual Repor t 2020
90
EQTEC biomass waste-to-energy plant,
Movialsa, Ciudad Real, Spain
INDEPENDENT AUDITOR’S
REPORT
Opinion
Conclusions relating to going concern
We have audited the financial statements of EQTEC plc (“the
Company”) and its subsidiaries (‘’the Group’’), which comprise the
Consolidated statement of profit or loss, Consolidated statement
of other comprehensive income, Consolidated statement of
financial position, Consolidated statement of changes in equity,
Consolidated statement of cash flows, Company statement of
financial position, Company statement of changes in equity,
Company statement of cash flows for the financial year ended 31
December 2020 and the related notes to the financial statements,
including the summary of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is Irish law and International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
In our opinion:
•
•
•
the consolidated financial statements give a true and fair view
in accordance with IFRS as adopted by the European Union of
the assets, liabilities and financial position of the Group as at
31 December 2020 and of the Group’s financial performance
and cash flows for the financial year then ended;
the Company statement of financial position gives a true and
fair view in accordance with IFRS as adopted by the European
Union of the assets, liabilities and financial position of the
Company as at 31 December 2020 and of its cash flows for the
financial year then ended; and
have been properly prepared in accordance with the
requirements of the Companies Act 2014.
In auditing the financial statements, we have concluded that
the directors’ use of going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group and
Company’s ability to continue as a going concern basis of
accounting included:
•
•
Evaluating management’s future cash flow forecasts, the
process by which they were prepared, and assessed the
calculations are mathematically accurate.
Challenging the underlying key assumptions such as expected
cash inflow from technology sales and cash outflow from
project costs and other operating expenses.
• Making inquiries with management and reviewing the
board minutes and available written communication with
commercial partners in order to understand the future plans
and to identify potential contradictory information.
Assessing the adequacy of the disclosures with respect to the
going concern assertion.
•
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and Company’s ability to continue as a going concern for a
period of at least twelve months from the date when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
Basis for opinion
Key audit matters
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (‘ISAs (Ireland)’) and applicable law.
Our responsibilities under those standards are further described
in the ‘Responsibilities of the auditor for the audit of the financial
statements’ section of our report. We are independent of the
Group and Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in Ireland,
including the Ethical Standard for Auditors (Ireland) issued by the
Irish Auditing and Accountancy Supervisory Authority (IAASA),
and the ethical pronouncements established by Chartered
Accountants Ireland, applied as determined to be appropriate
in the circumstances for the Group and Company. We have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current financial period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in
the audit, and the directing of efforts of the engagement team.
These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion
thereon, and therefore we do not provide a separate opinion on
these matters.
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Overall audit strategy
We designed our audit by determining materiality and assessing
the risks of material misstatement in the financial statements.
In particular, we looked at where the directors made subjective
judgements as discussed in the key audit matters section. We also
addressed the risk of management override of internal controls,
including evaluating whether there was any evidence of potential
bias that could result in a risk of material misstatement due to
fraud.
How we tailored the audit scope
The Group has two operating segments: the power generation
segment and the technology sales segment. We tailored the
scope of our audit taking into account the areas where the risk of
misstatement was considered material to the Group and Company,
taking into account the nature of the Group and Company’s
business and the industry in which it operates. We performed an
audit of the complete financial information of all the components
of the Group. Components’ represent business units across the
Group considered for audit scoping purposes.
In establishing the overall approach to our audit, we assessed
the risk of material misstatement at a Group level, taking into
account the nature, likelihood and potential magnitude of any
misstatement. As part of our risk assessment, we considered the
control environment in place at EQTEC plc.
Materiality and audit approach
The scope of our audit is influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, such as our
understanding of the Group and Company and their environment,
the history of misstatements, the complexity of the Group and
Company and the reliability of their control environment, helped
us to determine the scope of our audit and the nature, timing
and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and on the financial statements
as a whole.
Based on our professional judgment, we determined materiality for
the Group and Company as follows: 1% of total assets (excluding
goodwill for the Group) for the financial year ended 31 December
2020. We chose total assets as the benchmark as we considered this
to be the main focus of the users of the financial statements based
on nature of the Group and Company’s activities with continuing
funding rounds and business expansion.
We have set performance materiality for the Group and
Company at 60% of materiality, having considered our prior year
experience of the risk of misstatements, business risks and fraud
risks associated with the Group and Company and their control
environment. This is to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements in the financial statements exceeds materiality for
the financial statements as a whole.
We agreed with the board of directors that we would report to
them misstatements identified during our audit above 5% of
materiality as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Significant matters identified
The risks of material misstatement that had the greatest effect on
our audit, including the allocation of our resources and effort, are
below as significant matters together with an explanation of how
we tailored our audit to address these specific areas in order to
provide an opinion on the financial statements as a whole. This is
not a complete list of all risks identified by our audit.
Impairment of goodwill
The Group had significant amount of goodwill arising from the
acquisition of Eqtec Iberia SLU in 2017 (see Note 20). As at 31
December 2020, goodwill amounted to €15,283,459 which was
51.46% of the Group’s total assets. Eqtec Iberia SLU incurred losses
amounting to €1,077,576 in 2020 which we have identified as an
indicator of impairment. We obtained management’s discounted
cash flow projections in support of the recoverability of this
goodwill.
The preparation of the consolidated financial statements requires
management to make estimates and judgements that affect
the reported amounts of assets and liabilities at the date of the
consolidated financial statements and the reported amount of
income and expenses during the reporting period. Management
bases its estimates and judgements on future cash flows and
on other factors that are believed to be reasonable under the
circumstances. Actual results may differ from the estimates under
different assumptions or conditions.
Due to the subjective estimates inherent in this calculation, this
was a key judgmental area that our audit concentrated on.
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Our response
For this risk, our audit procedures included the following testing:
•
•
•
•
•
Evaluated, challenged management’s future cash flow
forecasts and the process by which they were drawn up
and tested the integrity and mathematical accuracy of the
impairment model;
Tested the significant assumptions and estimates used
in preparing the cash flows which includes revenue
forecasts, gross profit rates and discount rates and reviewed
reasonableness of growth rates used for the projection and
compared them against proven track record of performance;
Tested the adequacy of discount rate used and evaluated the
model in determining the value in use of the cash generating
unit;
Performed sensitivity analysis to determine reasonableness of
the input variables used in the impairment model; and
Considered the adequacy of the Group’s disclosures
relating to goodwill and the annual impairment review with
the requirements included in the consolidated financial
statements in accordance with IFRS as adopted by European
Union.
The value of the goodwill is based on the best estimates of the
Directors. As part of our audit, we have gained sufficient audit
evidence supporting the assumptions of the model. However, in
view of uncertainty in relation to the future events that affects the
timing of revenue cash flows and significance of this balance to the
consolidated financial statements, we consider that it should be
drawn to your attention. There is a risk that assumptions used by
the directors specifically on certain projects will be delayed which
may affect the future cash flows of the Group. The consolidated
financial statements do not reflect the adjustments that might arise
should the assumptions used in the impairment model change.
Other than as described above, our planned audit procedures were
completed without material exception.
Other information
Other information comprises information included in the annual
report, other than the financial statements and the auditor’s report
thereon, including the Chairman’s Statement, Chief Executive’s
Report, Corporate Governance Statement and Director’s Report.
The directors are responsible for the other information. Our
opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies in the financial
statements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by the
Companies Act 2014
• We have obtained all the information and explanations which
•
•
•
we consider necessary for the purposes of our audit.
In our opinion the accounting records of the Company were
sufficient to permit the financial statements to be readily and
properly audited.
The financial statements are in agreement with the accounting
records.
In our opinion the information given in the Directors’ report is
consistent with the financial statements. Based solely on the
work undertaken in the course of our audit, in our opinion, the
Directors’ report has been prepared in accordance with the
requirements of the Companies Act 2014.
Matters on which we are required to report by exception
Based on our knowledge and understanding of the Company and
its environment obtained in the course of the audit, we have not
identified material misstatements in the Directors’ Report.
Under the Companies Act 2014 we are required to report to you
if, in our opinion, the disclosures of directors’ remuneration and
transactions specified by sections 305 to 312 of the Act have not
been made. We have no exceptions to report arising from this
responsibility.
Responsibilities of management and those charged with
governance for the financial statements
As explained more fully in the Directors’ responsibilities statement,
management is responsible for the preparation of the financial
statements which give a true and fair view in accordance with IFRS
as adopted by the European Union, and for such internal control
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as they determine necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, management is responsible
for assessing the Group and Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or Company or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Group and Company’s financial reporting process.
Responsibilities of the auditor for the audit of the
financial statements
The auditor’s objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes their opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (Ireland) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs (Ireland), the auditor
will exercise professional judgment and maintain professional
scepticism throughout the audit. The auditor will also:
•
•
•
Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for their opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group and Company’s
internal control.
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
•
•
Conclude on the appropriateness of management’s use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the Group and Company’s ability to continue as a
going concern. If they conclude that a material uncertainty
exists, they are required to draw attention in the auditor’s
report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify their opinion.
Their conclusions are based on the audit evidence obtained
up to the date of the auditor’s report. However, future events
or conditions may cause the Group or Company to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
The auditor communicates with those charged with governance
regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant
deficiencies in internal control that may be identified during the
audit.
Where the auditor is reporting on consolidated financial
statements, the auditor’s responsibilities are to obtain sufficient
appropriate audit evidence regarding the financial information
of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. The
Group auditor is responsible for the direction, supervision and
performance of the Group audit, and the Group auditor remains
solely responsible for the audit opinion.
The auditor also provides those charged with governance with
a statement that they have complied with relevant ethical
requirements regarding independence, including the Ethical
Standards for Auditors (Ireland), and communicates with them all
relationships and other matters that may reasonably be thought
to bear on their independence, and where applicable, related
safeguards.
From the matters communicated with those charged with
governance, the auditor determines those matters that were
of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters.
These matters are described in the auditor’s report unless law or
regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, the auditor determines that a
matter should not be communicated in the report because the
adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
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The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with section 391 of the Companies Act 2014. Our
audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members
as a body, for our audit work, for this report, or for the opinions we
have formed.
Cathal Kelly
For and on behalf of Grant Thornton
Chartered Accountants & Statutory Audit Firm
Dublin 2, Ireland
16 April 2021
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EQTEC PLC
EQTEC biomass waste-to-energy plant,
Karlovo, Stroevo, Bulgaria
EQTEC plc
Registered Number: 462861
Cork, Building 1000, City Gate, Mahon,
Cork, T12 W7CV, Republic of Ireland