2021
Annual Report
Syngas for carbon negative, baseload energy & biofuels
Contents
04
42
Directors and advisers
Independent auditor’s report
05
48
2021 at a glance
Financial statements
07
Chairman’s statement
11
Chief Executive’s report
22
Corporate governance statement
32
Directors’ report
49
Consolidated statement of profit or loss
50
Consolidated statement of comprehensive income
51
Consolidated statement of financial position
53
Consolidated statement of changes in equity
54
Consolidated statement of cash flows
56
Company statement of financial position
57
Company statement of changes in equity
58
Company statement of cash flows
60
Notes to the financial statements
EQTEC believes in technology innovation and its power
to change the world for the better. We envision a world
wherein we help facilitate biodiversity and a circular
economy by applying leading technology to transform
waste into valuable energy and fuels to support the
ecosystem.
Fossil fuels do not support a sustainable world. EQTEC innovates
technologies for production of syngas – an intermediate fuel
enabling a wide range of clean, fossil fuel replacements that will
help deliver global Net Zero targets and the world we envision.
EQTEC plc Annual Report 2021 | 3
Directors
and advisers
2021 at
a glance
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
NAUMAN BABAR
Chief Financial Officer
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
410% markets7
of previous year’s
revenues delivered
recommissioning
additional
projects under
construction
2
3MDCs under
12
projects under
development
4 11
additional
process
engineers
PhDs in chemical
engineering &
gasification
50
project engineers
through engineering
partner CT3
Growth
Accelerating conversion of
opportunities into projects
across EU, UK and USA
Investment in growth
platform through Joint
Ventures in Croatia
and Greece
Strategic partnerships with
Toyota, Wood, MetalNRG,
H2 and Logik Developments
Projects
Financial close of Market
Development Centre (MDC)
projects in Italy and Croatia
Waste-to-hydrogen
feasibility at Deeside, UK
for Phase 3 expansion of
multi-technology plant
North Fork, USA project
targeted for carbon removal
credits with Carbonfuture
Financial overview
Revenue €9.2 million
(FY 2020: €2.2 million),
4x growth
Cash €6.4 million
(31 December 2020:
€6.4 million)
Net assets €43.4 million
(31 December 2020:
€25.3 million)
Delivery platform
Recruitment of engineering
and business development
staff to support growth
Attendance at COP26 and
increased engagement with
policymakers and influencers
Oversubscribed
institutional placing of
£16 million funding
growth and strategic project
development
4 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 5
Strategic
reports
Chairman’s
statement
2021 IN REVIEW
The past year, more than
any other, has reinforced
my view of EQTEC’s
strengths. We asked a lot
of our executive directors
and the team going into
2021. I’m delighted their
efforts and leadership are
reflected in an excellent
performance for the
period, delivering 410%
of last year’s revenues,
operating losses were
reduced and real
progress made with projects and
Market Development Centres.
Our people and technology are our
greatest strengths. We have a talented
and committed leadership team and
world-leading technology capabilities
that we continue to evolve and patent.
This powerful combination enables us to
produce what we believe is the world’s
most versatile synthesis gas (syngas), to
offer the world efficient baseload energy
and biofuels generated from waste.
As outlined by the CEO in his report, our
team has successfully built the platform
for growth set out as an objective at
the end of 2020 and there has been a
big expansion in essential capabilities
across the business. We converted more
opportunities into formal projects,
exercising more proficiency than ever in
pushing projects to financial close and
hiring more professionals to guarantee
more closes in future.
Most importantly, we delivered healthy
revenue growth, moved four projects
from development into construction,
eight opportunities into formally
managed projects and strategically
deferred the two most complex projects
in the interest of increasing their value for
customers, partners and shareholders.
EQTEC’S PURPOSE AND POTENTIAL
It should come as no surprise that this
business is growing. The Company
is positioned at the intersection of
two essential growth sectors: clean
waste disposal and sustainable energy
production. EQTEC brings a proven,
versatile technology that transforms an
exceptionally wide variety of waste types
into an exceptionally wide range of clean
energy types and fuels.
The COP26 Climate Summit in
November 2021 amplified the need
for our technology. The commitments
made there by 190 nations to making
greenhouse gas emissions net zero by
2050 still need to be delivered and then
exceeded. Non-baseload renewables
including solar, wind and hydro all have
important roles to play in well-managed
national energy strategies but these
technologies will not alone replace fossil
fuels. Reliable sources of clean baseload
energy are also required.
And even after everything is done first to
reduce, re-use and recycle, waste is still
an almost infinite supply as a resource.
Innovative, cleantech companies such
as EQTEC will take leading positions as
IAN PEARSON
Non-Executive Chairman
22 April 2022
6 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 7
Chairman’s statement
Chairman’s statement
As we transition from fossil fuels,
policymakers are starting to
understand the untapped potential of
syngas from waste as an alternative
fuel for baseload generation.
IAN PEARSON
Non-Executive Chairman
providers of carbon-negative, baseload
energy and biofuels as well as reduce
waste and its associated emissions.
Policymakers, in my view, are only now
starting to understand the untapped
potential of syngas from waste as an
alternative fuel for baseload generation.
Markets, too, are underestimating
the significant impact that cleantech
innovation will have.
I joined the board of EQTEC to help
the Company realise its potential as a
provider of advanced solutions that
enable the Net Zero future and I see
real progress being made. We believe
our three-year strategy, with its focus
on rapid growth, building scale, and
enhancing our technological capabilities,
is in your long-term interests. We will, of
course, keep the strategy in review and
react to market developments that are
continually and rapidly evolving.
OUTLOOK AND CLOSING THANKS
We are living with risks to the world
economy not seen for more than a
generation and there is a need to
navigate our business through a
range of macroeconomic, political
and environmental challenges. I
believe that the Board has a thorough
understanding of the issues and risks and
has appropriate plans in place.
As I noted above, our primary challenge
is not our technology capabilities nor the
quality of our people – these are already
the main Company’s assets. The primary
challenge – even in this turbulent market
- is how to scale rapidly and keep pace
with ever-increasing demand for what
it offers. The company has proven its
technology. It must move quickly to
make its solutions more readily available
to more customers in more markets
for greater impact in supporting a Net
Zero world.
The Company has reported in successive
trading updates the expansion of its
pipeline, improving conversion and
closure of deals. I expect that in 2022
we will begin turning also to reporting
the operational performance of more live
plants powered by EQTEC technology.
As Chairman of your Board of Directors,
I am conscious of my responsibilities to
our shareholders who should expect a
year of strong growth as we continue
to execute on our strategy.
We at EQTEC enjoy committed, active
and vocal stakeholders and I thank you
for your continued support.
L-R: Jeff Vander Linden (COO), Alex
Cunningham MP, David Palumbo (CEO)
8 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 9
Chief Executive’s
report
OPENING REMARKS
2021 was a year of
unprecedented change and
challenge, as the world’s
gradual recovery from the
Covid-19 pandemic revealed
mismatches in supply and
demand, with associated
market disruptions. Prices for
commodities such as steel,
copper and other essential
metals soared, supply
chains were unable to keep
up with sudden surges in
demand and global shipping
and transport brought inevitable
delays. Like many, EQTEC witnessed
significantly longer order lead times,
much higher production prices and
pricing guarantees measurable in
days instead of months.
But even in the face of these
challenges, EQTEC delivered solid
results. We reached financial close
on Market Development Centres in
Italy and Croatia, moved four projects
from development into construction
and eight opportunities into formally
managed projects. We delivered
410% of revenues recorded
in the previous year and reduced
operating losses by 17%. Our
momentum indicates we are on
the right track for continued growth
and we are targeting increasingly
positive, year-on-year results.
Our progress relies on a growing
network of license distributors,
developers, contractors and other
partners across target geographies.
At the end of 2021, we were active in
seven countries: USA, UK, France, Italy,
Croatia, Greece and Ireland. Each of
these markets has its own, growing
pipeline of opportunities, developed
and managed by a professional team
and with a growing, local network of
partners to support development,
construction and operations &
maintenance (O&M).
To support our Go-to-Market entities,
we focused global partnering efforts
on Tier 1, multinational technology
and Engineering, Procurement &
Construction (EPC) partners. On
26 November, we announced a
technology partnership with Wood,
for development and sales of waste-
to-synthetic natural gas (SNG) and
waste-to-hydrogen solutions. Our
joint pipeline already includes a dozen
opportunities. Additionally, we worked
through much of H2 2021 with three,
Tier 1 EPCs on our larger projects in
the UK and France, and expect to
announce their engagement in one
or more projects in due course.
Further, we formalised joint venture
(JV) arrangements in Croatia and
Greece, with a view to establishing
more subsidiaries and JVs in other
target markets in 2022. These
arrangements will ensure that our
standards for quality, efficiency
and innovation are applied
everywhere, but also that we
support successful, local businesses
to operate independently and
become reliable licensing and
distribution partners for EQTEC
technologies.
EQTEC plc Annual Report 2021 | 11
DAVID PALUMBO
Chief Executive Officer
22 April 2022
Forestry management waste at
BMEC, Wilseyville, California, USA
10 | EQTEC plc Annual Report 2021
Chief Executive’s report
Finally, and in support of our broadening
and deepening market presence, we
grew our global team, hiring process
engineers, control systems engineers and
solidifying our relationship with project
engineering partner CT3 Ingeniería (CT3).
These hires, and the CT3 relationship,
extended our core technical team and
added dozens of additional, project-
critical engineers to our global capacity.
We brought in a new CFO, who is raising
the bar for strategic finance, and we
added several other key roles to our
commercial and operational capabilities
in support of our Go-to-Markets.
We ended 2021 having done what we
set out to do: construct our platform for
growth; strengthen our presence across
geographies; grow our pipeline of go-to-
market entities and future licensors, each
with a pipeline of projects; grow our
partner network and future-proof
our technology leadership.
OPERATIONAL, COMMERCIAL
AND CORPORATE HIGHLIGHTS
In less than two years, EQTEC has grown
both its active projects and the pipeline
of interest and opportunity behind it. In
our 2020 annual report, we announced
10 projects under development or
construction, against a pipeline of
75 opportunities. In our 2021 interim
results last September, we announced
17 projects under development or
construction, against a pipeline of
well over 100.
Corporate development
R&D: The Company confirmed
completion of a successful R&D
programme in December, including
tests with Refuse Derived Fuel (RDF)
and others with contaminated plastics,
all at its R&D facility in France, operated
with partner Université de Lorraine.
Collaboration with Wood: The
Company in November signed a
strategic collaboration agreement with
Tier 1 engineering company Wood, to
focus on joint development of integrated
technology solutions for waste-to-SNG
and waste-to-hydrogen. Company
executives joined Wood at COP26 to
share its propositions and strategy for
waste-to-value business.
Collaboration with H2: The Company
in December signed a collaboration
framework agreement with development
consultancy H2 Energy Solutions Ltd
of Germany. The partners will pursue
opportunities for deployment of waste-
to-hydrogen and other solutions,
particularly in Germany and Turkey.
Appointment of CFO: The Company
in July appointed Nauman Babar as
CFO and to the Board of Directors.
Appointment of joint broker:
The Company in March appointed
Canaccord Genuity Limited as the
Company’s joint broker along with
Arden Partners.
Launch of Long-Term Incentive Plan:
The Company in February launched its
first Long-Term Incentive Plan for Group
employees, to support joint ownership
and drive performance through shared
accountability.
Plants under construction
USA: The Company in October invested
c. US$2.8 million (c. £2.1 million) in the
North Fork Community Power (NFCP)
project, increasing its equity share to
49%, offering a US$4.5 million convertible
loan facility. Following execution of the
facility, construction work continued.
The Company in December announced
a new partnership with Phoenix Energy,
North Fork Community Development
Council and Carbonfuture GmbH to help
Sierra Nevada communities sequester
carbon, reduce wildfire risk, generate
green energy, create jobs and support
the local community whilst generating
tradeable carbon credits.
Italy: The Company in May together
with a consortium of investors, acquired
a decommissioned, biomass waste-
to-energy plant in Tuscany, Italy that it
intends to recommission as a Market
Development Centre (MDC), with EQTEC
as O&M contractor. The plant will convert
multiple types of biomass feedstock into
heat, power and biochar.
We have done
what we set out
to do: construct
our platform
for growth,
strengthen our
presence across
geographies,
grow our
pipeline of
pipelines and
our partner
network, and
future-proof
our technology
leadership.
DAVID PALUMBO
Chief Executive Officer
Chief Executive’s report
Once operational, the Italia MDC is
expected to generate annual revenues of
c. €2,000,000 and EBITDA of c. €750,000.
Croatia: The Company in August
acquired through its Croatian JV,
a 1.2 MWe biomass-to-energy
gasification plant in Belišće, Croatia.
Once operational, it will become a
Croatia MDC, with EQTEC as O&M
contractor. Technology sales for EQTEC
over the life of the project are expected
to be c. €2.0 million, of which c. 60%
was invoiced in Q4 2021.
In September, the Company’s JV acquired
a 1.2 MWe biomass-to-energy gasification
plant in Karlovaç, Croatia. The plant will
be retrofitted with EQTEC technology and
repowered, and is expected to produce
3 MWe of green electricity and high-
quality biochar. It is expected that the
Company will become the plant’s O&M
contractor. Technology sales for EQTEC
over the life of the project are expected to
be c. €15m, of which c.10% was invoiced
by EQTEC in Q4 2021.
Greece: The Company in October
confirmed that all deliveries of EQTEC
technology had been made to the
0.5 MWe Larissa, Thessaly project. The
project is building Greece’s first advanced
gasification, waste-to-energy plant.
Projects under development
USA: The Company and its local partners
appointed EPC contractor Infinity Project
Management Inc (IPM) as owners’
representative for the Blue Mountain
Electric Company LLC opportunity in
Wilseyville, California (BMEC). The project
is expected to complete front-end
engineering design (FEED) in H2 2022,
toward financial close in the same year.
The BMEC plant will convert c. 24,000
tonnes of forestry waste per year into
c. 2,400 tonnes of high-quality biochar
and 3 MWe of power for the local
community, whilst contributing to
prevention of forest fires.
UK: In September, the Company’s
Southport project SPV entered into a
conditional share purchase agreement
to acquire full ownership of the project,
with the agreement expected to
complete in due course. In November,
the Company submitted a revised
planning application for a Phase 1
waste reception centre and anaerobic
digestion facility as a precursor to the
intended Phase 2 planning application
for an EQTEC facility. The planned Phase
1 facility is designed to convert 80,000
tonnes of waste into six million cubic
metres of biomethane, which, in turn
would output 9 MWe. The Phase 2 facility
is intended to convert up to 25,000
Partner spotlight
Synergy Projects d.o.o. is a joint venture (JV) in Croatia between EQTEC
and local partner, Sense ESCO d.o.o.
EQTEC provides development capital, commercial and funding support and
technology & engineering services to the JV and Managing Director, Marko
Slunjski toward qualifying and pursuing opportunities. Minority partner Sense
ESCO brings a development team and local relationships to generate pipeline
and drive projects to financial close and beyond.
The companies have been working together since 2015 and the JV was created
in July 2021 to co-develop projects in Croatia, starting with two, in Belišće and
Karlovaç, both with EQTEC Advanced Gasification Technology.
Sense ESCO was formed in 2014 by financial and technical partners from
Croatia, Germany and USA as an energy project management and development
company. With headquarters in Zagreb, Croatia, the team researches, designs,
finances, implements, operates and maintains energy efficiency, renewable
energy and biomass waste-to-energy projects in Southeastern Europe.
Sense ESCO has developed and commissioned or sold a number of energy
projects in the region, all with significantly positive returns on investment over
five to 15 years and with strong energy savings.
Marko Slunjski
Managing Director,
Synergy Projects d.o.o.
Partner: Go-To-Market
Market: Croatia
12 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 13
Chief Executive’s report
FINANCIAL HIGHLIGHTS
Chief Executive’s report
tonnes of RDF into an estimated 3 MWe
of green electricity per year. Further,
the Company and its partner, Rotunda
Group Ltd., identified the potential for
an additional gasification facility nearby.
The additional site would potentially
allow for installation of a larger, Phase 3
EQTEC facility that could transform waste
into synthetic natural gas (SNG) and/or
hydrogen. The Company and its partners
are carrying out feasibility studies. EQTEC
expects to be the project developer
for all phases of the project, providing
design and core Advanced Gasification
Technology and retaining a portion of
the O&M contract.
The Company in February signed a
Collaboration Framework Agreement
(CFA) with Logik Developments Limited,
toward development of a 9.9 MWe plant
at Deeside, Flintshire, UK, including
a Phase 1 recycling and anaerobic
digestion facility. The Company in
March announced it had signed a CFA
with Toyota Motor Manufacturing UK,
whose manufacturing facility is adjacent
to the site. The CFA expressed Toyota’s
intention to work with the Company
on innovative, circular and sustainable
waste-to-energy solutions for Toyota’s
engine manufacturing plant next to
the prospective Deeside plant. The
Company in June submitted a planning
application for a Phase 2 gasification
facility deploying EQTEC technology.
The proposed plant would combine
a 182,000-tonne waste reception
plant with anaerobic digestion and
EQTEC technology. The Company in
October announced it had through the
project SPV entered into a cooperation
agreement with Anaergia Inc. for
delivery of the multi-technology plant.
In December, the Company announced
entering into a Supplementary
Agreement with Logik under which
the two partners would develop an
additional Phase 3 waste-to-value
infrastructure on the Deeside site. The
partners successfully completed
a feasibility study for hydrogen
production that indicated planning
and environmental viability.
The Company in January received
notification of planning approval from
14 | EQTEC plc Annual Report 2021
Revenue: For the financial year
ending 31 December 2021, the
Group recognised revenue of
€9.2 million (FY 2020: €2.2 million).
Cash: The cash balance of the
Group as at 31 December 2021
stood at €6.4 million (31 December
2020: €6.4 million).
Profit/loss: For the financial year,
the Group incurred losses of
€4.7 million (FY 2020: €5.8 million).
Assets: The net assets of the Group
increased to €43.4 million as at
31 December 2021 (31 December
2020: €25.3 million).
Placing: The Company in May
raised £16 million (€19 million)
before expenses, in an institutional
investor-led, oversubscribed placing.
Debt: The Company in January
agreed a new loan facility of
€1.39 million with EQTEC
shareholder, Altair Group Investment
Limited, with a maturity date of
31 December 2021. The loan,
fully drawn down to repay an
outstanding debt with another
lender, had a lower interest rate
than the previously held debt
facility and was itself repaid in
full in June 2021, six months
ahead of schedule.
Stockton-on-Tees Borough Council for
an improved waste-to-energy scheme
for the Company’s RDF-to-energy project
at Billingham, Teesside. In February,
the Company’s project signed a
conditional Land Purchase Agreement.
The Company in June completed
concept design work for the core
gasification process, with progress
on design of the full plant.
The Company in December confirmed
it was investigating new offtake
opportunities for both Deeside and
Billingham and that it was working with
technology and delivery partners toward
feasibility work at both sites. The Company
in December also confirmed its decision
to defer financial close for both projects to
enable further feasibility work. Company
executives visited both sites in December
and had constructive meetings with the
local Members of Parliament.
France: The Company in December
signed a Letter of Intent (LoI) with
SEPS SAS of France (SEPS), a company
specialising in the management and
recycling of industrial waste. The LoI
will support the Company’s pursuit
of the safe and clean transformation
of contaminated plastics into energy,
hydrogen and biofuels.
The Company also confirmed it
had identified and was pursuing an
additional six project opportunities in
France for a range of biomass, RDF and
other feedstock, as well as a range of
offtake applications.
Greece: In January, the Company signed
a MoU with Nobilis Pro Energy S.A.
The agreement includes collaborative
development of Nobilis’s existing
pipeline of opportunities and for
construction in Nobilis, Almyros, where
grid connection and land agreement are
already confirmed.
The Company, in September, announced
formation of EQTEC Synergy Projects
Limited, a JV between EQTEC and its
strategic partners in Greece, German EPC
ewerGy GmbH and ECO Hellas M IKE. It
also confirmed that the JV had acquired
a 1 MWe biomass-to-energy project
in Livadia, Greece and exclusivity for a
second 1 MWe project nearby.
In October, the Company’s Greek JV
acquired the rights to a project in
Nevrokopi, Drama. The project would
develop a biomass-to-energy plant that
could generate 5 MW green electricity
from locally and sustainably sourced
forestry waste.
Ireland: The Company and its partner,
Carbon Sole Group Limited, pursued
development of 3 projects in Ireland
for biomass-to-bioenergy plants and in
particular for sustainable forestry waste for
production of synthetic natural gas (SNG).
L-R: Jeff Vander
Linden (COO) and
David Palumbo (CEO)
at Wood @ COP 26
Marian Sarti
General Manager, CT3
Partner: Technology
Market: Europe
Partner spotlight
CT3 Ingeniería S.L. has worked closely with EQTEC for 10 years, leading
the mechanical engineering work for most of the Company’s projects,
past and present, including at Billingham in Teesside, UK, North Fork in
California, USA, Larissa in Thessalia, Greece and the EQTEC Italia MDC
in Castiglione d’Orcia, Tuscany, Italy.
With EQTEC leading the process engineering at the core of EQTEC’s solutions,
CT3 continues to provide world-class design, development and construction
advisory services, including civil, mechanical and electrical engineering as well
as Instrument & Control (I&C) and electrical services, across an increasing number
of EQTEC-enabled plants.
Based in Madrid, Spain and operating for more than 30 years, CT3 now employs
more than 50 engineers deployed to EQTEC and a range of other new energy and
nuclear power businesses and can scale rapidly based on its Europe-wide database
of engineering talent and its flexible contracting capabilities. CT3 is increasingly a
core part of EQTEC’s platform for development, delivery and pipeline growth.
EQTEC plc Annual Report 2021 | 15
Chief Executive’s report
OUTLOOK AND FUTURE PLANS
The challenges of 2021 have only
expanded in 2022. The tragedy in
Ukraine and sanctions against Russia
have brought home to many the critical
importance of energy independence and
security. We see the recent, concerted
efforts to replace Russian oil and gas as
more than a short-term reaction; it is a
catalyst and accelerator of much more
fundamental, lasting change. Far greater
investment will now go into making the
shift away from fossil fuels. This presents
an enormous opportunity for EQTEC.
For the world to make this shift,
governments, investors and owner-
operators will turn their attention to the
pervasive, baseload energy challenge.
67% of baseload power is from non-
renewable sources that solar, wind and
hydro power cannot replace.1 Yet, more
than 90% of investments in alternative
energy solutions have gone toward
such non-baseload solutions.2 These
complementary solutions are also
essential, but the intermittency of
their supply makes them inadequate
to address baseload demand alone.
EQTEC and other companies able to
provide scalable, always-on, 24 x 7
x 365 solutions will increasingly find
themselves at the centre of attention
with policymakers and investors.
EQTEC’s ability to build smaller-scale,
local plants that use locally-sourced
feedstock for locally distributed energy
and biofuels not only advances the Net
Zero agenda, but it revolutionises waste
management, energy generation and
distribution. Our technology supports
communities and industries, in better
using local, unrecyclable types of waste,
transforming it into valuable resources.
EQTEC’s local-to-local approach also adds
grid resilience: one plant’s downtime
does not result in mass outages but is
supported by a distributed network.
This approach creates energy security,
independence and transition away from
fossil fuels.
We were happy to be acknowledged
in the UK Parliament for these very
points. Previous Leader of the House of
Commons Jacob Rees-Mogg commented
in January 2022 that, “Companies such
as EQTEC are exactly what we need to
keep us on course for net zero by 2050
while maintaining a healthy, varied and
affordable energy supply.” We are finding
increasing acknowledgement in the
UK and elsewhere across Europe, North
America and Asia that true gasification is
the preferred intermediate fuel solution
for hydrogen, synthetic natural gas
and biofuels. EQTEC is the innovation
leader in advanced gasification and we
intend to engage much more closely
with governments, investors and owner-
operators, embracing the post-fossil fuel
economy and the leading solutions in it.
To position EQTEC’s technology as a
replacement for fossil fuel technologies
and to support our growth and scale,
we are doing four key things:
First, we are investing in our Go-to-Market
model. We are formalising subsidiaries
in the USA, the UK, France and Italy, with
JVs in Croatia, the Aegean and possibly
elsewhere. We are looking again to Asia,
where we have long had demand and see
increasing opportunity.
Second, we are doubling-down on our
investments in innovation. A successful
year of tests and trials in 2021 is expected
to be followed by another in 2022. We
have a three-year strategy for technology
development and a solid plan every year.
Our partners at Université de Lorraine and
Universidad de Extremadura will be joined
by Wood and other, top-tier technology
businesses to be announced.
Third, we are enriching our global network
of partners. As EQTEC pursues relationships
with multinational, Tier 1 development,
delivery and technology partners, each
of our Go-to-Markets is building local
partnerships. The balance of local and
multinational will bring resilience to our
delivery model and support development
of a global, technology licensing network.
1 International Energy Agency (2021), Net Zero by 2050, IEA, Paris
2 IRENA (2021), World Energy Transitions Outlook: 1.5°C Pathway, International Renewable Energy Agency, Abu Dhabi
L-R: Dr Yoel Alemán (CTO),
Giampiero Servetti (COSMI), David
Palumbo (CEO) at Italia MDC, Italy
EQTEC’s ability to build smaller-scale,
local plants that use locally-sourced
feedstock for locally distributed
energy and biofuels not only
advances the Net Zero agenda,
but it revolutionises energy and
biofuel generation.
DAVID PALUMBO
Chief Executive Officer
Chief Executive’s report
Fourth, we are investing in talent. 2021
saw growth in both our technical and
corporate centres with a doubling across
the business as a whole. We invested in
veteran delivery managers with decades
of experience in large-scale infrastructure
project management and complex deal-
making. In 2022, we are investing in
corporate finance and venturing capabilities
to pursue private- and public-sector funding.
We are hiring more process engineers and
engineering project managers to cover our
growing project portfolio. We are adding
financial accountants to drive discipline
with forecasting and budget management.
Finally, we are investing in targeted Go-
to-Markets, including some of our partner
organisations, to ensure the quality and
discipline we expect is delivered through
all projects.
By the end of 2022, we are committed to
having two MDCs fully operational and
clocking the efficiency and high operational
availability we expect. The importance
of these and future MDCs cannot be
overstated. Not only will these further prove
EQTEC’s proposition, but they will be visitor
centres for the local community and for
prospective partners and customers. They
will be training and development facilities
for our partners and their partners. They will
be R&D facilities for testing capabilities in a
live environment. They will be the plants that
raise EQTEC’s visibility and prove to large-
scale owner-operators that we have a highly
scalable solution that will be the core of at
least one of their future lines of business.
The Net Zero future is one with minimum
dependency on fossil fuels. EQTEC and
companies like us will be the ones to make
that future possible. To accelerate progress
toward it, and to transform the greatest
challenge of our time into the greatest
opportunity, we are building a resourceful
and resilient team, a global ecosystem
of top-tier partners and technology-led
solution business models as a platform
to support exponential growth. 2022 is
expected to prove an even greater inflection
point than 2021 and we are embracing
its challenges fully, to show ourselves and
our shareholders that EQTEC can fulfil our
mission as a leading, technology innovator
for baseload energy and biofuels.
16 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 17
DR ESTHER LORENTE ROYO
Senior Process Engineer
MARCOS GARCÍA BARTOLOMÉ
Automation Controls Engineer
DR. YOEL ALEMÁN
Chief Technical Officer (Innovation and Engineering)
ARIEL ENTENZA MEDINA
Electrical Engineer
ERNESTO BRAVO CAMPOS
Mechanical Engineer
Innovating and deploying
clean solutions for advanced
biofuels and energy for a Net
Zero future.
MARCOS NEBOT CERDAN
I&C Engineer
DENISA RODRIGUEZ ROYO
Project Management
14
specialists;
4 PhDs in
gasification
LIZ DE ABREU DEVIA
Process Engineer
DR CÉSAR BERRUECO MORENO
Chief Process Engineer
MARIBEL MORMONTOY BENITES
Office Manager
Innovation and
engineering
EQTEC technical centre (Barcelona)
EQTEC’s proven, patented and
proprietary advanced gasification
capabilities are at the heart of our
business.
The technology reliably and sustainably
creates a uniquely versatile and customisable
syngas from the widest range of waste
feedstock types – with nearly 60 successfully
tested. EQTEC syngas can be applied to
diverse applications, including hydrogen,
synthetic natural gas (SNG), sustainable
aviation fuels (SAF) and other biofuels,.
electricity, thermal energy and biochar.
Our Technical Centre is based in Barcelona
and is led by our CTO, Dr Yoel Alemán, who
has over 20 years of experience in biomass
and municipal solid waste gasification and
authored a gasification patent. Prior to joining
EQTEC, Dr Alemán was renowned for reviving
failed gasification plants. Since joining EQTEC,
he has authored a further three patents and
designed, built, commissioned and operated
gasification facilities at both pilot and
commercial scale.
Dr Alemán is supported by a team, including
three other PhDs in Chemical Engineering,
two of whom also have long careers
specialising in gasification.
INNOVATION
EQTEC drives the front-edge of syngas
innovation through well-planned and intensive
trials with R&D facilities at the Université
de Lorraine (France) and Universidad de
Extremadura (Spain), and with an emerging list
of private sector partners able to apply EQTEC’s
world-leading syngas to a range of applications.
EQTEC’s annual R&D programme supports
development of greater process efficiency,
feedstock diversity and application versatility.
More R&D facilities are planned.
PROCESS ENGINEERING
EQTEC’s core capability is mastery of the end
to-end gasification process and decades of
research and development with the variables
that make it efficient and operationally
viable. This includes design of equipment
but also tailored specifications and in-house
programming of control systems that maximise
end-to-end process productivity.
PROJECT ENGINEERING
Civil, mechanical and electrical engineering are
all critical to integrated project development,
construction and commissioning. EQTEC’s
project engineering partner CT3 Ingenieria
S.L. (featured on page 15) leads this work for
EQTEC projects.
MARIA BELEN ESPIÑEIRA
Process Engineer
OSCAR VELASCO HERNAN
O&M Manager
DR JAVIER RECARI
Process Engineer
JUNHO JANG KWEON
I&C Engineer
18 | EQTEC plc Annual Report 2021
18 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 19
Development and growth
EQTEC corporate centre (Cork, London)
SEAN RUANE
Business Development Manager
DAVID LE SAINT
Market Lead, France
Strategy and operations
STRATEGY AND PLANNING
Direction and business priorities; three-year strategic
planning, one-year business planning and business growth
strategy; frame for all other planning and prioritisation
across the Group, and clear targets and objectives.
MARKETING AND COMMUNICATIONS
Capability for targeting, defining, delivering and creating
value from market-facing products and services; for market
positioning and communications of the EQTEC brand
and market growth.
Commercial and investment
VENTURES AND INVESTMENT
Funding pipeline and key investment partners into
EQTEC strategic priorities, innovation and disruption
including new technology.
BUSINESS DEVELOPMENT
Pipeline front-end management from demand
incubation and project inception through early-stage
project development, with end-to-end management
of stakeholders and handling of key relationships.
Supporting growth
into scale.
DAVID PALUMBO
Chief Executive Officer (Commercial and Investment)
PROJECT DEVELOPMENT
Based on a clear, integrated milestone plan for financial
close, disciplined delivery of commercial, funding,
engineering and delivery readiness outcomes at pace,
to specification and to quality.
ECOSYSTEM MANAGEMENT
Establishment and management of a global network
of JVs and partnerships across the value chain for
integrated, quality delivery.
BUSINESS SUPPORT INCLUDING PEOPLE,
PROCUREMENT AND LOGISTICS
A critical business functions that enable the whole
of the business, each with a blend of strategic and
operational activities.
Finance and compliance
FINANCE, GOVERNANCE AND COMPANY
SECRETARY
Financial management and management information,
Group reporting, project and commercial financing,
compliance oversight, company secretary function
and oversight of key external relationships with
strategic financial partners and advisers.
27
professionals
worldwide
JOHN HAYES
Head of Major Projects
PAUL CHECKETTS
Project Development, Major Projects
LISA SYLVESTER
Executive Assistant
ANDREW MILLINGTON
Project Development, Major Projects
LAURA LUCAS
Head of Strategic Growth
In
7
markets and
growing
JIMMY MCGLINCHEY
Group Financial Accountant
NAUMAN BABAR
Chief Financial Officer (Finance and Compliance)
JOSHUA PAYNE
Head of Analytics
LISA ARTEMIS
Head of Marketing and Communications
JEFFREY VANDER LINDEN
Chief Operating Officer (Strategy and Operations)
20 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 21
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, along with the Board, 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’s target business
model envisions EQTEC as the leading
technology innovator and licensing
partner to owner-operators for
syngas technology and production
of renewable, clean baseload energy
and biofuels. The Company’s business
strategy aims to develop that market,
position EQTEC as a leader within
it and scale the business through
targeted development of capability
and capacity, enabled by digital tools
and techniques. Critical to the
Company’s success with this strategy
is growth of a qualified and well-
integrated set of partners, who
would deliver an increasing number
of activities essential to integration
of EQTEC technologies into the
world’s energy and biofuels plants
of the future.
The Company currently generates
income through three revenue streams:
development services, technology sales &
services and other revenues. Development
services include activities essential to
achievement of Financial Close, from land
acquisition, planning & permitting and
engineering & design to Engineering,
Procurement & Construction (EPC)
selection, funding and legal execution
of contracts. Technology sales & services
include specification, manufacture and
delivery on site of EQTEC-designed
equipment and essential ancillary
equipment, on-site construction advisory
and further engineering as required,
technology integration support with non-
EQTEC technology and commissioning of
the EQTEC-enabled plant. Other revenues
include plant operations from part-owned
or wholly-owned Market Development
Centres, from consultancy or from
provision of other non-core services.
Business model
BUSINESS MODEL
THE TARGET MODEL IS TECHNOLOGY INNOVATOR & LICENSOR
The target model is Technology Innovator & Licensor
Other
Plant operations
& other
Plant operations
& other
Plant operations
& other
Plant operations
& other
Plant operations
& other
Plant operations
& other
Plant operations
& other
% of revenue from evolving revenue streams (2021 – 2035)
% of revenue from evolving revenue streams (2021 – 2035)
Maintenance
and value-added
services
Maintenance
and value-added
services
Maintenance
and value-added
services
% of
total
revenue
e
u
n
e
v
e
r
l
a
t
o
t
f
o
%
Technology
Sales and
Services
Technology
Sales and
Services
Maintenance
services
Technology
Sales and
Services
Maintenance
services
Technology
licensing
Maintenance
services
Technology
licensing
Commissioning
Services
Technology
Sales and
Services
Technology
Sales and Services
Project
Development
Services
Project
Development
Services
Development
engineering
Project
Development
Services
Development
engineering
Construction
engineering
Development
engineering
Technology
licensing
Commissioning
Services
Construction
engineering
Development
engineering
2021
2021
2022
2022
2023
2023
2024
2024
2025
2025
2028
2028
Early in its development (2020 – 2025), the Company earns revenue from plant development
and associated technology sales.
Early in its development (2020 – 2025), the Company
earns revenue from plant development and associated
technology sales.
In the medium-term (2025 – 2030), it will
In the medium-term (2025 – 2030), it will increasingly earn
revenue from services and licensing.
increasingly earn revenue from services
and licensing.
Technology
licensing
Construction
engineering
Development
engineering
2030
2030
Technology
licensing
Development
engineering
2035
2035
In the long term, development and construction will be undertaken
In the long term, development and construction
almost exclusively by partners, with the Company earning revenues
will be undertaken almost exclusively by partners,
predominantly from licensing and value-added services at live plants
with the Company earning revenues predomi-
running EQTEC technology but owned and operated by others.
nantly from licensing and value-added services at
live plants running EQTEC technology but owned
and operated by others.
© 2022 EQTEC plc and Group
22 | EQTEC plc Annual Report 2021
EQTEC CONFIDENTIAL
Carbon-negative, Baseload Energy & Biofuels | March 2022 | page 1
The Company anticipates that its
revenue streams will evolve in the future,
with development fees declining as
partners increasingly take over all but
the core technology engineering work
leading to Financial Close, with greater
differentiation across technology sales &
services as partners are able to integrate
more fully and drive more projects
with relative independence, and with
increasing revenue from technology
licensing, maintenance and other
value-added services for operational
plants running EQTEC technology.
The Company currently develops
business in the USA, UK and the EU
(including France, Italy, Croatia and
Greece) and will target new geographies
as substantial pipelines of qualified
opportunities in those markets present
themselves and as the viability of a
business development and delivery
capability in those markets can be
established.
The Company is focused on maximising
shareholder value in the near term
through greater recognition and an
increased valuation by the market,
measurable in the share price. To
achieve this, the Company is driving an
increase in the number of operational
plants running EQTEC technology, after
which it will also increase the variety
(in terms of feedstock inputs and
offtake applications) of EQTEC solutions
deployed in those plants. In addition to
biomass conversion to combined heat
and power (CHP), EQTEC is currently
pursuing projects with feedstock from
municipal waste (in the form of refuse-
derived fuel, or RDF), from industry waste
(such as contaminated plastics) and from
a range of agricultural and forestry waste.
In addition to CHP, EQTEC is currently
pursuing projects that would apply
EQTEC’s waste-to-syngas capabilities
to production of hydrogen, sustainable
aviation fuel (SAF), synthetic natural gas
(SNG) and other biofuels.
EQTEC plc is quoted on the AIM
market of the London Stock Exchange
(LSE), bears the Green Economy
Mark awarded by the LSE, and trades
as AIM:EQT.
Revenue streams will evolve in the
future as we move to technology
licensing, maintenance and other
value-added services.
The identification and management
of risk in relation to the achievement
of our strategy and business model
are addressed later in this report in
“Managing and mitigating risk”.
STAKEHOLDER RESPONSIBILITIES
Our technology and services have
a positive impact on societies,
economies and the environment.
Through taking waste which cannot
be recycled and turning it into a pure
syngas for transforming into energy
and biofuels, we reduce the need for
less environmentally-friendly methods
such as incineration and landfill and
contribute towards meeting country and
global Net Zero targets, reducing carbon
emissions and meeting renewable
energy targets. We are passionate
about using our technology to deliver
sustainable, local outcomes for local
businesses and the communities who
are customers of the plants that use our
technology, and to always deliver to the
highest environmental, regulatory and
business standards and practices.
The Board recognises that the ongoing
and long-term success of the Group is
significantly influenced by the efforts
and commitment of the employees of
the Group, its strategic partners (including
but not limited to those with expertise in
funding, technology, operational delivery
and go-to-market), contractors and
suppliers and on the Group’s relationships
with these and other stakeholders
including customers, investors, industry
associations, political and media
organisations, analysts, communities,
the public and the 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.
In 2021, the Group set out its
performance management cycle for all
employees. This is designed to ensure
that: every individual’s objectives and
performances are directly linked and
impacting on the most relevant Group
performance and success; there is
an open and confidential dialogue
with each person in the Group with
successful two-way communication
with agreement on goals, targets and
aspirations of the employee, across
teams 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.
The Board ensures that all key
relationships with partners, contractors
and suppliers are the responsibility of,
or are closely supervised by, one of
the directors.
ENGAGING AND COMMUNICATING
WITH SHAREHOLDERS
The Board is committed to continually
improving and maintaining frequent,
open and two-way dialogue with its
shareholders. Institutional shareholders
and analysts have the opportunity to
discuss topics, issues and to provide
feedback at meetings with the Company.
EQTEC plc Annual Report 2021 | 23
Corporate governance statement
Corporate governance statement
Our technology
and services
have a positive
impact on
society and the
environment.
In addition, all shareholders are
encouraged to attend and participate
with directors in the Company’s
Annual General Meeting and its
regular interactive shareholder webinars
through the Investor Meets Company
platform, which it introduced in 2021.
Investors also have access to current
information on the Company though
its website, www.eqtec.com and via
Nauman Babar, CFO and David Palumbo,
CEO, who are available to answer investor
relations enquiries through the Group’s
Marketing and Communications
function, on request.
providing a system of internal controls.
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 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.
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
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
believes 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 for on-going risk management are:
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.
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.
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.
Strong corporate governance and dedicated senior
management remain the key elements of effective
reputational 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.
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.
System process or control failure
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. 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. A robust performance
management framework coupled with a balanced incentive
programme allows the business to mitigate this risk ensures
that key individuals are retained.
We deliver 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.
We have built extensive operational processes to ensure
that our product design, engineering, and other services
meet the most rigorous quality standards. We have instituted
project governance committees to ensure regular reporting,
early risk identification and mitigation as well as monitoring
of progress against project delivery plans. Our internal
control procedures continue to be reviewed periodically and
adapted whenever necessary to address any new challenges
that the ever growing landscape has to offer.
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.
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. Furthermore, business growth and financial
performance are monitored through monthly performance
analysis around revenue and costs and mitigating actions are
taken accordingly.
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.
Political and regulatory risk
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.
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.
24 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 25
Board of
directors
The Board comprises four, full-time Executive Directors:
the CEO David Palumbo, the CFO Nauman Babar, the COO
Jeffrey Vander Linden and the CTO Dr Yoel Alemán, and two
independent, non-executive directors: the Chairman Ian
Pearson and the Director Tom Quigley. Each non-executive
director devotes as much time as required to carry out his
role and accountabilities to the business.
The biographies of the Directors, who we consider to be
the key managers of the business, are set out below:
The Board of Directors has a strong
mix of financial, operational,
renewable energy, waste
infrastructure, regulatory and
political experience.
L-R: Nauman Babar (CFO),
Jeff Vander Linden (COO)
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer (CEO)
NAUMAN BABAR
Chief Financial Officer (CFO)
and Company Secretary
JEFFREY VANDER LINDEN
Chief Operating Officer (COO)
DR. YOEL ALEMÁN
Chief Technical Officer (CTO)
THOMAS QUIGLEY
Non-Executive Director
Ian was the chairman of AIM-listed
OVCT2 for five years. OVCT2 invested
in a variety of renewable 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 and
Chairman of Quantum Exponential
Group plc. Ian has also previously
been a member of the UK Advisory
Board of the accountants PwC and
between 2001 and 2010, he 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 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.
Nauman is a senior Finance
professional who has almost 20 years
of international experience within
corporate finance, audit and finance
function transformation with a track
record of scaling up growth companies
and working in private equity-backed
businesses. He has predominantly
worked within the Energy & Utilities
space with a focus on renewables and
cleantech. Nauman initially worked with
international accountants, PwC and
has gained experience with Accenture,
EY and Mott Macdonald and most
recently served as Finance Director at
Woodlands Energy Services. Nauman
is a Fellow of the Institute of Chartered
Accountants in England & Wales and
holds a Bachelor’s degree in Finance
from University of Essex.
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 four
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
from April 2010.
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.
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.
26 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 27
Corporate governance statement
Corporate governance statement
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.
Partner spotlight
The ERBE (Equipe de Recherche sur la Biomasse Energie) and
LERMAB (Laboratoire d’Etudes et de Recherche sur le Matériau Bois) team
is part of the LERMAB laboratory, a research centre at the Université de
Lorraine. For the last 20 years, ERBE has worked on the thermochemical
conversion of biomass and waste-to-energy.
The centre includes industrial pilot plants (50 kg/h) that test gasification, pyrolysis
and combustion processes. The work has led to the team’s developing greater
understanding of precise mass and energy balances of a wide variety of waste
types, including forestry, agricultural, industrial and municipal. This growing
understanding of the performance of feedstocks in thermochemical processes
has then been applied to optimisation of processes for energy efficiency and
reduction of environmental impacts.
For the past 10 years, the team has worked with EQTEC to co-develop a gasification
pilot plant based on EQTEC’s bubbling fluidized bed Advanced Gasification
Technology. Today, this partnership allows both parties to further test the
gasification of biomass and waste for different uses, including cogeneration of
electricity and gas (CHP), production of methane and production of hydrogen.
Yann Rogaume
Professor & Head of Research Team
Partner: Technology R&D
Market: Europe
SKILLS, CAPABILITIES AND
BOARD PERFORMANCE
felt to be required on the Board,
it shall be sought.
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 Tom 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
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.
CORPORATE CULTURE
The Board recognises the importance
of sound corporate values and the
impact it has on delivering Group
strategy, target business model and
relevant stakeholders. The Board has
implemented several initiatives to
ensure that all personnel and partners
who are engaged with the Group have
a clear understanding of, the Code of
Conduct that the business expects
them to adhere to, transparent
performance measurement and
evaluation process and relevant
support mechanisms in place to
achieve personal and business
objectives. In addition, the Company
has also adopted a code for directors’
and employees’ dealings in securities
which is in accordance with Rule 21
of the AIM Rules and the Market
Abuse Regulation. As part of risk
identification and mitigation, the
Board constantly monitors the Group’s
culture through established processes
and feedback mechanism.
L-R: Damir Žaja (Local
consultant engineer), Marko
Slunjski (MD, Croatia JV),
Dr Yoel Alemán (CTO) at
Belišće MDC, Croatia
28 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 29
Corporate governance statement
Corporate governance statement
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
reserved for 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.
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.
A senior management
model of best practice
and guidance
ensures our values
and expected
behaviours are clear
and understood by
everyone.
Partner spotlight
COSMI provides Engineering, Procurement and Construction (EPC)
services and project management services for renewable energy plants.
It employs professionals from the engineering sector with decades of developed
experience in industries including steel, petrochemical and renewable energy.
Within its portfolio of projects, COSMI designs and provides construction
resources, piping made by expert technicians and specialised welders and
assembly of metal structures for industrial production lines, waste-to-energy
plants and industrial warehouses.
COSMI also provides industrial, engineering and mechanical maintenance so
that clients like EQTEC receive improved performance and better plant usage
rate from their projects.
Giampiero Servetti
President
Partner: Project delivery
Market: Europe
COMPANY SECRETARY
REMUNERATION COMMITTEE
At present the CFO also acts as the
Company Secretary.
AUDIT COMMITTEE
The Audit Committee comprises Tom
Quigley (Chairman) and Ian Pearson.
Meetings are also attended by the
CFO 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 two times in each financial
year and has unrestricted access to
the Group’s external auditor.
The Remuneration Committee
comprises Ian Pearson (Chairman)
and Tom 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
2021
BOARD
AUDIT COMMITTEE
REMUNERATION
COMMITTEE
Number of Meetings
Ian Pearson
David Palumbo
Nauman Babar
(since 19 Jul 2021)
Yoel Alemán
Jeffrey Vander Linden
Thomas Quigley
Gerry Madden
(retired 15 Jul 2021)
14
13
14
3
13
13
13
10
2
2
-
-
-
-
2
2
2
2
2
-
-
-
2
-
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
22 April 2022
30 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 31
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 2021.
Directors’ report
PRINCIPAL ACTIVITIES,
BUSINESS REVIEW AND FUTURE
DEVELOPMENTS
EQTEC is a leading technology provider
with proven, patented technology
for clean production of synthesis gas
(‘syngas’), which is a fossil fuel alternative
that will increasingly contribute to
production of the world’s baseload
energies and biofuels. What’s more,
it transforms the world’s waste (from
municipal, industrial and agricultural
sources) into a sustainable fuel source
for production of a diverse set of ‘final
fuels’ including hydrogen, biofuels,
synthetic natural gas (SNG), thermal
power and electricity.
EQTEC designs, develops and supplies
core technology for syngas production
plants in the USA, UK and EU , with highly
efficient equipment that is modular and
scalable from 1MW to 30MW. EQTEC’s
versatile solutions convert nearly 60
varieties of feedstock, including forestry
wood waste, vegetation and other
agricultural waste from farms, industrial
waste and sludge from factories and
municipal waste, all with no hazardous
or toxic emissions. EQTEC’s solutions
all produce a pure, high-quality syngas
that can be used for the widest range of
applications, including the generation
of electricity and heat, production
of synthetic natural gas (through
methanation) or biofuels (through
Fischer-Tropsch, gas-to-liquid processing)
and reforming of hydrogen.
Our revenue currently comes from the
following streams: 1) development
services and engineering (during project
development); 2) proprietary gasification
technology sales including software,
engineering & design and other related
services (during plant construction);
and 3) other, including operations,
maintenance and management services
(during plant operations). The only
plants we seek to own equity in are our
Market Development Centres (MDCs),
which are profitable, commercially-live
projects where we can showcase our
technology in a live environment. Our
business model does not depend upon
building plants using our balance sheet
nor does it involve retaining significant
equity stake once projects have been
developed to certain stage of maturity. 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 7 to 17.
RESULTS AND DIVIDENDS
The results for the financial year are set
out on page 49. No dividends have been
proposed by the Directors in the current
financial year (2020: €Nil).
PRINCIPAL RISKS AND
UNCERTAINTIES
The Group actively applies a risk
management framework to identify,
manage and mitigate business risk. Risk
assessment and evaluation are essential
parts of the Group’s internal controls.
Information about financial risk
management objectives and policies of
the Group, along with exposure of the
Group to credit risk, liquidity risk and
market risk, is disclosed in Note 5 to
the financial statements.
The Group is exposed to a number of
strategic and operational risks, outlined
below. Our risk framework addresses
both enterprise-wide and function-
specific risks and engages the Board in
defining mitigations for each. These risks
and their mitigations are reviewed and
updated regularly, to accommodate
changes in the Group’s market context as
well as the Board’s view on priorities and
responses to the changing context.
Strategic risks
Strategic risks address the Company’s
future plans and the global market
L-R: Dr Yoel Alemán (CTO),
David Palumbo (CEO)
32 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 33
Directors’ report
environment in which it operates,
including strategic partnerships,
intellectual property, demand for our
solutions and services, competitive
threats and investments in technology
and public policy.
Global market 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 strategic and operational success of
the Group depends on achieving a set of
clearly defined objectives. To do this, we
select, enter into and work with a wide
variety of strategic partners, including
but not limited to those with expertise in
funding, technology, operational delivery
and go-to-market, where we may have a
lesser degree of control over the business
operations, and in doing so which may
expose us to additional operational,
financial, legal or compliance risks.
Intellectual property risks
We continually review both the scope
and geographic applicability of all our
intellectual property (IP) and adjust
accordingly. Although the Group
undertakes reasonable endeavours to
protect its IP, however, our patents and
other IP may not prevent competitors
from independently developing or
selling products and services similar to
or duplicative of ours, and there can be
34 | EQTEC plc Annual Report 2021
no assurance that the resources invested
by us to protect our IP will be sufficient.
If we are not able to protect our IP, the
value of our brand and other intangible
assets may be diminished, and our
business may be adversely affected. In
addition to the IP and patents relating
to our technology process, we possess
a wide ranging level and breadth of
proprietary know-how that drives our
proven operational capabilities and
excellence.
COVID-19 risks
As countries move into the phase of
‘living with Covid-19’, a certain level
of normalcy has returned to the
macroeconomic business environment.
Despite this, the flow through impact
of Covid-19 on global supply chain is
still prevalent.
We closely monitor the supply chain
related effects of the pandemic on the
business and deploy risk mitigation
strategies where required. We have
considered the potential supply chain
impact of Covid-19 in our scenario
analysis and forecasting. We will keep
our business operations under review
and adapt accordingly if any of the
supply chain related factors change.
Operational risks
Operational risks arise from systems,
processes, people and external
factors that could adversely impact
the otherwise smooth, efficient and
timely operation of our businesses.
These include innovation, R&D,
project development, project delivery,
plant operations and maintenance,
quality management, information
management & data security, marketing
& communications and/or people
management.
We innovate, deploy and integrate highly
sophisticated solutions and provide
specialised services based on leading-
edge technologies, including know-how,
hardware and software. Many of our
solutions involve complex industrial
machinery and plant infrastructure such
that the impact of a product failure or
similar event could be catastrophic.
While we apply quality assurance, on-site
Directors’ report
inspection and operations & maintenance
processes to ensure that our solutions
operate as designed, there can be no
perfect assurance that the Company,
our customers or other third parties
will not experience operational process
failures or other problems that could
result in product, safety, regulatory or
environmental risks.
Even where crisis management or business
continuity plans exist, 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 and/or
financial position. 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.
In specific instances, the Group invests
capital in developing go-to-market entities
(such as wholly-owned subsidiaries or
majority-owned joint ventures) toward
growing and pursuing pipelines of waste-
to-energy projects. The Group’s business
model depends on increasing funding
of projects by third parties, the timing of
which is subject to uncertainties and is not
in the Group’s control. The timing of funds
generated from projects can be difficult
to predict and could adversely affect the
Group’s results of operations where they
cannot be raised in a timely way.
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.
We closely monitor the supply chain
related effects of the pandemic on the
business and deploy risk mitigation
strategies where required. We have
considered the potential supply chain
impact of COVID-19 in our scenario
analysis and forecasting. We will keep
our business operations under review
and adapt accordingly if any of the
supply chain related factors change.
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.
RESEARCH AND DEVELOPMENT
The Group is fully committed to ongoing
technological innovation in all sectors
of its business. Expenditure on research
and development amounted to €17,991
in 2021 (2020: €26,412) as disclosed in
Note 14 to the Financial Statements.
In addition, the company has incurred
EQTEC plc Annual Report 2021 | 35
Revenue 2021
FY 2020: €2.2 million€9.2M
Ian Pearson (Chairman)
Directors’ report
expenditure of €192,757 during the
financial year with respect to property,
plant and equipment involved in
research and development.
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
2023 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 on supply
chain and related operational and
execution challenges posed by it.
The forecasts demonstrate that the
Group and Company is forecast to
generate cash in 2022/2023 and that
the Group and Company has sufficient
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:
David Palumbo
Jeffrey Vander Linden
Nauman Babar
(appointed 19 Jul 2021)
Yoel Alemán
Ian Pearson
Thomas Quigley
Gerry Madden
(resigned 15 Jul 2021)
DIRECTORS’ AND SECRETARY’S
INTERESTS IN SHARES
The Directors and secretary of EQTEC
plc who held office at 31 December
2021 had the following interests in
the Ordinary Shares (€0.001 each) of
the Company:
DIRECTORS
AT 31 DECEMBER 2021
AT 31 DECEMBER 2020
(or date of appointment if later)
Ian Pearson
7,204,300
537,634
David Palumbo
43,659,090
23,659,090
Nauman Babar
(also the Company’s secretary)
-
Jeffrey Vander Linden
15,477,732
Yoel Alemán
170,791,970
Thomas Quigley
27,854,154
-
2,633,288
78,209,666
26,254,154
We do not use
our balance
sheet to build
plants, nor
do we retain
a significant
equity stake
once projects
reach maturity.
L-R: local Senior Project Manager
and Dr Yoel Alemán (CTO) at
North Fork, California, USA
Directors’ report
The Directors who held office at
31 December 2021 had the following
interests in warrant and option
instruments issued by the Company:
ambiguity, entrepreneurialism and
long experience and expertise on
matters policy, strategic decision-making
and governance.
DIRECTORS
LTIP OPTIONS 2021
EMPLOYEE WARRANTS 2020
AT 31 DEC
2021
AT 31 DEC
2020
AT 31 DEC
2021
AT 31 DEC
2020
David Palumbo
-
Nauman Babar
(also the Company’s secretary)
3,332,716
Jeffrey Vander Linden
8,181,818
Yoel Alemán
Thomas Quigley
-
-
-
-
-
-
-
196,968,812
196,968,812
-
-
-
-
98,484,406
98,484,406
19,696,881
19,696,881
The exercise price of the employee
warrants is 0.25p with a contractual life
of three years (expiry date 31 March
2023). At 31 December 2021 all of the
employee warrants had fully vested.
The exercise price of the LTIP Options
2021 is 0.01p with an expiry date of 31
January 2032. At 31 December 2021,
none of the LTIP options had vested –
one-third of the options granted above
are expected to vest in 2022. Further
details of the LTIP scheme are set out in
Note 27 of the financial statements.
The directors and secretary who held
office at 31 December 2021 did not have
any interests in the share capital of any
of the subsidiaries of the Company.
In setting remuneration levels, the
Remuneration Committee benchmarks
other companies of similar size and scope.
To date, remuneration has favoured a
lower average executive non-contingent
base pay, augmented by a higher rate
of contingent, performance-based pay.
The Company has implemented a formal
performance management framework
for both the business and individuals,
including executives and both cash-based
and share-based incentive pay are linked
to individual and Company performance.
All incentive pay is approved by the
Remuneration Committee and ratified
by the Board.
Details of Directors’ remuneration are
included in Note 34 of the notes to the
financial statements.
REMUNERATION COMMITTEE
REPORT
ACCOUNTING RECORDS
The Group’s remuneration model is
designed to attract and retain people of
the highest calibre who can bring their
experience and impact to the work of the
Group and achievement of its near-term
business plan and long-term strategy.
Executive remuneration in particular
targets a higher proportion of pay based
on performance of the Company as
a whole and attracts leadership with
strong accountability, comfort with
The Directors believe that they have
complied with the 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.
36 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 37
Directors’ report
Directors’ report
IMPORTANT EVENTS SINCE THE
YEAR-END
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
Details of occurrence of events since
31 December 2021 with an impact on
the Group are included in Note 35 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.
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 the Company
Law, the Directors must not approve the
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.
Our technology transforms
the world’s waste into
syngas, a sustainable fuel for
hydrogen, biofuels, synthetic
natural gas (SNG), electricity
and thermal power.
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
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
38 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 39
L-R: Dr. Esther Lorente,
Denisa Rodríguez
22 April 2022
22 April 2022
ESG spotlight
EQTEC ESG Statement: Carbon Engineering for a
Net Zero Future
In January 2022, we released our Environmental, Social and Governance (ESG) Statement.
The Statement sets out how EQTEC will build on its ESG achievements to date and incorporate a range
of ESG goals into its three-year business strategy and annual business plans. We view realisation of these
goals as fundamental to the Company’s mission and long-term commercial success.
The Statement organises our ESG goals into four strategic priorities to focus the Group, our projects,
people and partners on accelerating progress toward realisation of global Net Zero targets.
ESG goals in the three-year business strategy:
EQTEC focuses talent and innovation on CARBON ENGINEERING;
we will innovate and deploy clean solutions for advanced biofuels and energy;
EQTEC is dedicated to re-establishing a CLEAN WORLD;
we convert the world’s waste into valuable energy and biofuels without creating
dangerous pollutants or emissions. We will manage carbon for the Net Zero
transition and transform waste to value;
EQTEC supports the development of SUSTAINABLE COMMUNITIES;
we engage locally, employ locally, implement locally and maintain our
technology locally. We will invest in responsible partners and suppliers and
engage and support local communities; and
EQTEC commits to COMMERCIAL RESPONSIBILITY;
we practice high standards of governance and management across our
operations and value chain and communicate and engage openly with our
stakeholders. We will build the best teams and keep them safe and grow and
scale the business responsibly.
Managing and reporting our progress:
The Group is establishing formal governance for ESG and integrating ESG
reporting into existing Group management reporting with ESG communication
aligned into its existing communication standards. A full year ESG report for 2022
will be released in Spring 2023.
EQTEC has long
prioritised sustainable
growth in its business
strategy. The ESG
Statement enriches
our strategy by
setting ambitious
goals for the Group
and its partners,
suppliers and
employees. It also
makes the Company
and its leadership
accountable for
driving progress and
communicating it to
our stakeholders.
IAN PEARSON
Non-Executive Chairman
40 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 41
Independent auditor’s report
Independent auditor’s report
Independent
auditor’s report
OPINION
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
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 2021 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 2021 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 2021
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.
BASIS FOR OPINION
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.
CONCLUSIONS RELATING TO GOING
CONCERN
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, understanding 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
and development sales and cash
outflow from project costs and other
operating expenses.
Making inquiries on the status of the
projects and understanding on how
the Group and Company’s future
plans for each of the projects will be
funded and assessing whether this
can support the future developments
and cost projections.
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.
KEY AUDIT MATTERS
bias that could result in a risk of material
misstatement due to fraud.
Based on our considerations as set out
below, our areas of focus included:
Impairment of goodwill;
Revenue recognition; and
Existence and valuation of
investments accounted for using
the equity method.
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.
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
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 and Company
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 2021. 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.
42 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 43
Independent auditor’s report
Independent auditor’s report
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
18). As at 31 December 2021, goodwill
amounted to €15,283,459 which was
30.20% of the Group’s total assets. Eqtec
Iberia SLU incurred losses amounting
to €104,852 in 2021 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.
Our response
For this risk, our audit procedures
included the following testing:
Evaluated and 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.
Revenue recognition – occurrence,
completeness and accuracy
Revenue from the rendering of services
which includes after-sales service
and maintenance, consulting and
construction contracts for renewable
energy systems is recognised when
the Group and Company satisfies
performance obligations which is based
on the stage of completion of the
contract activity at the reporting date.
For this purpose, the stage of completion
set as at the balance sheet date and the
expected future costs to completion
are assessed. The Group CFO discusses
and monitors status of scoped projects
per relevant contracts. The projects are
discussed at meetings of the Board of
Directors at the request of the CFO.
The completion method involves
significant scope for judgment by
Management in terms of determining
the correct amount and timing of
revenue recognition, including estimated
cost required to complete the contract,
which could have a material impact on
the consolidated financial statements. In
addition, revenue recognition is deemed
a significant risk during the performance
of our audit.
Please refer to Note 3, 4, 7 and 8 in the
notes to the consolidated financial
statements for further information.
Our response
Our opinion is based on the following
audit procedures:
We understand the Group’s estimation
process (including the approval
of project budget, monitoring of
project costs and activities, and
management’s review and customer’s
approval of project’s stage of
completion) used in determining
the amounts of revenue from the
rendering of services and related costs
recognised in the financial statements.
For significant customer contracts,
we challenged the management’s
assessment with regard to estimating
the stage of completion by reviewing
the underlying customer agreements
and verifying the extent and timing
of delivery acceptance from customer
for consistency.
Obtained management’s projections
of expected future costs and tested
the estimate for consistency with
the status of delivery and customer
acceptances and sign off from
customers to identify possible delays
in achieving milestones, which
require changes in estimated costs
or efforts to complete the remaining
performance obligations including
how this costs will be funded for the
project to close.
Our planned audit procedures were
completed without material exception.
Existence and valuation of
investments accounted for using the
equity method
There is a risk that investments
accounted for using the equity method
held by the Group and Company do not
exist or that the balance included in the
Statement of Financial Position of the
Group and Company as at 31 December
2021 is not valued in line with the
recognition and measurement provisions
of IAS 28, Investments in Associates
and Joint Ventures (as adopted in the
European Union).
Significant auditor’s attention was
deemed appropriate because of the
materiality of the investments accounted
for using the equity method. In addition,
the impairment of the Company’s
financial assets and investments
accounted for using the equity method
is a key judgmental area due to the
level of subjectivity in estimating its
recoverability such as the financial
condition of the counterparties and
their expected future cash flows. As a
result, we considered these as key audit
matters.
Our response
The following audit work has been
performed to address the risks:
Reviewed client prepared memos
where management assessed the
appropriate accounting, recoverability
and presentation of each of the
investments.
Obtained external filings of the
investments from relevant regulatory
sites and understand the level of
considerations paid or payable which
was agreed to the amounts held to
the accounting records ensuring that
the investments exists.
Evaluated and 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. In addition, we assessed
recoverability of the investments by
inspecting the investee’s financial
statements and other relevant
documentation and ensured that the
investments were recoverable and
that no provisions were necessary.
Reviewed elimination of gains and
losses resulting from downstream
transactions between the Company
and its associates to confirm gains
or losses are recognised only to the
extent of unrelated investors’ interests
in the associates.
Reviewed minutes of board meetings
for increase or decreases in rights
on investments held including
agreeing whether considerations
have been paid.
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
Directors’ 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.
44 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 45
Independent auditor’s report
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 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.
the adverse consequences of doing
so would reasonably be expected to
outweigh the public interest benefits
of such communication.
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
22 April 2022
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
46 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 47
Financial
statements
Belišće MDC, Croatia
48 | EQTEC plc Annual Report 2021
Consolidated statement of profit or loss
for the financial year ended 31 December 2021
Revenue
Cost of sales
Gross profit
Operating income / (expenses)
Administrative expenses
Other income
Impairment costs
Other losses
Employee share-based compensation
Foreign currency gains
Operating loss
Share of results from equity accounted investments
Gains from sales to equity accounted investments deferred
Gain arising from loss of control of subsidiaries
Change in fair value of financial investments
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
8
9
14
12
10
20
20
19
22
11
11
14
15
32
16
16
16
16
2021 €
9,171,764
(7,541,354)
1,630,410
2020 €
2,234,727
(1,978,987)
255,740
(4,190,592)
(3,694,217)
-
(5,498)
(1,418,860)
(205,648)
348,885
61,922
(17,250)
(170,059)
(1,297,309)
211,337
(3,841,303)
(4,649,836)
(24,188)
(211,478)
9,957
(250,378)
134,069
(517,108)
-
-
-
-
17,329
(1,206,392)
(4,700,429)
(5,838,899)
-
-
(4,700,429)
(5,838,899)
-
71,084
(4,700,429)
(5,767,815)
(4,700,497)
(5,762,733)
68
(5,082)
(4,700,429)
(5,767,815)
2021 € per share
2020 € per share
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
(0.001)
EQTEC plc Annual Report 2021 | 49
The notes on pages 60 to 118 form part of these financial statements. Consolidated statement of comprehensive income
for the financial year ended 31 December 2021
Consolidated statement of financial position
at 31 December 2021
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
2021 €
2020 €
(4,700,429)
(5,767,815)
238,715
238,715
6,080
6,080
Total comprehensive loss for the financial year
(4,461,714)
(5,761,735)
Attributable to:
Owners of the Company
Non-controlling interests
(4,301,511)
(5,848,045)
(160,203)
86,310
(4,461,714)
(5,761,735)
L-R: Jeff Vander Linden (COO), Lisa Sylvester (Executive
Assistant), Lisa Artemis (Head of Marketing & Communcations),
Joshua Payne (Head of Analytics), Nauman Babar (CFO)
ASSETS
NOTES
2021 €
2020 €
Non-current assets
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Financial assets
Other financial investments
Total non-current assets
Current assets
Development assets
Loans receivable from project development undertakings
Trade and other receivables
Cash and cash equivalents
Assets included in disposal group classified as held for resale
17
18
20
21
22
24
24
25
26
32
446,861
187,792
17,702,833
15,283,459
8,074,184
3,379,625
4,050,030
2,570,888
506,976
-
30,780,884
21,421,764
3,455,496
3,000,469
6,876,747
503,653
482,537
894,531
6,446,217
6,394,791
19,778,929
8,275,512
-
-
Total current assets
19,778,929
8,275,512
Total assets
50,559,813
29,697,276
Total assets
€50.5M
50 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 51
The notes on pages 60 to 118 form part of these financial statements. The notes on pages 60 to 118 form part of these financial statements. Consolidated statement of financial position
at 31 December 2021 – continued
Consolidated statement of changes in equity
for the financial year ended 31 December 2021
EQUITY AND LIABILITIES
NOTES
2021 €
2020 €
Equity
Share capital
Share premium
Other reserves
Accumulated deficit
27
27
25,977,130
24,355,545
83,610,562
62,896,521
2,353,868
2,148,220
(66,177,072)
(61,875,561)
SHARE
CAPITAL
€
SHARE
PREMIUM
€
OTHER
RESERVES
€
ACCUMULAT-
ED DEFICIT
€
EQUITY AT-
TRIBUTABLE
TO OWNERS
OF THE
COMPANY
€
NON-CON-
TROLLING
INTERESTS
€
TOTAL
€
Balance at 1 January 2020
21,317,482
52,487,278
Issue of ordinary shares in
EQTEC plc (Note 27)
Conversion of debt into
equity (Note 27)
2,658,622
9,841,484
379,441
1,536,252
-
-
-
-
(56,011,538)
17,793,222
(2,326,274)
15,466,948
-
-
12,500,106
1,915,693
-
-
12,500,106
1,915,693
-
(639,931)
-
(639,931)
Equity attributable to the owners of the Company
45,764,488
27,524,725
Share issue costs (Note 27)
-
(639,931)
Non-controlling interests
28
(2,384,189)
(2,223,986)
Total equity
43,380,299
25,300,739
Non-current liabilities
Lease liabilities
30
56,855
106,465
Total non-current liabilities
56,855
106,465
Employee share-based
compensation (Notes 10 & 27)
Recognition of equity element
of debt (Notes 12 & 27)
Warrants issued on placing
of shares
Change in the ownership
interest
-
-
-
-
-
1,297,309
522,349
(328,562)
328,562
-
-
-
1,297,309
522,349
-
-
-
-
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
-
-
-
(5,762,733)
(5,762,733)
(5,082)
(5,767,815)
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Liabilities included in disposal group
classified as held for resale
31
29
30
32
6,921,806
-
200,853
3,183,979
1,020,851
85,242
7,122,659
4,290,072
-
-
Unrealised foreign
exchange losses
Total comprehensive loss
for the financial year
Balance at
31 December 2020
Issue of ordinary shares in
EQTEC plc (Note 27)
Conversion of debt into
equity (Notes 27 and 29)
Issued in acquisition of
financial asset (Note 27)
-
-
-
(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
1,402,324
18,206,268
167,728
3,285,013
51,533
693,628
-
-
-
-
-
-
-
-
19,608,592
3,452,741
745,161
(1,470,868)
-
-
-
-
19,608,592
3,452,741
745,161
(1,470,868)
Total current liabilities
7,122,659
4,290,072
Share issue costs (Note 27)
-
(1,470,868)
Total equity and liabilities
50,559,813
29,697,276
Transactions with owners
1,621,585
20,714,041
205,648
-
22,541,274
-
22,541,274
Employee share-based
compensation (Note 10)
-
-
205,648
-
205,648
-
205,648
The financial statements were approved by the Board of Directors on 22 April 2022 and signed on its behalf by:
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
Loss for the financial year
-
-
-
(4,700,497)
(4,700,497)
68
(4,700,429)
Unrealised foreign
exchange losses
Total comprehensive
loss for the financial year
Balance at
31 December 2021
-
-
-
398,986
398,986
(160,271)
238,715
-
-
-
(4,301,511)
(4,301,511)
(160,203)
(4,461,714)
25,977,130
83,610,562
2,353,868
(66,177,072)
45,764,488
(2,384,189)
43,380,299
52 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 53
The notes on pages 60 to 118 form part of these financial statements. The notes on pages 60 to 118 form part of these financial statements. Consolidated statement of cash flows
for the financial year ended 31 December 2021
Consolidated statement of cash flows
for the financial year ended 31 December 2021 - continued
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES
2021 €
2020 €
CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
NOTES
2021 €
2020 €
(4,700,429)
(5,838,899)
Additions to intangible assets
(1,000,000)
-
Cash flows from investing activities
Cash flows from operating activities
Loss for the financial year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on disposal of investments
Impairment of other financial investments
Employee share-based compensation
Impairment of trade receivables
Share of loss of equity accounted investments
Gains from sales to equity accounted investments deferred
Gain on loss of control of subsidiary
Change in fair value of financial investments
Loss on debt for equity swap
Unrealised foreign exchange movements
Operating cash flows before working capital changes
Decrease/(increase) in:
Development assets
Trade and other receivables
Increase in trade and other payables
Cash used in operating activities – continuing operations
Finance income
Finance costs
Net cash used in operating activities – continuing operations
Net cash used in operating activities – discontinued operations
17
18
22
10
25
19
22
12
11
11
32
156,520
72,685
-
-
83,463
-
1,275
17,250
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
205,648
1,297,309
Investment in equity accounted undertakings
-
19,016
Loans advanced to equity accounted undertakings
Investment in related undertakings
Other advances to equity accounted undertakings
24,188
211,478
(9,957)
250,378
-
-
-
-
1,418,860
170,059
Net cash used in investing activities
103,234
(201,723)
Cash flows from financing activities
(2,267,395)
(4,452,250)
Proceeds from borrowings and lease liabilities
Repayment of borrowings and lease liabilities
(3,144,600)
(503,653)
Loan issue costs
(5,946,010)
6,754
Proceeds from issue of ordinary shares
3,432,256
264,141
Share issue costs
(7,925,749)
(4,685,008)
Interest paid
33
33
-
-
-
300,000
218,635
(65,261)
(2,430,137)
(469,769)
-
84
(978,825)
(1,150,619)
(3,746,984)
-
(697,635)
(333,882)
(27,508)
-
32
29
29
29
-
(19,997)
(8,881,089)
(1,520,809)
1,391,174
107,000
(3,031,724)
(1,363,348)
-
(30,944)
19,420,222
12,735,236
(1,180,217)
(635,911)
(20)
(21,955)
Net cash used in investing activities – continuing operations
(8,881,089)
(1,500,812)
Net cash used in investing activities – discontinued operations
(134,069)
(17,329)
Net cash generated from financing activities – continuing operations
16,599,435
10,790,078
517,108
1,206,392
Net cash used in financing activities – discontinued operations
32
-
(63,196)
(7,542,710)
(3,495,945)
Net cash generated from financing activities
16,599,435
10,726,882
-
(47,741)
Cash used in operating activities
(7,542,710)
(3,543,686)
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
Details of non-cash transactions are set out in Note 36 of the financial statements.
175,636
5,662,387
6,270,581
608,194
6,446,217
6,270,581
-
-
6,446,217
6,270,581
26
32
26
54 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 55
The notes on pages 60 to 118 form part of these financial statements. The notes on pages 60 to 118 form part of these financial statements. Company statement of financial position
at 31 December 2021
Company statement of changes in equity
for the financial year ended 31 December 2021
NOTES
2021 €
2020 €
SHARE
CAPITAL €
SHARE
PREMIUM €
OTHER
RESERVES €
ACCUMULATED
DEFICIT €
TOTAL €
ASSETS
Non-current assets
Intangible assets
Investment in subsidiary undertakings
Investments accounted for using the equity method
Other financial investments
Total non-current assets
Current assets
Development assets
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
18
19
20
22
24
24
25
26
27
27
29
31
2,419,374
17,994,504
6,569,432
506,976
-
17,869,630
3,379,625
-
27,490,286
21,249,255
305,553
613,678
14,507,848
4,845,633
20,272,712
47,762,998
25,977,130
102,544,642
2,353,868
9,275
243,598
2,703,491
6,111,864
9,068,228
30,317,483
24,355,545
81,830,601
2,148,220
Balance at 1 January 2020
21,317,482
71,421,358
-
(76,390,202)
16,348,638
Issue of ordinary shares in EQTEC plc (Note 27)
2,658,622
9,841,484
Conversion of debt into equity (Notes 27 and 29)
379,441
1,536,252
-
-
-
-
12,500,106
1,915,693
Share issue costs (Note 27)
-
(639,931)
-
-
(639,931)
Employee share-based compensation
(Notes 10 and 27)
Recognition of equity element of debt
(Notes 12 and 27)
-
-
-
-
1,297,309
522,349
-
-
1,297,309
522,349
Warrants issued on placing of shares (Note 27)
-
(328,562)
328,562
-
-
Transactions with owners
3,038,063
10,409,243
2,148,220
-
15,595,526
Loss for the financial year (Note 37)
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
Issue of ordinary shares in EQTEC plc (Note 27)
1,402,324
18,206,268
Conversion of debt into equity (Note 27)
167,728
3,285,013
Issued in acquisition of financial asset (Note 27)
51,533
693,628
Share issue costs (Note 27)
-
(1,470,868)
-
-
-
-
-
-
-
-
19,608,592
3,452,741
745,161
(1,470,868)
Employee share-based compensation (Note 10)
-
-
205,648
-
205,648
(83,603,698)
(79,661,097)
Transactions with owners
1,621,585
20,714,041
205,648
-
22,541,274
47,271,942
28,673,269
Loss for the financial year
-
Total comprehensive loss for the financial year
-
-
-
-
-
-
(3,942,601)
(3,942,601)
(3,942,601)
(3,942,601)
Balance at 31 December 2021
25,977,130
102,544,642
2,353,868
(83,603,698)
47,271,942
896,641
747,573
1,644,214
30,317,483
-
-
491,056
491,056
47,762,998
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 €3,942,601 (2020: €3,270,895).
The financial statements were approved by the Board of Directors on 22 April 2022 and signed on its behalf by:
IAN PEARSON
Non-Executive Chairman
DAVID PALUMBO
Chief Executive Officer
56 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 57
The notes on pages 60 to 118 form part of these financial statements. The notes on pages 60 to 118 form part of these financial statements. Company statement of cash flows
for the financial year ended 31 December 2021
Company statement of cash flows
for the financial year ended 31 December 2021 - continued
COMPANY STATEMENT OF CASH FLOWS
NOTES
2021 €
2020 €
COMPANY STATEMENT OF CASH FLOWS - CONTINUED
NOTES
2021 €
2020 €
(3,942,601)
(3,270,895)
Proceeds from borrowings
Cash flows from financing activities
Cash flows from operating activities
Loss before taxation
Adjustments for:
Amortisation of intangible assets
Employee share-based compensation
Reversal of impairment of intercompany loans
Finance costs
Finance income
Impairment of intercompany balances
Change in fair value of financial investments
Loss on debt for equity swap
Foreign currency (gains)/losses 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 assets
Increase in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Addition to intangible assets
Investment in equity accounted undertakings
Loans advanced to equity accounted undertakings
Investment in subsidiary
Subsidiaries transferred to other subsidiary undertakings
Loans advanced to project development undertakings
Net cash used in investing activities
18
10
22
10
72,685
80,771
-
1,297,309
-
(1,720,704)
508,747
(104,568)
5,627
250,378
1,418,860
(280,767)
1,177,335
(13,397)
140,678
-
170,059
235,968
(1,990,868)
(1,983,647)
(13,490,118)
(2,112,285)
2,205,863
(296,278)
(283,968)
689,637
(9,275)
(107,773)
178,869
352,350
(13,676,500)
(3,170,993)
(1,000,000)
-
(968,324)
(1,150,619)
(2,036,074)
-
(10,000)
10,003
(1,000,000)
-
(350,000)
(230,957)
(4,354,395)
(2,381,576)
Repayment of borrowings
Proceeds from issue of ordinary shares
Share issue costs
Loan issue costs
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
29
29
29
1,391,174
-
(2,866,515)
(852,567)
19,420,222
12,735,236
(1,180,217)
(635,911)
-
(30,944)
16,764,664
11,215,814
(1,266,231)
5,663,245
6,111,864
448,619
Cash and cash equivalents at the end of the financial year
26
4,845,633
6,111,864
Proven to
sustainably
convert nearly
60 types of
waste - EQTEC’s
capabilities
have never
been stronger.
Agriculture waste
58 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 59
The notes on pages 60 to 118 form part of these financial statements. The notes on pages 60 to 118 form part of these financial statements. Notes to the 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 2021 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 nearly 60 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.
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 2021
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 2021. Their adoption has not had any
impact on the disclosures or on the amounts reported in these
financial statements.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest
Rate Benchmark Reform Phase 2;
Amendments to IFRS 16: COVID-19 Rent Related Concessions.
New and revised IFRS Standards in issue but not
yet effective
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
and interpretations are:
IFRS 17 Insurance Contracts and Amendments to IFRS 17
Insurance Contracts (Amendments to IFRS 17 and IFRS 4);
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;
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 IAS 41 Agriculture;
Amendments to IAS 1 and IFRS Practice Statement 2
Disclosure of Accounting Policies;
Amendments to IAS 8 Definition of Accounting Estimates;
Amendments to IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single Transaction.
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 2021 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 2021 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 re-presented where necessary,
to present the financial statements on a consistent basis.
The financial statements are presented in euros and all values are
not rounded, except when otherwise indicated.
The Group incurred a loss of €4,700,429 (2020: €5,767,815)
during the financial year ended 31 December 2021 and had net
current assets of €12,656,270 (2020: €3,985,440) and net assets
of €43,380,299 (2020: €25,300,739) at 31 December 2021.
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
2023 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
cash in 2022/2023 and that the Group has sufficient cash reserves
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
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. Amongst other
things, the assessment involved assumptions around collection
of receivables from associate and joint venture companies and
availability of project funding.
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 2021. 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. The carrying
amount of the Group’s interests and the non-controlling interests
are adjusted to reflect the changes in their relative interests in
the subsidiaries. Any difference between the amount by which
the noncontrolling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and
attributed to the owners of the Company.
When the Group loses control of a subsidiary, the gain or loss on
disposal recognised in profit or loss is calculated as the difference
between (i) the aggregate of the fair value of the consideration
received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), less
liabilities of the subsidiary and any non-controlling interests. All
amounts previously recognised in other comprehensive income
in relation to that subsidiary are accounted for as if the Group had
directly disposed of the related assets or liabilities of the subsidiary
(i.e. reclassified to profit or loss or transferred to another category
of equity as required/permitted by applicable IFRS Standards).
The fair value of any investment retained in the former subsidiary
at the date when control is lost is regarded as the fair value on
initial recognition for subsequent accounting under IFRS 9 when
applicable, or the cost on initial recognition of an investment in an
associate or a joint venture.
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 related undertaking
Advances paid to acquire investee shares are recognised at cost
and will be reclassified to either to investments in associates and
joint ventures or investments in subsidiaries, as applicable.
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
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Notes to the Financial Statements
Notes to the Financial Statements
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
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.
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. To the
extent that foreign subsidiaries are not under the full control of
the parent company, the relevant share of currency differences is
allocated to the non-controlling interests.
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
5-step process:
1. Identifying the contract with a customer;
2. Identifying the performance obligations;
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
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
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
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. Construction in progress is derecognised upon disposal or
when the asset is permanently withdrawn from use and no future
economic benefits are expected from the disposal. Any gain or loss
arising on derecognition of the construction in progress (calculated
as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the
period in which the asset is derecognised.
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
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
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Notes to the Financial Statements
Notes to the Financial Statements
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
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 presented in separate lines therein.
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation and
accumulated impairment losses. All finite-lived intangible assets,
including patents, are accounted for using the cost model whereby
capitalised costs are amortised on a straight-line basis over their
estimated useful lives. Residual values and useful lives are reviewed
at each reporting date The following useful lives are applied:
Patents: 20 years
Impairment testing of goodwill, intangible assets 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
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. If the Group
issues equity instruments to a creditor to extinguish all or part
of a financial liability, the Group recognises in profit or loss the
difference between the carrying amount of the financial liability
(or part thereof) extinguished and the measurement of the equity
instruments issued.
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 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 2021 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,
lease liabilities, trade and other payables and derivative financial
instruments.
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Notes to the Financial Statements
Notes to the Financial Statements
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
3. STATEMENT OF ACCOUNTING POLICIES - CONTINUED
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.
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
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.
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.
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
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.
Post-employment benefit plans
The Group provides post-employment benefit plans through
various defined contribution plans.
Defined contribution plans
The Group pays fixed contributions into independent entities in
relation to several retirement plans and insurances for individual
employees. The Group has no legal or constructive obligations
to pay contributions in addition to its fixed contributions, which
are recognised as an expense in the period that related employee
services are received.
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
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.
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.
Going concern
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 19, 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, based
on its sufficiently dominant voting interests to direct its activities,
it has control of Newry Biomass Limited.
Interests in joint ventures
The Group holds 50.1% of the share capital of EQTEC Synergy
Projects Limited but this entity is considered to be a joint venture
as decisions about the relevant activities requires the unanimous
consent of both the Group and the joint venture partner.
66 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 67
Notes to the Financial Statements
Notes to the Financial Statements
4. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION
UNCERTAINTY - CONTINUED
5. FINANCIAL RISK MANAGEMENT
The Company’s maximum exposure to credit risk is represented by
the balance sheet amount of each financial asset:
Loans receivable from
project development
undertakings
2021 €
2020 €
613,678
243,598
Trade and other receivables
14,507,848
2,703,491
Cash and cash equivalents
4,845,633
6,111,864
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.
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.
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:
Loans receivable from
project development
undertakings
2021 €
2020 €
3,000,469
482,537
Trade and other receivables
6,876,747
894,531
Cash and cash equivalents
6,446,217
6,394,791
The Group holds 49% of the share capital of Synergy Karlovaç d.o.o.
and Synergy Belisce d.o.o. However, this entity is considered to be a
joint venture of the Group as decisions about the relevant activities
requires the unanimous consent of both the Group and the joint
venture partner.
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.
Impairment of goodwill and non-financial assets
Determining whether goodwill and non-financial assets are
impaired requires an estimation of the value in use of the cash
generating units to which the assets have been allocated. The value
in use calculation requires the directors to estimate the future cash
flows to arise from the cash-generating unit and a suitable discount
rate in order to calculate present value. Where the actual cash
flows are less than expected, a material impairment may arise. The
estimate for future cash flows includes consideration of possible
delays due to Covid-19. The total property, plant and equipment
reversal of impairment charges during the financial year as included
in Note 17 amounted to €Nil (2020: €Nil), while the impairment for
goodwill during the financial year as included in Note 18 amounted
to €Nil (2020: €Nil).
Provision for impairment of financial assets - Group
Determining whether the carrying value of financial assets has
been impaired requires an estimation of the value in use of the
investment in associated undertakings 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 (2020: €Nil) be recognised in the Group
accounts of EQTEC plc.
Provision for impairment of investment in subsidiaries - Company
Determining whether the carrying value of the Company’s
investment in subsidiaries has been impaired requires an estimation
of the value in use of the investment in subsidiaries. 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 (2020: €Nil) be recognised in the Company accounts
of EQTEC plc.
Useful lives and residual values of intangible assets
Intangible assets are amortised over their useful lives taking
into account, where appropriate, residual values. Assessment of
useful lives and residual values are performed annually, taking
into account factors such as technological innovation, market
information and management considerations. In assessing the
residual value of an asset, its remaining life, projected disposal
value and future market conditions are taken into account. Detail
on intangible assets can be found in Note 18.
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
2021, provisions for doubtful debts amounted to €475,687 which
represents 9% of trade receivables at that date (31 December 2020:
€475,687– 74%) (see Note 25).
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 10 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).
68 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 69
Notes to the Financial Statements
Notes to the Financial Statements
5. FINANCIAL RISK MANAGEMENT - CONTINUED
5. FINANCIAL RISK MANAGEMENT - CONTINUED
The Group had risk exposure to the following counterparties at year-end:
Loans receivable from project development undertakings
Loan receivable from Logik Wte Limited
Loan receivable from Shankley Biogas Limited
Trade and other receivables
Receivable from Synergy Karlovaç d.o.o.
Receivable from Synergy Belisce d.o.o.
2021 €
2020 €
1,538,420
848,371
2,202,884
1,962,925
170,561
68,378
-
-
Apart from the above, the Group does not have significant
risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The Group defines
counterparties as having similar characteristics if they are
related parties. Concentration of credit risk related to the above
companies did not exceed 20% of gross monetary assets at any
time during the year. Concentration of credit risk to any other
counterparty did not exceed 5% of gross monetary assets at any
time during the financial year.
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 (2020: 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.
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 2021:
NOTES
UP TO 1 YEAR €
1-5 YEARS €
AFTER 5 YEARS €
TOTAL €
Trade and other payables
Investor loans
Bank overdraft
31
29
29
6,921,806
-
-
6,921,806
-
-
-
-
-
-
-
-
6,921,806
-
-
6,921,806
Maturity of all Company’s liabilities as at 31 December 2021 and
31 December 2020 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 €Nil
and €1,020,851 in 31 December 2021 and 31 December 2020,
respectively. The Company’s debt instruments amounted to
€Nil and €896,641 in 31 December 2021 and 31 December 2020,
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 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 to cash flow interest rate risk. The other remaining debt
instruments were arranged at fixed interest rates and expose the
Group 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. For floating rate liabilities,
the analysis is prepared assuming that 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 2021 would increase/decrease
by €Nil (2020: increase/decrease by €621) with a corresponding
decrease/increase in equity.
The Group’s sensitivity to interest rates has decreased during the
current financial year mainly due to the repayment of investor
loans in EQTEC plc in the financial year.
Foreign exchange risk
The Group and Company is mainly exposed to future changes
in the Sterling, the US Dollar and the Croatian Kuna relative to
the Euro. These risks are managed by monthly review of Sterling,
US Dollar and Croatian Kuna 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:
Sterling
US Dollar
Croatian Kuna
LIABILITIES
2021 €
3,813,537
-
240,247
2020 €
2,722,298
984,906
-
ASSETS
2021 €
8,208,131
2020 €
6,441,771
25,695
38,354
1,212,271
-
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 €
Trade and other payables
Investor loans
Bank borrowings
31
29
29
3,183,980
896,641
124,210
4,204,831
-
-
-
-
-
-
-
-
TOTAL €
3,183,980
896,641
124,210
4,204,831
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:
Sterling
US Dollar
LIABILITIES
ASSETS
2021 €
169,433
-
2020 €
461,909
984,906
2021 €
12,822,699
2020 €
7,221,106
45,549
54,661
70 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 71
Notes to the Financial Statements
Notes to the Financial Statements
5. FINANCIAL RISK MANAGEMENT - CONTINUED
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.
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, coupled with
the set up of a new Croatian subsidiary.
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.
Price risk
The Group is exposed to equity price risk in respect of its
investment in Metal NRG plc, which is listed on the London
Stock Exchange (see Note 22).
The investment in Metal NRG plc is considered a long-term,
strategic investment. In accordance with the Group’s policies,
no specific hedging activities are undertaken in relation to these
investments. The investments are continuously monitored and
voting rights arising from these equity instruments are utilised
in the Group’s favour.
The sensitivity analyses below have been determined based on
the exposure to equity price risks at the reporting date. If the
quoted stock price for these securities increased or decreased
by 5%, the net loss for the year ended 31 December 2021 and
2020 would increase/decrease by €25,349 (2020: Not applicable)
as a result of the changes in fair value of the investments in
listed shares.
Sterling Impact: Profit and loss/equity
US Dollar Impact: Profit & Loss/Equity
Croatian Kuna: Profit and loss/equity
GROUP
COMPANY
2021 €
443,898
2,288
98,184
2020 €
375,704
95,611
-
31 Dec 2021 €
31 Dec 2020 €
1,278,108
4,056
-
682,747
93,964
-
6. CAPITAL MANAGEMENT POLICIES AND PROCEDURES
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.
Borrowings
Lease liabilities
Cash and bank balances
Net debt
Equity
Net debt to equity ratio
72 | EQTEC plc Annual Report 2021
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
2021 and 2020.
The gearing ratio of the Group for the financial year presented is
as follows:
31 DEC 2021 €
31 DEC 2020 €
-
257,708
(6,446,217)
(6,188,509)
45,764,488
(14%)
1,020,851
191,707
(6,394,791)
(5,182,233)
27,524,725
(19%)
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)
2021 €
2020 €
9,171,764
2,234,727
2021 €
995,000
2020 €
(878,877)
-
-
(328)
(11,094)
Total from continuing operations
9,171,764
2,234,727
994,672
(889,971)
Central administration costs and directors’ salaries
Impairment costs
Other income
Other losses
Change in fair value of financial investments
Foreign currency gains
Employee share-based compensation
Share of results from equity accounted investments
Gains from sales to equity accounted investments deferred
Gain arising from loss of control of subsidiaries
Finance income
Finance costs
Loss before taxation (continuing operations)
(3,554,854)
(2,548,506)
(5,498)
-
(17,250)
61,922
(1,418,860)
(170,059)
(250,378)
-
348,885
211,337
(205,648)
(1,297,309)
(24,188)
(211,478)
9,957
134,069
-
-
-
17,329
(517,108)
(1,206,392)
(4,700,429)
(5,838,899)
Revenue reported above represents revenue generated from
associated companies, jointly controlled entities and external
customers. Inter-segment sales for the financial year amounted
to €Nil (2020: €Nil). Included in revenues in the Technology Sales
Segment are revenues of €7,084,872 (2020: €1,980,000) which
arose from sales to associate undertakings and joint ventures
of EQTEC plc. This represents 77% (2020: 89%) of total revenues
in the financial year. A breakdown of the turnover by associated
undertaking and joint venture is set out in Note 34 Related
Party Transactions.
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.
EQTEC plc Annual Report 2021 | 73
Notes to the Financial Statements
Notes to the Financial Statements
7. SEGMENT INFORMATION - CONTINUED
Other segment information:
Technology Sales
Power Generation
Head Office
DEPRECIATION AND AMORTISATION
ADDITIONS TO NON-CURRENT ASSETS
2021 €
84,381
-
144,824
229,205
2020 €
83,463
-
-
83,463
2021 €
195,643
-
2,708,474
2,904,117
2020 €
-
-
-
-
In addition to the depreciation and amortisation reported above,
reversal of impairment losses of €Nil (2020: €Nil) were recognised
in respect of property, plant, equipment and intangible assets and
goodwill respectively.
The Group operates in four principal geographical areas:
Republic of Ireland (country of domicile), the European Union, 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
EU
United States of America
United Kingdom
REVENUE FROM ASSOCIATES AND
EXTERNAL CUSTOMERS
NON-CURRENT ASSETS*
2021 €
-
6,734,156
2,437,608
-
2020 €
-
2021 €
-
254,727
2,720,427
1,980,000
-
-
147,808
9,171,764
2,234,727
2,868,235
2020 €
-
187,792
-
-
187,792
*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.
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
Revenue from technology sales
Revenue from the generation of
energy from wind
2021 €
8,022,509
2020 €
2,234,727
-
-
Revenue from development fees
1,149,255
-
9,171,764
2,234,727
2021 €
-
-
-
-
9. OTHER INCOME
Operating grants
Reimbursement of wind
development costs
Other income
CONTINUING
2021 €
-
-
-
-
2020 €
39,782
16,449
5,691
61,922
DISCONTINUED
2021 €
-
-
-
-
2020 €
-
135,644
-
135,644
2020 €
-
-
-
-
10. EMPLOYEE SHARE-BASED PAYMENTS
Expensed in the year
CONTINUING
DISCONTINUED
2021 €
205,648
2020 €
1,297,309
2021 €
-
2020 €
-
The share-based payment expense includes the cost of employee warrants and options granted and vested in the year (Note 27).
74 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 75
Notes to the Financial Statements
Notes to the Financial Statements
11. FINANCE COSTS AND INCOME
13. EMPLOYEE DATA - CONTINUED
CONTINUING
DISCONTINUED
2021 €
2020 €
2021 €
2020 €
Average number of employees (including executive directors)
Finance Costs
Interest on loans, bank facilities and overdrafts
41,818
1,149,141
Fees on early redemption of loans
Interest expense for leasing arrangements
Other interest
Finance Income
Interest receivable on loans advanced
Interest receivable on deferred consideration
Interest receivable on bank deposits
466,929
8,341
20
50,149
7,102
-
517,108
1,206,392
121,459
12,610
-
134,069
13,397
3,932
-
17,329
-
-
-
-
-
-
-
3
3
-
18,382
-
-
-
18,382
-
-
-
3
3
Included in finance costs under continuing activities is an amount of €Nil (2020: €522,349) with respect to lender warrants granted during
the year (see Note 27).
12. OTHER LOSSES
Loss on debt for equity swap
CONTINUING
DISCONTINUED
2021 €
1,418,860
2020 €
170,059
2021 €
-
2020 €
-
During the financial year the Group extinguished some of its financial liabilities by issuing equity instruments. In accordance with IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments, the loss recognised on these transactions was €1,418,860 (2020: €170,059).
Company
Average number of employees (including executive directors)
14. LOSS BEFORE TAXATION
Loss before taxation on continuing operations is stated after charging/(crediting):
Depreciation of leasehold buildings (Note 17)
Amortisation of intangible assets (Note 18)
Impairment of investments (Note 22)
Movement in fair value of investments (Note 22)
Research and development
Gains on foreign exchange
Directors’ remuneration (Note 34):
for services as directors
for salaries as management
share-based payments
compensation for loss of office
NO. 2021
NO. 2020
19
4
13
2
2021 €
2020 €
156,520
72,685
83,463
-
-
17,250
250,378
17,991
-
26,412
(348,885)
(211,337)
111,234
730,496
86,261
241,061
486,122
408,948
1,127,141
-
13. EMPLOYEE DATA
Impairment of development assets (Note 24)
5,498
-
The aggregate payroll costs of employees (including executive directors) in the Group were as follows:
Salaries
Social insurance costs
Pension costs – defined contribution plans
Termination payments
Other compensation costs:
Cost of share-based payments
Short term incentives
Private health insurance and other insurance costs
2021 €
2020 €
1,575,325
284,643
858,915
163,423
34,134
(16,932)
241,061
-
205,648
506,999
1,297,309
-
15,071
-
2,862,881
2,302,715
Auditor’s remuneration:
Audit of Group accounts
Tax advisory services
90,000
15,000
105,000
60,000
11,000
71,000
76 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 77
Notes to the Financial Statements
Notes to the Financial Statements
15. INCOME TAX
16. LOSS PER SHARE
2021 €
2020 €
2021 PER SHARE €
2020 PER SHARE €
Income tax expense comprises:
Current tax expense
Deferred tax credit
Adjustment for prior financial years
Tax expense
Loss before taxation
Applicable tax 12.50% (2020: 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
-
-
-
-
2021 €
(4,700,429)
(587,554)
28,475
234,361
324,718
-
-
-
-
-
-
2020 €
(5,767,815)
(720,977)
17,130
248,715
455,132
-
-
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.
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
(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
(4,700,497)
(5,762,733)
Profit for the period from discontinued operations used in the calculation
of basic earnings per share from discontinued operations
-
71,084
Losses used in the calculation of basic loss per share from continuing operations
(4,700,497)
(5,833,817)
2021 €
2020 €
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
No.
No.
7,956,449,726
5,435,107,932
7,956,449,726
5,435,107,932
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
Share options in issue
LTIP options in issue
Total anti-dilutive shares
2021 PER SHARE €
2020 PER SHARE €
464,005,793
67,304,542
21,124,586
651,936,876
33,652,271
-
552,434,921
685,589,147
Details of share warrants and share options in issue outstanding at year-end are set out in Note 27.
78 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 79
Notes to the Financial Statements
Notes to the Financial Statements
17. PROPERTY, PLANT AND EQUIPMENT
17. PROPERTY, PLANT AND EQUIPMENT - CONTINUED
GROUP
Cost
At 1 January 2020
Disposals
Derecognition of assets
At 31 December 2020
Additions
Exchange differences
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for the financial year
Charge on disposal
Derecognition of assets
At 31 December 2020
Charge for the financial year
Exchange differences
At 31 December 2021
Carrying amount
At 31 December 2020
At 31 December 2021
RIGHT OF USE
ASSETS
€
OFFICE
EQUIPMENT
€
CONSTRUCTION
IN PROGRESS
€
181,264
(117,922)
2,465,103
-
TOTAL
€
-
3,001,085
(117,922)
COMPANY
Cost
At 1 January 2020, at 31 December 2020 and at 31 December 2021
Accumulated depreciation
At 1 January 2020, at 31 December 2020 and at 31 December 2021
354,718
-
-
354,718
219,301
5,297
579,316
83,463
83,463
-
(2,465,103)
(2,465,103)
63,342
-
-
63,342
-
192,757
-
192,757
418,060
412,058
5,297
835,415
Carrying amount
At 31 December 2020
At 31 December 2021
181,264
2,465,103
2,729,830
18. INTANGIBLE ASSETS
OFFICE EQUIPMENT
€
TOTAL
€
1,233
1,233
-
-
1,233
1,233
-
-
-
-
(117,922)
-
-
83,463
(117,922)
-
166,926
156,520
1,766
325,212
187,792
254,104
-
(2,465,103)
(2,465,103)
63,342
-
-
63,342
-
-
-
-
-
-
-
192,757
230,268
156,520
1,766
388,554
187,792
446,861
Included in the net carrying amount of property, plant and equipment are right-of-use assets as follows:
Leasehold buildings
2021 €
254,104
2020 €
187,792
GROUP
Cost
GOODWILL
€
PATENTS
€
TOTAL
€
As at 1 January 2020 and at 31 December 2020
16,710,497
-
16,710,497
Additions, separately acquired
As at 31 December 2021
Amortisation and Impairment
As at 1 January 2020
Impairment losses
As at 31 December 2020
Amortisation
Impairment losses
As at 31 December 2021
Carrying amount
As at 31 December 2020
As at 31 December 2021
-
2,492,059
2,492,059
16,710,497
2,492,059
19,202,556
1,427,038
-
1,427,038
-
1,427,038
-
-
-
1,427,038
-
72,685
72,685
-
-
-
1,427,038
72,685
1,499,723
15,283,459
-
15,283,459
15,283,459
2,419,374
17,702,833
80 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 81
Notes to the Financial Statements
Notes to the Financial Statements
18. INTANGIBLE ASSETS - CONTINUED
18. INTANGIBLE ASSETS - CONTINUED
COMPANY
Cost
As at 1 January 2020 and at 31 December 2020
Additions
As at 31 December 2021
Amortisation and Impairment
As at 1 January 2020 and at 31 December 2020
Amortisation
As at 31 December 2021
Carrying amount
As at 31 December 2020
As at 31 December 2021
PATENTS
€
TOTAL
€
-
-
2,492,059
2,492,059
2,492,059
2,492,059
-
72,685
72,685
-
72,685
72,685
-
-
2,419,374
2,419,374
Patents
During the year ended 31 December 2021, the Group acquired
patents from a company controlled by one of the directors. Patents
and trademarks are amortised over their estimated useful lives,
which is on average 20 years. The average remaining amortisation
period for these patents is 19.4 years (2020: Not applicable).
Goodwill
Cash-generating units
Goodwill acquired in business combinations is allocated, at
acquisition, to the cash-generating units (CGUs) that are expected
to benefit from that business combination. A CGU is the smallest
identifiable group of assets that generate cash inflows that are
largely independent of the cash inflows from other assets or
group of assets. The CGUs represent the lowest level within the
Group at which the associated goodwill is assessed for internal
management purposes and are not larger than the operating
segments determined in accordance with IFRS 8 Operating
Segments. A total of 1 CGUs (2020: 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 (2020: €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:
Eqtec Iberia SLU
15,283,459
15,283,459
2021 €
2020 €
For the purpose of impairment testing, the discount rates applied
to this CGU to which significant amounts of goodwill have been
allocated was 14% (2020: 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% (2020: 14%). These rates are based on the Group’s estimated
weighted average cost of capital, adjusted for risk, and are
consistent with external sources of information.
The cash flows and the key assumptions used in the value in use
calculations are determined based on management’s knowledge
and expectation of future trends in the industry. Expected future
cash flows are, however, inherently uncertain and are therefore
liable to material change over time. The key assumptions used in
the value in use calculations are subjective and include projected
EBITDA margins, net cash flows, discount rates used and the
duration of the discounted cash flow model. The estimate for
future cash flows includes consideration of possible delays
due to Covid-19.
The directors performed sensitivity analysis to account
for changes in value in use calculation due to potential
delays in commencement of the projects. The following
are the sensitivities performed:
1% increase in discount rate
1 project delayed in 2022, 2 projects delayed in 2023,
3 projects delayed in 2024
Zero percentage long term growth rate (year 6 onwards)
1 major anticipated project delayed until 2023
All of these sensitivity analysis resulted in no impairment.
An impairment loss of €Nil (2020: €Nil) has been calculated
for the financial year ended 31 December 2021.
19. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
COMPANY
Investment in subsidiary undertakings
At beginning of financial year
2021
€
2020
€
17,869,630
16,869,625
Reclassification of inter-company balance as contribution to capital in Eqtec Iberia
-
1,000,000
Investment in other subsidiaries
Transfer of investment in subsidiaries to other subsidiary undertakings
Share options and awards
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
10,000
(10,003)
124,877
5
-
-
17,994,504
17,869,630
-
571,304
-
(571,304)
-
-
The share options and awards addition reflect the cost of share-based payments attributable to employees of subsidiary undertakings,
which are treated as capital contributions by the Company.
During the year, the Company transferred shareholdings in subsidiary undertakings at cost to other subsidiary undertakings.
82 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 83
Notes to the Financial Statements
Notes to the Financial Statements
19. INVESTMENT IN SUBSIDIARY UNDERTAKINGS - CONTINUED
19. INVESTMENT IN SUBSIDIARY UNDERTAKINGS - CONTINUED
Details of EQTEC plc subsidiaries at 31 December 2021 are as follows:
The table below shows details of non-wholly owned subsidiaries of the Group that have non-controlling interests:
NAME
COUNTRY OF
INCORPORATION
SHAREHOLDING
REGISTERED
OFFICE
PRINCIPAL ACTIVITY
Eqtec Iberia SLU
Spain
EQTEC Holdings Limited
Republic of Ireland
100%
100%
EQTEC UK Services
Limited (formerly EQTEC
Holdings (UK) Limited)
United Kingdom
100%
Haverton WTV Limited
United Kingdom
Deeside WTV Limited
United Kingdom
100%
100%
Southport WTV Limited
(formerly Humber Gate
WTV Limited)
United Kingdom
100%
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
100%
100%
100%
100%
50.02%
100%
100%
100%
100%
Clay Cross Biomass
Limited
Altilow Wind Turbine
Limited
United Kingdom
100%
Republic of Ireland
Synergy Projects d.o.o.
Croatia
EQTEC France SAS
France
100%
100%
100%
5
1
2
2
2
2
1
1
1
3
4
3
1
1
3
3
1
6
7
Provision of technical engineering
services
Development of building projects
Development of building projects
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
Waste-to-energy developer
Waste-to-energy developer
The shareholding in each company above is equivalent to the proportion of voting power held.
Key to registered offices:
1. Building 1000, City Gate, Mahon, Cork T12 W7CV, Ireland.
2. 3 Stucley Place, London NW1 8NS, England.
3. Labs Triangle, Camden Lock Market, Chalk Farm Road, London
5. Rosa Sensat nº 9-11 Planta 5ª, 08005 Barcelona, Spain.
6. Zagorska 31, HR-10000 Zagreb, Croatia.
7. 28 Cours Albert 1er, 75008 Paris, France.
NW1 8AB, England.
4. 68 Cloughanramer Road, Carnmeen, Newry, Co. Down BT34
1QG, Northern Ireland.
84 | EQTEC plc Annual Report 2021
NAME OF
SUBSIDIARY
PRINCIPAL PLACE
OF BUSINESS
AND PLACE OF
INCORPORATION
PROPORTION
OF OWNERSHIP
INTERESTS AND
VOTING RIGHTS
HELD BY NON-
CONTROLLING
INTERESTS
PROFIT/(LOSS)
ALLOCATED TO
NON-CONTROLLING
INTERESTS FOR THE
FINANCIAL YEAR
NON-CONTROLLING
INTERESTS
2021
%
2020
%
2021
€
2020
€
2021
€
2020
€
Northern Ireland
49.98
49.98
68
(5,080)
(2,489,189)
(2,328,986)
0.00
0.00
-
(2)
105,000
105,000
Newry Biomass
Limited
Individually immaterial
subsidiaries with non-
controlling 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.
No dividends were paid to the non-controlling interests during the
years ended 31 December 2021 and 2020.
During the year, the Group set up two subsidiaries, Synergy Belisce
d.o.o. and Synergy Karlovaç d.o.o. that were initially accounted
for as an investment in subsidiaries. On 26 November 2021, the
Group disposed of 51% of its share in the two companies to Sense
ESCO d.o.o. for proceeds of €2,709 (receivable after the year-end).
68
(5,082)
(2,384,189)
(2,223,986)
The Group has accounted for the remaining 49% interest in these
companies as an investment in joint ventures. The transaction has
resulted in the recognition of a gain in profit and loss, calculated
as follows:
Proceeds of disposal
Plus: Fair value of investment retained (49%)
Add: Carrying amount of net liabilities of
investments on the date of loss of control
Gain recognised
€
2,709
489
6,759
9,957
EQTEC plc Annual Report 2021 | 85
Notes to the Financial Statements
Notes to the Financial Statements
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD - CONTINUED
Group
Investment in associate undertakings (a)
Investment in joint ventures (b)
Company
2021
€
2020
€
6,951,064
3,379,625
1,123,120
-
8,074,184
3,379,625
Investment in associate undertakings
Details of the Group’s interests in associated undertakings at 31 December 2021 is as follows:
NAME OF ASSOCIATE
UNDERTAKING
COUNTRY OF
INCORPORATION
North Fork Community
Power LLC
United States of
America
SHAREHOLDING
2021
49%2
2020
19.99%1
EQTEC Italia MDC srl
Italy
20.02%
N/a
PRINCIPAL ACTIVITY
Operator of biomass gasification
power project
Operator of biomass gasification
power project
Investment in associate undertakings (a)
6,569,432
3,379,625
a) Investment in associate undertakings
Group
At beginning of financial year
Derecognition of loans
Investment in shares
3,379,625
2,229,006
(1,150,619)
2,458,584
-
-
Loans advanced to associate undertakings
2,272,113
1,150,619
Interest accrued on loans to associate undertakings
Share of loss of associate undertakings
Adjustment in respect on unrealised gains on sales from the Group
Exchange differences
At end of financial year
Made up as follows:
Investment in shares in associate undertakings
Loans advanced to associate undertakings
Less: Losses recognised under the equity method
64,693
(19,441)
(101,296)
47,405
-
-
-
-
6,951,064
3,379,625
4,597,855
2,229,006
2,384,248
1,150,619
(31,039)
-
6,951,064
3,379,625
Notes:
1 Per the original shareholders’ agreement, the share of profits in
the associate was limited to 0.1999% rising to 19.99% thereafter.
2 On 14 October 2021, the Group announced an additional
investment of US$2.8 million in North Fork, increasing the
Group’s equity in the associate to 49%, with no restriction on
the share of profits.
EQTEC Italia MDC srl was set up originally as a subsidiary
undertaking of the Group. On 21 June 2021, it was announced that
three different parties have agreed to contribute additional capital
into EQTEC Italia MDC srl, leaving the Group with an interest of
20.02% in the associate undertaking.
On 14 October 2021, it was announced that the Group would
provide North Fork Community Power LLC with a two-year
convertible loan facility of up to $4.5 million. The Convertible Loan
Facility will accrue interest at a rate of 10% per annum, payable
annually, and the balance outstanding (including any accrued
interest) will be convertible at the Group’s option at the earliest of:
the maturity date, any default or any takeover. If the Convertible
Loan Facility were fully drawn down and converted into equity,
it would result in the Company’s taking a controlling interest in
North Fork Community Power LLC. At 31 December 2021, the total
of principal and accrued interest amounted to €1,891,842.
On 21 June 2021, the group advanced €482,000 to EQTEC Italia
MDC srl by way of a five-year loan. The loan will accrue interest at
a rate of 4% per annum, and the principal and accrued interest will
become payable on the expiry date, being 18 June 2026.
86 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 87
Notes to the Financial Statements
Notes to the Financial Statements
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD - CONTINUED
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD - CONTINUED
2021
EQTEC
ITALIA
€
NORTH
FORK
€
TOTAL
€
NORTH
FORK
€
Non-current assets
Current assets
46,469
2,155,006
2,201,475
44,552
23,555,070
454,946
24,010,016
17,686,647
Non-current liabilities
(19,422,943)
(2,542,001)
(21,964,944)
(16,213,836)
2020
EQTEC
ITALIA
€
-
-
-
TOTAL
€
44,552
17,686,647
(16,213,836)
Current liabilities
74,253
(110,805)
(36,552)
(263,150)
-
(263,150)
Net Assets
4,252,849
(42,854)
4,209,995
1,254,213
-
1,254,213
Reconciliation to carrying amount
Group’s share of net assets/(liabilities)
2,083,896
(8,589)
2,075,307
250,717
Carrying value of loan to associate
1,891,842
492,406
2,384,248
1,150,519
Adjustment in respect of unrealised
profits on sales from the Group
(78,846)
(22,450)
(101,296)
-
Exchange differences
(1,245,590)
-
(1,245,590)
(135,427)
-
-
-
-
250,717
1,150,519
-
(135,427)
Goodwill
3,838,395
-
3,838,395
2,113,816
-
2,113,816
Carrying amount
6,489,697
461,367
6,951,064
3,379,625
-
3,379,625
COMPANY
At beginning of financial year
Derecognition of loans
Investment in shares
Loans advanced to associate undertakings
Interest accrued on loans to associate undertakings
Exchange differences
At end of financial year
Made up as follows:
Investment in shares in associate undertakings
Loans advanced to associate undertakings
At end of financial year
b) Investment in joint ventures
The Group’s interests in joint ventures at the end of the reporting period is as follows:
Summarised income statement
Revenue
12,888
-
12,888
22,047
(Loss)/Profit after tax for period
Other comprehensive income
3,481
-
(92,852)
(89,371)
5,541
-
-
-
-
-
Total comprehensive income/(loss)
3,481
(92,852)
(89,371)
(5,541)
-
(5,541)
-
-
22,047
5,541
GROUP
Synergy Belisce d.o.o.
Synergy Karlovaç d.o.o.
Eqtec Synergy Projects Limited
Interests in joint ventures
Details of the Group’s interests in joint ventures is as follows:
NAME OF JOINT
VENTURE
COUNTRY OF
INCORPORATION
Reconciliation to Group’s share of
total comprehensive income
Group’s share of total
comprehensive income/(loss)
Group’s share of total
comprehensive income/(loss)
(852)
(18,589)
(19,441)
-
-
-
(852)
(18,589)
(19,441)
-
-
-
Synery Belisce d.o.o.
Croatia
Synergy Karlovaç d.o.o.
Croatia
Eqtec Synergy Products
Limited
Cyprus
SHAREHOLDING
2021
49%
49%
50.1%
2020
N/a
N/a
N/a
PRINCIPAL ACTIVITY
Operator of biomass gasification
power project
Operator of biomass gasification
power project
Operator of biomass gasification
power project
88 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 89
2021
€
2020
€
3,379,625
2,229,006
(1,150,619)
2,448,584
-
-
1,790,113
1,150,619
54,287
-
47,442
-
6,569,432
3,379,625
4,677,590
2,229,006
1,891,842
1,150,619
6,569,432
3,379,625
2021
€
506,664
519,437
97,019
2020
€
-
-
-
1,123,120
-
Notes to the Financial Statements
Notes to the Financial Statements
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD - CONTINUED
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD - CONTINUED
The joint ventures have share capital, consisting solely of ordinary
shares. Decisions about the relevant activities of the joint ventures
require unanimous consent of the Group and the respective joint
venture partners.
a) Synergy Belisce d.o.o. was set up in April 2021 as a 100%
subsidiary of Synergy Projects d.o.o., a 100% subsidiary of
the Group. On 26 November 2021, the Group’s Croatian
project development partner, Sense ESCO d.o.o. subscribed
for additional shares in Synergy Belisce d.o.o. which resulted
in the Group owning 49% of the equity of the joint venture.
Synergy Belisce d.o.o. has acquired a 1.2 MWe waste-to-energy
gasification plant in Belisce, Croatia which had been built in
2016 around EQTEC’s proprietary and patented Advanced
Gasification Technology. The plant is expected to be updated,
recommissioned and repowered for operations towards the
end of 2022.
b) Synergy Karlovaç d.o.o. was set up in April 2021 as a 100%
subsidiary of Synergy Projects d.o.o., a 100% subsidiary of the
Group. On 26 November 2021, the Group’s Croatian project
development partner, Sense ESCO d.o.o. subscribed for
additional shares in Synergy Karlovaç d.o.o. which resulted
in the Group owning 49% of the equity of the joint venture.
The movement in the investment in joint ventures is as follows:
Synergy Karlovaç d.o.o. has acquired a 1.2 MWe waste-to-
energy gasification plant in Karlovaç, Croatia which originally
employed an early gasification technology from a third party.
The plant was not able to achieve the designed operational
availability and had to be closed. The Group’s intention is
to redesign and reconfigure the Plant to incorporate the
patented, proprietary EQTEC Advanced Gasification Technology
at the centre. When subsequently commissioned, it will
transform locally sourced wood chips and forestry wood
waste from regional forests into green electricity for use by
the local community. The plant is expected to be updated,
recommissioned and repowered for operations towards the
end of 2022.
c) Eqtec Synergy Projects Limited was set up in 2020 in
partnership with its Greek strategic partners, ewerGy GmbH.
The Group owns 50.1% of the equity of the joint venture.
The joint venture has signed an agreement for the proposed
acquisition of a 5MWe project in Drama, North-eastern Greece.
Once acquired, the joint venture will lead the development
of a new biomass-to-energy plant, generating 5MW green
electricity from locally and sustainably sourced forestry waste.
Due diligence, including financial and technical feasibility, has
been completed.
At the beginning of the year
Investment in joint ventures
Fair value retained on disposal of control in subsidiary
Loans advanced to joint ventures
Interest receivable on loans to joint ventures
Share of loss after tax
Unrealised profits on sales to joint ventures
Exchange differences
Interests in joint ventures
Made up as follows:
Investment in shares in joint ventures
Loans advanced to associate ventures
Less: Losses recognised under the equity method
2021 €
2020 €
-
501
490
1,228,909
6,485
(4,747)
(110,182)
-
-
-
-
-
-
-
1,664
-
1,123,120
-
1,237,059
-
-
-
(113,939)
-
1,123,120
-
Summarised financial information for joint ventures accounted for
using the equity method
Set out below is the summarised financial information for the
Group’s joint ventures which are accounted for using the equity
method. The information below reflects the amounts presented
in the financial statements of the joint ventures reconciled to the
carrying value of the Group’s investments in joint ventures. (Note:
As this is the first year of the operation of the joint ventures, there
is no comparative figures).
2021
Summarised balance sheet (100%)
Non-current assets
Current assets
Cash and Cash equivalents
Other current assets
Non-current liabilities
Current liabilities
Bank overdrafts and loans
Other current liabilities
Net Assets/(Liabilities)
Reconciliation to carrying amount
SYNERGY
BELISCE
D.O.O.
€
SYNERGY
KARLOVAÇ
D.O.O.
€
EQTEC
SYNERGY
PROJECTS
LIMITED
€
TOTAL
€
4,043,271
3,128,485
-
7,171,756
640
747
10,412
11,799
133,308
123,510
200,499
457,317
133,948
124,257
210,911
469,116
-
-
-
-
555,331
588,987
100,000
1,244,318
3,613,016
2,666,235
116,860
6,396,111
4,168,347
3,255,222
216,860
7,640,429
8,872
(2,480)
(5,949)
443
Group’s share of net assets/(liabilities)
4,347
(1,215)
(2,981)
151
Carrying value of loans to joint ventures
551,808
585,251
100,000
1,237,059
Unrealised gains on sales to joint ventures
Adjustment arising on loss of control in period
(45,185)
(64,997)
(4,306)
398
-
-
(110,182)
(3,908)
Carrying amount
506,664
519,437
97,019
1,123,120
90 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 91
Notes to the Financial Statements
Notes to the Financial Statements
20. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD - CONTINUED
21. FINANCIAL ASSETS - CONTINUED
2021
Summarised income statement (100%)
Revenue
Depreciation
Amortisation
Interest expenses
Taxation
Profit/(loss) after tax
SYNERGY
BELISCE
D.O.O.
€
SYNERGY
KARLOVAÇ
D.O.O.
€
EQTEC
SYNERGY
PROJECTS
LIMITED
€
TOTAL
€
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(917)
(1,666)
(6,949)
(9,532)
Other comprehensive income
-
-
-
-
Total comprehensive income/(loss)
(917)
(1,666)
(6,949)
(9,532)
Reconciliation to Group’s share of total comprehensive income
Group’s share of total comprehensive income
Group’s share of total comprehensive income
(449)
(449)
(816)
(816)
(3,482)
(4,747)
(3,482)
(4,747)
21. FINANCIAL ASSETS
Investment in related undertakings
At beginning of financial year
Advance payment on purchase of in shares in Logik WTE Limited
Advance payment on purchase of shares in Shankley Biogas Limited
Exchange differences
At end of financial year
2021 €
2020 €
2,570,888
-
1,034,825
2,570,888
116,272
328,045
-
-
4,050,030
2,570,888
Investment in Logik WTE Limited
On 8 December 2020, it was announced that the Company’s wholly
owned subsidiary, Deeside WTV Limited (“Deeside”), had signed
a share purchase agreement (“SPA”) with Logik Developments
Limited (“Logik”) to acquire full ownership of the Deeside Refuse
Derived Fuel project (“Project”) through the acquisition of Logik
WTE Limited (“Project SPV”), a company incorporated in the
United Kingdom.
The key terms of the 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
2021 (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:
• 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”).
On 6 December 2021, the Company announced that Deeside
has signed a binding supplemental agreement (the “Agreement”)
with Logik. The Agreement, inter alia, set out the terms on
which the parties have agreed to vary the terms of the existing
SPA signed by Logik and Deeside (together, the “Parties”), as
announced on 8 December 2020 pursuant to which Deeside
agreed to acquire full ownership of the Project SPV from
Logik. Through the new Agreement the Parties will now act
in partnership and seek to develop additional waste-to-value
infrastructure on the Deeside site.
The key terms of the Agreement were as follows:
Deeside will acquire 32% of the share capital of the Project
SPV, the entity which holds the land and necessary planning
permissions for the Project, from Logik for a consideration of
£3.3 million to be paid no later than 31 March 2022. Deeside
can select to make this payment from its existing cash resources
or investment raised directly at the Project SPV level;
Under the Agreement, £500k was paid as a fee to Logik. The
Parties have agreed that this payment will be converted to
equity in the Project SPV by 31 March 2022;
The Project site currently comprises 6.27 hectares of land
located off Weighbridge Road in the Deeside Industrial Estate.
Under the new Agreement, the Parties have agreed that c.
2.4 hectares of the land will be retained by Logik to be used
in connection with the proposed hydrogen/biofuel project
intended to be carried out jointly between the parties;
The new Agreement removes any overage payments, deferred
consideration and fixed dividend sum due to Logik in the SPA,
since the Parties intend that their relationship going forward be
that of joint venture partners, rather than seller and buyer; and
The Parties are seeking a minimum of £10 million of third-
party funding in order to bring the Project to Financial
Close. Following receipt of such funding, EQTEC will invoice
£1,500,000 for its project development services to the Project
SPV (such fee to be reduced on a pound for pound basis if the
investment received is less than £10 million), subject to certain
conditions to be finalised and agreed with third-party funders.
Contracts have been exchanged but completion as defined in
the Agreement had not occurred at the year-end, and as a result
Logik WTE Limited is not considered a joint venture of the Group
at 31 December 2021.
In these financial statements the full initial consideration of
€3,930,911 (£3,300,000) (2020: €2,570,888 (£2,310,000)) has been
recognised as an investment in a related undertaking and the
balance of consideration payable of €2,977,963 (£2,500,000)
(2020: €2,237,006 (£2,010,000)) has been recognised as a payable
in other payables (see Note 31).
Investment in Shankley Biogas Limited
On 27 September 2021, EQTEC announced that EQTEC’s wholly
owned subsidiary, Southport WTV Limited (“Southport”), had
signed a Share Purchase Agreement (“SPA - Southport”) with
Rotunda Group Limited (“Rotunda”) to acquire full ownership of
the Southport Hybrid Energy Park project (“Southport Project”)
from Rotunda through the acquisition of Shankley Biogas Limited
(“Shankley”).
The key terms of the SPA-Southport were as follows:
Initial consideration of £382,000 (€444,161) from which the
existing exclusivity payment of £100,000 was deducted,
payable on the achievement of certain conditions precedent
related to development milestones of the Southport Project
on or before a date 12 months from the date of signing of the
SPA-Southport;
92 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 93
Notes to the Financial Statements
Notes to the Financial Statements
21. FINANCIAL ASSETS - CONTINUED
22. OTHER FINANCIAL INVESTMENTS - CONTINUED
One of the conditions precedent is that EQTEC is granted a
lease in relation to the Southport Project sufficient for the
development and operation of the Southport Project and on
terms generally acceptable to Southport and any funder (in
their entire discretion); and
The issue of a fixed dividend share in Southport to Rotunda,
which gives Rotunda the right to 20% of distributable profits in
Southport. This share carries no voting rights or entitlement to
dividends in EQTEC.
Contracts have been exchanged but completion as defined
in SPA-Southport had not occurred at the year-end, and as a
result Shankley Biogas Limited is not considered a subsidiary
undertaking of the Group at 31 December 2021.
In these financial statements the exclusivity payment of €119,119
(£100,000) has been recognised as an investment in a related
undertaking and the balance of consideration payable of €335,914
(£282,000) has classified as a commitment (see Note 39).
22. OTHER FINANCIAL INVESTMENTS
GROUP
Financial investments at amortised cost
Bonds and Debentures
Less: Provision against investment in Bonds
Investment in Shares
Other investments
Less: Provisions against other investments
Financial investments at fair value through profit or loss (FVTPL)
Investment in Metal NRG plc
Total
COMPANY
Financial investments at fair value through profit or loss (FVTPL)
Investment in Metal NRG plc
Total
2021
€
2020
€
402,644
402,644
(402,644)
(402,644)
1,832
15,418
1,832
15,418
(17,250)
(17,250)
-
-
506,976
506,976
2021
€
506,976
506,976
-
-
2020
€
-
-
Financial assets at FVTPL include the equity investment in Metal NRG plc which was financed through the exchange of shares in the
Company. The Group and the Company accounts for the investment in Metal NRG plc at FVTPL and did not make the irrevocable election
to account for it at FVOCI. As at 31 December 2021, the fair value of the Group’s interest in Metal NRG plc, which is listed on the London
Stock Exchange, was €506,976 (2020: Not applicable) based on the quoted market price available on the London Stock Exchange, which is a
Level 1 input in terms of IFRS 13.
Movement in other financial investments was as follows:
At beginning of financial year
Acquired via the exchange of shares in EQTEC plc
Movement in fair value
Exchange differences
2021
€
-
745,161
(250,378)
2020
€
-
-
-
12,193
-
At end of financial year
506,976
-
23. DEFERRED TAXATION
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
€24.4 million at 31 December 2021 (2020: €21.5 million).
24. DEVELOPMENT ASSETS
GROUP
Costs associated with project development
Loan receivable from project development undertakings
The Group invests capital in assisting in the development of waste
to value projects which can deploy its technology and expertise
and make a profit from the realisation of the development costs at
the financial close, when project financing is in place so that the
project undertaking can commence construction. Cost comprises
direct materials and overheads that have been incurred in
furthering the development of a project towards financial close.
For the financial year ended 31 December 2021, €Nil (2020: €Nil)
of development assets was included in consolidated statement of
2021
€
3,455,496
3,000,469
2020
€
503,653
482,537
profit or loss as an expense and €5,498 (2020: €Nil) was impaired
resulting from write down of development assets.
Included in loans receivable from project development
undertakings is an amount of €550,000, (2020: €200,000) which is
receivable, along with accrued interest, 18 months from the date of
drawdown. Interest is charged at 15% per annum. At 31 December
2021, the loan is valued at €613,678 (2020: €213,297).
94 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 95
Notes to the Financial Statements
Notes to the Financial Statements
24. DEVELOPMENT ASSETS - CONTINUED
25. TRADE AND OTHER RECEIVABLES - CONTINUED
The remaining loans receivables were issued with no interest and no fixed repayment date.
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value.
COMPANY
Costs associated with project development
Loan receivable from project development undertakings
2021
€
305,553
613,678
2020
€
9,275
243,598
Included in loans receivable from project development
undertakings is an amount of €550,000, (2020: €200,000) which is
receivable, along with accrued interest, 18 months from the date of
drawdown. Interest is charged at 15% per annum. At 31 December
2021, the loan is valued at €613,678 (2020: €213,297).
25. TRADE AND OTHER RECEIVABLES
GROUP
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
Amounts receivable from associate companies
Deposit payment on land (See below)
Corporation tax
Payments on account to suppliers
Other receivables
2021
€
2020
€
5,268,923
638,602
(475,687)
(475,687)
4,793,236
162,915
903,069
133,034
60,000
(60,000)
133,344
27,508
309,708
381
355,267
221,200
6,876,747
172,405
120,424
60,000
(60,000)
133,403
-
-
6,841
120,798
177,745
894,531
The option payment represents a deposit paid with respect to a
conditional land purchase agreement relating to the land on which
the proposed up to 25 MWe Billingham waste gasification and
power plant at Haverton Hill, Billingham, UK, will be constructed.
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
2021
€
4,649,704
2,876
616,343
2020
€
10,579
149,925
478,098
5,268,923
638,602
Included in the Group’s trade receivables balance are debtors with
carrying amount of €140,656 (2020: €2,411) 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 €Nil (2020: €4,754) 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:
Ireland
Spain
Croatia
The aged analysis of other receivables is within terms.
2021
€
72,919
4,007,695
1,188,309
2020
€
30,000
608,602
-
5,268,923
638,602
96 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 97
Notes to the Financial Statements
Notes to the Financial Statements
25. TRADE AND OTHER RECEIVABLES - CONTINUED
25. TRADE AND OTHER RECEIVABLES - CONTINUED
The closing balance of the trade receivables loss allowance as at 31 December 2021 reconciles with the trade receivables loss allowance
opening balance as follows:
There is no concentration of credit risk with respect to receivables as disclosed in Note 5 under credit risk.
Opening loss allowance as at 1 January 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2021
€
475,687
-
475,687
-
475,687
The closing balance of the advances to related undertakings loss allowance as at 31 December 2021 reconciles with the advances to related
undertakings loss allowance opening balance as follows:
Opening loss allowance as at 1 January 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2021
€
60,000
-
60,000
-
60,000
COMPANY
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
Corporation Tax
VAT Receivable
Other receivables
2021
€
2020
€
14,091,925
2,567,624
-
-
14,091,925
2,567,624
353,219
(30,000)
60,000
(60,000)
87,567
96
2,281
30,000
(30,000)
60,000
(60,000)
124,582
96
8,429
2,760
2,760
14,507,848
2,703,491
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 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 2021 reconciles with the trade receivables loss
allowance opening balance as follows:
Opening loss allowance as at 1 January 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2021
€
30,000
-
30,000
-
30,000
98 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 99
Notes to the Financial Statements
Notes to the Financial Statements
25. TRADE AND OTHER RECEIVABLES - CONTINUED
27. EQUITY
The closing balance of the advances to related undertakings loss allowance as at 31 December 2021 reconciles with the advances to related
undertakings loss allowance opening balance as follows:
Opening loss allowance as at 1 January 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2020
Loss allowance recognised during the financial year
Loss allowance as at 31 December 2021
€
60,000
-
60,000
-
60,000
26. CASH AND CASH EQUIVALENTS
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
2021
€
2020
€
6,446,217
6,394,791
-
(124,210)
6,446,217
6,270,581
Cash and cash equivalents included in a disposal group held for resale (Note 32)
-
-
Company
Cash and bank balances
Bank overdrafts (Note 29)
6,446,217
6,270,581
4,845,633
6,111,864
-
-
4,845,633
6,111,864
The carrying amount of the cash and cash equivalents is considered a reasonable approximation of its fair value.
SHARE CAPITAL
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
Deferred “B” Ordinary Shares of €0.099 each
75,140,494
75,140,494
7,438,909
6,977,439
8,948,017
7,438,909
Deferred convertible “A” ordinary shares
of €0.01 each
10,000,000,000
99,117,952
100,000,000
991,180
200,000,000
24,355,545
At 31 December 2021
Ordinary shares of €0.001 each
12,561,091,094
8,599,024,945
12,561,091
Deferred ordinary shares of €0.40 each
200,000,000
22,370,042
80,000,000
8,599,024
8,948,017
Deferred “B” Ordinary Shares of €0.099 each
75,140,494
75,140,494
7,438,909
7,438,909
Deferred convertible “A” ordinary shares
of €0.01 each
10,000,000,000
99,117,952
100,000,000
991,180
200,000,000
25,977,130
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.
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 €1,470,868 (2020: €639,931).
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.
100 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 101
Notes to the Financial Statements
Notes to the Financial Statements
27. EQUITY- CONTINUED
Details of warrants granted
2021
2020
LTIP 2021 OPTIONS
PLACING WARRANTS
EMPLOYEE WARRANTS
EMPLOYEE OPTIONS
ADVISOR WARRANTS
NUMBER
EXERCISE
PRICE
(PENCE)
NUMBER
EXERCISE
PRICE
(PENCE)
NUMBER
EXERCISE
PRICE
(PENCE)
NUMBER
EXERCISE
PRICE
(PENCE)
NUMBER
EXERCISE
PRICE
(PENCE)
27. EQUITY- CONTINUED
Movements in the financial year to 31 December 2021
Amounts of shares
Ordinary Shares of €0.001 each issued and fully paid
- Beginning of the financial year
- Issued on exercise of warrants
- Issued in lieu of borrowings and settlement of payables
- Issued in exchange for financial instruments
- Share issue placement
6,977,439,598
3,939,376,266
335,657,692
436,400,000
167,728,038
379,441,112
51,532,961
-
1,066,666,656
2,222,222,220
Total Ordinary shares of €0.001 each authorised,
issued and fully paid at the end of the financial year
8,599,024,945
6,977,439,598
Share warrants and options
As at 31 December 2021 the Company had 554,355,338 share warrants and options outstanding (2020: 866,968,027).
NO OF WARRANTS/OPTIONS
EXERCISE PRICE (PENCE)
FINAL EXERCISE DATE
1,533,505
38,450,000
424,022,288
67,304,542
23,045,003
554,355,338
5.53
10.0
0.25
0.65
0.01
05/02/2022
15/07/2022
31/03/2023
30/06/2024
31/01/2032
At 1 January
2021
-
- 138,000,000
0.25 590,906,437
0.25 67,304,542
Issued in year
23,045,003
0.01
-
-
-
-
-
-
-
-
-
- 138,000,000
0.25
166,884,149
-
-
-
-
-
-
-
-
-
-
30,773,543
0.33
-
-
-
-
30,773,543
0.33
23,045,003
0.01
-
10.08 years
-
-
-
-
-
- 424,022,288
0.25 67,304,542
0.65
- 424,022,288
0.25 67,304,542
0.65
-
1.25 years
-
2.58 years
-
-
-
-
-
-
-
Cancelled or
expired in year
Exercised in
year
At 31
December
2021
Exercisable at
31 December
2021
Average life
remaining at
31 December
2021
ADVISOR WARRANTS
ADVISOR WARRANTS
At 1 January 2021 and 31 December 2021
1,533,505
5.53
38,450,000
Exercisable at 31 December 2021
1,533,505
5.53
38,450,000
Average life remaining at 31 December 2021
0.08 years
0.54 years
NUMBER
EXERCISE
PRICE
(PENCE)
NUMBER
EXERCISE
PRICE
(PENCE)
10.0
10.0
Advisor warrants totalling 1,533,505 lapsed post year end leaving a
Nil balance.
The options granted during the year related to the adoption of
the EQTEC All Employee Long-term Incentive Plan (the “LTIP”).
The LTIP is a core part of the Company’s new approach to business
planning, performance management and employee incentives and
is designed to drive individual and team performance in line with
Company performance, thereby creating value for shareholders
while minimising cash outlay. All Company Executive Directors
and employees are eligible to participate in the LTIP.
Any awards made under the LTIP will comprise zero-cost share
allocations (“Incentive Shares”) and will be settled in equity.
60% will vest providing the relevant individual is employed
by the Company as of the vesting date, subject to no notice of
termination, disciplinary proceedings or similar, and in the view
of the Board, fulfilling his/her responsibilities to the highest
possible standards. The remaining 40% of Incentive Shares will
vest provided the relevant individual has met the aforementioned
employment conditions and, in addition, a Company-wide
performance condition. The condition will be set annually by the
Board against one or more of the Company’s priority financial
targets. In respect of these Company performance allocations,
there will be a minimum or ‘threshold’ achievement that must
be obtained to qualify, with a ‘straight-line’ calculation of award
up to a maximum level. Both types of Incentive Shares will be
allocated annually and, subject to the above vesting conditions
would vest over three years. The 2021 share allocation would vest
in three equal instalments on 1 May 2022, 1 May 2023 and 1 May
2024, following announcement of the Company’s annual results.
All vested awards are subject to a lock-in period, whereby any new
ordinary shares of €0.001 each issued (“Ordinary Shares”) cannot be
sold for two years from vesting for Directors and Heads of Function,
or 12 months for all other employees. Awards are further subject to
certain malus and clawback provisions, at the Board’s discretion.
The Group recognised total expenses of €205,648 and €1,819,658
related to equity-settled share-based payment transactions in
2021 and 2020 respectively (see Notes 10 and 11).
102 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 103
Notes to the Financial Statements
Notes to the Financial Statements
28. NON-CONTROLLING INTERESTS
29. BORROWINGS - CONTINUED
Balance at beginning of financial year
Share of profit/(loss) for the financial year
Release of non-controlling interest
Unrealised foreign exchange (losses)/gains
Balance at end of financial year
29. BORROWINGS
GROUP
Current liabilities
At amortised cost
Bank overdrafts
Secured loan facility (SLF)
COMPANY
Current liabilities
At amortised cost
Secured loan facility (SLF)
2021
€
2020
€
(2,223,986)
(2,326,274)
68
-
(5,082)
15,978
(160,271)
91,392
(2,384,189)
(2,223,986)
2021
€
2020
€
-
896,641
-
1,020,851
2021
€
2020
€
-
896,641
-
896,641
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
changes. Liabilities arising from financing activities are those for
which cash flows were, or future cash flows will be, classified in the
Group’s consolidated statement of cash flows as cash flows from
financing activities. Except where noted, all liabilities noted below
are disclosed in Note 29.
CSLN
€
SLF
€
OTHER
LOANS
€
BANK
BORROW-
INGS
€
BANK
OVER-
DRAFT
€
LEASE
LIABILI-
TIES
(NOTE 30)
€
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
Change in bank overdraft
-
-
-
-
(852,567)
-
Loan issue costs
(11,489)
(19,455)
Total from financing cash flows
(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 costs
50,022
89,921
Reprofiling fee levied
104,989
157,341
Redemption fee levied
-
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.
-
-
-
-
-
-
-
-
-
-
-
-
-
274,434
3,020,123
-
107,000
(89,828)
(1,363,348)
107,000
(420,953)
-
124,210
-
124,210
-
-
-
(30,944)
(313,953)
124,210
(89,828)
(1,163,082)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,165,809)
(154,972)
139,943
262,330
50,149
7,101
223,876
7,101
(644,483)
124,210
191,707
1,212,558
-
124,210
Non-cash changes
Borrowings at amortised cost
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% (2020: 12.5%) and the loan was due to mature on 30 June
2021. On 4 January 2021, the SLF was repaid early using funds from
a separate facility (see below). Included in the repayment was an
early redemption fee of €466,929.
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.
On 1 March 2021, the Company repaid £285,000 of the ULF
and the balance of principal plus accrued interest was settled
on 2 June 2021.
104 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 105
Notes to the Financial Statements
Notes to the Financial Statements
29. BORROWINGS - CONTINUED
30. LEASES - CONTINUED
SLF
€
BANK
OVERDRAFT
€
LEASE
LIABILITIES
(NOTE 30)
€
TOTAL
€
896,641
124,210
191,707
1,212,558
ULF
€
-
Balance at 1 January 2021
Financing Cash Flows
Proceeds from borrowings
1,391,174
-
Repayment of borrowings
(1,479,764)
(1,386,752)
-
-
-
1,391,174
(165,208)
(3,031,724)
Change in bank overdraft
-
-
(124,210)
-
(124,210)
Total from financing cash flows
(88,590)
(1,386,752)
(124,210)
(165,208)
(1,764,760)
Non-cash changes
Capitalisation of leases
Effect of changes in foreign
exchange rates
Amortisation of loan issue costs
Redemption fee levied
-
-
60,019
9,936
-
-
12,058
466,929
-
-
-
-
Other changes
28,571
1,188
-
8,341
Total non-cash changes
88,590
490,111
-
Balance at 31 December 2021
-
-
-
231,209
257,708
Other changes include interest accruals and payments.
219,301
219,301
3,567
73,522
-
-
12,058
466,929
38,100
809,910
257,708
30. LEASES
Lease liabilities are presented in the statement of financial position as follows:
GROUP
Current
Non-current
2021
€
200,853
56,855
257,708
2020
€
85,242
106,465
191,707
The Group has leases for its offices in London, England and in
Barcelona, 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 17).
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
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.
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:
NO. OF
RIGHT-OF-
USE ASSETS
LEASED
RANGE OF
REMAINING
TERM
AVERAGE
REMAINING
LEASE TERM
NO. OF
LEASES
WITH EX-
TENSION
OPTIONS
NO OF LEAS-
ES WITH
OPTIONS TO
PURCHASE
NO OF LEAS-
ES WITH
VARIABLE
PAYMENTS
LINKED TO
AN INDEX
NO OF
LEASES
WITH TER-
MINATION
OPTIONS
2
1.33 years
1.29 years
0
0
0
0
RIGHT-OF-
USE ASSET
Leasehold
Building
The lease liabilities are secured by the related underlying asset. Further minimum lease payments at 31 December 2021 were as follows:
WITHIN 1
YEAR
€
1-2
YEARS
€
2-3
YEARS
€
3-4
YEARS
€
4-5
YEARS
€
AFTER 5
YEARS
€
TOTAL
€
2021
Lease payments
Finance charges
205,838
57,177
-
(4,985)
(322)
-
Net Present Values
200,853
56,855
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
263,015
-
(5,307)
-
257,708
-
198,370
-
(6,663)
-
191,707
106 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 107
Notes to the Financial Statements
Notes to the Financial Statements
30. LEASES - CONTINUED
31. TRADE AND OTHER PAYABLES - CONTINUED
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
2021
€
29,053
12,566
41,619
2020
€
37,406
14,594
52,000
At 31 December 2021, the Group was committed to short-term leases and the total commitment at that date was €17,472 (2020: €53,287).
Total cash outflow for lease liabilities for the financial year ended 31 December 2021 was €165,208 (2020: €89,828).
Additional information on the right-to-use assets by class of assets is as follows:
Leasehold Buildings
Total Right-of-use assets
CARRYING AMOUNT
(NOTE 17)
€
254,104
254,104
DEPRECIATION EXPENSE
€
IMPAIRMENT
€
156,520
156,520
-
-
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
VAT payable
Trade payables
Advances paid by customers
Other payables
Accruals
PAYE & social welfare
2021
€
220,167
2,526,017
400,000
2020
€
-
146,091
-
2,986,084
2,243,257
680,938
108,600
716,473
78,158
6,921,806
3,183,979
The carrying amount of trade and other payables approximates its
fair value. All trade and other payables fall due within one year.
Included in other payables is an amount of €2,977,963 (£2,500,000)
(2020:€2,237,006 (£2,010,000)) relating to consideration payable
under the share purchase contract to acquire Logik WTE Limited
(see Note 21).
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.
COMPANY
Trade payables
Other creditors
Amounts payable to subsidiary undertakings
PAYE & social welfare
Accruals
2021
€
89,669
2,840
2
16,604
381,941
491,056
2020
€
91,390
1,250
3
12,022
642,908
747,573
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.
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.
108 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 109
Notes to the Financial Statements
Notes to the Financial Statements
32. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE AND DISCONTINUED OPERATIONS - CONTINUED
32. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE AND DISCONTINUED OPERATIONS - CONTINUED
The combined results of the discontinued operations included in the loss for the financial year are set out below.
The carrying amount of assets and liabilities in this disposal group are summarised as follows:
Assets classified as held for resale
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
Current liabilities:
Borrowings
Trade and other payables
Liabilities classified as held for resale
2021
€
2020
€
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Profit for the financial year from discontinued operations
Revenue (Note 8)
Cost of sales
Administrative Expenses
Operating Profit
Finance Costs (Note 11)
Finance Income (Note 11)
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 financial period from discontinued operations
Cash flows generated by Pluckanes Windfarm Limited for the financial periods under review are as follows:
Cash flows from discontinued operations
Operating activities
Investing activities
Financing activities
Net cash flows used in discontinued operations
PERIOD ENDED
24 AUGUST 2020
€
135,644
(663)
134,981
(91,233)
43,748
(18,381)
3
25,370
-
25,370
45,714
71,084
PERIOD ENDED
24 AUGUST 2020
€
(47,741)
(19,997)
(63,196)
(130,934)
110 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 111
Notes to the Financial Statements
Notes to the Financial Statements
33. DISPOSAL OF SUBSIDIARY
33. DISPOSAL OF SUBSIDIARY - CONTINUED
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:
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
24 AUGUST 2020
€
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
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;
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 2021, the fair
value of the deferred consideration was valued at €133,034 (31
December 2020: €120,424) and is included in trade and other
receivables (See Note 25).
(ii) the Group procuring the transfer of the substation between
the landlord and ESB Networks; and
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).
(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.
112 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 113
Notes to the Financial Statements
Notes to the Financial Statements
34. RELATED PARTY TRANSACTIONS
34. RELATED PARTY TRANSACTIONS - CONTINUED
The Group’s related parties include Altair Group Investment
Limited (“Altair”),who at 31 December 2021 held 19.00% (2020:
19.66%) of the shares in the Company. Other Group related
parties include the associate and joint venture companies
and key management.
Altair for the financial year ended 31 December 2021 amounted
to €28,571 (2020: €170,084); this includes a reprofiling fee of €Nil
(2020: €106,321) with respect to the reprofiling of the debt.
Included in borrowings, net of amortisation costs, at 31 December
2021 is an amount of €Nil (2020: €Nil) due to Altair from the Group.
Transactions with Altair
During the financial year ended 31 December 2021, Altair advanced
€1,391,174 (2020: €Nil) to the Group by way of borrowings. During
the financial year ended 31 December 2021, the Group repaid
borrowings of €1,479,764 (2020: €1,175,839 by way of conversion
into equity) by way of conversion into equity. Interest payable to
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:
DATE OF
DIRECTORSHIP
APPOINTMENT/
RETIREMENT
SALARY
€’000s
FEES
€’000s
PENSION
CONTRI-
BUTION
€’000s
OTHER
BENE-
FITS
€’000s
TERMI-
NATION
PAY-
MENTS
€000’s
SHORT
TERM
INCEN-
TIVES
€000’s
LONG
TERM
INCEN-
TIVES
€000’s
2021
TOTAL
€
2020
TOTAL
€
NAME
Executive
Directors
D Palumbo
J Vander Linden
N Babar
Y Alemán
Former
Executive
Directors
G Madden
Non-
Executive
Directors
I Pearson
T Quigley
Total 2021
Total 2020
Appointed
01/12/2020
Appointed
19/07/2021
174
174
70
154
Retired
15/07/2021
159
-
-
-
-
-
-
-
731
409
69
42
111
486
9
10
4
-
-
-
-
23
-
2
4
1
-
-
-
-
-
14
241
-
-
21
24
-
-
241
-
105
105
42
90
-
-
-
-
61
25
-
-
-
-
290
354
142
244
565
14
-
383
414
947
69
42
68
69
Prior to becoming a director, Mr D Palumbo provided advisory
services to the Company. The cost of these services amounted to
€Nil (2020: €103,201) for the financial year ended 31 December
2021. In addition, a company controlled by Mr. Palumbo provided
office space to the Group in London. The cost of these services
amounted to €12,566 (2020: €21,843). At 31 December 2021, an
amount of €Nil is included in trade and other payable with respect
to payments due to this company (2020: €3,172).
Prior to becoming a director, Mr J Vander Linden provided advisory
services to the Company. The cost of these services amounted to
€Nil (2020: €144,148) for the financial year ended 31 December
2021. At 31 December 2021, an amount of €Nil is included in trade
and other payable with respect to payments due to this company
(2020: €63,883). 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.
During the year ended 31 December 2021, the Group entered
into a royalty settlement arrangement, to the value of €2,492,059,
with Syngas Technology Engineering, S.L. (a company controlled
by Dr. Yoel Alemán, the Group’s CTO and current Board Director).
This balance was settled through a cash payment of €1,000,000
with the remainder through the issue of new ordinary shares of
€0.001 each in the capital of the Company on 3 June 2021.
During the year, a director, Mr. T Quigley, provided consultancy
services to the Group in the year ended 31 December 2021
amounting to €11,543 (2020: €Nil). Included in trade and
other payables is an amount of €Nil (2020: €Nil) with respect to
these services.
During the year ended 31 December 2021 a director, Mr I Pearson
provided consultancy services to the Group to the value of
€116,261 (2020: €Nil) for which he received 6,666,666 in shares.
Included in trade and other payables at 31 December 2021 is an
amount of €Nil (31 December 2020: €Nil) with respect to payments
due to these services.
During the year, the company settled certain debts owed to
directors and former directors by way of equity. In accordance
with IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments, the loss recognised on these transactions related
to directors and former directors was €1,104,374 (2020: loss
of €128,900).
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 and
joint ventures
The following transactions were made with associate
undertakings and joint ventures in the year ended
31 December 2021:
NORTH FORK
COMMUNITY
POWER LLC
SYNERGY BELISCE
D.O.O.
SYNERGY
KARLOVAÇ D.O.O.
EQTEC ITALIA
MDC SRL
EQTEC SYNERGY
PROJECTS LIMITED
2021
€
2020
€
2021
€
2020
€
2021
€
2020
€
2021
€
2020
€
2021
€
2020
€
2021
€
TOTAL
2020
€
Loans to associated undertakings and joint ventures
At start of year
1,150,619
-
-
1,790,113
1,150,619
547,853
Advanced
during year
Loans
derecognised
(1,150,619)
Interest charged
in year
54,287
-
-
-
3,147
-
-
-
-
-
581,056
-
3,338
Exchange
differences
47,442 -
808
-
857
-
-
-
-
-
-
-
482,000
-
10,406
-
492,406
-
-
-
-
-
-
-
-
-
-
100,000
-
-
-
100,000
-
-
-
-
-
-
-
-
-
-
-
-
1,150,619
-
3,501,022
1,150,619
(1,150,619)
71,178
49,107
-
-
-
3,621,307
1,150,619
5,935,618
1,980,000
1,149,254
-
7,084,872
1,980,000
At 31 December 2021, directors’ remuneration unpaid (including past directors) amounted to €341,812 (31 December 2020: €260,875).
Technology
sales
Development
fees
2,158,118
1,980,000
1,237,500
-
1,540,000
-
1,000,000
-
-
599,607
-
549,647
-
-
2,158,118 1,980,000 1,837,107
-
2,089,647
- 1,000,000
342
86
1,555
-
At end of year
1,891,842
1,150,619
551,808
-
585,251
-
1,127
-
2,046
Sales of goods and services
114 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 115
Notes to the Financial Statements
Notes to the Financial Statements
34. RELATED PARTY TRANSACTIONS - CONTINUED
35. EVENTS AFTER THE BALANCE SHEET DATE - CONTINUED
NORTH FORK
COMMUNITY
POWER LLC
SYNERGY BELISCE
D.O.O.
SYNERGY
KARLOVAÇ D.O.O.
EQTEC ITALIA
MDC SRL
EQTEC SYNERGY
PROJECTS LIMITED
2021
€
2020
€
2021
€
2020
€
2021
€
2020
€
2021
€
2020
€
2021
€
2020
€
2021
€
TOTAL
2020
€
Year-end balances
Included in trade
receivables
Included in loans
to development
companies
Included in other
receivables
34,900
-
1,962,925
-
30,201
-
-
-
2,202,884
-
-
-
42,919
-
-
-
-
-
-
-
-
-
12,452
-
100
-
14,956
34,900
30,201 1,962,925
-
2,215,336
-
43,019
-
14,956
-
-
-
-
4,243,628
-
-
30,201
27,508
-
4,271,136
30,201
35. EVENTS AFTER THE BALANCE SHEET DATE
Variation to Land Purchase Agreement
On 15 February 2022, the Group announced an agreement to
extend the existing, conditional Land Purchase Agreement (the
“LPA”) relating to the land on which the proposed, up to 25 MWe
Billingham waste gasification and power plant (the “Project”) at
Haverton Hill, Billingham, UK, will be constructed (the “Project
Site”). Pursuant to the variation, the Group agreed to make a
payment of on 24 February 2022, with an additional payment of
£500,000 to be paid on or before 30 September 2022 to Scott Bros,
the sellers. These two payments will be deducted from the total
purchase price along with the previously paid deposit. The balance
of £7,590,000 is payable at completion of the land purchase, which
must occur on or before 23 December 2022. In addition, the Group
paid a further fee of £250,000 as consideration for the Variation to
Scott Bros on 24 February 2022.
Loan Facility
On 29 March 2022, the Group announced that it had entered into
a loan agreement with Riverfort Global Opportunities PCC Limited
and YA II PN, Ltd (together, the “Lenders”) for the provision of an
unsecured loan facility of up to £10 million. The Loan Facility may
be drawn down in multiple instalments with the Initial Advance
being received on 29 March 2022.
Each instalment of the Loan Facility will have a maturity date of
12 months from the date of advance with repayments of principal
made on a monthly basis, as set out in a closing statement to be
agreed at the time of each advance. The Loan Facility will accrue a
fixed interest coupon equivalent to 7.5% of the Initial Advance and
of any further advance, payable on a quarterly basis.
Instalments of the Loan Facility subsequent to the Initial Advance
are not committed and would only be advanced to the Company
in the event that the Lenders and the Company agree in writing
and upon the satisfaction of certain conditions precedent. The
Loan Agreement has a commitment period of 18 months.
The Company and the Lenders may mutually agree that the
Company satisfies any payment of the amounts due under the
Loan Agreement by the issue of ordinary shares of €0.001 each
in the capital of the Company (“Ordinary Shares”) at a reference
price of the average daily VWAP for each of the five consecutive
trading days preceding the drawdown date of of each advance of
the Facility (the “Reference Price”). If such settlement is agreed by
the parties, the value of Ordinary Shares the Lenders will receive at
the Reference Price will be 115% of the amount of the Loan Facility
being settled in lieu of repayment of the debt.
The Company may elect to redeem the Loan Facility early by
repaying all outstanding principal and interest together with
an early repayment fee of 5% of the outstanding principal at
the date of repayment. If the Company elects to repay the Loan
Facility early, the Lenders may elect to subscribe up to 20% of the
outstanding amount in Ordinary Shares, at the Reference Price. In
addition, if the Company completes an equity placing whilst the
facility is in place, the Lenders may elect to convert up to 20% of
the outstanding amount of the Facility into Ordinary Shares in the
Company at the price at which such shares are issued pursuant
to the placing and multiplying the resulting number by 1.1.
The Company received net approximately £4,750,000 from the
Initial Advance following the deduction of a commitment fee
of 2.5% of the aggregate amount of the Loan Facility, being
£10 million. The Company will use the proceeds of the Loan
Facility to fund further growth and development activities in
its key markets, and for general working capital purposes.
Deeside RDF Project Update
On 1 April 2022, the Group announced that its wholly owned
subsidiary, Deeside WTV Limited (“Deeside WTV”) had signed
a binding supplemental agreement (the “Supplemental
Agreement”) with Logik Developments Limited (“Logik”). The
Supplemental Agreement, inter alia, sets out the terms on which
Logik and Deeside WTV (together, the “Parties”) have agreed to
vary the terms of the share purchase agreement signed by the
Parties on 7 December 2020, as amended by the supplemental
agreement announced on 6 December 2021 (the “Existing SPA”).
The key terms of the Supplemental Agreement are as follows:
Deeside WTV will acquire 32% of the share capital of Logik WTE
Limited (the “Project SPV”), the entity which holds the land and
necessary planning permissions for the Deeside RDF project
(the “Project”), with the consideration to be satisfied by the
settlement of advances from the Group to Logik and the
Project SPV in an amount of c. £2.3 million;
Completion of Deeside WTV’s acquisition of the interest in the
share capital in the Project SPV is subject to third party consent
and is expected to complete on or before 30 June 2022;
Parties are in discussions to procure a buyer for the Project
SPV at a minimum valuation of £15 million. Subject to the sale
of the Project SPV, EQTEC will invoice up to £2 million for its
project development services to the Project SPV (such fee
to be reduced on a pound for pound basis if the investment
received is less than £17 million), subject to certain conditions
to be finalised and agreed as part of ongoing discussions with
potential buyers; and
While the amendment of the Existing SPA to extend the
completion date to 30 June 2022 is immediately effective,
the Parties have agreed to act in good faith and to use
all reasonable endeavours to implement the additional
undertakings and agreements in the Supplemental Agreement
as summarised in this announcement, including to amend
the terms of the Existing SPA and to finalise other necessary
documentation such as a shareholders’ agreement for the
Project SPV.
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
Issue of shares in exchange for financial assets
2021
€
2020
€
3,452,741
1,915,693
745,161
-
116 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 117
Notes to the Financial Statements
Notes
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
2021 was €3,942,601 (2020: €3,270,895).
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 2021 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. COMMITMENTS
As disclosed in Note 21, consideration of €335,914 (£282,000) will become payable on the achievement of certain conditions precedent
related to development milestones of the Southport Project on or before a date 12 months from the date of signing of the Share Purchase
Agreement (i.e. 27 September 2022) to acquire full ownership of the Southport Hybrid Energy Park project through the acquisition of
Shankley Biogas Limited.
40. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were approved by the Board of Directors on 22 April 2022.
118 | EQTEC plc Annual Report 2021
EQTEC plc Annual Report 2021 | 119
EQTEC plc
Cork, Building 1000,
City Gate,
Mahon,
Cork,
T12 W7CV,
Republic of Ireland
Registered Number: 462861