EQTEC PLC Final Results (4892Y)

TIDMEQT

RNS Number : 4892Y

EQTEC PLC

05 May 2023

5 May 2023

EQTEC plc

("EQTEC", the "Company" or the "Group")

Audited results for the year ended 31 December 2022

EQTEC plc (AIM: EQT), a global technology innovator powering distributed, decarbonised, new energy infrastructure through its waste-to-value solutions for hydrogen, biofuels and energy generation announces its audited results for the year ended 31 December 2022, with post-period progress.

Financial highlights

   --     Revenue and other operating income: EUR8.0 million (2021: EUR9.2 million) 

-- EBITDA loss before significant and non-recurring items: EUR4.9 million (2021: EUR3.8 million)

   --     Net assets: EUR37.1 million (31 December 2021: EUR43.4 million) 
   --     Capital raise of GBP3.7 million (EUR4.2 million) through the placing of new shares 

-- Two loan facilities secured: one for up to GBP10 million (EUR11.3 million) and the other for GBP2 million (EUR2.3 million)

The net loss including significant and non-recurring items was EUR10.5 million (2021: EUR4.7 million), which included an investment impairment of EUR4.7 million in relation to the North Fork project in California.

Commercial and operational highlights

   --     Strong progress with Market Development Centres ("MDCs"): 
   --   Italy MDC construction completed, and commissioning commenced. 
   --   Croatia MDC funding identified for final construction and recommissioning. 
   --   France MDC acquired, and project buyer identified for sale of the project. 

-- EQTEC France launched as wholly owned subsidiary, with strong pipeline of projects particularly focused on renewable natural gas ("RNG") and advanced biofuels.

-- Contaminated plastics added to EQTEC feedstock library after testing success, followed by collaboration agreement with French waste management company toward future plants.

-- EQTEC R&D facility at Université de Lorraine ("UL") upgraded to support steam-oxygen gasification capabilities for testing of advanced biofuel solutions.

   --     Deeside project (UK) completed initial FEED, Livadia project (Greece) achieved 80% funding. 

-- North Fork project (USA) refinanced, and construction restarted; Southport and Billingham projects (UK) restructured to reduce EQTEC liabilities whilst maintaining rights to development fees due.

David Palumbo, CEO of EQTEC, commented:

"EQTEC in 2022 reaffirmed its business strategy, strengthened its growth platform and toughened its resolve. Based on having one of the few technologies of its kind with a proven track record, we focused our energies on ensuring we can truly make our technology available, reliably and consistently, for the several business models we support in the world of new energy infrastructure.

We delivered focused, formative progress in three key areas of our business strategy. First, we pushed ahead with three MDCs, as demonstration of EQTEC's versatile syngas solutions in live, reference plants that deliver attractive returns through a variety of business models. Second, we took further steps in retaining our technology leadership, deploying upgraded R&D capability for regular testing of solutions for advanced biofuels such as RNG, hydrogen, liquid fuels such as sustainable aviation fuel (SAF) and for chemicals such as ethanol or methanol. Third, we released the Company from untenable liabilities in major projects and turned our attention to the Tier 1 and 2 leaders that will help us deploy our solutions through the world's best funded, best managed projects.

Our target remains making EQTEC a leading licensor and innovator of technology that delivers clean, baseload energy and biofuels solutions to the world's leading Industrial and Utility companies and to Municipalities and Agroindustry around the globe. To become that, we must be more than simply the leading innovator for waste-to-value solutions; we must also be known for deploying our technology through projects that consistently deliver on time, to budget and for plants that deliver healthy returns on investment, sustainably over their lifetimes."

Current trading and outlook

-- France and Italy leading execution of EQTEC business strategy, combining advanced capabilities, demonstration of EQTEC technology and collaboration with top-tier partners:

-- Mechanical and electrical completion of Italy MDC in 2022, followed by achievement of full operations in March 2023 with handover to the operating company expected imminently.

-- Visits by prospective customers throughout 2022 and early 2023 to Movialsa plant in Spain and now also to Italy MDC in Tuscany, with a full slate of visits planned to Italy MDC in 2023.

-- Acquisition of France MDC in July 2022, followed by engagement of prospective buyer, confirmation of planning, feedstock and offtake arrangements; project sale expected in H1 2023.

-- Launch into the contaminated plastic waste treatment business in France with French partner SEPS in March 2022, following completion of successful contaminated plastic waste trials.

-- Following a competitive tender win, EQTEC and French utility partner Idex awarded in March 2023 a waste-to-RNG project built on demonstrated R&D capabilities.

-- Collaboration agreement in April 2023 between EQTEC and Poseidon LNG Hub, a sister company of Belleli Group and consortium including Linde, Wood, Alfa Laval and Chemprod.

-- Built on collaboration agreement with major players, pipeline in Italy for at least four waste-to-RNG and waste-to-hydrogen solutions, also building on global partnership with Wood.

-- Major UK, France and Ireland projects demonstrate EQTEC scale capability with target business models and top-tier customers:

-- Reconfiguration of near-premise Industrial business model at Deeside, Flintshire, UK for a more cost-effective, dual-technology facility deploying Anaergia, Inc. anaerobic digestion technology and EQTEC syngas technology for power offtake by neighbouring Toyota Motor Company engine production plant; initial FEED completed by global EPC Black & Veatch.

-- Updated financial modelling and development strategy for Billingham project, for an advanced facility that can support surrounding, large-scale Industrial offtakers in Teesside, with Petrofac appointed as the FEED partner and prospective EPC; engagement with neighbouring CF Fertilisers and other local players for purchase of advanced biofuels.

-- Progress toward acquisition of project at decommissioned, large-scale coal-fired power station at Gardanne, France, secured in Q1 2023; EQTEC leading feasibility work for an early-stage design of a clean, syngas-based production of RNG or other, advanced biofuels in support of Industrial and/or Municipal offtake customers.

-- Engagement underway toward Ireland-based projects in support of power, RNG or ethanol production to support Ireland's IT services industry, de-carbonise the national grid and create autonomous, sustainable alternatives to traditional energy solutions.

-- Appointed top-tier investment bank to approach large corporates in the growing market for large-scale, new energy infrastructure such as RNG, hydrogen and liquid fuels with a mandate to identify strategic investors at individual project, project portfolio and/or Group levels.

   --     Continued commitment to innovation and applied R&D: 

-- Expansion of variable feedstock capabilities, including successful tests of plastics and polymers contaminated with fossil fuels and other chemicals that cannot be burned or put into landfill, and successful testing of high-humidity RDF (refuse-derived fuel).

-- Expansion of R&D capabilities for advanced offtake applications such as RNG, hydrogen, liquid biofuels, ethanol, methanol and other chemicals, through upgrade of R&D facility at the University of Lorraine to accommodate steam-oxygen gasification technology.

-- Active engagement of Wood VESTA technology for hydrogen or for RNG at multiple project opportunities, starting with Southport project in UK, with other opportunities in France, Italy.

-- Collaboration agreement with CompactGTL for development of liquid biofuels through EQTEC syngas technology and CompactGTL gas-to-liquids technology, at UK pilot plant.

-- Ireland project opportunity for development of integrated syngas-to-ethanol capability with new technology partner to be announced.

   --     Focus Plan in response to tighter market conditions, for prioritised, strategic execution: 

-- Portfolio prioritisation with focus on completion and live operation of MDCs in Italy, Croatia and France, followed by development of scale capabilities at large facilities in UK, France and Italy.

-- Exited liabilities of EUR18 million+ through renegotiation of agreements at all three UK projects: Deeside, Billingham, Southport.

-- Focus on core capabilities, bringing on top-tier development, project management, FEED and EPC partners to support EQTEC's design, engineering and technology integration.

Annual report

The full, 2022 annual report, which addresses all the points above and which details full, financial results and other performance outcomes for the Company, may be found on the Company's website at https://eqtec.com/investing-in-eqtec/

Additionally, the full2022 annual report for the Company is available at the following hyperlink:

http://www.rns-pdf.londonstockexchange.com/rns/4892Y_1-2023-5-4.pdf

The principal financial tables, extracted from the Annual Report, are set out below:

Consolidated statement of profit or loss for the financial year ended 31 December 2022

 
                                         Notes               2022                  2021 
                                                              EUR                   EUR 
Revenue                                    8            7,970,072             9,171,764 
Cost of sales                                         (7,002,314)           (7,541,354) 
Gross profit                                              967,758             1,630,410 
Operating income/(expenses) 
Administrative expenses                               (5,742,563)           (4,190,592) 
Other income                               9               33,645                     - 
Impairment costs                          14              (2,752)               (5,498) 
Other (gains)/losses                      12               10,088           (1,418,860) 
Employee share-based compensation         10            (340,257)             (205,648) 
Foreign currency gains                                    156,835               348,885 
Operating loss                                        (4,917,246)           (3,841,303) 
Share of results from equity accounted 
 investments                              21             (52,059)              (24,188) 
Gains from sales to equity accounted 
 investments deferred                     21             (28,378)             (211,478) 
Loss/(gain) arising from loss 
 of control of subsidiaries                                 (489)                 9,957 
Change in fair value of financial 
 investments                               23           (326,501)             (250,378) 
Finance income                            11              316,805               134,069 
Finance costs                             11            (589,618)             (517,108) 
Significant and non-recurring 
 transactions: 
Impairment of equity-accounted 
 investment                               15          (4,712,490)                     - 
Loss on disposal of tangible asset        15            (154,205)                     - 
Loss before taxation                      14         (10,464,181)           (4,700,429) 
Income tax                                16             (60,934)                     - 
 
LOSS FOR THE FINANCIAL YEAR                          (10,525,115)           (4,700,429) 
Loss attributable to: 
Owners of the Company                                (10,525,104)           (4,700,497) 
Non-controlling interest                                     (11)                    68 
 
                                                     (10,525,115)           (4,700,429) 
 
                                                             2022                  2021 
                                                    EUR per share         EUR per share 
Basic loss per share: 
From continuing operations                17              (0.001)               (0.001) 
From continuing and discontinued 
 operations                               17              (0.001)               (0.001) 
Diluted loss per share: 
From continuing operations                17              (0.001)               (0.001) 
From continuing and discontinued 
 operations                               17              (0.001)               (0.001) 
 

Consolidated statement of comprehensive income for the financial year ended 31 December 2022

 
                                             2022         2021 
                                              EUR          EUR 
 
Loss for the financial year          (10,525,115)  (4,700,429) 
 
Other comprehensive (loss)/income 
 
Items that may be reclassified 
 subsequently to profit or loss 
Exchange differences arising on 
 re-translation 
of foreign operations                   (478,066)      238,715 
 
Other comprehensive (loss)/income 
 for the year                           (478,066)      238,715 
 
Total comprehensive loss for 
 the financial year                  (11,003,181)  (4,461,714) 
 
Attributable to: 
Owners of the company                (11,128,847)  (4,301,511) 
Non-controlling interests                 125,666    (160,203) 
 
                                     (11,003,181)  (4,461,714) 
 

Consolidated statement of financial position at 31 December 2022

 
                                           Notes             2022          2021 
ASSETS                                                        EUR           EUR 
Non-current assets 
Property, plant and equipment               18            133,053       446,861 
Intangible assets                           19         17,578,231    17,702,833 
Investments accounted for using 
 the equity method                          21          7,619,514     8,074,184 
Financial assets                            22          3,728,434     4,050,030 
Other financial investments                 23            171,186       506,976 
 
Total non-current assets                               29,230,418    30,780,884 
 
Current assets 
Development assets                          25          6,033,543     3,455,496 
Loan receivable from project development 
 undertakings                               25          5,446,087     3,000,469 
Trade and other receivables                 26          7,221,046     6,876,747 
Cash and cash equivalents                   27          1,693,116     6,446,217 
 
Total current assets                                   20,393,792    19,778,929 
 
Total assets                                           49,624,210    50,559,813 
 
EQUITY AND LIABILITIES                                        EUR           EUR 
Equity 
Share capital                               28         26,799,584    25,977,130 
Share premium                               28         87,203,372    83,610,562 
Other reserves                              28          2,694,125     2,353,868 
Accumulated deficit                                  (77,305,919)  (66,177,072) 
 
Equity attributable to the owners 
 of the company                                        39,391,162    45,764,488 
Non-controlling interests                   29        (2,258,523)   (2,384,189) 
 
Total equity                                           37,132,639    43,380,299 
 
Non-current liabilities 
Borrowings                                  30          1,064,598             - 
Lease liabilities                           31                  -        56,855 
 
Total non-current liabilities                           1,064,598        56,855 
 
Current liabilities 
Trade and other payables                    32          6,264,404     6,921,806 
Borrowings                                  30          5,106,038             - 
Lease liabilities                           31             56,531       200,853 
 
Total current liabilities                              11,426,973     7,122,659 
 
Total equity and liabilities                           49,624,210    50,559,813 
 

The financial statements were approved by the Board of Directors on 5 May 2023 and signed on its behalf by:

Ian Pearson

David Palumbo

Non-Executive Chairman Chief Executive Officer

05 May 2023

05 May 2023

Consolidated statement of changes in equity for the financial year ended 31 December 2022

 
                                                                                                         Equity 
                                                                                                   attributable 
                                                                                                      to owners 
                              Share                                                  Accumulated         of the      Non-controlling 
                            Capital         Share premium    Other reserves              deficit        company            interests         Total 
                                EUR                   EUR               EUR                  EUR            EUR                  EUR           EUR 
Balance at 1 
 January 2021            24,355,545            62,896,521         2,148,220         (61,875,561)     27,524,725          (2,223,986)    25,300,739 
Issue of 
 ordinary 
 shares in 
 EQTEC plc 
 (Note 28)                1,402.324            18,206,268                 -                    -     19,608,592                    -    19,608,592 
Conversion of 
 debt into 
 equity 
 (Notes 28)                 167,728             3,285,013                 -                    -      3,452,741                    -     3,452,741 
Issued in 
 acquisition 
 of financial 
 asset (Note 
 28)                         51,533               693,628                 -                    -        745,161                    -       745,161 
Share issue 
 costs (Note 
 28)                              -           (1,470,868)                 -                    -    (1,470,868)                    -   (1,470,868) 
Employee 
 share-based 
 compensation 
 (Notes 10)                       -                     -           205,648                    -        205,648                    -       205,648 
Transactions 
 with owners              1,621,585            20,714,041           205,648                    -     22,541,274                    -    22,541,274 
Loss for the 
 financial 
 year                             -                     -                 -          (4,700,497)    (4,700,497)                   68   (4,700,429) 
Unrealised 
 foreign 
 exchange 
 losses                           -                     -                 -              398,986        398,986            (160,271)       238,715 
Total 
 comprehensive 
 loss 
 for the 
 financial 
 year                             -                     -                 -          (4,301,511)    (4,301,511)            (160,203)   (4,461,714) 
Balance at 31 
 December 2021           25,977,130            83,610,562         2,353,868         (66,177,072)     45,764,488          (2,384,189)    43,380,299 
Issue of 
 ordinary 
 shares in 
 EQTEC plc 

 (Note 28)                  769,697             3,717,379                 -                    -      4,487,076                    -     4,487,076 
Conversion of 
 debt into 
 equity 
 (Note 28)                   52,757               237,672                 -                    -        290,429                    -       290,429 
Share issue 
 costs (Note 
 28)                              -             (362,241)                 -                    -      (362,241)                    -     (362,241) 
Employee 
 share-based 
 compensation 
 (Note 10)                        -                     -           340,257                    -        340,257                    -       340,257 
Transactions 
 with owners                822,454             3,592,810           340,257                    -      4,755,521                    -     4,755,521 
Loss for the 
 financial 
 year                             -                     -                 -         (10,525,104)   (10,525,104)                 (11)  (10,525,115) 
Unrealised 
 foreign 
 exchange 
 losses                           -                     -                 -            (603,743)      (603,743)              125,677     (478,066) 
Total 
 comprehensive 
 loss 
 for the 
 financial 
 year                             -                     -                 -         (11,128,847)   (11,128,847)              125,666  (11,003,181) 
Balance at 31 
 December 2022           26,799,584            87,203,372         2,694,125         (77,305,919)     39,391,162          (2,258,523)    37,132,639 
 

Consolidated statement of cash flows for the financial year ended 31 December 2022

 
                                          Notes           2022                  2021 
                                                           EUR                   EUR 
Cash flows from operating activities 
Loss for the financial year before 
 income tax                                       (10,464,181)           (4,700,429) 
Adjustments for: 
Depreciation of property, plant 
 and equipment                             18          239,233               156,520 
Amortisation of intangible assets          19          124,602                72,685 
Loss on disposal of tangible assets        15          154,205                     - 
Impairment of equity-accounted 
 investments                               15        4,712,490                     - 
Employee share-based compensation          10          340,257               205,648 
Impairment of development assets           25            2,752                     - 
Share of loss of equity accounted 
 investments                               21           52,059                24,188 
Gains from sales to equity accounted 
 investments deferred                      21           28,378               211,478 
Loss/(gain) on loss of control 
 of subsidiary                             20              489               (9,957) 
Change in fair value of financial 
 investments                               23          326,501               250,378 
(Gain)/loss on debt for equity 
 swap                                      12         (10,088)             1,418,860 
Unrealised foreign exchange movements                (319,440)               103,234 
Operating cash flows before working 
 capital changes                                   (4,812,743)           (2,267,395) 
Increase in: 
    Development assets                             (2,578,047)           (3,144,600) 
    Trade and other receivables                    (2,837,708)           (5,946,010) 
(Decrease)/increase in Trade and 
 other payables                                      (274,938)             3,432,256 
Net cash used in operating activities 
 - continuing operations                          (10,503,436)           (7,925,749) 
Finance income                             11        (316,805)             (134,069) 
Finance costs                              11          589,618               517,108 
Taxes paid                                           (108,311)                     - 
 
Net cash used in operating activities             (10,338,934)           (7,542,710) 
 
Cash flows from investing activities 
Addition to tangible assets                18         (79,199)                     - 
Additions to intangible assets             19                -           (1,000,000) 
Payments on deposit on land                26        (586,421)                     - 
Cash inflow from disposal of subsidiary    33          170,000                     - 
Loans advanced to project development 
 undertakings                              25        (773,034)           (2,430,137) 
Loans repaid by project development 
 undertakings                              25          100,000                     - 
Investment in equity accounted 
 undertakings                              21          (6,790)             (978,825) 
Loans advanced to equity accounted 
 undertakings                              21      (2,852,699)           (3,746,984) 
Loans repaid by equity accounted 
 undertakings                              21           40,018                     - 
Investment in related undertakings         22        (351,853)             (697,635) 
Other advances to equity accounted 
 undertakings                                          (2,000)              (27,508) 
 
  Net cash used in investing activities            (4,341,978)           (8,881,089) 
 
Cash flows from financing activities 
Proceeds from borrowings and lease 
 liabilities                               30        7,236,850             1,391,174 
Repayment of borrowings and lease 
 liabilities                               30      (1,126,483)           (3,031,724) 
Loan issue costs                           30        (334,557)                     - 
Proceeds from issue of ordinary 
 shares                                    28        4,430,069            19,420,222 
Share issue costs                          28        (274,784)           (1,180,217) 
Interest paid                                          (3,284)                  (20) 
 
Net cash generated from financing 
 activities                                          9,927,811            16,599,435 
 
Net (decrease)/increase in cash 
 and cash equivalents                              (4,753,101)               175,636 
 
Cash and cash equivalents at the 
 beginning of the financial year                     6,446,217             6,270,581 
 
Cash and cash equivalents at 
 the end of the financial year             27        1,693,116             6,446,217 
 

ENQUIRIES

 
 EQTEC plc 
  David Palumbo / Nauman Babar              [phone] 
 Strand Hanson - Nomad & Financial 
  Adviser 
  James Harris / Richard Johnson            [phone] 
 Panmure Gordon - Broker 
  John Prior / Hugh Rich                    [phone] 
 Instinctif - Media & investor relations    [e-mail] 
  enquiries                                  [phone] / +44 788 
  Guy Scarborough / Tim Field                788 4794 
 

About EQTEC plc

As one of the world's most experienced gasification technology and engineering companies, with a growing track record of delivering operational and commercial success for transforming waste-to-energy through best-in-class technology innovation, engineering and project development, EQTEC brings together design innovation, project delivery discipline and solid commercial experience to add momentum to the global energy transition. EQTEC's proven, proprietary and patented technology is at the centre of clean energy projects, sourcing local waste, championing local businesses, creating local jobs and supporting the transition to localised, decentralised and resilient energy systems.

EQTEC designs, supplies and builds advanced gasification facilities in the UK, EU and US, with highly efficient equipment that is modular and scalable from 1MW to 30MW. EQTEC's versatile solutions process over 50 varieties of feedstock, including forestry wood waste, vegetation and other agricultural waste from farmers, industrial waste and sludge from factories and municipal waste, all with no hazardous or toxic emissions. EQTEC's solutions produce a pure, high-quality synthesis gas ("syngas") that can be used for the widest range of applications, including the generation of electricity and heat, production of synthetic natural gas (through methanation) or biofuels (through Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen.

EQTEC's technology integration capabilities enable the Group to lead collaborative ecosystems of qualified partners and to build sustainable waste reduction and green energy infrastructure around the world.

The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange has awarded EQTEC the Green Economy Mark, which recognises listed companies with 50% or more of revenues from environmental/green solutions.

Further information on the Company can be found at www.eqtec.com

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May 05, 2023 02:00 ET (06:00 GMT)