CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2025

 

		2025	2024
	Notes	£'000	£'000
Cash from operating activities
Loss for the period before taxation		(6,850)	(11,457)
Non-cash adjustments	30	3,900	9,656
Operating cash flows before movements in working capital		(2,950)	(1,801)
Increase in inventories		(19)	(163)
(Increase)/decrease in receivables		(244)	630
Increase/(decrease) in accounts payable and accrued liabilities		687	(39)
Income tax paid		(3)	-
Net cash used in operating activities		(2,529)	(1,373)
Purchase of property, plant and equipment	12	(1,460)	(3,622)
Additions to exploration and evaluation assets	15	(223)	-
Payment of deferred consideration	25	(867)	(1,117)
Investment agreement - purchase of call option	6	(64)	-
Net cash outflow from investing activities		(2,614)	(4,739)
Proceeds from issue of shares	16	3,628	2,438
Proceeds from borrowings / convertible instruments	23	2,500	4,012
Lease principal repayments	23	(65)	-
Loan repayments	23	(77)	(65)
Transaction cost	16	(203)	(70)
Interest paid		(302)	-
Net cash inflow from financing activities		5,481	6,315
Effect of exchange rate changes on cash		(7)	-
Net increase in cash and cash equivalents		331	203
Cash and cash equivalent at beginning of period		375	172
Cash and cash equivalent at end of period		706	375

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1.   GENERAL INFORMATION

Cindrigo Holdings Limited and its subsidiaries (together, the "Group") are engaged in the development and operation of renewable energy projects, focusing on biomass and geothermal heat and power generation.

 

The Group's strategy is to be an active renewable energy developer, coordinating project owner with outsourced construction and operation supported by world class partners, both sub and on- surface. Development is based on proven technology with a modular, replicable expansion.

 

The Company was incorporated on 24 November 2014, under Section II of the Companies (Guernsey) Law, 2008, as a Company limited by shares. It is registered in Guernsey under Company number 59383.

 

The Company's ordinary shares are listed on the Equity Shares (Commercial Companies) sector of the Main Market of the London Stock Exchange with admission occurring on 31 October 2025.

 

2.   MATERIAL ACCOUNTING POLICIES

 

2.1 Basis of preparation

 

The consolidated financial statements of the Group have been prepared in accordance with IFRS Accounting Standards as adopted by the European Union ("EU"). The Group's consolidated financial statements have been prepared on an accrual basis and under the historical cost convention, other than derivative call options and financial liabilities arising in relation to contingent consideration arrangement, which are measured at fair value. They have been prepared under the assumption the Group is a going concern, which assumes the Group will be able to discharge its liabilities as they fall due at least for a period of 12 months post balance sheet date.

 

The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards as adopted by the EU requires management to make certain critical accounting estimates and to apply judgement in selecting and applying the Group's accounting policies. Areas involving a higher degree of judgement or complexity, as well as areas where assumptions and estimates have a significant impact on the consolidated financial statements, are disclosed in Note 3.

 

The financial information has been presented in Pounds Sterling (£), being the functional currency of the Group.

 

2.2 Basis of consolidation

 

The Group's financial statements consolidate those of the parent Company and all of its subsidiaries at 31 December 2025. All subsidiaries have a reporting date of 31 December.

 

All transactions and balances between the 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 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.

 

The following companies are consolidated into the Group financial statements:

 

Name of Company	Country of incorporation	Principal activity	%  Owned	Method of Consolidation
Cindrigo Ltd ("CL")	UK	Cost Center	100%	Full Consolidation
Cindrigo Geothermal Limited ("CEGO UK")	UK	Holding Company	100%	Full Consolidation
Kaipolan Energia Oy ("Kaipola")	Finland	Biomass	90%	Full Consolidation
Zukunft Geoenergie GmbH ("ZGE")	Germany	Geothermal Energy	100%	Full Consolidation (Incorporated in 2025)
Zukunft Geoenergie 1 GmbH ("ZGE 1")	Germany	Geothermal Energy	100%	Full Consolidation (Incorporated in 2025)
Zukunft Geoenergie 2 GmbH ("ZGE 2")	Germany	Geothermal Energy	100%	Full Consolidation (Incorporated in 2025)
Zukunft Geoenergie 3 GmbH ("ZGE 3")	Germany	Geothermal Energy	100%	Full Consolidation (Incorporated in 2025)

 

Kaipola is a wholly owned subsidiary of the Group and represents a major subsidiary undertaking for the purposes of UKLR 6.6.1. As at 31 December 2025, Kaipola is not yet operational and remains in the development stage.

 

During the year, the entity generated limited revenue of £263k, primarily from management fees and personnel leasing arrangements.

 

As at the reporting date, Kaipola had total assets of approximately £2,010k, comprising primarily capitalised development expenditure. In addition, goodwill of £15,909k and right-of-use assets of £4,492k are recognised in the Group's consolidated balance sheet in respect of Kaipola. These balances represent a significant proportion of the Group's total assets.

 

The development of the Kaipola project is subject to a number of risks, including obtaining and maintaining the necessary permits, securing project financing, and entering into key commercial agreements.

 

The subsidiary is currently funded through intercompany loans from the Group. Additional funding will be required to progress the project to construction and ultimately to operational status.

 

The following subsidiaries have not been audited as at 31 December 2025. The UK subsidiary did not trade during the year. Four German subsidiaries were incorporated during the current year and incurred only early-stage project development expenditure. Management has used the latest available financial information of these subsidiaries for consolidation. The directors consider that any adjustments that may arise from an audit of these subsidiaries would not be material to the Group's financial statements.

 

Name of Company	Country of incorporation	% Owned
Cindrigo Geothermal Limited ("CEGO UK")	UK	100%
Zukunft Geoenergie GmbH ("ZGE")	Germany	100%
Zukunft Geoenergie 1 GmbH ("ZGE 1")	Germany	100%
Zukunft Geoenergie 2 GmbH ("ZGE 2")	Germany	100%
Zukunft Geoenergie 3 GmbH ("ZGE 3")	Germany	100%

 

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is obtained and are deconsolidated from the date that control ceases.

 

The Group applies the acquisition method for business combinations. Intercompany transactions, balances, and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses on transactions between Group companies are also eliminated unless they provide evidence of impairment.

 

Each subsidiary maintains its own accounting policies. Where necessary and material, adjustments are made to align the accounting policies of subsidiaries with those of the Group for consolidation purpose.

 

2.3 Going concern

 

The consolidated financial statements have been prepared on the assumption that the Group will continue as a going concern. Under this assumption, the Group is considered to be operating for the foreseeable future, with no intention or requirement to liquidate, cease trading, or seek protection from creditors under any applicable laws or regulations.

 

In evaluating the appropriateness of the going concern assumption, the Directors have considered all relevant information available for the foreseeable future, being a period of at least twelve months from the date of approval of these consolidated financial statements, based on forecast cash flows through April 2027.

 

The Directors' assessment of the Group's ability to continue as a going concern involves significant judgement, particularly in relation to funding availability, project execution timelines and the timing of future cash inflows.

 

As at the date of approval of these consolidated financial statements, the Group have secured funding commitments and guarantees in the amount of approximately £11.3 million. 

 

o  £6.7 million equity investment into Cindrigo at a price of 12 pence per share. 

 

o  €3 million been secured for the Fuelwood joint venture, this amount plus a €1 million development loan from Cindrigo, a total of €4 million which is sufficient to support Fuelwoods establishment and initial operational phase

 

o  Up to £2 million under a separate subscription arrangement, which will be drawn if the Company's warrants due for exercise at the end of July are not exercised

 

No cash has been received in respect of these arrangements as of publishing of the Annual Report, cash for the equity investment and Fuelwood is expected to be received during May 2026, and any potential cash related to the Warrant guarantee would be expected in August 2026.

 

As such, the timing of receipt of these funds is a key assumption underpinning the Directors' assessment of the Group's ability to continue as a going concern.

 

The Directors have prepared detailed cash flow forecasts through to April 2027, reflecting the Group's expected funding inflows, expected operating costs and development plans. These forecasts indicate that the Group has sufficient financial resources to meet its obligations as they fall due for at least twelve months from the date of approval of these financial statements.

 

The Directors have also performed reverse stress testing on the cash flow forecasts to assess the level of downside required to exhaust available liquidity. This analysis incorporated severe but plausible assumptions, including delays in the commencement of production at Kaipola, and the removal of any proceeds from the exercise of warrants. Under this combined downside scenario, the Group continues to maintain a positive cash position throughout the going‑concern assessment period and is able to meet its obligations as they fall due.

 

The Directors' objective in managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. At the date of this financial information, the Group has been financed through a combination of equity and convertible notes. Going forward, the capital structure of the Group is expected to consist of convertible notes and equity attributable to equity holders of the Group, comprising issued share capital and reserves.

 

Based on the above assessment, the Board do not believe that there are any material uncertainties that may cast significant doubt on the Group's ability to continue as a going concern.

 

Accordingly, the Directors consider that the going concern basis of preparation remains appropriate.

 

2.4 New or revised Standards or Interpretations

 

New standards, interpretations and amendments effective from 1 January 2025

 

The Group has applied the following new accounting standards and amendments effective from 1 January 2025. These changes did not have a significant impact on the consolidated financial statements for the reporting period.

 

Lack of Exchangeability (Amendments to IAS 21)

These amendments address currency translation issues when a currency cannot be freely exchanged into another and introduces related disclosures.

Impact: The Group has reviewed this amendment and determined that it does not have a material impact on the consolidated financial statements for the year ended 31 December 2025. Disclosures are updated where applicable.

 

Standards, amendments and interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

 

At the date of authorisation of these consolidated financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB or IFRIC. None of these Standards or amendments to existing Standards have been adopted early by the Group and no Interpretations have been issued that are applicable and need to be taken into consideration by the Group at either reporting date.

 

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement.

 

In April 2024, the IASB issued IFRS 18, which replaces IAS 1 'Presentation of Financial Statements'. Although IFRS 18 includes many of the requirements of IAS 1, it introduces new requirements to better structure financial statements and to provide more detailed and useful information to investors, including:

 

·    two new subtotals defined in the statement of profit or loss, namely (1) operating profit and (2) profit or loss before financing and income taxes

·    the classification of all income and expenses within the Statement of profit or loss in one of five categories

·    a new requirement to disclose performance measures defined by management, and

·    an improvement in the principles related to the aggregation and disaggregation of information in the financial statements and accompanying notes.

Some of the disclosure requirements previously contained in IAS 1 have been transferred to IAS 8 without any material changes. This applies in particular to disclosures on accounting policies and sources of estimation uncertainty. As a result of these changes, IAS 8 will be renamed 'Basis of Preparation of Financial Statements'.

The publication of IFRS 18 also results in consequential amendments to other IFRS Accounting Standards, including IAS 7.

IFRS 18 is effective for annual periods beginning on or after 1 January 2027, with earlier application permitted. IFRS 18 will be applied retrospectively with specific transitional provisions.

The Group has not yet completed its assessment of the impact of IFRS 18. At the reporting date, it is not practicable to provide a reasonable estimate of the expected effects. The area's most likely to be affected include the structure and subtotals in the statement of profit or loss and the disclosure of management-defined performance measures.

Other new Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group's consolidated financial statements.

 

2.5 Business Combinations

 

The acquisition method is used for all business combinations. The consideration transferred for the acquisition of a subsidiary includes the acquisition date fair values of:

 

·    Assets transferred,

·    Liabilities incurred,

·    Equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement,

·    Pre-existing equity interests in the subsidiary.

 

Identifiable assets and liabilities acquired are generally measured at fair value at the acquisition date. Non-controlling interests in the acquired entity are recognised either at fair value or the proportionate share of net identifiable assets, depending on the acquisition.

 

Acquisition-related costs are expensed as incurred.

 

The excess of consideration transferred and the fair value of any non-controlling interest over the fair value of net identifiable assets acquired is recognised as goodwill. If this excess is negative, the difference is recognised as a bargain purchase in profit or loss.

 

Deferred cash consideration is discounted to its present value using the Group's incremental borrowing rate.

 

Contingent consideration is classified as either equity or a financial liability, with changes in fair value recognised in profit or loss only when contingent consideration is classified as financial liability.

 

2.6 Segment Reporting

 

The Chief Operating Decision Maker ("CODM"), identified as the Board of Directors, is responsible for allocating resources and assessing the performance of the Group.

 

The CODM reviews financial and operational performance primarily on a consolidated Group basis, including overall financial results, cash flow projections, and funding requirements. Internal reporting to the CODM focuses on the performance of the Group's integrated portfolio of energy-related projects and does not include regularly reviewed discrete financial information, such as profit or loss or other key performance measures, for individual subsidiaries, projects, or geographical regions.

 

The Group's activities, including operational assets, development-stage projects, and management service arrangements, are managed and evaluated as a single integrated portfolio. Resource allocation decisions and performance assessments are made based on overall portfolio returns and strategic objectives rather than the performance of individual components.

           

Although the Group operates in multiple jurisdictions and at different stages of the project lifecycle, and generates revenue from different sources, including energy production and management services, these activities are not separately monitored or managed as distinct operating segments by the CODM.

 

Accordingly, management has determined that the Group operates as a single operating segment, being the identification, acquisition, development, and operation of energy-related projects. No separate reportable segments have been identified.

 

Segment information is therefore presented on the same basis as that used in the preparation of the Group's consolidated financial statements.

 

Revenue is currently generated from external customers primarily through the Group's Finnish subsidiary, Kaipolan Energia Oy, while other entities within the Group are in development or holding phases. This concentration of revenue does not result in separate operating segments, as it does not reflect the basis on which the CODM assesses performance or allocates resources.

 

For impairment testing purposes, the Group has identified separate cash-generating units ("CGUs") within the Group; however, these do not represent operating segments, as they are not reviewed separately by the CODM for performance assessment or resource allocation decisions.

 

At the reporting date, the Group's non-current assets are located in Guernsey, the United Kingdom, Finland and Germany.

 

2.7 Foreign Currency Translation

 

Functional and presentation currency

The consolidated financial statements are presented in Pounds Sterling ("GBP"), which is also the functional currency of the parent company.

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 currencies at the period-end exchange rates are recognised in profit or loss.

 

Non-monetary items are not retranslated at the period-end. They 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 the fair value was determined.

 

Foreign operations

For the purposes of consolidation, the assets and liabilities of Group entities with a functional currency other than GBP are translated into GBP at the exchange rate prevailing at the reporting date. Income and expenses are translated at the average exchange rate for the reporting period, unless exchange rates fluctuate significantly, in which case the rate at the date of the transaction is used. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated into GBP at the closing exchange rate at the reporting date.

 

Exchange differences arising from the translation of foreign operations are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (FCTR) within equity. On disposal of a foreign operation, the cumulative amount of such exchange differences recognised in equity relating to that operation is reclassified to profit or loss and recognised as part of the gain or loss on disposal.

 

2.8 Income recognition

 

Sale of energy

Revenue represents the fair value of the consideration received or receivable for the sale of energy, including electricity and heat, in the ordinary course of the Group's activities. The Group identifies its performance obligations as the delivery of energy (electricity and heat) to customers. Each contract with a customer comprises a single performance obligation, as the customer simultaneously receives and consumes the benefits of the energy supplied.

 

The transaction price is determined based on the agreed contractual price for the energy delivered. This price reflects the volume of energy supplied during the reporting period, adjusted for any variable consideration where applicable. Since each contract contains a single performance obligation-the delivery of energy-the entire transaction price is allocated to this performance obligation.

 

Revenue from the sale of energy is recognised over time, on the basis that the customer simultaneously receives and consumes the benefits as the Group performs by delivering energy. Revenue is recognised based on the volume of energy delivered during the reporting period and the agreed price per unit.

 

Management fees

The Company charges management fees for operational support services provided through its personnel strictly in accordance with agreed contractual terms. Management fees are determined based on the nature and scope of services provided and are disclosed in client agreements and relevant product documentation. Fees are applied consistently in line with contractual arrangements and are subject to periodic internal review. Revenue from management services is recognised over time, as the services are performed, as the customer simultaneously receives and consumes the benefits of the services in accordance with IFRS 15.35(a), and measured based on the stage of completion of the services (e.g. time elapsed or services performed). Invoices are issued in accordance with contractual terms and do not determine the timing of revenue recognition.

 

Interest income

Interest income is recognised using the effective interest method in accordance with the terms of the intercompany loan agreements. If a financial asset becomes credit-impaired, the Group recognises interest income on the net carrying amount of the asset, applying the original effective interest rate

 

Other income

Other income comprises gains and receipts that are not part of the Group's primary activities. It is recognised when it is probable that future economic benefits will flow to the Group and the amount of income can be measured reliably. Income is recognised on an accrual basis, irrespective of the timing of cash receipts.

 

2.9 Goodwill

 

Goodwill is measured as described under "Business Combinations" in note 2.5. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes.

 

The Group tests cash-generating units (CGUs) to which goodwill has been allocated for impairment annually, or more frequently where indicators of impairment exist. Goodwill is allocated to the Kaipola CGU (the "Plant"), which represents the lowest level within the Group at which goodwill is monitored for internal management purposes and is expected to benefit from the synergies of the business combination.

 

2.10           Exploration and Evaluation Expenditure

 

Exploration and evaluation ("E&E") expenditure comprises costs incurred in the search for geothermal and other energy resources prior to the demonstration of technical feasibility and commercial viability.

 

In accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources, E&E expenditure is capitalised as an intangible asset on an area-of-interest basis when the Group has the right to explore in a specific area and it is expected that the costs will be recouped through successful development or sale, or where exploration activities have not yet reached a stage which permits a reasonable assessment of the existence of economically recoverable resources. Costs incurred prior to obtaining legal rights to explore are expensed as incurred.

 

Capitalised E&E costs include licence acquisition costs, geological and geophysical studies, exploration drilling, sampling and directly attributable employee and contractor costs.

 

Exploration and evaluation assets are initially recognised at cost, being the aggregate of consideration transferred and directly attributable expenditures incurred in obtaining and developing exploration rights.

 

E&E assets are measured at cost less accumulated impairment losses and are not amortised while in the exploration and evaluation phase.

 

E&E assets are assessed for impairment when facts and circumstances indicate that the carrying amount may exceed the recoverable amount. Such indicators include the expiry of exploration rights, a lack of planned substantive expenditure, or unsuccessful exploration results. Where indicators exist, the Group performs an impairment test in accordance with IAS 36 and recognises any impairment loss in statement of comprehensive income.

 

Upon demonstration of technical feasibility and commercial viability, E&E assets are reclassified to development assets and subsequently accounted for in accordance with the applicable standard.

 

The geothermal licence rights provide the Group with the legal right to explore and evaluate geothermal energy resources within specified licence areas, forming the basis for capitalisation of exploration and evaluation expenditure.

 

E&E assets are derecognised when the rights to explore expire or when no future economic benefits are expected.

 

2.11           Property, plant and equipment

 

Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

 

After initial recognition, property, plant and equipment are measured using the cost model and are carried at cost less accumulated depreciation and any accumulated impairment losses.

 

Depreciation is recognised so as to write down the cost of assets to their residual values over their estimated useful lives, reflecting the pattern in which the assets' future economic benefits are expected to be consumed.

 

·    Construction-related assets (e.g. assets under construction, development and upgrade costs): carried at cost and not depreciated until available for use. Once available for use, these assets are depreciated on a straight-line basis over up to 10 years.

 

·    Tangible assets (e.g. plant, machinery, furniture and movables): written down value method at 25% per annum. The depreciation method reflects the expected pattern of consumption of the assets' future economic benefits. Residual values, useful lives and the depreciation method are reviewed at least annually and adjusted prospectively where appropriate.

 

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

 

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

 

2.12           Leases

 

The Group accounts for leases in accordance with IFRS 16 Leases. At the commencement date, the Group recognises a right-of-use asset and a corresponding lease liability for all lease agreements, except for short-term leases (with a lease term of 12 months or less) and leases of low-value assets.

 

The Group assesses whether a contract contains a lease at inception. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

 

The right-of-use asset is initially measured at cost, comprising the initial lease liability, any initial direct costs, estimated dismantling or restoration costs, and any lease payments made in advance (net of incentives received). The right-of-use asset is depreciated on a straight-line basis over the shorter of the asset's useful life or the lease term and is assessed for impairment where indicators exist.

 

The lease liability is initially measured at the present value of lease payments, discounted using the Group's incremental borrowing rate, as the interest rate implicit in the lease is generally not readily determinable. Lease payments included in the liability comprise fixed payments, variable payments based on an index or rate, and amounts expected under residual value guarantees.

 

Subsequent to initial recognition, lease payments reduce the liability and are allocated between finance costs and principal repayment. The lease liability is remeasured when lease payments change due to modifications, reassessment of lease terms, options to purchase, or changes in payments linked to indices or floating interest rates. Remeasurements adjust the carrying amount of the right-of-use asset, except when the asset is fully written down, in which case any excess is recognised in profit or loss.

 

Payments for short-term leases, low-value assets, and leases of assets under construction are expensed on a straight-line basis and disclosed separately as off-balance sheet commitments. As at 31 December 2025, the Group did not have any short-term leases, low-value asset leases, or leases of assets under construction, and accordingly no related expenses were recognised.

 

2.13           Impairment of Assets

 

Cash-generating units to which goodwill or intangible assets that have an indefinite useful life or are not yet available for use have been allocated 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 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 is 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 are first applied to reduce the carrying amount of any goodwill allocated to the 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.

 

2.14           Financial instruments

 

Recognition and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

 

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

 

Classification and initial measurement of financial assets

 

Except for those trade and other receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

 

Financial assets are classified into one of the following categories:

 

·    amortised cost

·    fair value through profit or loss (FVTPL), or

·    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, and

·    the contractual cash flow characteristics of the financial asset

 

All revenue and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

 

Subsequent measurement of financial assets

o  Financial assets at amortised cost

 

Financial assets are measured at amortised cost if the assets meet the following conditions:

 

·    they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows, and

·    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, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

 

o  Financial assets at fair value through profit or loss (FVTPL)

 

Financial assets are classified as FVTPL if they are:

 

·    held for trading, or

·    derivatives (unless designated and effective as hedging instruments)

 

Derivatives, including call options, are initially recognised at fair value on the date the Group becomes a party to the contractual provisions of the instrument and are subsequently remeasured at fair value at each reporting date.

 

Gains or losses arising from changes in fair value are recognised immediately in statement of profit or loss and presented within finance income or finance costs.

 

Impairment of financial assets

IFRS 9's impairment requirements apply to financial assets measured at amortised cost, including loans, trade receivables and contract assets recognised under IFRS 15. The Group applies the expected credit loss (ECL) model, which uses forward-looking information to recognise credit losses on these financial assets.

 

For trade receivables and contract assets, the Group applies the simplified approach permitted by IFRS 9, under which lifetime expected credit losses are recognised from initial recognition.

 

For other financial instruments, the Group applies the general approach and classifies financial assets into the following categories based on changes in credit risk since initial recognition:

 

·    Stage 1: Financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk.

 

·    Stage 2: Financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low.

 

·    Stage 3: Financial assets that have objective evidence of impairment at the reporting date.

 

12-month expected credit losses are recognised for Stage 1 assets, while lifetime expected credit losses are recognised for Stage 2 and Stage 3 assets.

 

A significant increase in credit risk is assessed by comparing the risk of default at the reporting date with the risk of default at initial recognition, taking into account reasonable and supportable forward-looking information.

 

Expected credit losses are measured as a probability-weighted estimate of credit losses over the expected life of the financial instrument.

 

Financial assets are written off when there is no reasonable expectation of recovery, either in full or in part.

 

Classification and measurement of financial liabilities

The Group's financial liabilities include borrowings and trade and other payables, as well as certain financial liabilities in relation to contingent consideration arrangements which are measured at fair value through profit or loss (FVTPL).

 

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for directly attributable transaction costs. However, transaction costs are expensed immediately for financial liabilities classified at fair value through profit or loss.

 

Subsequently, financial liabilities are measured as follows:

·    financial liabilities measured at amortised cost are subsequently measured using the effective interest method; and

·    financial liabilities measured at fair value through profit or loss are remeasured at each reporting date with gains or losses recognised in profit or loss.

 

All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in statement of comprehensive income are included within finance costs or finance income, except for fair value movements on financial liabilities at FVTPL, which are presented within finance income or finance costs depending on their nature.

 

Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire. Where a financial liability is modified or replaced, the Group assesses whether derecognition is appropriate in accordance with IFRS 9, including whether the modification is substantial.

 

2.15           Cash and cash equivalents

 

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

2.16           Inventories

 

Inventories are initially measured at cost, which includes all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition.

 

Subsequently, inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as appropriate allocations of production overheads, based on normal operating capacity. The cost of ordinarily interchangeable items is determined using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less any costs necessary to make the sale.

 

2.17           Trade and Other Receivables

 

Trade and Other Receivables are initially recognised at fair value including transaction costs that are directly attributable to their acquisition. The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets 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 using a provision matrix.

 

2.18           Income taxes

 

Income tax expense recognised in profit or loss comprises current tax and deferred tax, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

 

Current tax

Current tax is based on taxable profit for the year and is calculated using tax rates and tax laws that have been enacted or substantively enacted at the end of the reporting period.

 

The Group operates in multiple jurisdictions and, despite an overall loss position, incurs minor current income tax charges.

 

Management applies judgement in assessing uncertain tax positions and recognises current tax liabilities where it is probable that the taxation authority will accept the tax treatment applied.

 

Deferred tax

Deferred tax is calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.

 

Deferred tax assets are recognised to the extent 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.

 

The Group has incurred recurring tax losses and, at the reporting date, there is no convincing evidence that sufficient taxable profits will be generated in the foreseeable future. Accordingly:

 

No deferred tax assets have been recognised in respect of unused tax losses or deductible temporary differences.

 

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 (only to the extent that the Group control the timing of the reversal of the taxable temporary difference and that reversal is not likely to occur in the foreseeable future). The Group does not offset deferred tax assets and liabilities unless it has a legally enforceable right to do so and intends to settle on a net basis.

 

2.19           Trade and other payables

 

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are classified as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

 

2.20           Borrowings

 

Borrowings are initially recognised at fair value, net of directly attributable transaction costs. Subsequent measurement depends on the nature of the borrowing instrument:

 

Non-convertible loans are subsequently measured at amortised cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the loan. Fees paid on the establishment of loan facilities are capitalised as part of the loan to the extent that it is probable that some or all of the facility will be drawn down. Where there is no evidence of probable drawdown, such fees are recognised as prepaid costs and amortised over the term of the facility.

 

Convertible loans are assessed to determine whether they include an embedded derivative or qualify for split accounting. Where the conversion terms are variable and do not meet the "fixed- for-fixed" criterion, the entire instrument is classified as a financial liability at fair value through profit or loss (FVTPL), with changes in fair value recognised in profit or loss. Where the conversion option meets the fixed-for-fixed requirement, the instrument is split into a liability component (measured at amortised cost) and an equity component (representing the conversion feature), with the liability portion determined using a market interest rate for a comparable non-convertible loan.

 

2.21           Employee benefits

 

Short term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

 

The obligations are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

 

Share-based payments

The fair value of equity-settled share options granted to employees, directors, and key management personnel is measured at the grant date in accordance with IFRS 2 Share-based Payment. The fair value is determined using an appropriate option pricing model, such as the Black-Scholes model, taking into account the terms and conditions upon which the options were granted, including that no market performance conditions are attached.

 

The fair value determined at the grant date is recognised as a share-based payment expense in the statement of comprehensive income, with a corresponding increase in equity, over the vesting period, being the period over which all vesting conditions are to be satisfied.

 

The total amount to be expensed is determined by reference to the fair value of the options granted:

 

·    Includes: any market performance conditions (e.g., the entity's share price);

·    Excludes: the impact of service and non-market performance vesting conditions (e.g., profitability, sales targets, or continued employment); and

·    Includes: the impact of any non-vesting conditions (e.g., employee savings or shareholding requirements).

 

At each reporting date, the Group reviews and updates its estimate of the number of options expected to vest, based on service and non-market performance conditions. Any adjustment to original estimates is recognised in profit or loss, with a corresponding impact on equity.

 

The options are administered by the Board, which issues the relevant number of shares upon exercise. Proceeds received on exercise, net of any directly attributable transaction costs, are credited directly to equity.

 

2.22           Warrants

 

The Company issues warrants that entitle holders to subscribe for ordinary shares at a fixed price over a defined exercise period.

 

Warrants are assessed at inception to determine whether they fall within the scope of IFRS 2 - Share-based Payment or IAS 32 - Financial Instruments: Presentation, based on the nature of the counterparty and transaction.

 

Warrants issued in exchange for goods or services are accounted for under IFRS 2 as equity-settled share-based payments.

 

Warrants issued in a financing or capital raising context, where the counterparty acts in its capacity as an investor or lender, are accounted for under IAS 32 as equity instruments, provided they meet the fixed-for-fixed criterion.

Warrants classified within IFRS 2 are measured at fair value at the grant date using an option pricing model and recognised in profit or loss over the vesting period, or immediately if vesting is immediate.

 

Warrants classified within IAS 32 are measured at fair value at grant date using an option pricing model.

 

Any difference between fair value and proceeds received is recognised directly in equity. No charge is recognised in profit or loss.

 

The valuation of warrants is based on a Black-Scholes model using assumptions including expected volatility, expected life, risk-free interest rate, and dividend yield (assumed nil unless otherwise stated). Where limited historical data exists, volatility is derived from comparable listed entities.

 

Warrants are classified as equity instruments where they meet the fixed-for-fixed requirement and do not confer voting or dividend rights until exercised.

 

2.23           Related Parties

 

For the purposes of these consolidated financial statements, a party is considered to be related to the Group if:

 

I.    the party has the ability, directly or indirectly, through one or more intermediaries, to control the Group or exercise significant influence over the Group in making financial and operating policy decisions, or has joint control over the Group;

 

II.   the Group and the party are subject to common control;

 

III.  the party is an associate of the Group or a joint venture in which the Group is a joint venturer;

 

IV.  the party is a member of key management personnel of the Group or the Group's parent, or a close family member of such an individual, or is an entity under the control, joint control, or significant influence of such individuals;

 

V.   the party is a close family member of a party referred to in (i) or is an entity under the control, joint control, or significant influence of such individuals;

 

VI.  the party, or any member of a group of which it is part, provides key management personnel services to the Group or its parent.

 

2.24           Equity and reserves

 

Share capital represents the total amount received by the Company in consideration for shares issued. This includes amounts received on the issuance of both ordinary and preference shares, net of any transaction costs directly attributable to the equity issuance.

 

Other components of equity include the following:

 

·    Equity component of convertible instruments (such as convertible loan notes) is recognised separately within equity when the instrument includes a conversion option that meets the definition of equity. The equity component is measured at the residual amount after deducting the fair value of the liability component from the fair value of the compound instrument as a whole at initial recognition. The equity component is not subsequently remeasured. On conversion, the related equity component is transferred within equity to share capital. If the instrument expires or is settled without conversion, the equity component remains in equity.

 

·    Foreign Currency Translation reserve comprises foreign currency translation differences arising from the translation of financial statements of the Group's foreign entities into GBP.

 

·    Share option reserve represents the cumulative fair value of equity-settled share-based payments granted to employees and others providing similar services. The reserve is increased by charges for the fair value of options over the vesting period. On lapse or forfeiture, the balance is transferred to retained earnings.

 

·    Share warrant reserve represents the equity component of warrants issued by the Group. Warrants are initially recognised at fair value on the date of grant, with the corresponding credit recorded in the warrant reserve within equity. No subsequent remeasurement is made to the warrant reserve. When warrants are exercised, the proceeds received, together with the amount previously recognised in the warrant reserve, are transferred to share capital as appropriate. If warrants expire unexercised, the balance in the warrant reserve is retained within equity.

 

3.   CRITICAL ESTIMATES, JUDGEMENTS AND ERRORS

 

When preparing the Group's consolidated financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, revenue and expenses.

 

The following are the judgements and estimates made by management in applying the accounting policies of the Group that have the most significant effect on these consolidated financial statements.

 

Significant management judgements

 

Capitalisation of plant development cost

The Group applies judgement in determining whether costs incurred in the development, upgrade and pre-operational activities of plant assets meet the criteria for capitalisation in accordance with applicable accounting standards. Such costs are capitalised only where they are directly attributable to bringing the asset to the condition necessary for it to be capable of operating as intended by management and where they are expected to generate future economic benefits. During the year ended 31 December 2025, the Group capitalised £1,218k (2024: £632k) of costs relating primarily to pre-operational and development activities for plant assets. These costs have been included within Development and Upgrade Costs.

 

Management exercises judgement in assessing whether such costs are directly attributable to the construction and commissioning of the plant and whether the projects remain technically feasible and commercially viable. The recoverability of these capitalised amounts is dependent on the successful completion and commissioning of the plant assets and the generation of forecast future cash flows. The Group monitors the projects for indicators of impairment and considers factors including anticipated commissioning timelines, forecast energy output and expected tariff rates.

 

Assessment of Deferred Tax Asset Recognition

The Group assesses at each reporting date the recoverability of deferred tax assets arising from deductible temporary differences and unused tax losses. This assessment requires judgement in evaluating whether it is probable that sufficient future taxable profits will be available against which such amounts can be utilised, taking into account legal, regulatory and economic factors in the relevant tax jurisdictions.

 

Based on this assessment, and given the Group's continued loss-making position and the uncertainty regarding the timing and level of future taxable profits, no deferred tax assets have been recognised in the consolidated financial statements.

 

Significant estimates

 

Impairment of goodwill

During the current year, the Group performed its annual impairment assessment using recoverable amounts determined with reference to value-in-use and/or fair value less costs of disposal calculations. This assessment requires management to make significant estimates and assumptions in relation to future cash flows, including projected operating performance, capital expenditure and long-term growth assumptions, as well as the determination of appropriate discount rates.

 

As part of the impairment assessment, the Group utilised an independent external valuation of the relevant plant assets that was performed in May 2025. The same valuation was used as an input into both the prior year and current year assessments, with management updating and assessing the underlying cash-flow assumptions to reflect conditions at the current reporting date. The plant assets represent a significant component of the related cash-generating units.

 

Management has reviewed and concurred with the assumptions and methodology used in the external valuation. However, this assessment remains subject to estimation uncertainty, and any changes in key assumptions may affect future impairment conclusions. Further details of the key assumptions used are provided in Note 14.

 

Useful lives and residual values of depreciable assets

Management reviews its estimate of the useful lives and residual values of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and environmental regulations that can require polluting assets to be depreciated more quickly

 

Fair value measurement of derivative call option

The Group has entered into a call option agreement granting it the right to acquire a 100% equity interest in another entity for a fixed cash consideration. The call option is classified as a derivative financial instrument and is measured at fair value through profit or loss in accordance with IFRS 9.

 

The determination of the fair value of the call option involves significant management judgement, including assessment of factors such as the probability of exercise, expected volatility of the underlying investment, and market conditions. The fair value is subject to estimation uncertainty, and changes in these judgements could materially affect the Group's profit or loss. Further details are disclosed in Note 6.

 

Leases - determination of the appropriate discount rate to measure lease liabilities

The Group enters into leases with third parties and as a consequence the rate implicit in the relevant lease is not readily determinable. Therefore, the Group uses its incremental borrowing rate as the discount rate for determining its lease liabilities at the lease commencement date. The incremental borrowing rate is the rate of interest that the Group would have to pay to borrow over similar terms which requires estimations when no observable rates are available. The Group consults with its main bankers to determine what interest rate they would expect to charge the Group to borrow money to purchase a similar asset to that which is being leased. These rates are, where necessary, then adjusted to reflect the creditworthiness of the entity entering into the lease and the specific condition of the underlying leased asset. The estimated incremental borrowing rate is higher than the parent company for leases entered into by its subsidiary undertaking

 

Fair value measurement of contingent financial liabilities

The Group recognises certain contingent financial liabilities arising from contractual arrangements, which are measured at fair value through profit or loss.

 

The fair value of these liabilities is determined using probability-weighted cash flow models, which require management to estimate the likelihood and timing of future events, such as the achievement of specified milestones or conditions. These cash flows are discounted using appropriate discount rates reflecting the time value of money and risks specific to the liability.

 

Given the long-term and uncertain nature of these assumptions, the resulting fair value is subject to significant estimation uncertainty. Changes in key assumptions, including probability assessments and discount rates, may materially affect the carrying amount of the liability and the corresponding charge or credit to profit or loss. Further information is provided in Note 22.

 

4.   FINANCIAL RISK MANAGEMENT

 

This note explains the Group's exposure to financial risks and how these risks could affect the Group's future financial performance. Current year profit and loss information has been included where relevant to add further context.

 

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below

 

4.1 Categories of financial assets and financial liabilities

 

31 December 2025	Amortised cost £'000	FVTPL £'000	Total £'000
Trade and other receivables	648	-	648
Cash and cash equivalents	706	-	706
Derivative asset	-	-	-
Total financial assets	1,354	-	1,354

 

31 December 2025	Amortised cost £'000	FVTPL £'000	Total £'000
Non-current borrowings	9,352	-	9,352
Financial liabilities - contingent consideration	-	2,792	2,792
Trade and other payables	1,126	-	1,126
Total financial liabilities	10,478	2,792	13,270

 

 

31 December 2024	Amortised cost £'000	FVTPL £'000	Total £'000
Trade and other receivables	413	-	413
Cash and cash equivalents	375	-	375
Total financial assets	788	-	788

 

31 December 2024	Amortised cost £'000	FVTPL £'000	Total £'000
Non-current borrowings	10,590	-	10,590
Current borrowings	390	-	390
Trade and other payables	1,525	-	1,525
Total financial liabilities	12,505	-	12,505

 

4.2 Financial risk management

 

I.    Market risk analysis

 

Foreign exchange risk

Most of the Group's transactions are carried out in GBP. Exposures to currency exchange rates arise from the Group's borrowings, some loans are denominated in Euro (EUR).

 

The Group mitigates its euro-currency exposure by maintaining a dedicated euro bank account for seamless transfers and engaging a designated agent to convert funds at competitive rates; it also executes early transfers of forecast euro inflows to match project outflows, closely monitors its net open euro position.

 

Foreign currency denominated financial assets and liabilities, which expose the Group to currency risk, are disclosed below. The amounts presented represent those reported to key management, translated into GBP at the closing exchange rate. The Group's exposure arises primarily from its Finnish subsidiary, whose functional currency is EUR.

	Short-term exposure		Long-term exposure
	EUR	SEK	EUR
31 December 2025
Financial assets	-	-	8,356
Financial liabilities	-	-	(10,814)
Total exposure	-	-	(2,457)
31 December 2024
Financial assets	-	-	4,011
Financial liabilities	-	(72)	(5,532)
Total exposure	-	(72)	(1,521)

 

The following sensitivity analysis illustrates the impact of changes in foreign exchange rates on the Group's profit or loss, assuming all other variables remain constant. A change of ±5% has been applied to the relevant foreign exchange rates, which the Directors consider to be a reasonably possible change at the reporting date. In the prior year, different sensitivity percentages were applied to certain currencies; however, the Directors have standardised the sensitivity assumption in the current year to improve consistency and comparability across periods.

 

If the GBP had strengthened against the EUR by 5% (2024: 5%). During the current year all SEK-denominated loans were fully settled and, accordingly, the Group had no SEK exposure at the reporting date.

	Profit for the year		Equity	Total
	EUR	SEK	EUR
31 December 2025	73	-	50	123
31 December 2024	67	5	9	81

 

If the GBP had weakened against the EUR by 5% (2024: 5%) and SEK by N/A (2024: 7%). During the current year all SEK-denominated loans were fully settled and, accordingly, the Group had no SEK exposure at the reporting date.

 

	Profit for the year		Equity	Total
	EUR	SEK	EUR
31 December 2025	(73)	-	(50)	(123)
31 December 2024	(67)	(5)	(9)	(81)

 

During the year, Group has recorded £24k foreign-exchange related losses [2024 - gain £17k] were recognised in statement of comprehensive income.

 

Interest rate risk

The Group's fixed-rate borrowings, including compound financial instruments such as interest-free convertible loans, are carried at amortised cost. While market interest rates are used in the initial measurement of such instruments to allocate between liability and equity components, they do not give rise to ongoing interest rate risk. This is because the carrying amounts and future cash flows of these instruments are not remeasured based on changes in market interest rates.

 

Interest rate risk(continued)

The Group does not hold any variable-rate financial instruments. Accordingly, the Group is not exposed to interest rate risk as defined under IFRS 7.

 

II.   Credit risk

 

Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to credit risk from financial assets including cash and cash equivalents held at banks, trade and other receivables.

 

The credit risk is managed on a Group basis based on the Group's credit risk management policies and procedures.

 

The Group's exposure to credit risk is primarily limited to its cash balances held in bank accounts and trade receivables. To mitigate this risk, the Group holds the majority of its cash and cash equivalents with reputable banks with strong credit profiles. Group's main cash resources are held with banks with an external rating of B. Trade receivables majorly relate to a one customer, which concentrates credit risk but is monitored regularly to ensure recoverability.

 

The Group applies the expected credit loss ("ECL") model in accordance with IFRS 9. No loss allowance has been recognised as management considers the ECL to be immaterial. The Group's exposure to credit risk is currently limited due to the nature and volume of its trade receivables and the Group being in a pre-operational stage. Based on ongoing oversight by management, the Group considers the credit risk associated with its trade receivables to be low. As the Group transitions into operational activities, it will implement more formal credit risk assessment processes and policies appropriate to the scale and nature of its operations.

 

As at the reporting date, the Group's maximum credit risk exposure corresponds to the carrying amount of cash and cash equivalents and trade receivables on the balance sheet. This represents the maximum amount that could be at risk should any counterparty fail to meet its obligations.

 

As at 31 December 2025, the Group's trade receivables, which are financial assets measured at amortised cost, are all current. The following table provides an ageing analysis of trade receivables:

	2025 £'000	2024 £'000
0 to 3 months	332	413
3 to 6 months	316	-
6 months +	-	-
Total	648	413

 

III.  Liquidity Risk

 

Liquidity risk is that the Group might be unable to meet its obligations. The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows.

 

The Group's objective is to maintain cash and marketable securities to meet its liquidity requirements for 30-day periods at a minimum. The Group currently holds cash balances to provide funding for normal trading activity. Trade and other payables are monitored as part of normal management routine.

 

As at 31 December 2025, all financial liabilities were classified at amortised cost. A maturity analysis of the Group's non-derivative financial liabilities has contractual maturities (including interest payments where applicable) as summarised below:

 

31 December 2025	Within 6 months £'000	6 to 12 months £'000	1 to 5 years £'000	Later than 5 years £'000
Borrowings	-	-	4,572	8,359
Lease liabilities	157	157	1,257	13,568
Financial liabilities - contingent consideration	-	-	2,792	-
Trade and other payables	492	337	-	-
Total financial liabilities	649	494	8,621	21,927

 

31 December 2024	Within 6 months £'000	6 to 12 months £'000	1 to 5 years £'000	Later than 5 years £'000
Borrowings	-	72	1,794	16,620
Lease liabilities	150	150	1,200	13,254
Trade and other payables	493	1,035	-	-
Total financial liabilities	643	1,257	2,994	29,874

           

 

4.3 Fair value measurement

 

The Group measures certain financial instruments at fair value in the statement of financial position. These fair values are categorised into the fair value hierarchy based on the observability of significant inputs, in accordance with IFRS 13 - Fair Value Measurement:

 

·    Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

·    Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

·    Level 3: unobservable inputs for the asset or liability.

 

The following table summarises the Group's financial instruments measured at fair value:

 

Financial instruments	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assets - Derivative assets	-	-	-	-
Financial liability -  Contingent consideration	-	-	2,792	2,792

 

The Group currently has no Level 1 or Level 2 financial instruments measured at fair value; all fair value amounts relate to Level 3 instruments.

 

No transfers occurred between levels.

 

Level 3 fair value measurement - Financial assets

 

·    The fair value of derivative assets is determined using valuation techniques based on unobservable inputs.

·    The Group has assessed the fair value of the call option and concluded that, as at the reporting date, its value is not material and has therefore been determined to be nil.

·    Given the nil valuation, changes in significant unobservable inputs, including assumptions such as volatility and probability of exercise, would not result in a material impact on the financial statements. Accordingly, a sensitivity analysis has not been presented, more details are provided in Note 6.

·    The valuation reflects management's assessment that the likelihood of the option being exercised and generating economic benefit is remote at the reporting date.

 

Level 3 fair value measurement - Financial liabilities

 

·    The Group measures contingent liability now recognised at fair value, using valuation techniques based on unobservable inputs.

·    Key assumptions include the probability of settlement, expected timing of outflows, and applicable discount rates.

·    Changes in these significant unobservable inputs could materially affect the fair value of the liability. A sensitivity analysis is provided in Note 22.

 

The Group's finance team performs fair value measurements for reporting purposes. Valuation techniques are selected based on the characteristics of each instrument. The finance team reports directly to the CFO. Valuation processes and fair value changes are reviewed by the CFO and CEO at least annually in line with the Group's reporting dates.

 

5.   CAPITAL MANAGEMENT POLICIES AND PROCEDURES

 

The Group's objectives when managing capital are to safeguard its ability to continue as a going concern and to maintain sufficient funding to support the development and operation of its on-going projects.

 

The Group considers its capital to comprise total equity and borrowings. Management monitors capital based on the Group's cash position, available funding and overall equity position as presented in the consolidated statement of financial position.

 

As the Group continues to develop its projects, it may incur operating losses and therefore relies on a combination of shareholder support and external financing to fund its activities. Management reviews the Group's capital requirements regularly and takes appropriate actions to ensure that adequate resources are available to meet its obligations as they fall due.

 

The Group is not subject to any externally imposed capital requirements.

 

6.   INVESTMENTS AND DEVELOPMENT AGREEMENTS

 

German Geothermal Development Structure

During the period, the Group entered into an agreement to establish a new investment structure in Germany focused on the development of geothermal energy assets. The arrangement involved the creation of a holding entity and underlying project companies to progress three geothermal projects.

 

Ownership and Governance

In March 2025, the Cindrigo Geothermal Limited a 100% subsidiary of the Company entered into an investment agreement with Zukunft Geowärme GmbH ("ZGG") for developing three geothermal projects via dedicated SPVs.

 

The intention was that new companies would be established, comprising one new German holding company and three SPVs, with Zukunft Geoenergie GmbH ("ZGE") serving as the holding entity. The Group was to ultimately hold 85% of the shares in this holding company, with the remaining 15% held by ZGG. However, due to administrative arrangements at the time of incorporation, the shares were initially registered in the name of the parent company, Cindrigo Holdings Limited.

 

In addition, three project companies, ZGE 1, ZGE 2 and ZGE 3, have been incorporated in respect of each geothermal licence, with 100% of their shares held by ZGE.

 

As at 31 December 2025, Cindrigo Holdings Limited held 100% of the shares in ZGE. The transfer of shares to the agreed shareholding structure is expected to be completed subsequently. A shareholders' agreement governs the rights and obligations of the parties.

 

Contingent Liabilities - BEW and KfW Funding Entitlements

Under the investment agreement, milestone bonuses of up to €1M per project are payable to ZGG's shareholders if each project secures at least €15M of German federal funding (e.g., BEW/KfW). A pro-rata bonus applies for funding between €10M to €15M, with no payment due if less than €10m of German federal funding is received. An additional €5M per project is payable if, post-completion, average output across all three plants meets or exceeds 22 MW.

 

While these payments are contractually contingent on future events, management has assessed that the Group has a present obligation under the terms of the agreement and that an outflow of economic benefits is probable. Accordingly, a provision has been recognised in the statement of financial position as at 31 December 2025. Further details of the provision, including measurement and key assumptions, are disclosed in Note 22.

 

Call Option on ZGG Shareholding

The Group has entered into a call option agreement granting it the right, but not the obligation, to acquire 100% of the issued share capital of ZGG for a fixed consideration of €600,000, exercisable at any time up to April 2027. A fee of £64k (€75k) was paid on inception in respect of the grant of option.

 

o  Accounting classification and initial recognition

The call option meets the definition of a derivative financial instrument under IFRS 9, as its value changes in response to an underlying variable, it requires little or no initial net investment relative to other contracts with a similar response to market factors, and it is settled at a future date. On initial recognition, the fee paid of £64k in respect of the grant of the option was recognised as a financial asset at fair value.

 

o  Subsequent measurement

In accordance with IFRS 9, the call option is subsequently measured at fair value through profit or loss (FVTPL) at each reporting date.

 

At 31 December 2025, the fair value of the option has been assessed as nil (see Fair Value Measurement below). Accordingly, a fair value loss of £64k has been recognised in profit or loss for the year (2024: £nil).