Consolidated and Company's Statement of Cash Flows

For the year ended 31 December 2024

Notes to the Financial Statements

For the year ended 31 December 2024

1. General information

European Green Transition plc ("EGT", the "Company", the " EGT Group"), was incorporated on 25 January 2024. The Company is a public limited company, incorporated in England and Wales. The Company is limited by shares, and it listed on the AIM market of the London Stock Exchange on 8 April 2024. The registered address of the Company is The Walbrook Building, 25 Walbrook, London, EC4N 8AF, UK. The EGT Group comprises European Green Transition plc and its subsidiary companies.

The principal activity of the Group is developing green economy assets in Europe which aims to capitalise on the opportunity created by the green energy transition.

The Financial Statements are presented in GBP ("£"), except where otherwise indicated.

The registered number of the Company is 15442832.

European Green Transition plc (formerly European Green Metal Holdings Ltd) completed a share for share exchange agreement with the European Green Metals Ltd Group ("EGM Group") on 14 March 2024, effectively completing a reverse acquisition by the EGM group.

2. Accounting policies

Basis of preparation

Compliance with applicable law and UK-adopted IAS

The consolidated Financial Statements comprise those of the Company and its subsidiaries (together the "Group"). The consolidated Financial Statements of the Group and the individual Financial Statements of the Company have been prepared in accordance with UK-adopted international accounting standards ("UK-adopted IAS") as they apply to the Group for the period ended 31 December 2024 and with the requirements of the Companies Act 2006. The Financial Statements are prepared on the historical cost basis.

Principal accounting policies

The principal accounting policies are summarised below. They have been consistently applied throughout the year covered by the Financial Statements.

Consolidation

The consolidated Financial Statements comprise the Financial Statements of the Company and its subsidiaries as at and for the year ended 31 December 2024. Subsidiaries are entities controlled by the Group. Where the Group has control over an investee, it is classified as a subsidiary. The Group controls an investee if all three of the following elements are present: power over an investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intergroup balances and any unrealised gains or losses or income or expenses arising from intergroup transactions are eliminated in preparing the consolidated Financial Statements.

Reverse acquisition

The acquisition of European Green Metals Ltd and its subsidiaries by European Green Transition plc on 14 March 2024 has been accounted using the principles of reverse acquisition accounting. Although the Group Financial Statements have been prepared in the name of the legal parent, European Green Transition Plc, they are in substance a continuation of the consolidated Financial Statements of the legal subsidiary, European Green Metals Ltd. The following accounting treatment has been applied in respect of the reverse accounting:

The assets and liabilities of the legal subsidiary, European Green Metals Ltd, are recognised and measured in the Group Financial Statements at the pre-combination carrying amounts, without restatement to fair value. The retained earnings recognised in the Group Financial Statements reflect the current earnings of European Green Transition plc from its incorporation date of 25 January 2024 to the period end plus the current and retained earnings of European Green Metals Ltd to the period end. The equity structure appearing in the Group Financial Statements reflects the equity structure of the legal parent, European Green Transition plc, including the equity instruments issued in order to affect the business combination. See Note 10 for further details.

Comparative period

The comparative period is for the year ended 31 December 2023.

Going concern

Management believe that it is appropriate to prepare these consolidated Financial Statements on the going concern basis. In making that assessment, management are required to consider whether the Group can continue in operational existence for the foreseeable future, being a period of not less than twelve months from the date of the approval of the consolidated Financial Statements. In reaching the going concern conclusion, the cash and cash equivalents of £3,661,001 as at 31 December 2024 and Group's forecasts and projections over the foreseeable future, along with sensitivity analysis performed on the projected cashflows taking into account reasonable changes in market conditions, were considered. The Group, therefore, continues to adopt the going concern basis in preparing the consolidated Financial Statements. Further information is provided on page 15 of the Group Directors' Report.

Presentation of balances

The consolidated Financial Statements are presented in Pounds Sterling ("£") which is the functional and presentational currency of both the Company and its subsidiary European Green Metals Ltd. The functional currency of the subsidiaries European Green Metals (Ireland) Limited and Rockfleet Minerals Ltd is the Euro ("€"). The functional currency of the subsidiaries European Mineral Exploration AB and Olree AB is the Swedish Kroner ("SEK").

The following table discloses the major exchange rates of those currencies utilised by the Group:

Changes in accounting policies and disclosures

Except where disclosed otherwise in this note, the accounting policies adopted in the preparation of the consolidated Financial Statements are consistent with those applied when preparing the consolidated Financial Statements for the year ended 31 December 2023.

New accounting standards, amendments and interpretations adopted by the Group

The following new standards and amendments to existing standards became effective in January 2024 and have been adopted in the consolidated Financial Statements for the first time during the year ended 31 December 2024.

These have been assessed as having no financial or disclosure impact on these consolidated Financial Statements.

New standards, amendments and interpretations not yet adopted by the Group

The following standards, amendments and interpretations were in issue but were not yet effective at the balance sheet date. These have not yet been endorsed by the UK Endorsement Board. These standards have not been applied when preparing the consolidated Financial Statements for the year ended 31 December 2024.

It is not anticipated that the application of the below will have a significant financial or disclosure impact in future years.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of Financial Statements in conformity with UK-adopted IAS requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the period end and the reported amounts of revenues and expenses during the reporting period. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group's accounting policy descriptions set out the areas that involve significant estimation, uncertainty and critical judgement. The most significant of which are:

(a)  Carrying value of intangible exploration and evaluation assets - Note 14

The capitalisation of exploration costs relating to the exploration and evaluation phase requires management to make judgements as to the future events and circumstances of a project, especially in relation to whether an economically viable extraction operation can be established. In making such judgements, the Directors take comfort from the findings from exploration activities undertaken, the fact the Group intends to continue these activities and that the Company expects to be able to bring in a partner to support future development of the project.

At each reporting date, management make a judgment as to whether circumstances have changed following the initial capitalisation and whether there are indicators of impairment. If there are such indicators, an impairment review will be performed which could result in the relevant capitalised amount being written off to the income statement. The Directors assess the impairment indicators as presented within IFRS 6 Exploration for and Evaluation of Mineral Resources.

In the current year an impairment charge of £nil (2023: £44,115) was made to Intangibles Assets and charged to the Consolidated Statement of Comprehensive Income, see Note 14.

(b) Investment in subsidiaries and recoverability of intercompany receivables - Note 15 and 17

In addition, the Company has also considered its investment in subsidiaries and loans to subsidiaries. In the current year and at this stage of the Company's development, the Company sees no requirement for impairment of its investment in or loans to its subsidiaries, given the early stage nature of the underlying exploration assets, the fact we have only just completed our first drill programme and we have recently renewed our exploration licences.

Employee benefits

All employee benefit costs, notably bonuses and contributions to personal pension plans are charged to the Consolidated Statement of Comprehensive Income on an accruals basis.

Financial instruments

Financial instruments are classified on initial recognition as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement. Financial instruments are initially recognised when the Company becomes party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire or when the contractual rights to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the contract is discharged, cancelled or expired.

Financial assets

Cash and cash equivalents

Cash and cash equivalents comprise bank current account balances and short-term deposits with a maturity of three months or less. Amounts are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade and other receivables

Trade and other receivables have fixed or determinable payments that are not quoted in an active market, are measured at initial recognition at fair value, and are subsequently measured at amortised costs using the effective interest method less impairment. Trade and other receivables are reduced by appropriate allowances for estimated irrecoverable amounts. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

At each statement of financial position date, financial assets are assessed for indicators of impairment. Financial assets are impaired if indications exist that events have occurred after the initial recognition of the financial asset that estimated future cash flows have been impacted. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any impairment loss arising from the review is charged to the statement of comprehensive income whenever the carrying amount of the asset exceeds its recoverable amount.

IFRS 9 requires the Company to make an assessment of expected credit losses relating to loans to subsidiary companies. An expected credit loss model has been used which takes into account the probability of default, the exposure at default and the loss given default at the year end. The Company defines default as the performance against plans, forecasts and the overall progress towards monetisation.

The Company does not expect loans to be recalled within the next 24 months and nor would amounts be available to repay on demand and therefore the Company has considered this in calculating the expected credit loss. The probability of default is considered to be low when considering the performance of the subsidiary companies. The potential recoverable amount has been estimated based on a probability weighted cashflow model. Cashflow assumptions include forecast future licence payments, the amount and timing of which are uncertain. The Company does not believe that there is a significant risk of default and therefore has not recognised a loss provision in the current year.

Financial liabilities

Trade and other payables

Trade and other payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest rate method except for short-term payables when the recognition of interest would be immaterial.

Foreign currency translation

The Company translates foreign currency transactions into its functional currency, £, at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rate of exchange prevailing at the Statement of Financial Position date. Exchange differences arising are taken to the Statement of Comprehensive Income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

On consolidation, exchange differences arising from the translation of the net investment in foreign subsidiaries (listed below) are taken to other comprehensive income. When a foreign subsidiary is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

EGT and European Green Metals Limited have a functional currency of GBP£, Rockfleet Minerals Limited and European Green Metals (Ireland) Limited have a functional currency of Euro€ and European Mineral Exploration AB and Olree AB have a functional currency of Swedish Krona SEK.

Intangible assets - Exploration for and Evaluation of Mineral Resources

Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a detailed assessment of deposits that have been identified as having economic potential. The costs of exploration assets include the cost of acquiring the right to explore. Costs incurred in relation to evaluating the technical feasibility and commercial viability of extracting resources are capitalised as part of exploration and evaluation assets. Exploration costs are capitalised until technical feasibility and commercial viability of extraction of reserves are demonstrable. At that point, all costs which have been capitalised to date and included in exploration and evaluation assets, are assessed for impairment. All impairment losses are recognised immediately in the statement of comprehensive income. If assets are not impaired, then they are reclassified as either tangible assets or intangible assets and amortised over their useful life.

Impairment of intangible assets - Exploration for and Evaluation of Minerals Resources

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. The Group reviews and tests for impairment indicators on an ongoing basis and specifically if the following occurs:

•  the period for which the group has a right to explore in the specific area has expired during the year or will expire in the near future, and is not expected to be renewed;

•  substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;

•  exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities in the specific area;

•  sufficient data exists to indicate that although a development in the specific area is likely to proceed the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Where an impairment indicator is met, the Group performs a full impairment assessment under IAS 36.

Investment in subsidiaries

 Investments in subsidiaries are stated at cost less impairment. Investment in subsidiaries are subject to annual impairment review, with any impairment charge being recognised in the Statement of Comprehensive Income. The Group determines whether an investment is a business combination by applying the definition in IFRS 3, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the Group accounts for the transaction as an asset acquisition. Frequently, the acquisition of mining exploration assets is effected through a non-operating corporate structure. As these structures do not represent a business, it is considered that the transaction does not meet the definition of a business combination. Accordingly, the transaction is accounted for as the acquisition of an asset. The net assets acquired are recognised at cost. When IFRS 3 guidance is applied to the acquisition of Rockfleet Minerals Limited, European Mineral Exploration AB and Olree AB the indicators point to the acquisition being that of assets (primarily mining exploration permits) as opposed to an acquisition of a business. After reviewing the characteristics of the acquisition, the Group has determined that the appropriate accounting treatment of these acquisitions is as asset acquisition.

 Impairment of investment in subsidiaries

At each Statement of Financial Position date, the Company reviews the carrying amounts of its investment in subsidiaries to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Any impairment loss arising from the review is charged to the Statement of Comprehensive Income whenever the carrying amount of the asset exceeds its recoverable amount.

The Group assesses each asset annually to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as discount rates, future capital requirements, general risks affecting the green energy industry and other risks specific to the individual asset. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. Fair value is generally determined as the present value of estimated future cash flows arising from the continued use of the asset, using assumptions that an independent market participant may take into account. Cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Assets are grouped into the smallest group that generate cash inflows are independent of other assets.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any provision for impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the asset and bringing the asset to its working condition for its intended use.

 Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only where it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of the replaced asset is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred. Any borrowing costs associated with qualifying property, plant and equipment are capitalised and depreciated at the rate applicable to that asset category.

Depreciation on assets is calculated using the straight-line method to allocate their cost to its residual value over their estimated economic useful lives, as follows:

Computer Equipment              three years

Office Equipment                    three years

The assets' residual values and useful economic lives are reviewed regularly, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying value 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 the disposal of assets are determined by comparing the proceeds with the carrying amount and are recognised in Administration expenses in the Statement of Comprehensive Income.

Taxes

Tax comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at the reporting date. Deferred tax assets or liabilities are recognised where the carrying value of an asset or liability in the Statement of Financial Position differs to its tax base and is accounted for using the statement of financial position liability method. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. There is no deferred tax asset recognised for the Group or Company as the Company is still pre-revenue, and thus not considered probable that future trading profits would be generated in which this asset could be offset.

Share capital

Ordinary Shares are classified as equity. Proceeds in excess of the nominal value of shares issued are allocated to the share premium account and are also classified as equity. Incremental costs directly attributable to the issue of new Ordinary Shares or options are deducted from the share premium account.

Revenue recognition

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Exceptional items

These are items of an unusual or non-recurring nature incurred by the Group and include transactional costs and one-off items relating to business combinations, such as acquisition expenses, restructuring costs, IPO costs etc.

3. Segmental information

The Board considers there to be only a single operating segment: Green Energy projects. All areas of the business are engaged in the development of a range of Green Energy projects. Performance information is reported as a single business unit to the executive management team, who are responsible for reviewing the Group's management information. The Chief Executive Officer and Chief Financial Officer are considered to be the chief operating decision makers.

The Group did not generate revenue during the year or prior year.

Location of non-current assets

Non-current assets consist of intangible assets and tangible assets. Intangible assets are classified under the location where the project is located. Tangible assets are classified where the company holding the asset is incorporated.

4. Administrative costs

There were no short-term lease payments expensed during year ended 31 December 2024 (2023: £Nil).

5. Exceptional items

6. Auditor remuneration

Services provided by the Company's auditor and its associates. During the year the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and its associates:

7. Directors' emoluments

See further disclosures within the Group Director's Report. There were no emoluments paid to Directors for their services as directors during 2023.

8. Employee benefit expense (including Note 7)

9. Average number of people employed

Monthly weighted average used in above calculation.

10. Net finance costs

*All convertible debt securities converted to ordinary shares in EGT on date of IPO 8 April 2024.

11. Income tax expense

The tax charge on the Group's results before tax differs from the theoretical amount that would arise using the standard tax rate applicable to the loss of the consolidated entities as follows:

See Note 20 for details on deferred tax asset.

12. Loss per share

Basic and diluted

Basic loss per share is calculated by dividing the (Loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

On incorporation on 25 January 2024, 2000 shares@ £0.0005 were issued. These shares were later converted to 400 shares@ £0.0025 when EGT acquired the EGM Group in March 2024.

On 14 March 2024, EGT and EGM completed a share exchange agreement whereby EGT acquired the EGM group by issuing 1 EGT share for each 1 EGM share in issue. 56,307,702 EGT shares @£0.0025/share were issued as a result.

Convertible debt securities (see Note 21) were converted to equity on admission of EGT to AIM on the London Stock exchange on 8 April 2024. 23,691,900 EGT shares@ £0.01/share were issued as a result.

The Company issued a further 64,620,890 shares@ £0.01/share as part of a fundraise on admission of EGT to AIM on the London Stock Exchange on 8 April 2024.

EGT adopted an Employee Performance Incentive Plan ("EPIP") for a number of key senior management on admission of EGT to AIM on the London Stock Exchange on 8 April 2024. Due to the losses in the year, the effect of the share options noted in Note 24 are considered to be anti-dilutive. The weighted average number of potentially dilutive shares at 31 December 2024 was 1,684,153.

13. Property, plant and equipment

The Company has no property, plant or equipment.

14. Intangible fixed assets

The Group reviews the carrying amounts of its intangible assets to determine whether there are any indications that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Impairment indications include events causing significant changes in any of the underlying valuation assumptions used.

In the current year an impairment charge of £nil (2023: £44,115) was made to the Consolidated Statement of Comprehensive Income.

The Company has no intangible fixed assets.

15. Investments in subsidiaries

On 14 March 2024, EGT and EGM completed a share exchange agreement whereby EGT acquired the EGM Group by issuing 1 EGT share for each 1 EGM share in issue. 56,308,102 EGT shares@ £0.0025/share were issued as a result. (See Note 23)

The investment in the EGM Group is recorded at cost, which is the fair value of the consideration paid. Following review an impairment provision of Nil (2023: N/a) has been made to the investment in subsidiaries.

All the subsidiaries are included in the consolidation. The proportions of voting shares held by the Parent Company do not differ from the proportion of Ordinary Shares held. The subsidiaries are listed below: