Consolidated statement of financial position

At 31 December 2021

 

	Notes	2021	2020
ASSETS		€	€
Non-current assets
Property, plant and equipment	17	446,861	187,792
Intangible assets	18	17,702,833	15,283,459
Investments accounted for using the equity method	20	8,074,184	3,379,625
Financial assets	21	4,050,030	2,570,888
Other financial investments	22	506,976	-
Total non-current assets		30,780,884	21,421,764
Current assets
Development assets	24	3,455,496	503,653
Loan receivable from project development undertakings	24	3,000,469	482,537
Trade and other receivables	25	6,876,747	894,531
Cash and cash equivalents	26	6,446,217	6,394,791
		19,778,929	8,275,512
Assets included in disposal group classified as held for resale	32	-	-
Total current assets		19,778,929	8,275,512
Total assets		50,559,813	29,697,276

 

 

Consolidated statement of financial position

At 31 December 2021 - continued

 

	Notes	2021		2020
EQUITY AND LIABILITIES		€		€
Equity
Share capital	27	25,977,130			24,355,545
Share premium	27	83,610,562			62,896,521
Other reserves		2,353,868			2,148,220
Accumulated deficit		(66,177,072)			(61,875,561)
Equity attributable to the owners of the company		45,764,488			27,524,725
Non-controlling interests	28	(2,384,189)			(2,223,986)
Total equity		43,380,299			25,300,739
Non-current liabilities
Lease liabilities	30	56,855			106,465
Total non-current liabilities		56,855			106,465
Current liabilities
Trade and other payables	31	6,921,806			3,183,979
Borrowings	29	-			1,020,851
Lease liabilities	30	200,853			85,242
		7,122,659			4,290,072
Liabilities included in disposal group classified as held for resale	32	-			-
Total current liabilities		7,122,659			4,290,072
Total equity and liabilities		50,559,813			29,697,276

 

 

The financial statements were approved by the Board of Directors on  22 April 2022 and signed on its behalf by:

                                                                                                                                                                       

Ian Pearson                                                                                                                                                                     David Palumbo

Chairman                                                                                                                                                                          Director

 

 

 

 

 

 

Consolidated statement of changes in equity

for the financial year ended 31 December 2021

 

		Share Capital	Share premium	Other  reserves	Accumulated deficit	Equity attributable to owners of the company	Non-controlling interests	Total
		€	€	€	€	€	€	€
Balance at 1 January 2020		21,317,482	52,487,278	-	(56,011,538)	17,793,222	(2,326,274)	15,466,948
Issue of ordinary shares in EQTEC plc (Note 27)		2,658,622	9,841,484	-	-	12,500,106	-	12,500,106
Conversion of debt into equity (Notes 27)		379,441	1,536,252	-	-	1,915,693	-	1,915,693
Share issue costs (Note 27)		-	(639,931)	-	-	(639,931)	-	(639,931)
Employee share-based compensation (Notes 10 & 27)		-	-	1,297,309	-	1,297,309	-	1,297,309
Recognition of equity element of debt (Notes 12 & 27)		-	-	522,349	-	522,349	-	522,349
Warrants issued on placing of shares		-	(328,562)	328,562	-	-	-	-
Change in the ownership interest		-	-	-	(15,978)	(15,978)	15,978	-
Transactions with owners		3,038,063	10,409,243	2,148,220	(15,978)	15,579,548	15,978	15,595,526
Loss for the financial year		-	-	-	(5,762,733)	(5,762,733)	(5,082)	(5,767,815)
Unrealised foreign exchange losses		-	-	-	(85,312)	(85,312)	91,392	6,080
Total comprehensive loss for the financial year		-	-	-	(5,848,045)	(5,848,045)	86,310	(5,761,735)
Balance at 31 December 2020		24,355,545	62,896,521	2,148,220	(61,875,561)	27,524,725	(2,223,986)	25,300,739
Issue of ordinary shares in EQTEC plc (Note 27)		1,402.324	18,206,268	-	-	19,608,592	-	19,608,592
Conversion of debt into equity (Note 27)		167,728	3,285,013	-	-	3,452,741	-	3,452,741
Issued in acquisition of financial asset (Note 27)		51,533	693,628	-	-	745,161	-	745,161
Share issue costs (Note 27)		-	(1,470,868)	-	-	(1,470,868)	-	(1,470,868)
Employee share-based compensation (Note 10)		-	-	205,648	-	205,648	-	205,648
Transactions with owners		1,621,585	20,714,041	205,648	-	22,541,274	-	22,541,274
Loss for the financial year		-	-	-	(4,700,497)	(4,700,497)	68	(4,700,429)
Unrealised foreign exchange losses		-	-	-	398,986	398,986	(160,271)	238,715
Total comprehensive loss for the financial year		-	-	-	(4,301,511)	(4,301,511)	(160,203)	(4,461,714)
Balance at 31 December 2021		25,977,130	83,610,562	2,353,868	(66,177,072)	45,764,488	(2,384,189)	43,380,299

 

 

 

Consolidated statement of cash flows

for the financial year ended 31 December 2021

 

 

	Notes	2021	2020
		€	€
Cash flows from operating activities
Loss for the financial year		(4,700,429)	(5,838,899)
Adjustments for:
Depreciation of property, plant and equipment	17	156,520	83,463
Amortisation of intangible assets	18	72,685
Loss on disposal of investments		-	1,275
Impairment of other financial investments	22	-	17,250
Employee share-based compensation	10	205,648	1,297,309
Impairment of trade receivables	25	-	19,016
Share of loss of equity accounted investments		24,188	-
Gains from sales to equity accounted investments deferred		211,478	-
Gain on loss of control of subsidiary	19	(9,957)	-
Change in fair value of financial investments	22	250,378	-
Loss on debt for equity swap	12	1,418,860	170,059
Unrealised foreign exchange movements		103,234	(201,723)
Operating cash flows before working capital changes		(2,267,395)	(4,452,250)
Decrease/(increase) in:
Development assets		(3,144,600)	(503,653)
Trade and other receivables		(5,946,010)	6,754
Increase in Trade and other payables		3,432,256	264,141
Cash used in operating activities - continuing operations		(7,925,749)	(4,685,008)
Finance income	11	(134,069)	(17,329)
Finance costs	11	517,108	1,206,392
Net cash used in operating activities - continuing operations		(7,542,710)	(3,495,945)
Net cash used in operating activities - discontinued operations	32	-	(47,741)
Cash used in operating activities		(7,542,710)	(3,543,686)
Cash flows from investing activities
Additions to intangible assets		(1,000,000)	-
Proceeds from the disposal of property, plant and equipment		-	300,000
Cash inflow from disposal of subsidiary	33	-	218,635
Selling expenses on disposal of subsidiary	33	-	(65,261)
Loans advanced to project development undertakings		(2,430,137)	(469,769)
Proceeds from the disposal of other investments		-	84
Investment in equity accounted undertakings		(978,825)	(1,150,619)
Loans advanced to equity accounted undertakings		(3,746,984)	-
Investment in related undertakings		(697,635)	(333,882)
Other advances to equity accounted undertakings		(27,508)	-
Net cash used in investing activities - continuing operations		(8,881,089)	(1,500,812)
Net cash used in investing activities - discontinued operations	32	-	(19,997)
Net cash used in investing activities		(8,881,089)	(1,520,809)

 

 

 

 

Consolidated statement of cash flows

for the financial year ended 31 December 2021 - continued

 

	Notes	2021	2020
		€	€
Cash flows from financing activities
Proceeds from borrowings and lease liabilities	29	1,391,174	107,000
Repayment of borrowings and lease liabilities	29	(3,031,724)	(1,363,348)
Loan issue costs	29	-	(30,944)
Proceeds from issue of ordinary shares		19,420,222	12,735,236
Share issue costs		(1,180,217)	(635,911)
Interest paid		(20)	(21,955)
Net cash generated from financing activities - continuing operations		16,599,435	10,790,078
Net cash used in financing activities - discontinued operations	32	-	(63,196)
Net cash generated from financing activities		16,599,435	10,726,882
Net increase in cash and cash equivalents		175,636	5,662,387
Cash and cash equivalents at the beginning of the financial period		6,270,581	608,194
Cash and cash equivalents at the end of the financial period	26	6,446,217	6,270,581
Cash and cash equivalents included in disposal group	32	-	-
Cash and cash equivalents for continuing operations	26	6,446,217	6,270,581
Details of non-cash transactions are set out in Note 36 of the financial statements.

 

 

 

Company statement of financial position

At 31 December 2021

 

 

	Notes	2021	2020
ASSETS		€	€
Non-current assets
Intangible assets	18	2,419,374	-
Investment in subsidiary undertakings	19	17,994,504	17,869,630
Investments accounted for using the equity method	20	6,569,432	3,379,625
Other financial investments	22	506,976	-
Total non-current assets		27,490,286	21,249,255
Current assets
Development assets	24	305,553	9,275
Loan receivable from project development undertakings	24	613,678	243,598
Trade and other receivables	25	14,507,848	2,703,491
Cash and bank balances	26	4,845,633	6,111,864
Total current assets		20,272,712	9,068,228
Total assets		47,762,998	30,317,483
EQUITY AND LIABILITIES
Equity
Share capital	27	25,977,130	24,355,545
Share premium	27	102,544,642	81,830,601
Other reserves		2,353,868	2,148,220
Accumulated deficit		(83,603,698)	(79,661,097)
Total equity		47,271,942	28,673,269
Total non-current liabilities		-	-
Current liabilities
Borrowings	29	-	896,641
Trade and other payables	31	491,056	747,573
Total current liabilities		491,056	1,644,214
Total equity and liabilities		47,762,998	30,317,483

 

 

The Group is availing of the exemption in Section 304 of the Companies Act 2014 from filing its Company Statement of Comprehensive Income. The loss for the financial year incurred by the Company was €3,942,601 (2020: €3,270,895).

The financial statements were approved by the Board of Directors on 22 April 2022 and signed on its behalf by:

                                                                                                                                                                       

Ian Pearson                                                                                                                                                                     David Palumbo

Chairman                                                                                                                                                                          Director

 

 

Company statement of changes in equity

for the financial year ended 31 December 2021

 

		Share capital	Share premium	Other reserves	Accumulated deficit	Total
		€	€	€	€	€
Balance at 1 January 2020		21,317,482	71,421,358	-	(76,390,202)	16,348,638
Issue of ordinary shares in EQTEC plc (Note 27)		2,658,622	9,841,484	-	-	12,500,106
Conversion of debt into equity (Notes 27 and 29)		379,441	1,536,252	-	-	1,915,693
Share issue costs (Note 27)		-	(639,931)	-	-	(639,931)
Employee share-based compensation (Notes 10 and 27)		-	-	1,297,309	-	1,297,309
Recognition of equity element of debt (Notes 12 and 27)		-	-	522,349	-	522,349
Warrants issued on placing of shares (Note 27)		-	(328,562)	328,562	-	-
Transactions with owners		3,038,063	10,409,243	2,148,220	-	15,595,526
Loss for the financial year (Note 37)		-	-	-	(3,270,895)	(3,270,895)
Total comprehensive loss for the financial year		-	-	-	(3,270,895)	(3,270,895)
Balance at 31 December 2020		24,355,545	81,830,601	2,148,220	(79,661,097)	28,673,269
Issue of ordinary shares in EQTEC plc (Note 27)		1,402.324	18,206,268	-	-	19,608,592
Conversion of debt into equity (Note 27)		167,728	3,285,013	-	-	3,452,741
Issued in acquisition of financial asset (Note 27)		51,533	693,628	-	-	745,161
Share issue costs (Note 27)		-	(1,470,868)	-	-	(1,470,868)
Employee share-based compensation (Note 10)		-	-	205,648	-	205,648
Transactions with owners		1,621,585	20,714,041	205,648	-	22,541,274
Loss for the financial year		-	-	-	(3,942,601)	(3,942,601)
Total comprehensive loss for the financial year		-	-	-	(3,942,601)	(3,942,601)
Balance at 31 December 2021		25,977,130	102,544,642	2,353,868	(83,603,698)	47,271,942

 

 

Company statement of cash flows

for the financial year ended 31 December 2021

 

 

	Notes	2021	2020
		€	€
Cash flows from operating activities
Loss before taxation		(3,942,601)	(3,270,895)
Adjustments for:
Amortisation of intangible assets	18	72,685	-
Employee share-based compensation	10	80,771	1,297,309
Reversal of impairment of intercompany loans		-	(1,720,704)
Finance costs		508,747	1,177,335
Finance income		(104,568)	(13,397)
Impairment of intercompany balances		5,627	140,678
Change in fair value of financial investments	22	250,378	-
Loss on debt for equity swap	10	1,418,860	170,059
Foreign currency (gains)/losses arising from retranslation of borrowings		(280,767)	235,968
Operating cash flows before working capital changes		(1,990,868)	(1,983,647)
Funds advanced to inter-company accounts		(13,490,118)	(2,112,285)
Repayment of inter-company balances		2,205,863	689,637
Increase in development assets		(296,278)	(9,275)
Increase in trade and other receivables		(283,968)	(107,773)
Increase in trade and other payables		178,869	352,350
Net cash used in operating activities		(13,676,500)	(3,170,993)
Cash flows from investing activities
Addition to intangible assets		(1,000,000)	-
Investment in equity accounted undertakings		(968,324)	(1,150,619)
Loans advanced to equity accounted undertakings		(2,036,074)	-
Investment in subsidiary		(10,000)	(1,000,000)
Subsidiaries transferred to other subsidiary undertakings		10,003	-
Loans advanced to project development undertakings		(350,000)	(230,957)
Net cash used in investing activities		(4,354,395)	(2,381,576)
Cash flows from financing activities
Proceeds from borrowings	29	1,391,174	-
Repayment of borrowings	29	(2,866,515)	(852,567)
Proceeds from issue of ordinary shares		19,420,222	12,735,236
Share issue costs		(1,180,217)	(635,911)
Loan issue costs	29	-	(30,944)
Net cash generated from financing activities		16,764,664	11,215,814
Net (decrease)/increase in cash and cash equivalents		(1,266,231)	5,663,245
Cash and cash equivalents at the beginning of the financial year		6,111,864	448,619
Cash and cash equivalents at the end of the financial year	26	4,845,633	6,111,864

 

 

 

Notes to the financial statements 

 

1.         GENERAL INFORMATION

 

EQTEC plc ("the Company") is a company domiciled in Ireland. These financial statements for the financial year ended 31 December 2021 consolidate the individual financial statements of the Company and its subsidiaries (together referred to as 'the Group').

The Group is a waste-to-value group, which uses its proven proprietary Advanced Gasification Technology to generate safe, green energy from over 50 different kinds of feedstock such as municipal, agricultural and industrial waste, biomass, and plastics. The Group collaborates with waste operators, developers, technologists, EPC contractors and capital providers to build sustainable waste elimination and green energy infrastructure.

 

Our income currently comes from the following streams: gasification technology sales including software, engineering & design and other related services; maintenance income from operating plants; and we receive development fees from projects where we invest development capital. In the future we expect to receive potential revenue from licensing opportunities and revenue from live operations where EQTEC has an equity stake in a plant.

 

2.          APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)
 

New/revised standards and interpretations adopted in 2021

In the current financial year, the Group has applied a number of amendments to IFRS Standards and Interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union, that are effective for an annual period that begins on or after 1 January 2021. Their adoption has not had any impact on the disclosures or on the amounts reported in these financial statements.

 

 

New and revised IFRS Standards in issue but not yet effective

The following new and revised Standards and Interpretations have not been adopted by the Group, whether endorsed by the European Union or not. The Group is currently analysing the practical consequences of the new Standards and the effects of applying them to the financial statements. The related standards and interpretations are:

 

·	IFRS 17 Insurance Contracts and Amendments to IFRS 17 Insurance Contracts (Amendments to IFRS 17 and IFRS 4);
·	IFRS 10 and IAS 28 (amendments) Sale of Contribution of Assets between an Investor and its Associate or Joint Venture;
·	Amendments to IAS 1 Classification of Liabilities as Current or Non-current;
·	Amendments to IFRS 3 Reference to the Conceptual Framework;
·	Amendments to IAS 16 Property, Plant and Equipment-Proceeds before Intended Use;
·	Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract;
·	Annual improvements to IFRS Standards 2018-2020 cycle Amendments to IFRS 1 First time adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases and IAS 41 Agriculture;
·	Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies;
·	Amendments to IAS 8 Definition of Accounting Estimates;
·	Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction.

The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods.

 

3.          STATEMENT OF ACCOUNTING POLICIES

Statement of Compliance, Basis of Preparation and Going Concern

 

The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union ('EU') and effective at 31 December 2021 for all years presented as issued by the International Accounting Standards Board.

 

The financial statements of the parent company, EQTEC plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union ('EU') effective at 31 December 2021 for all years presented as issued by the International Accounting Standards Board and Irish Statute comprising the Companies Act 2014.

The consolidated financial statements are prepared under the historical cost convention except for certain financial assets and financial liabilities which are measured at fair value. The principal accounting policies set out below have been applied consistently by the parent company and by all of the Company's subsidiaries to all years presented in these consolidated financial statements.

Comparative amounts have been re-presented where necessary, to present the financial statements on a consistent basis.

The financial statements are presented in euros and all values are not rounded, except when otherwise indicated.

The Group incurred a loss of €4,700,429 (2020: €5,767,815) during the financial year ended 31 December 2021 and had net current assets of €12,656,270 (2020: €3,985,440) and net assets of €43,380,299 (2020: €25,300,739) at 31 December 2021.

 

The financial statements have been prepared on a going concern basis. The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Statement and Chief Executive's Report. The principal risks and uncertainties are set out in the Directors' Report.

 

Management have produced forecasts for the period up to April 2023 taking account of reasonably plausible changes in trading performance and market conditions, which have been reviewed by the Directors. These reasonably plausible changes include the continued impact of the Covid-19 pandemic and any related operational and execution delays caused by it. The forecasts demonstrate that the Group and Company is forecast to generate cash in 2022/2023 and that the Group has sufficient cash reserves to enable the Group and Company to meet its obligations as they fall due for a period of at least 12 months from the date when these financial statements have been signed. Amongst other things, the assessment involved assumptions around collection of receivables from associate and joint venture companies and availability of project funding.

 

After undertaking the assessments and considering the uncertainties set out above, the Directors have a reasonable expectation that the Group and Company has adequate resources to continue to operate for the foreseeable future and for these reasons they continue to adopt the going concern basis in preparing the financial statements.

 

Basis of consolidation

The Group financial statements consolidate those of the parent company and all of its subsidiaries as of 31 December 2021. All subsidiaries have a reporting date of 31 December.

 

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the financial year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

 

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.  The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

 

When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. All amounts previously  recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by applicable IFRS Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 when applicable, or the cost on initial recognition of an investment in an  associate or a joint venture.

 

 

 

 

 

Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

Step Acquisitions

Business combination achieved in stages is accounted for using acquisition method at acquisition date. The components of a business combination, including previously held investments are remeasured at fair value at acquisition date and a gain or loss is recognised in the consolidated statement of profit or loss.

 

Profit or loss from discontinued operations

A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale. Profit or loss from discontinued operations comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale (see also policy on non-current assets and liabilities classified as held for sale and discontinued operations below and Note 32).

 

Investments in associates and joint ventures

Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. When the Group's share of losses on an associate or a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate or joint venture), the Group discontinues recognising its share of future losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

 

Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group's interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

 

Investments in related undertaking

Advances paid to acquire investee shares are recognised at cost and will be reclassified to either to investments in associates and joint ventures or investments in subsidiaries, as applicable.

 

Investments in subsidiaries

Investments in subsidiaries in the Company's statement of financial position are measured at cost less accumulated impairment. When necessary, the entire carrying amount of the investment is tested for impairment by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

 

Foreign currency translation

Functional and presentation currency

The consolidated financial statements are presented in Euro, which is also the functional and presentation currency of the parent company. The Group has subsidiaries in the United Kingdom, whose functional currency is the GBP £.

 

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in consolidated statement of profit or loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

Foreign operations

In the Group's financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than Euro are translated into Euro upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting financial year.

 

On consolidation, assets and liabilities have been translated into Euro at the closing rate at the reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into Euro at the closing rate. Income and expenses have been translated into Euro at the average rate over the reporting financial year. Exchange differences are charged or credited to consolidated statements of other comprehensive income and recognised in the accumulated deficit reserve in equity. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognised as part of the gain or loss on disposal. To the extent that foreign subsidiaries are not under the full control of the parent company, the relevant share of currency differences is allocated to the non-controlling interests.

 

 

 

                

Segment reporting

The Group has two operating segments: the power generation segment and the technology sales segment. In identifying these operating segments, management generally follows the Group's service lines representing its main products and services.

 

Each operating segment is managed separately as each requires different technologies, marketing approaches and other resources. All inter-segment transfers are carried out at arm's length prices based on prices charged to unrelated customers in standalone sales of identical goods or services.

For management purposes, the Group uses the same measurement policies as those used in its financial statements. In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Group's central administration costs and directors' salaries.

Revenue

Revenue arises from the rendering of services. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.  To determine whether to recognise revenue, the Group follows a 5-step process:

 

1.        Identifying the contract with a customer;

2.        Identifying the performance obligations;

3.        Determining the transaction price;

4.        Allocating the transaction price to the performance obligations; and

5.        Recognising revenue when/as performance obligation(s) are satisfied.

 

The Group applies the revenue recognition criteria set out below to each separately identifiable component of the sales transaction. The consideration received from these multiple-component transactions is allocated to each separately identifiable component in proportion to its relative fair value. Revenue is recognised either at a point in time or over time, when the Group satisfies performance obligations by transferring the promised goods or services to its customers.

 

Rendering of services

The Group generates revenues from after-sales service and maintenance, consulting, and construction contracts for renewable energy systems. Consideration received for these services is initially deferred, included in other payables, and is recognised as revenue in the financial year when the performance obligation is satisfied. In recognising after-sales service and maintenance revenues, the Group determines the stage of completion by considering both the nature and timing of the services provided and its customer's pattern of consumption of those services, based on historical experience. Where the promised services are characterised by an indeterminate number of acts over a specified year of time, revenue is recognised over time.

 

Revenue from consulting services is recognised when the services are provided by reference to the contract's stage of completion at the reporting date in the same way as construction contracts for renewable energy systems described below.

 

Construction contracts for renewable energy systems

Construction contracts for renewable energy systems specify a fixed price for the design, development and installation of biomass systems. When the outcome can be assessed reliably, contract revenue and associated costs are recognised by reference to the stage of completion of the contract activity at the reporting date. Contract revenue is measured at the fair value of consideration received or receivable and recognised over time on a cost-to-cost method. When the Group cannot measure the outcome of a contract reliably, revenue is recognised only to the extent of contract costs that have been incurred and are recoverable. Contract costs are recognised in the financial year in which they are incurred. In either situation, when it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately in consolidated statement of profit or loss.

 

A construction contract's stage of completion is assessed by management by comparing costs incurred to date with the total costs estimated for the contract (a procedure sometimes referred to as the cost-to-cost method). Only those costs that reflect work performed are included in costs incurred to date. The gross amount due from customers for contract work is presented within trade and other receivables for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceeds progress billings. The gross amount due to customers for contract work is presented within other liabilities for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).

 

Interest and dividends

Interest income and expenses are reported on an accrual basis using the effective interest method. Dividends, other than those from investments in associates and joint ventures, are recognised at the time the right to receive payment is established.

 

 

 

 

                

Operating expenses

Operating expenses are recognised in consolidated statement of profit or loss upon utilisation of the service or as incurred. Expenditure for warranties is recognised when the Group incurs an obligation, which is typically when the related goods are sold.

 

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

 

Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Goodwill is not amortised but is reviewed for impairment at least annually. Refer below for a description of impairment testing procedures.

 

Non-controlling interests

Non-controlling interests that are present ownership interest and entitle their holders to a proportionate share of the entity's net assets in the event of a liquidation may be initially measured either at fair value of at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. Other types of non-controlling interests are measured at fair value, or, when applicable, on the basis specified in another IFRS.

 

Property, plant and equipment

Property, plant and equipment are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by the Group's management. Property, plant and equipment, are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of leasehold buildings. The following useful lives are applied:

 

• Leasehold buildings: 5-50 years

• Office equipment: 2-5 years

 

Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of leasehold buildings are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses.

 

Construction in progress is stated at cost less any accumulated impairment loss. Cost comprises direct costs of construction as well as interest expense and exchange differences capitalised during the year of construction and installation. Capitalisation of these costs ceases and the asset in course of construction is transferred to fixed assets when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided in respect of payments on account and asset in course of construction until it is fully completed and ready for its intended use. Construction in progress is derecognised upon disposal or when the asset is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the construction in progress (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the asset is derecognised.

 

Leased assets

The Group as a lessee

The Group makes the use of leasing arrangements principally for the provision of the main office space. The rental contract for offices are typically negotiated for terms of between 3 and 10 years and some of these have extension terms. The Group does not enter into sale and leaseback arrangements. All the leases are negotiated on an individual basis and contain a wide variety of different terms and conditions such as purchase options and escalation clauses.

 

The Group assesses whether a contract is or contains a lease at inception of the contract. A lease conveys the right to direct the use and obtain substantially all of the economic benefits of an identified asset for a period of time in exchange for consideration. Some lease contracts contain both lease and non-lease components. The Group has elected to not separate its leases for offices into lease and non-lease components and instead accounts for these contracts as a single lease component.

 

Measurement and recognition of leases 

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

 

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

 

Measurement and recognition of leases - continued

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the Group's incremental borrowing rate because as the lease contracts are negotiated with third parties it is not possible to determine the interest rate that is implicit in the lease. The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.

 

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and finance costs. The finance cost is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability.

 

The lease liability is reassessed when there is a change in the lease payments. Changes in lease payments arising from a change in the lease term or a change in the assessment of an option to purchase a leased asset. The revised lease payments are discounted using the Group's incremental borrowing rate at the date of reassessment when the rate implicit in the lease cannot be readily determined. The amount of the remeasurement of the lease liability is reflected as an adjustment to the carrying amount of the right-of-use asset. The exception being when the carrying amount of the right-of-use asset has been reduced to zero then any excess is recognised in consolidated statement profit or loss.

 

Payments under leases can also change when there is either a change in the amounts expected to be paid under residual value guarantees or when future payments change through an index or a rate used to determine those payments, including changes in market rental rates following a market rent review. The lease liability is remeasured only when the adjustment to lease payments takes effect and the revised contractual payments for the remainder of the lease term are discounted using an unchanged discount rate. Except for where the change in lease payments results from a change in floating interest rates, in which case the discount rate is amended to reflect the change in interest rates.

 

The remeasurement of the lease liability is dealt with by a reduction in the carrying amount of the right-of-use asset to reflect the full or partial termination of the lease for lease modifications that reduce the scope of the lease. Any gain or loss relating to the partial or full termination of the lease is recognised in profit or loss. The right-of-use asset is adjusted for all other lease modifications.

 

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in consolidated statement of profit or loss on a straight-line basis over the lease term.

 

On the consolidated statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been presented in separate lines therein.

 

Intangible assets acquired separately

 

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. All finite-lived intangible assets, including patents, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date The following useful lives are applied:

 

• Patents: 20 years

 

Impairment testing of goodwill, intangible assets and property, plant and equipment

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Group's management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

 

An impairment loss is recognised for the amount by which the asset's (or cash-generating unit's) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors.

 

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.

 

          

Development assets

Development assets are stated at the lower of cost and net realisable value. Cost comprises direct materials and overheads that have been incurred in furthering the development of a project towards financial close, when project financing is in place so that the project undertaking can commence construction. Net realisable value represents the costs plus an estimated development premium to be earned on the costs at financial close of a project.

 

Financial instruments

Recognition, initial measurement and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value, and trade receivables that do not contain a significant financing component, which are measured at the transaction price in accordance with IFRS 15. Subsequent measurement of financial assets and financial liabilities is described below.

 

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. If the Group issues equity instruments to a creditor to extinguish all or part of a financial liability, the Group recognises in profit or loss the difference between the carrying amount of the financial liability (or part thereof) extinguished and the measurement of the equity instruments issued.

 

Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement financial assets, other than those designated and effective as hedging instruments, are classified into the following categories upon initial recognition:

 

•                amortised cost

•                fair value through profit or loss (FVTPL)

•                fair value through other comprehensive income (FVOCI)

 

In the periods presented, the Group does not have any financial assets categorised as FVOCI.

 

The classification is determined by both:

 

·           the Group's business model for managing the financial asset; and

·           the contractual cash flow characteristics of the financial asset.

 

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

 

Financial assets at amortised cost and impairment

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated at FVTPL):

 

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

·          the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

After initial recognition, they are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group and Company's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

 

The Group and Company makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses.

 

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of the counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group.

 

In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers.

 

The expected loss rates are based on the payment profile for sales over the past 48 months before 31 December 2021 and 1 January respectively as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forward-looking macroeconomic factors affecting the customer's ability to settle the amount outstanding. The Group has identified gross domestic product (GDP) and unemployment rates in the countries in which the customers are domiciled to be the most relevant factors and accordingly adjusts historical loss rates for expected changes in these factors. However, given the short period exposed to credit risk, the impact of these macroeconomic factors has not been considered significant within the reporting period.

 

Classification and subsequent measurement of financial liabilities

The Group and Company's financial liabilities include borrowings, lease liabilities, trade and other payables and derivative financial instruments.

 

Financial liabilities are measured subsequently at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.

 

Fair values

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

 

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

Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based on observable market data

 

Income taxes

Tax expense recognised in consolidated statement of profit or loss comprises the sum of deferred tax and current tax not recognised in consolidated statement of other comprehensive income or directly in equity.

 

Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting financial year. Deferred income taxes are calculated using the liability method.

 

Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Group's forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

 

Deferred tax liabilities are generally recognised in full, although IAS 12 'Income Taxes' specifies limited exemptions. As a result of these exemptions the Group does not recognise deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

 

Non-current assets and liabilities classified as held for sale and discontinued operations

Non-current assets classified as held for sale are presented separately and measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group's relevant accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation or amortisation.

 

Any profit or loss arising from the sale or remeasurement of discontinued operations is presented as part of a single line item, profit or loss from discontinued operations (see also policy on profit or loss from discontinued operations above).

 

Equity, reserves and dividend payments

Share capital represents the nominal (par) value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

 

Accumulated deficit includes all current and prior financial year retained losses. All transactions with owners of the parent are recorded separately within equity. Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date.

 

 

Share-based payments

All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. The Company issues equity- settled share-based payments in the form of share options and warrants to certain Directors, employees and advisers.

 

Equity-settled share-based payments are made in settlement of professional and other costs. These payments are measured at the fair value of the services provided which will normally equate to the invoiced fees and charged to the consolidated statement of profit or loss, share premium account or are capitalised according to the nature of the fees incurred.

 

Where employees are rewarded using share-based payments, the fair value of employees' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). Fair value is estimated using the Black-Scholes valuation model. The expected life used in the model has been adjusted on the basis of management's best estimate for the effects of non- transferability, exercise restrictions and behavioural considerations. All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to retained earnings. If vesting years or other vesting conditions apply, the expense is allocated over the vesting year, based on the best available estimate of the number of share options expected to vest.

 

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current financial year. The number of vested options ultimately exercised by holders does not impact the expense recorded in any financial year.

 

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

 

Warrants

Share warrants issued to shareholders in connection with share capital issues are measured at fair value at the date of issue and treated as a separate component of equity, in Other Reserves. Fair value is determined at the grant date and is estimated using the Black-Scholes valuation model. Share warrants issued separately to Directors, employees and advisers are accounted for in accordance with the policy on share-based payments.

 

Post-employment benefit plans

The Group provides post-employment benefit plans through various defined contribution plans.

 

Defined contribution plans

The Group pays fixed contributions into independent entities in relation to several retirement plans and insurances for individual employees. The Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense in the period that related employee services are received.

 

Short-term employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

 

Provisions, contingent assets and contingent liabilities

Provisions for legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.

 

Restructuring provisions are recognised only if a detailed formal plan for the restructuring exists and management has either communicated the plan's main features to those affected or started implementation. Provisions are not recognised for future operating losses.

 

Any reimbursement that the Group is virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

 

No liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

 

 

When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

 

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements.

 

 

Going concern

As described in the basis of preparation and going concern in Note 3 above, the validity of the going concern basis is dependent upon the achievement of management forecasts taking account of reasonably plausible changes in trading performance and market conditions, which include the continued impact of the Covid-19 pandemic and any related operational and execution delays caused by it. After undertaking the assessments and considering the uncertainties set out above, the Directors have a reasonable expectation that the Group and the Company has adequate resources to continue to operate for the foreseeable future. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group and Company's ability to continue as a going concern.

 

Control assessment in a business combination.

As disclosed in Note 19, the Group owns 50.02% of the voting rights in Newry Biomass Limited. One other company owns the remaining voting rights. Management has reassessed its involvement in Newry Biomass Limited in accordance with IFRS 10's revised control definition and guidance and has concluded that, based on its sufficiently dominant voting interests to direct its activities, it has control of Newry Biomass Limited.

 

Interests in joint ventures

The Group holds 50.1% of the share capital of EQTEC Synergy Projects Limited but this entity is considered to be a joint venture as decisions about the relevant activities requires the unanimous consent of both the Group and the joint venture partner.

 

The Group holds 49% of the share capital of Synergy Karlovac d.o.o. and Synergy Belisce d.o.o. However, this entity is considered to be a joint venture of the Group as decisions about the relevant activities requires the unanimous consent of both the Group and the joint venture partner.

 

Revenue

As revenue from construction contracts is recognised over time, the amount of revenue recognised in a reporting period depends on the extent to which the performance obligation has been satisfied. It also requires significant judgment in determining the estimated costs required to complete the promised work when applying the cost-to-cost method.

 

Deferred tax assets

Deferred tax is recognised based on differences between the carrying value of assets and liabilities and the tax value of assets and liabilities. Deferred tax assets are only recognised to the extent that the Group estimates that future taxable profits will be available to offset them. The Group and Company has not recognised any deferred tax assets in the current or prior financial years.

 

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

 

Impairment of goodwill and non-financial assets

Determining whether goodwill and non-financial assets are impaired requires an estimation of the value in use of the cash generating units to which the assets have been allocated. The value in use calculation requires the directors to estimate the future cash flows to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual cash flows are less than expected, a material impairment may arise. The estimate for future cash flows includes consideration of possible delays due to Covid-19. The total property, plant and equipment reversal of impairment charges during the financial year as included in Note 17 amounted to €Nil (2020: €Nil), while the impairment for goodwill during the financial year as included in Note 18 amounted to €Nil (2020: €Nil).

 

Provision for impairment of financial assets - Group

Determining whether the carrying value of financial assets has been impaired requires an estimation of the value in use of the investment in associated undertakings and joint venture vehicles. The value in use calculation requires the directors to estimate the future cash flows expected to arrive from these vehicles and a suitable discount rate in order to calculate present value. After reviewing these calculations, the directors are satisfied that a net impairment cost of €Nil (2020: €Nil) be recognised in the Group accounts of EQTEC plc.

 

Provision for impairment of investment in subsidiaries - Company

Determining whether the carrying value of the Company's investment in subsidiaries has been impaired requires an estimation of the value in use of the investment in subsidiaries. The value in use calculation requires the directors to estimate the future cash flows expected to arrive from these vehicles and a suitable discount rate in order to calculate present value. After reviewing these calculations, the directors are satisfied that a net impairment cost of €Nil (2020: €Nil) be recognised in the Company accounts of EQTEC plc.

 

Useful lives and residual values of intangible assets

Intangible assets are amortised over their useful lives taking into account, where appropriate, residual values. Assessment of useful lives and residual values are performed annually, taking into account factors such as technological innovation, market information and management considerations. In assessing the residual value of an asset, its remaining life, projected disposal value and future market conditions are taken into account. Detail on intangible assets can be found in note 18.

 

     

Allowances for impairment of trade receivables

The Group estimates the allowance for doubtful trade receivables based on assessment of specific accounts where the Group has objective evidence comprising default in payment terms or significant financial difficulty that certain customers are unable to meet their financial obligations.  In these cases, judgment used was based on the best available facts and circumstances including but not limited to, the length of relationship. The Group and Company measure expected credit losses of a financial instrument in a way that reflects an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, the time value of money and information about past events, current conditions and forecasts of future economic conditions. When measuring ECL the Group and Company use reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. At 31 December 2021, provisions for doubtful debts amounted to €475,687 which represents 9% of trade receivables at that date (31 December 2020: €475,687- 74%) (see note 25).

 

Share based payments and warrants

The calculation of the fair value of equity-settled share-based awards and warrants issued in connection with share issues and the resulting charge to the consolidated statement of profit or loss or share-based payment reserve requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company's share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards at the date of grant (See Notes 10 and 27).

 

Estimating impairment of development assets

Management estimates the net realisable values of development assets, taking into account the most reliable evidence available at each reporting date. The future realisation of these development assets may be affected by market-driven changes that may reduce future prices/premiums (See Note 24).

 

5.              FINANCIAL RISK MANAGEMENT

 

Financial risk management objectives and policies

The Group and Company's activities expose it to a variety of financial risks: credit risk, liquidity risk, interest rate risk and foreign currency exchange risk.

 

The Group and Company's financial risk management programme aims to manage the Group's exposure to the aforementioned risks in order to minimise the potential adverse effects on the financial performance of the Group and Company. The Group and Company seeks to minimise the effects of these risks by monitoring the working capital position, cash flows and interest rate exposure of the Group and Company. There is close involvement by members of the Board of Directors in the day-to-day running of the business.

 

Many of the Group and Company's transactions are carried out in Pounds Sterling.

 

Credit risk

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

 

The Group's maximum exposure to credit risk is represented by the balance sheet amount of each financial asset:

 

	2021	2020
	€	€
Loans receivable from project development undertakings	3,000,469	482,537
Trade and other receivables	6,876,747	894,531
Cash and cash equivalents	6,446,217	6,394,791

The Company's maximum exposure to credit risk is represented by the balance sheet amount of each financial asset:

	2021	2020
	€	€
Loans receivable from project development undertakings	613,678	243,598
Trade and other receivables	14,507,848	2,703,491
Cash and cash equivalents	4,845,633	6,111,864

The Group and Company's credit risk is primarily attributable to its loans receivable from project development undertakings and trade and other receivables.
 

 

                                                              

Credit risk (continued)

The Group has adopted procedures in extending credit terms to customers and in monitoring its credit risk.  The Group's exposure to credit risk arises from defaulting customers, with a maximum exposure equal to the carrying amount of the related receivables. Provisions are made for impairment of trade receivables when there is default of payment terms and significant financial difficulty. On-going credit evaluation is performed on the financial condition of accounts receivable at operating unit level at least on a monthly basis.

 

The Group had risk exposure to the following counterparties at year-end:

	2021	2020
	€	€
Loans receivable from project development undertakings
Loan receivable from Logik Wte Limited	1,538,420	170,561
Loan receivable from Shankley Biogas Limited	848,371	68,378
Trade and other receivables
Receivable from Synergy Karlovac d.o.o.	2,202,884	-
Receivable from Synergy Belisce d.o.o.	1,962,925	-

 

 

Apart from the above, the Group does not have significant risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related parties. Concentration of credit risk related to the above companies did not exceed 20% of gross monetary assets at any time during the year. Concentration of credit risk to any other counterparty did not exceed 5% of gross monetary assets at any time during the financial year.

 

Exposure to credit risk on cash deposits and liquid funds is monitored by directors. Cash held on deposit is with financial institutions in the Ba rating category of Moody's (2020: Ba). The directors are of the opinion that the likelihood of default by a counter party leading to material loss is minimal. The reconciliation of loss allowance is included in Note 25.

 

Liquidity risk

The Group and Company's liquidity is managed by ensuring that sufficient facilities are available for the Group and Company's operations from diverse funding sources. The Group uses cash flow forecasts to regularly monitor the funding requirements of the Group. The Group's operations are funded by cash generated from financing activities, borrowings from banks and investors and proceeds from the issuance of ordinary share capital.

 

The table below details the maturity of the Group's liabilities as at 31 December 2021:

 

		Up to 1 year	1 - 5 years	After 5 years	Total
	Notes	€	€	€	€
Trade and other payables	31	6,921,806	-	-	6,921,806
Investor loans	29	-	-	-	-
Bank overdraft	29	-	-	-	-
		6,921,806	-	-	6,921,806

 

The table below details the maturity of the Group's liabilities as at 31 December 2020:

 

		Up to 1 year	1 - 5 years	After 5 years	Total
	Notes	€	€	€	€
Trade and other payables	31	3,183,980	-	-	3,183,980
Investor loans	29	896,641	-	-	896,641
Bank overdraft	29	124,210	-	-	124,210
		4,204,831	-	-	4,204,831

 

Maturity of all Company's liabilities as at 31 December 2021 and 31 December 2020 are up to 1 year. Refer to Note 29 and 31 for the outstanding balance.

 

       Interest rate risk

The primary source of the Group's interest rate risk relates to bank loans and other debt instruments while the Company's interest rate risk relates to debt instruments. The interest rates on these liabilities are disclosed in Note 29.  

 

                                                      

 

       Interest rate risk (continued)

The Group's bank borrowings and other debt instruments (excluding amounts in the disposal group) amounted to €Nil and €1,020,851 in 31 December 2021 and 31 December 2020, respectively.  The Company's debt instruments amounted to €Nil and €896,641 in 31 December 2021 and 31 December 2020, respectively. 

 

The interest rate risk is managed by the Group and Company by maintaining an appropriate mix of fixed and floating rate borrowings. The Group does not engage in hedging activities. Bank borrowings and certain debt instruments are arranged at floating rates which are mainly based upon EURIBOR and the prime lending rate of financial institutions thus exposing the Group to cash flow interest rate risk. The other remaining debt instruments were arranged at fixed interest rates and expose the Group to a fixed cash outflow.

 

These bank borrowings and debt instruments are mostly medium-term to long-term in nature. Interest rates on loans received from investors and shareholders are fixed in some cases while others are a fixed percentage greater than current prime lending rates.  'Medium-term' refers to bank borrowings and debt instruments repayable between 2 and 5 years and 'long-term' to bank borrowings repayable after more than 5 years.

 

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting financial year. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability outstanding at the end of the financial year was outstanding for the whole year. A 50-basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible changes in interest rates.

 

If interest rates have been 50 basis points higher/lower and all other variables were held constant, the Group's loss for the financial year ended 31 December 2021 would increase/decrease by €Nil (2020: increase/decrease by €621) with a corresponding decrease/increase in equity.

 

The Group's sensitivity to interest rates has decreased during the current financial year mainly due to the repayment of investor loans in EQTEC plc in the financial year.

 

Foreign exchange risk

The Group and Company is mainly exposed to future changes in the Sterling, the US Dollar and the Croatian Kuna relative to the Euro. These risks are managed by monthly review of Sterling, US Dollar and Croatian Kuna denominated monetary assets and monetary liabilities and assessment of the potential exchange rate fluctuation exposure. The Group and Company's exposure to foreign exchange risk is not actively managed. Management will reassess their strategy to foreign exchange risk in the future.

 

The carrying amount of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting financial year are as follows:

	Liabilities		Assets
	2021 €	2020 €	2021 €	2020 €
Sterling	3,813,537	2,722,298	8,208,131	6,441,771
US Dollar	-	984,906	25,695	38,354
Croatian Kuna	240,247	-	1,212,271	-

                

The carrying amount of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting financial year are as follows:

 

	Liabilities		Assets
	2021 €	2020 €	2021 €	2020 €
Sterling	169,433	461,909	12,822,699	7,221,106
US Dollar	-	984,906	45,549	54,661

 

The following table details the Group and Company's sensitivity to a 10% increase and decrease in the Euro against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in the currency other than the currency of the lender or the borrower. A positive number below indicates an increase in profit where the Euro strengthens 10% against the relevant currency. For a 10% weakening of the Euro against the relative currency, there would be a comparable impact on the loss, and the balances below will be negative.

 

	Group		Company
	2021 €	2020 €	31 Dec 2021 €	31 Dec 2020 €
Sterling Impact: Profit and loss/equity	443,898	375,704	1,278,108	682,747
US Dollar Impact: Profit & Loss/Equity	2,288	95,611	4,056	93,964
Croatian Kuna: Profit and loss/equity	98,184	-	-	-

 

 

      Foreign exchange risk (continued)

The Group and Company's sensitivity to foreign currency has increased during the current financial year mainly due to the placing of equity for sterling in the financial year, coupled with the set up of a new Croatian subsidiary.

 

Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates, which are detailed above. There has been no change to the Group's exposure to market risks or the manner in which it manages and measures the risk.

 

Price risk

The Group is exposed to equity price risk in respect of its investment in Metal NRG plc, which is listed on the London Stock Exchange (see Note 22).

 

The investment in Metal NRG plc is considered a long-term, strategic investment. In accordance with the Group's policies, no specific hedging activities are undertaken in relation to these investments. The investments are continuously monitored and voting rights arising from these equity instruments are utilised in the Group's favour.

 

The sensitivity analyses below have been determined based on the exposure to equity price risks at the reporting date. If the quoted stock price for these securities increased or decreased by 5%, the net loss for the year ended 31 December 2021 and 2020 would increase/decrease by €25,349 (2020: Not applicable) as a result of the changes in fair value of the investments in listed shares.

 

6.               CAPITAL MANAGEMENT POLICIES AND PROCEDURES

 

The Group manages its capital to ensure that the Group is able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.

 

The capital structure of the company consists of financial liabilities, cash and cash equivalents and equity attributable to the equity holders of the parent company.

 

The Group's management reviews the capital structure on a yearly basis.  As part of the review, management considers the cost of capital and risks associated with it. The Group's overall strategy on capital risk management is to continue to improve the ratio of debt to equity.

 

The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

 

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2021 and 2020.

 

The gearing ratio of the Group for the financial year presented is as follows:

 

	31 Dec 2021	31 Dec 2020
	€	€
Borrowings	-	1,020,851
Lease liabilities	257,708	191,707
Cash and bank balances	(6,446,217)	(6,394,791)
Net debt	(6,188,509)	(5,182,233)
Equity	45,764,488	27,524,725
Net debt to equity ratio	(14%)	(19%)

 

 

7.              SEGMENT INFORMATION

 

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the products and services sold to customers. The Group's reportable segments under IFRS 8 Operating Segments are as follows:

 

Technology Sales: Being the sale of Gasification Technology and associated Engineering and Design Services;

 

Power Generation: Being the development and operation of renewable energy electricity and heat generating plants.

 

The chief operating decision maker is the Chief Executive Officer. Information regarding the Group's current reportable segment is presented below. The following is an analysis of the Group's revenue and results from continuing operations by reportable segment:

 

                                             

 

	Segment Revenue		Segment Profit/(Loss)
	2021	2020	2021	2020
	€	€	€	€
Technology Sales	9,171,764	2,234,727	995,000	(878,877)
Power Generation	-	-	(328)	(11,094)
Total from continuing operations	9,171,764	2,234,727	994,672	(889,971)
Central administration costs and directors' salaries			(3,554,854)	(2,548,506)
Impairment costs			(5,498)	(17,250)
Other income			-	61,922
Other losses			(1,418,860)	(170,059)
Change in fair value of financial investments			(250,378)	-
Foreign currency gains			348,885	211,337
Employee share-based compensation			(205,648)	(1,297,309)
Share of results from equity accounted investments			(24,188)	-
Gains from sales to equity accounted investments deferred			(211,478)	-
Gain arising from loss of control of subsidiaries			9,957	-
Finance income			134,069	17,329
Finance costs			(517,108)	(1,206,392)
Loss before taxation (continuing operations)			(4,700,429)	(5,838,899)

Revenue reported above represents revenue generated from associated companies, jointly controlled entities and external customers. Inter-segment sales for the financial year amounted to €Nil (2020: €Nil). Included in revenues in the Technology Sales Segment are revenues of €7,084,872 (2020: €1,980,000) which arose from sales to associate undertakings and joint ventures of EQTEC plc. This represents 77% (2020: 89%) of total revenues in the financial year. A breakdown of the turnover by associated undertaking and joint venture is set out in Note 34 Related Party Transactions.

 

The accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 3. Segment profit or loss represents the profit or loss earned by each segment without allocation of central administration costs and directors' salaries, other operating income, share of profit or loss of jointly controlled entities, profit on disposal of jointly controlled entities, interest costs, interest income and income tax expense. This is the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

 

Other segment information:

	Depreciation and amortisation		Additions to non-current assets
	2021	2020	2021	2020
	€	€	€	€
Technology sales	84,381	83,463	195,643	-
Power Generation	-	-	-	-
Head Office	144,824	-	2,708,474	-
	229,205	83,463	2,904,117	-

In addition to the depreciation and amortisation reported above, reversal of impairment losses of €Nil (2020: €Nil) were recognised in respect of property, plant, equipment and intangible assets and goodwill respectively.

 

The Group operates in four principal geographical areas: Republic of Ireland (country of domicile), the European Union, the United States of America and the United Kingdom. The Group's revenue from continuing operations from external customers and information about its non-current assets* by geographical location are detailed below:

	Revenue from Associates and External Customers		Non-current assets*
	2021	2020	2021	2020
	€	€	€	€
Republic of Ireland	-	-	-	-
EU	6,734,156	254,727	2,720,427	187,792
United States of America	2,437,608	1,980,000	-	-
United Kingdom	-	-	147,808	-
	9,171,764	2,234,727	2,868,235	187,792

*Non-current assets excluding goodwill, financial instruments, deferred tax and investment in jointly controlled entities and associates.

The management information provided to the chief operating decision maker does not include an analysis by reportable segment of assets and liabilities and accordingly no analysis by reportable segment of total assets or total liabilities is disclosed.

 

 

                                             

8.               REVENUE

An analysis of the Group's revenue for the financial year (excluding interest revenue), from continuing and discontinued operations, is as follows:

	Continuing			Discontinued
	2021	2020	2021		2020
	€	€	€		€
Revenue from technology sales	8,022,509	2,234,727	-		-
Revenue from the generation of energy from wind	-	-	-		135,644
Revenue from development fees	1,149,255	-	-		-
	9,171,764	2,234,727	-		135,644

9.               OTHER INCOME

	Continuing		Discontinued
	2021	2020	2021	2020
	€	€	€	€
Operating grants	-	39,782	-	-
Reimbursement of wind development costs	-	16,449	-	-
Other income	-	5,691	-	-
	-	61,922	-	-

 

 

 

10.            EMPLOYEE SHARE-BASED PAYMENTS

	Continuing		Discontinued
	2021	2020	2021	2020
	€	€	€	€
Expensed in the year	205,648	1,297,309	-	-

 

The share-based payment expense includes the cost of employee warrants and options granted and vested in the year (Note 27).

 

 

11.	FINANCE COSTS AND INCOME
		Continuing		Discontinued
		2021	2020	2021	2020
	Finance Costs	€	€	€	€
	Interest on loans, bank facilities and overdrafts	41,818	1,149,141	-	18,382
	Fees on early redemption of loans	466,929	50,149	-	-
	Interest expense for leasing arrangements	8,341	7,102	-	-
	Other interest	20	-	-	-
		517,108	1,206,392	-	18,382
	Finance Income
	Interest receivable on loans advanced	121,459	13,397	-	-
	Interest receivable on deferred consideration	12,610	3,932	-	-
	Interest receivable on bank deposits	-	-	3	3
		134,069	17,329	3	3

Included in finance costs under continuing activities is an amount of €Nil (2020: €522,349) with respect to lender warrants granted during the year (see Note 27).

 

 

 

12.            OTHER LOSSES

	Continuing		Discontinued
	2021	2020	2021	2020
	€	€	€	€
Loss on debt for equity swap	1,418,860	170,059	-	-

 

During the financial year the Group extinguished some of its financial liabilities by issuing equity instruments. In accordance with IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments, the loss recognised on these transactions was €1,418,860 (2020: €170,059).

 

 

                                                    

13.	EMPLOYEE DATA	2021	2020
		€	€
	The aggregate payroll costs of employees (including executive directors) in the Group were as follows:
	Salaries	1,575,325	858,915
	Social insurance costs	284,643	163,423
	Pension costs - defined contribution plans	34,134	(16,932)
	Termination payments	241,061	-
	Other compensation costs:
	Cost of share-based payments	205,648	1,297,309
	Short term incentives	506,999	-
	Private health insurance and other insurance costs	15,071	-
		2,862,881	2,302,715
		No.	No.
	Average number of employees (including executive directors)	19	13

 

 

 

Company

Average number of employees (including executive directors)

4

2

 

Capitalised employee costs in the financial year amounted to €Nil (2020 €Nil).

 

 

 

14.		LOSS BEFORE TAXATION	2021		2020
			€		€
		Loss before taxation on continuing operations is stated after charging/(crediting):
		Depreciation of leasehold buildings (Note 17)	156,520		83,463
		Amortisation of intangible assets (Note 18)	72,685		-
		Impairment of investments (Note 22)	-		17,250
		Movement in fair value of investments (Note 22)	250,378		-
		Research and development	17,991		26,412
		Gains on foreign exchange	(348,885)		(211,337)
		Directors' remuneration:                for services as directors	111,234		486,122
		(Note 34).                                          for salaries as management	730,496		408,948
		share-based payments	86,261		1,127,141
		compensation for loss of office	241,061		-
		Impairment of development assets (Note 24)	5,498		-
				2021		2020
				€		€
	Auditor's remuneration:
	Audit of Group accounts			90,000		60,000
	Tax advisory services			15,000		11,000
				105,000		71,000

 

 

 

 

                                                                   

 

15.	INCOME TAX	2021	2020
		€	€
	Income tax expense comprises:
	Current tax expense	-	-
	Deferred tax credit	-	-
	Adjustment for prior financial years	-	-
	Tax expense	-	-
		2021	2020
		€	€
	Loss before taxation	(4,700,429)	(5,767,815)
	Applicable tax 12.50% (2020: 12.50%)	(587,554)	(720,977)
	Effects of:
	Amortisation & depreciation in excess of capital allowances	28,475	17,130
	Expenses not deductible for tax purposes	234,361	248,715
	Losses carried forward	324,718	455,132
	Movement in deferred tax	-	-
	Actual tax expense	-	-

 

 

The tax rate used for the reconciliation above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under tax law in that jurisdiction.