2024 Financial Results and Operational Update

Consolidated Statement of Cash Flows
	Notes	Year ended 31 December 2024   £'000	Year ended 31 December 2023 (Restated) £'000
Cash flow from operating activities
Loss for the period before taxation		(11,457)	(3,747)
Non-cash adjustments	28	9,656	2,320
Operating cash flows before movements in working capital		(1,801)	(1,427)
Increase in inventories		(163)	-
Increase/(decrease) in receivables		630	(639)
(Decrease)/increase in accounts payable and accrued liabilities		(39)	49
Net cash used in operating activities		(1,373)	(2,017)
Cash flow from investing activities Purchase of property, plant and equipment	13	(3,622)	(1,305)
Acquisition of subsidiary	6c	(1,117)	-
Net cash outflow from investing activities		(4,739)	(1,305)
Cash flow from financing activities Proceeds from issue of shares (net of placing fees)	16	2,368	-
Proceeds from borrowings / convertible instruments	21	4,012	2,804
Loan repayments	21	(65)	-
Net cash inflow from financing activities		6,315	2,804
Net increase/(decrease) in cash and cash equivalents		203	(518)
Cash and cash equivalent at beginning of period		172	690
Cash and cash equivalent at end of period		375	172

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1.          GENERAL INFORMATION

 

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

 

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

 

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

 

2.          MATERIAL ACCOUNTING POLICIES

 

2.1  Basis of preparation

 

The consolidated financial statements of the Group have been prepared in accordance with IFRS Accounting Standards ("IFRS") as adopted by the European Union ("EU"). The Group's consolidated financial statements have been prepared on an accrual basis and under the historical cost convention. They have been prepared under the assumption the Group operates on a going concern basis, which assumes the Group will be able to discharge its liabilities as they fall due.

 

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

 

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

 

2.2  Income recognition

 

Revenue

 

Revenue represents the fair value of the consideration received or receivable for the sale of energy, including electricity and heat, in the ordinary course of the Group's activities.

 

The Group identifies its performance obligations as the delivery of energy (electricity and heat) to customers. Each contract with a customer comprises a single performance obligation, as the customer simultaneously receives and consumes the benefits of the energy supplied.

 

The transaction price is determined based on the agreed contractual price for the energy delivered. This price reflects the volume of energy supplied during the reporting period, adjusted for any variable consideration where applicable.

 

Since each contract contains a single performance obligation-the delivery of energy-the entire transaction price is allocated to this performance obligation.

 

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

 

Interest income

 

Interest income is recognised in accordance with the terms of the intercompany loan agreement. The effective interest method is applied only where relevant, such as in cases involving discounts, premiums, or fees. If a receivable becomes impaired, the Group reduces the carrying amount to its recoverable value - estimated based on future cash flows discounted at the original effective interest rate - and continues to recognise interest income on the unwinding of the discount where applicable.

 

Other income

 

Other income is recognized when it is probable that economic benefits will flow to the entity, and the income can be reliably measured. Income is recognized irrespective of when the cash is received or receivable.

 

2.3  Basis of consolidation

 

The Group's financial statements consolidate those of the parent company and all of its subsidiaries at 31 December 2024. All subsidiaries have a reporting date of 31 December.

 

The Group conducts its operational business through the Company's wholly owned subsidiary, Cindrigo Limited (UK) ("CL").

 

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 year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.

 

The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

 

The following companies are consolidated into the Group financial statements:

 

Name of Company	Country of incorporation	Nature of Operations	% owned	Method of Consolidation
Cindrigo Limited ("CL")	U.K.	Cost Centre	100%	Full consolidation
Cindrigo Geothermal Limited ("CGL")	U.K	Holding Company	100%	Full consolidation
Dravacel Energetika doo (Dravacel")	Croatia	Geothermal	90%	Deconsolidated effective 20 November 2024 due to loss of control**
Kaipolan Energia Oy ("Kaipola")	Finland	Waste to Energy Plant	90%	Full consolidation

 

During the current year, one additional subsidiary, Cindrigo Geothermal (Europe) Ltd, which was dormant, was not consolidated. The entity was liquidated during the year.

 

**Loss of Control - Dravacel

Dravacel's principal project was the Slatina 3 Project, which was suspended during the year due to licensing issues. Specifically, the extension for the exploration license was denied, preventing the project from progressing further. As a result, Dravacel was placed into liquidation, and the Group lost control of Dravacel on 20 November 2024.

In accordance with IFRS 10 Consolidated Financial Statements, the Group has derecognised the assets, liabilities, and non-controlling interests associated with Dravacel as of the loss of control date. Any resulting gain or loss from the derecognition has been recognised in the consolidated statement of comprehensive income.

 

Subsidiaries

 

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

 

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

 

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

 

2.4  Going concern

 

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

 

In evaluating the appropriateness of the going concern assumption, the Directors have considered all relevant information available for the foreseeable future, and in particular for the period of at least twelve months from the date of approval of this financial information.

 

To preserve cash resources, the Group retains the flexibility to reduce certain costs, principally consulting fees payable to senior executives.

 

The Directors have prepared detailed cash flow forecasts through to June 2026. Based on these forecasts and taking into account the Group's current financial position, the Directors are confident that the Group has sufficient working capital to continue operating as a going concern for the forecast period.

Subsequent to the year end, the Group received an additional £2.5 million in funding from Danir to further support its cash flow and working capital requirements.

 

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

 

2.5  New or revised Standards or Interpretations

 

New standards, interpretations and amendments effective from 1 January 2024

 

The Group has applied the following new accounting standards and amendments effective from 1 January 2024. These changes did not have a significant impact on the consolidated financial statements for the reporting period.

 

Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendments to IAS 1)

These amendments clarify the requirements for classifying liabilities as current or non-current. Key clarifications include:

 

·    The right to defer settlement must exist at the end of the reporting period.

·    Classification is based on the existence of the right, not the likelihood of exercising it.

·    The presence of an embedded derivative in a convertible liability affects classification only if the derivative is itself an equity instrument.

 

The amendments also introduce disclosure requirements where non-current classification depends on future covenant compliance within 12 months.

 

Impact: No effect on the Group's consolidated financial statements.

 

Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

 

These amendments clarify the measurement of lease liabilities in a sale and leaseback transaction. Specifically, they require that any gain or loss related to the retained right-of-use asset is not recognised.

Impact: No effect on the Group's consolidated financial statements.

 

Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)

 

These amendments require enhanced disclosures for supplier finance arrangements to improve

transparency around their effects on liabilities, cash flows, and liquidity risk. Disclosures include:

 

·      Terms and conditions of the arrangements

·      Quantitative information on related liabilities at the beginning and end of the period

·      Non-cash changes in the carrying amounts of those liabilities

 

Impact: The Group currently has no such arrangements in place; therefore, the amendments had no impact on the consolidated financial statements.

 

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

 

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

 

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

 

Other than IFRS 18 'Presentation and Disclosure in Financial Statements', the new Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group's consolidated financial statements.

 

IFRS 18 sets out the requirements for the presentation and disclosure of information in the financial statements. The standard is effective from 1 January 2027, subject to local endorsement requirements.

 

IFRS 18 requires a statement of financial position at the beginning of the preceding period where there has been a retrospective adjustment to the accounts or reclassification of items.

 

Entities may use other names for the main statements, and the totals, subtotals and line items within, as long as they are labelled in a way that faithfully represents the characteristics of the items.

 

The statement of profit or loss and other comprehensive income, as the name suggests, presents profit and loss for the period as well as other comprehensive income. Other comprehensive income includes income and expenses not recognised in profit or loss such as revaluation surpluses. The statement of profit or loss and other comprehensive income may be presented either as one statement or a separate statement of profit or loss and statement showing other comprehensive income.

 

IFRS 18 includes requirements on the grouping of information in the financial statements, and guidance to determine if information should be included in the primary financial statements or disclosed in the notes.

 

Entities who use management-defined performance measures, as termed within the standard, must make specified disclosures in the notes. Subtotals of income and expenses used in public communications to communicate management's view of financial performance, such as adjusted operating profit, will be in scope of this requirement.

 

2.7  Segment Reporting

 

The Chief Operating Decision Maker ("CODM"), which is the Board, is of the opinion that the Group is engaged in a single segment of business, through it identification, acquisition, development, and operation of energy-related projects. The financial information used by the CODM to manage the Group presents the business as a single segment.

 

Segment information is measured on the same basis as that used in the preparation of the Group's Consolidated Financial Statements.

 

The Group receives revenues from external customers solely through its Finnish subsidiary, Kaipola, which is held through a United Kingdom subsidiary. Other than Kaipola, none of the Group's subsidiaries received revenue from external parties during the reporting period. At the year end, the Group held no non-current assets in any geographical area outside of Guernsey, the United Kingdom, and Finland.

 

2.8  Foreign Currency Translation

 

Functional and presentation currency

 

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

 

Foreign currency transactions and balances

 

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

 

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

 

Foreign operations

 

For the purposes of consolidation, the assets and liabilities of Group entities with a functional currency other than GBP are translated into GBP at the exchange rate prevailing at the reporting date. Income and expenses are translated at the average exchange rate for the reporting period, unless exchange rates fluctuate significantly, in which case the rate at the date of the transaction is used.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated into GBP at the closing exchange rate at the reporting date.

 

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

 

2.9  Cash and cash equivalents

 

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

 

2.10     Inventories

 

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

 

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

 

2.11 Trade and Other Receivables

 

Trade and Other Receivables are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue. The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses.

 

These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

 

2.12     Financial instruments

 

Recognition and derecognition

 

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

 

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

 

Classification and initial measurement of financial assets

 

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

 

Financial assets are classified into one of the following categories:

 

·      amortised cost

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

·      fair value through other comprehensive income (FVOCI).

 

In the periods presented the Group only holds financial assets measured at amortised cost. The classification is determined by both:

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

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

 

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

 

Subsequent measurement of financial assets

 

o  Financial assets at amortised cost

 

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

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

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

 

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

 

Impairment of financial assets

 

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

 

In assessing ECL's, applying this forward-looking approach, a distinction is made between:

·      financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('Stage 1') and

·      financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('Stage 2').

 

'Stage 3' would cover financial assets that have objective evidence of impairment at the reporting date.

 

'12-month expected credit losses' are recognised for the first category (i.e. Stage 1) while 'lifetime expected credit losses' are recognised for the second category (i.e. Stage 2).

 

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

 

Classification and measurement of financial liabilities

 

The Group's financial liabilities include borrowings and trade and other payables.

 

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs.

 

Subsequently, financial liabilities are measured at amortised cost using the effective interest method.

 

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.

 

2.13     Property, plant and equipment

 

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

 

The depreciation methods and useful lives applied vary by subsidiary, depending on the nature of operations and asset usage. Each subsidiary follows its own approved accounting policies for depreciation, which are not overridden by the holding company unless required for consolidation purposes under IFRS as adopted by EU.

 

Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value. The depreciation periods and rates for the principal categories of assets are as follows:

 

·      Construction-related assets (e.g. assets under construction, development and upgrade costs): straight-line basis over up to 10 years

 

·      Tangible assets (e.g. plant, machinery, furniture and movables): written down value method at 25%, with useful lives of up to 15 year

 

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

 

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

 

2.14     Business Combinations

 

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

 

·    Assets transferred,

·    Liabilities incurred,

·    Equity interests issued by the Group,

·    Contingent consideration arrangements, and

·    Pre-existing equity interests in the subsidiary.

 

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

 

Acquisition-related costs are expensed as incurred.

 

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

 

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

 

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

 

2.15     Goodwill

 

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

 

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

 

2.16     Impairment of Assets

 

Goodwill and indefinite life intangible assets are tested annually for impairment, or more frequently if events suggest potential impairment. Other assets are tested for impairment when events or changes in circumstances indicate that their carrying amount may not be recoverable.

 

An impairment loss is recognised when the asset's carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal or value in use. Impaired assets (other than goodwill) are reviewed for possible reversal of impairment at each reporting date.

 

2.17     Trade and other payables

 

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

 

2.18     Leases

 

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

 

The lease liability is initially measured at the present value of future lease payments, discounted using the Group's incremental borrowing rate or the interest rate implicit in the lease, if readily determinable. The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability, lease payments made before commencement, and any initial direct costs.

 

The lease term for the leased asset is 50 years. Accordingly, the right-of-use asset is amortised on a straight-line basis over the 50-year lease term, which reflects the estimated useful life of the asset.

 

Payments for short-term leases, low-value asset leases, and leases of assets still under construction are recognised on a straight-line basis as an expense in the income statement. These leases are disclosed separately as off-balance sheet commitments in the financial statement notes.

 

2.19     Borrowings

 

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

 

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

 

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

 

2.20     Employee benefits

 

Short term obligations

 

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

 

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

 

Share based payments

The fair value of equity-settled share options granted to key management personnel is recognised as a share-based payment expense, with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options at the grant date and is calculated as follows:

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

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

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

 

The expense is recognised over the vesting period, being the period during which all vesting conditions are expected to be satisfied. At each reporting date, the Group reviews and updates its estimate of the number of options expected to vest, based on service and non-market performance conditions. Any adjustment to original estimates is recognised in profit or loss, with a corresponding impact on equity.

 

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

 

2.21     Related Parties

 

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

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

(ii) the Group and the party are subject to common control;

(iii) the party is an associate of the Group or a joint venture in which the Group is a venture;

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

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

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

 

2.22     Equity and reserves

 

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

 

Other components of equity include the following:

 

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

 

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

 

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

 

3. CRITICAL ESTIMATES, JUDGEMENTS AND ERRORS

 

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

 

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

 

Significant management judgements

 

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

Capitalisation of plant development cost

 

The Group applies judgement in determining whether costs incurred in the development or repair of plant assets meet the criteria for capitalisation as per applicable accounting standards. In the case of one plant, significant repair and upgrade activities were undertaken which were assessed to enhance the asset's future economic benefits beyond its originally assessed performance. Accordingly, these costs were capitalised as part of the plant's carrying value. Management continues to assess whether the capitalisation criteria remain valid and monitors for any indicators of impairment.

 

Assessment of Deferred Tax Asset Recognition

 

The Group has assessed the recoverability of deferred tax assets arising from deductible temporary differences and tax loss carry-forwards. Recognition of such assets requires an evaluation of the likelihood that future taxable profits will be available against which these amounts can be utilised. The assessment also considers any legal, regulatory or economic uncertainties within the relevant tax jurisdictions.

 

As a result of this evaluation and given the current loss-making position and uncertainty over future taxable profits, no deferred tax assets have been recognised in the financial statements.

 

Significant estimates

 

Impairment of goodwill

 

The Group assesses goodwill for impairment at least annually, and whenever indicators of impairment arise. This process requires significant management judgement, estimating future cash flows, and determining discount rates.

 

For the current reporting period, the Group engaged an independent external party to perform a valuation of the plant assets. Based on this valuation, the recoverable amounts of the relevant amount of plant exceeded their carrying amounts, indicating that no impairment of goodwill was required.

 

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

 

Useful lives and residual values of depreciable assets

 

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

 

Inventories

 

Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

 

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

 

The Group enters into leases with third party and as a consequence the rate implicit in the relevant lease is not readily determinable. Therefore, the Group uses its incremental borrowing rate as the discount rate for determining its lease liabilities at the lease commencement date. The incremental borrowing rate is the rate of interest that the Group would have to pay to borrow over similar terms which requires estimations when no observable rates are available. The Group consults with its main bankers to determine what interest rate they would expect to charge the Group to borrow money to purchase a similar asset to that which is being leased.

 

These rates are, where necessary, then adjusted to reflect the credit worthiness of the entity entering into the lease and the specific condition of the underlying leased asset. The estimated incremental borrowing rate is higher than the parent company for leases entered into by its subsidiary undertakings.

 

4.  FINANCIAL RISK MANAGEMENT

 

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

 

Risk	Exposure arising from	Measurement	Management
Foreign exchange risk	Future commercial cash flows not denominated in GBP Recognised financial assets and liabilities not denominated in GBP	Cash flow forecasting Sensitivity analysis	No hedging
Credit risk	Cash and cash equivalents, trade receivables, other receivables	Aging analysis Credit ratings	Diversification of bank deposits. Monitoring credit ratings Regular follow-ups receivables
Liquidity risk	Borrowings and other liabilities	Rolling cash flow forecasts	Availability of committed credit lines and borrowing facilities

 

Foreign exchange risk

 

Most of the Group's transactions are carried out in GBP. Exposures to currency exchange rates arise from the Group's borrowings, some loans are denominated in Euro (EUR) and there is one other loan which is denominated in SEK.

 

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

 

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into GBP at the closing rate:

 

	Short-term exposure		Long-term exposure
	EUR	SEK	EUR
31 December 2024
Financial assets	-	-	4,011
Financial liabilities	-	72	5,532
31 December 2023 (restated)
Financial assets	-	-	2,865
Financial liabilities	1,727	-	2,015

 

The following table illustrates the impact of changes in foreign exchange rates on the Group's financial assets and liabilities, assuming all other variables remain constant. A +/- 7% change is considered for the SEK/GBP exchange rate, reflecting the average annual volatility observed in 2024. For the EUR/GBP exchange rate, a +/- 5% change is applied, consistent with the volatility observed in 2024. These percentages have been determined based on the average market fluctuations in exchange rates over the full year ended 31 December 2024. The sensitivity analysis is based on the Group's foreign currency financial instruments held at the reporting date.

 

If the GBP had strengthened against the EUR by 5% (2023: 10%) and SEK by 7% (2023: NA).

 

	Profit for the year		Equity	Total
	EUR	SEK	EUR
31 December 2024	67	5	9	81
31 December 2023	173	-	(85)	88

 

If the GBP had weakened against the EUR by 5% (2023: 10%) and SEK by 7% (2023: NA).

 

	Profit for the year		Equity	Total
	EUR	SEK	EUR
31 December 2024	(67)	(5)	(9)	(81)
31 December 2023	(173)	-	85	(88)

 

During the year, group has recorded (£17k) [2023 - (£21k)] foreign-exchange related gains were recognised in profit or loss.

 

Interest rate risk

 

The Group's fixed-rate borrowings, including compound financial instruments such as interest-free convertible loans, are carried at amortised cost. While market interest rates are used in the initial measurement of such instruments to allocate between liability and equity components, they do not give rise to ongoing interest rate risk. This is because the carrying amounts and future cash flows of these instruments are not remeasured based on changes in market interest rates. Accordingly, the Group is not exposed to interest rate risk as defined under IFRS 7.

 

Credit risk

 

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

 

The Group's exposure to credit risk is primarily limited to its cash balances held in bank accounts and trade receivables. To mitigate this risk, the Group holds the majority of its cash and cash equivalents with reputable banks with strong credit profiles. Group's main cash resources are held with banks with an external rating of B.

 

Trade receivables relate to a single customer, which concentrates credit risk but is monitored regularly to ensure recoverability.

 

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

 

Liquidity Risk

 

Liquidity risk is that the Group might be unable to meet its obligations.

 

The Group currently holds cash balances to provide funding for normal trading activity. Trade and other payables are monitored as part of normal management routine.