EQT Eqtec Plc

 

Company statement of changes in equity

for the financial year ended 31 December 2023

 

 

		Share capital	Share premium	Other reserves	Accumulated deficit	Total
		€	€	€	€	€
Balance at 1 January 2022		25,977,130	102,544,642	2,353,868	(83,603,698)	47,271,942
Issue of ordinary shares in EQTEC plc (Note 28)		769,697	3,717,379	-	-	4,487,076
Conversion of debt into equity (Notes 28 and 30)		52,757	237,672	-	-	290,429
Share issue costs (Note 28)		-	(362,241)	-	-	(362,241)
Employee share-based compensation (Note 10)		-	-	340,257	-	340,257
Transactions with owners		822,454	3,592,810	340,257	-	4,755,521
Loss for the financial year (Note 39)
		-	-	-	(5,216,344)	(5,216,344)
Total comprehensive loss for the financial year		-	-	-	(5,216,344)	(5,216,344)
Balance at 31 December 2022		26,799,584	106,137,452	2,694,125	(88,820,042)	46,811,119
Issue of ordinary shares in EQTEC plc (Note 28)		1,596,560	2,399,413	-	-	3,995,973
Conversion of debt into equity (Note 28)		4,101,704	(224,713)	-	-	3,876,991
Share issue costs (Note 28)		-	(461,122)	-	-	(461,122)
Transactions with owners		5,698,264	1,713,578	-	-	7,411,842
Loss for the financial year (Note 39)		-	-	-	(33,492,877)	(33,492,877)
Total comprehensive loss for the financial year		-	-	-	(33,492,877)	(33,492,877)
Balance at 31 December 2023		32,497,848	107,851,030	2,694,125	(122,312,919)	20,730,084

 

The notes on pages 11 to 58 form part of these financial statements.

 

 

 

Company statement of cash flows

for the financial year ended 31 December 2023

 

	Notes	2023	2022
		€	€
Cash flows from operating activities
Loss for the financial year before taxation		(33,492,877)	(5,216,344)
Adjustments for:
Amortisation of intangible assets	19	124,603	124,602
Employee share-based compensation	10	-	151,411
Impairment of subsidiaries	20	15,783,854	-
Impairment of equity-accounted investments	15	2,728,959	4,712,490
Impairment of other investments	23	148,521	-
Impairment of loans to project development undertakings	25	3,528,550	-
Impairment of development assets	25	496,312	-
Reversal of impairment of intercompany loans		-	(170,000)
Finance costs	11	1,459,891	579,137
Finance income	11	(48,176)	(260,720)
Impairment of intercompany balances	26	8,986,681	2,786
Change in fair value of other financial investments	23	26,143	326,501
Gain on debt for equity swap	12	(431,962)	(10,088)
Foreign currency losses arising from retranslation of borrowings		43,971	349,360
Operating cash flows before working capital changes		(645,530)	589,135
Funds advanced to intercompany accounts		(3,862,913)	(11,029,109)
Repayment of intercompany balances		1,771,585	3,832,442
Increase in development assets		(88,631)	(952,638)
Increase in trade and other receivables		(883,808)	(5,310,477)
(Decrease)/increase in trade and other payables		(27,068)	773,618
Net cash used in operating activities		(3,736,365)	(12,097,029)
Cash flows from investing activities
Loans advanced to equity accounted undertakings	21	-	(528,085)
Investment in subsidiary	20	(1,000,000)	(1,550,000)
Loans to subsidiaries repaid		-	170,000
Loans repaid by project development undertakings	25	-	100,000
Interest received		12	-
Net cash used in investing activities		(999,988)	(1,808,085)
Cash flows from financing activities
Proceeds from borrowings	30	2,291,952	7,138,782
Repayment of borrowings	30	(2,132,512)	(919,931)
Proceeds from issue of ordinary shares	28	4,051,609	4,430,069
Share issue costs	28	(295,670)	(274,784)
Loan issue costs	30	(50,361)	(334,557)
Net cash generated from financing activities		3,865,018	10,039,579
Net decrease in cash and cash equivalents		(871,335)	(3,865,535)
Cash and cash equivalents at the beginning of the financial year		980,098	4,845,633
Cash and cash equivalents at the end of the financial year	27	108,763	980,098

The notes on pages 11 to 58 form part of these financial statements.

 

 

 

Notes to the financial statements

 

 

 

1.      GENERAL INFORMATION

 

EQTEC plc ("the Company/parent company") is a company domiciled in Ireland. These financial statements for the financial year ended 31 December 2023 consolidate the individual financial statements of the Company and its subsidiaries (together referred to as 'the Group').

The Group is a technology provider to clients in the Utility, Industrial and Waste Management sectors with its own, proprietary and patented technology for clean production of synthesis gas (syngas), a fossil fuel alternative that will increasingly contribute to production of the world's baseload energy and biofuels. Syngas plants utilising EQTEC technology are fuelled by waste from industrial, municipal, agricultural, forestry and other sources. Syngas can be used either as a direct replacement for natural gas or as an intermediate fuel for generation of a range of final fuels including hydrogen, renewable natural gas (RNG), liquid biofuels, thermal energy, electrical power and chemicals such as methanol or ethanol.

 

EQTEC designs, develops and supplies core technology to syngas production plants in Europe and the USA, with highly efficient equipment that is modular and scalable from 1MW to 30MW and beyond. EQTEC's versatile solutions convert at least 60 types of feedstock, including biomass wastes, industrial wastes and municipal solid waste, with no hazardous or toxic emissions.

 

In future, EQTEC intends to augment its services and equipment revenues with recurring revenues from licensing of its technology to syngas plant owners, providing value-added services including maintenance, upgrades and data-based services over the lifetime of each plant.

 

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

 

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

New/revised standards and interpretations adopted in 2023

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 2023. 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:

 

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 MATERIAL 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 2023 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 2023 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 €23,508,692 after posting non-recurring items of €18,845,719 (2022: €10,525,115) during the financial year ended 31 December 2023 and had net current assets of €4,441,183 (2022: €8,966,819) and net assets of €21,214,826 (2022: €37,132,639) at 31 December 2023.

 

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.

 

The directors had carried out an evaluation of financial forecasts, sensitised to reflect a rational judgement of the level of inherent risk. The forecasts which Management have prepared covering the next 12 months include certain assumptions with regard to cost and overhead reductions, the timing and amount of any funds generated from sales of the Group's technology and committed proceeds from a legal settlement agreement. The forecasts indicate that during this period the Group will have sufficient funds to continue with its activities for a period of at least 12 months from the date of signing these financial statements.

 

After undertaking the assessments and considering the level of inherent risk, 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 2023. 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 non-controlling 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 35).

 

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.

 

If there is objective evidence that the Group's net investment in an associate or joint venture is impaired, the requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

 

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.

 

Foreign operations - continued

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.

 

Financial assets as fair value through profit or loss (FVPTL)

Financial assets held within a different business model other than 'hold to collect and sell' are categorised at FVTPL. Further, irrespective of the business model used, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.

 

This category contains equity investments. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for the investments at FVOCI. The fair value was determined in line with the requirements of IFRS13 'Fair Value Measurement'.

 

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active markets transactions or using a valuation technique where no active market exists.

 

Impairment of financial assets

IFRS 9's impairment requirements use forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

 

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

 

Impairment of financial assets - continued

In 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 (ie Stage 1) while 'lifetime expected credit losses' are recognised for the second category (ie 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.

 

Trade and other receivables

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 2023 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.

 

Income taxes - continued

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 a rational judgement of the level of inherent risk and market conditions. 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 20, 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.

 

As disclosed in Note 20, the Group owns 100% of the shares in Biogaz Gardanne SAS. Biogaz Gardanne SAS was created to fulfil a narrow, specific purpose which was to fulfil the objectives of the French government. Management has assessed its involvement in Biogaz Gardanne SAS in accordance with IFRS 10's revised control definition and guidance and has concluded that, based on the fact that control over the activities of the company is driven by the French government, it does not have control over Biogaz Gardanne SAS and that the investment should be accounted for as an unconsolidated structured entity.

 

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, these entities are 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 total property, plant and equipment reversal of impairment charges during the financial year as included in Note 18 amounted to €Nil (2022: €Nil), while the impairment for goodwill during the financial year as included in Note 19 amounted to €5,283,459 (2022: €Nil).

 

Provision for impairment of equity-accounted investments - Group

Determining whether the carrying value of Group's equity-accounted investments 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 €2,619,234 (2022: €4,712,490) be recognised in the Group accounts of EQTEC plc. Details on equity-accounted investments can be found in note 21.

 

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 €15,783,854 (2022: €Nil) be recognised in the Company accounts of EQTEC plc. Details on investment in subsidiaries can be found in note 20.

 

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 19.

 

Provision for impairment of financial assets

Determining whether the carrying value of Group's financial assets has been impaired requires an estimation of the value in use of the financial assets. 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 €1,417,066 (2022: €Nil) be recognised in the Group accounts of EQTEC plc. Details on financial assets can be found in Note 22.

 

Allowances for impairment of loans receivable from project development undertakings

The Group estimates the allowance for doubtful loan receivables based on assessment of specific accounts where the Group has objective evidence comprising default in payment terms or significant financial difficulty that certain borrowers 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 2023, provisions for doubtful loans receivable amounted to €3,528,550 (2022: €Nil) (see note 25).

 

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 2023, provisions for doubtful debts amounted to €875,687 which represents 12% of trade receivables at that date (2022: €475,687- 7%) (see note 26).

 

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 28).

 

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 25). After reviewing the development assets, the directors are satisfied that a net impairment cost of €4,603,546 (2022: €2,752) be recognised in the Group accounts of EQTEC plc.

 

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:

	2023	2022
	€	€
Loans receivable from project development undertakings (Note 25)	2,066,099	5,446,087
Trade and other receivables (Note 26)	6,723,599	6,094,669
Cash and cash equivalents (Note 27)	262,019	1,693,116

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

	2023	2022
	€	€
Loans receivable from project development undertakings (Note 25)	-	3,421,901
Trade and other receivables (Note 26)	18,591,102	23,552,137
Cash and cash equivalents (Note 27)	108,763	980,098

 

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

 

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:

	2023	2022
	€	€
Loans receivable from project development undertakings
Loan receivable from Logik Wte Limited (Note 25)	2,066,099	2,024,186
Loan receivable from Shankley Biogas Limited (Note 25)	-	2,824,572
Trade and other receivables
Receivable from Synergy Karlovac d.o.o. (Note 36)	2,320,428	2,245,191
Receivable from Synergy Belisce d.o.o. (Note 36)	2,292,836	2,217,523

 

 

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 (2022: Ba). During the financial year ended 31 December 2023, the Group impaired the balance receivable from Shankley Biogas Limited, resulting in a loss of €2,883,057 (see Note 25). The directors are of the opinion that the likelihood of default by any other counter party leading to material loss is minimal. The reconciliation of loss allowance is included in Note 26.

 

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 contracted liabilities as at 31 December 2023:

		Up to 1 year	1 - 5 years	After 5 years	Total
	Notes	€	€	€	€
Trade and other payables	32	2,853,641	-	-	2,853,641
Borrowings	30	3,025,476	2,775,242	-	5,800,718
		5,879,117	2,775,242	-	8,654,359

 

The table below details the maturity of the Group's liabilities as at 31 December 2022:

 

		Up to 1 year	1 - 5 years	After 5 years	Total
	Notes	€	€	€	€
Trade and other payables	32	6,264,404	-	-	6,264,404
Borrowings	30	5,180,902	1,131,513	-	6,312,415
		11,445,306	1,131,513	-	12,576,819

 

Refer to Notes 30 and 32 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 30.  

 

The Group's bank borrowings and other debt instruments (excluding amounts in the disposal group) amounted to €4,946,213 and €6,170,636 in 31 December 2023 and 31 December 2022, respectively.  The Company's bank borrowings and debt instruments amounted to €4,700,234 and €6,070,674 in 31 December 2023 and 31 December 2022, 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 2023 would increase/decrease by €741 (2022: €Nil) with a corresponding decrease/increase in equity.

 

The Group's sensitivity to interest rates has increased as a result of obtaining a bank overdraft in the 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.

 

Foreign exchange risk (continued)

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
	2023 €	2022 €	2023 €	2022 €
Sterling	5,498,875	10,475,339	2,453,921	6,559,389
US Dollar	44,938	29,463	2,301	2,076
Croatian Kuna	-	426,154	-	5,143,044

                

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
	2023 €	2022 €	2023 €	2022 €
Sterling	5,088,681	7,274,170	12,374,437	13,894,925
US Dollar	44,938	27,802	20,421	19,463

 

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
	2023 €	2022 €	31 Dec 2023 €	31 Dec 2022 €
Sterling Impact: Profit and loss/equity	307,571	395,550	735,935	668,763
US Dollar Impact: Profit & Loss/Equity	4,307	2,766	2,476	893
Croatian Kuna: Profit and loss/equity	-	476,454	-	-

 

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.

 

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 23). However, as the likelihood of the Group recovering this amount is considered remote, it was deemed prudent to provide fully for the investment in Metal NRG plc, thus eliminating further price risk.

 

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 2023 and 2022.

 

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

 

	31 Dec 2023	31 Dec 2022
	€	€
Borrowings	4,946,213	6,170,636
Lease liabilities	603,316	56,531
Cash and cash equivalents	(262,019)	(1,693,116)
Net debt	5,287,510	4,534,051
Equity attributable to the owners of the company	23,520,758	39,391,162
Net debt to equity ratio	22%	12%

 

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.

 

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)
	2023	2022	2023	2022
	€	€	€	€
Technology Sales	2,546,975	7,970,072	(1,629,462)	(988,906)
Total from continuing operations	2,546,975	7,970,072	(1,629,462)	(988,906)
Central administration costs and directors' salaries			(2,361,673)	(3,785,899)
Impairment costs			-	(2,752)
Other income			109,672	33,645
Other gains			431,962	10,088
Change in fair value of financial investments			(26,143)	(326,501)
Foreign currency (losses)/gains			(48,212)	156,835
Employee share-based compensation			-	(340,257)
Share of results from equity accounted investments			(23,603)	(52,059)
Gains from sales to equity accounted investments deferred			-	(28,378)
Loss arising from loss of control of subsidiaries			-	(489)
Impairment of equity-accounted investment			(2,619,234)	(4,712,490)
Impairment of other investments			(1,417,066)	-
Impairment of loans receivable from project development undertakings			(3,528,550)	-
Impairment of development assets			(4,603,546)	-
Impairment of goodwill			(5,283,459)	-
Impairment of trade and other receivables			(1,393,864)	-
Loss on disposal of tangible asset			-	(154,205)
Finance income			121,320	316,805
Finance costs			(1,486,020)	(589,618)
Loss before taxation (continuing operations)			(23,757,878)	(10,464,181)

Revenue reported above represents revenue generated from associated companies, jointly controlled entities, unconsolidated structured entities and external customers. Inter-segment sales for the financial year amounted to €Nil (2022: €Nil). Included in revenues in the Technology Sales Segment are revenues of €1,126,977 (2022: €4,860,015) which arose from sales to associate undertakings, joint ventures and unconsolidated structured entities of EQTEC plc. This represents 44% (2022: 61%) of total revenues in the financial year. A breakdown of the turnover by associated undertaking, joint venture and unconsolidated structured entity is set out in Note 36 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
	2023	2022	2023	2022
	€	€	€	€
Technology sales	113,376	130,084	502,696	83,241
Head Office	192,872	233,751	217,574	-
	306,248	363,835	720,270	83,241

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*
	2023	2022	2023	2022
	€	€	€	€
Republic of Ireland	-	-	-	-
EU	2,256,621	5,128,979	2,607,493	2,392,776
United States of America	290,354	-	-	-
United Kingdom	-	2,841,093	185,549	35,049
	2,546,975	7,970,072	2,793,042	2,427,825

 

*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 operations, is as follows:

			2023	2022
			€	€
Revenue from technology sales			1,469,589	4,768,964
Revenue from development fees			1,077,386	3,201,108
			2,546,975	7,970,072

9.          OTHER INCOME

			2023	2022
			€	€
Other income			109,672	33,645

10.        EMPLOYEE SHARE-BASED PAYMENTS

			2023	2022
			€	€
Expensed in the year			-	340,257

 

The share-based payment expense includes the cost of employee warrants and options granted and vested in the year (Note 28).

 

11.	FINANCE COSTS AND INCOME
				2023	2022
	Finance Costs			€	€
	Interest on loans, bank facilities and overdrafts			1,144,349	582,620
	Fees on early redemption of loans			320,474	-
	Interest expense for leasing arrangements			13,641	5,000
	Other interest			7,556	1,998
				1,486,020	589,618
	Finance Income
	Interest receivable on loans advanced			119,726	279,839
	Interest receivable on deferred consideration			-	36,966
	Other interest receivable			1,594	-
				121,320	316,805

12.        OTHER GAINS

			2023	2022
			€	€
Gain on debt for equity swap			431,962	10,088

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 gain recognised on these transactions was €431,962 (2022: €10,088).

 

13.	EMPLOYEE DATA	2023	2022
		€	€
	The aggregate payroll costs of employees (including executive directors) in the Group were as follows:
	Salaries	2,495,084	2,375,349
	Social insurance costs	504,769	543,682
	Pension costs - defined contribution plans	61,998	64,317
	Other compensation costs:
	Cost of share-based payments	-	340,257
	Short term incentives	(547,575)	444,690
	Private health insurance and other insurance costs	54,555	58,897
		2,568,831	3,827,192
		No.		No.
	Average number of employees (including executive directors)	28		27

 

Company

Average number of employees (including executive directors)

3

3

 

Capitalised employee costs in the financial year amounted to €Nil (2022 €Nil).

 

 

14.		LOSS BEFORE TAXATION	2023		2022
			€		€
		Loss before taxation on continuing operations is stated after charging/(crediting):
		Depreciation of property, plant and equipment (Note 18)	181,584		239,233
		Amortisation of intangible assets (Note 19)	124,664		124,602
		Movement in fair value of investments (Note 23)	26,143		326,501
		Research and development	-		12,170
		Losses/(gains) on foreign exchange	48,212		(156,835)
		Directors' remuneration:       for services as directors	110,442		112,860
		(Note 34).                                          for salaries as management	901,379		919,776
		share-based payments	-		185,495
		Impairment of development assets (Note 25)	4,603,546		2,752
				2023		2022
				€		€
	Auditor's remuneration:
	Audit of Group accounts			100,000		93,000
	Tax advisory services			15,000		15,000
				115,000		108,000
15.   SIGNIFICANT AND NON-RECURRNING TRANSACTIONS				2023		2022
				€		€
Impairment of investment (Note (a))				2,619,234		4,712,490
Impairment of other investments (Note (b))				1,417,066		-
Impairment on loans receivable from project development undertakings (Note (c))				3,528,550		-
Impairment of development assets (Note (d))				4,603,546		-
Impairment of goodwill (Note (e))				5,283,459		-
Impairment of trade and other receivables (Note (f))				1,393,864		-
Loss on disposal of tangible asset (Note (g))				-		154,205

 

a)     Please see note 21 for further details

b)     Please see notes 22 and 23 for further details

c)     Please see note 25 for further details

d)     Please see note 25 for further details

e)     Please see note 19 for further details

f)      Please see note 26 for further details

g)     This is a loss arising on the disposal of gasification equipment installed in the University of Lorraine for R&D purposes.

 

 

16.			INCOME TAX		2023		2022
					€		€
			Income tax expense comprises:
			Current tax expense		-		-
			Deferred tax credit		-		-
			Adjustment for prior financial years		22,768		60,934
			Tax expense		22,768		60,934
				2023				2022
				€				€
		Loss before taxation		(23,485,924)				(10,464,181)
		Applicable tax 12.50% (2022: 12.50%)		(2,935,741)				(1,308,023)
		Effects of:
		Amortisation & depreciation in excess of capital allowances		38,281				45,479
		Expenses not deductible for tax purposes		1,114,243				690,421
		Losses carried forward		1,783,217				572,123
				-				-
		Adjustment for prior financial years		22,768				60,934
		Actual tax expense		22,768				60,934
		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.
17.	LOSS PER SHARE					2023			2022
						€ per share			€ per share (Restated)
	Basic loss per share
	From continuing operations					(0.208)			(0.117)
	From discontinued operations					0.002			-
	Total basic loss per share					(0.206)			(0.117)
	Diluted loss per share
	From continuing operations					(0.208)			(0.117)
	From discontinued operations					0.002			-
	Total diluted loss per share					(0.206)			(0.117)

 

The loss and weighted average number of ordinary shares used in the calculation of the basic and diluted loss per share are as follows:

 

		2023			2022
		€			€
	Loss for financial year attributable to equity holders of the parent	(23,508,657)		(10,525,104)
	Profit/(loss) for the financial year from discontinued operations used in the calculation of basic earnings per share from discontinued operations	271,954		(33,776)
	Losses used in the calculation of basic loss per share from continuing operations	(23,780,611)		(10,491,328)
		No.		No. (Restated)
	Weighted average number of ordinary shares for
	the purposes of basic loss per share	114,129,384		89,660,843
	Weighted average number of ordinary shares for
	the purposes of diluted loss per share	114,129,384		89,660.843

Dilutive and anti-dilutive potential ordinary shares

The following potential ordinary shares were excluded in the diluted earnings per share calculation as they were anti-dilutive.

		2023		2022
				(Restated)
	Share warrants in issue	27,339,399		4,598,810
	Share options in issue	673,045		673,045
	LTIP options in issue	2,116,938		1,488,109
	Convertible loans	207,422,790		3,918,853
	Total anti-dilutive shares	237,552,172		10,678,817

 

Details of share warrants and share options in issue outstanding at year-end are set out in Note 28.

 

             Events after the year-end

As disclosed in Note 37, 12,802,031 shares were issued on 8 May 2024 in settlement of debt. If these shares were in issue prior to 31 December 2023, they would have affected the calculation of the weighted average number of shares in issue for the purposes of calculating both the basic and diluted loss per share by 1,066,836 (assuming the shares were issued in December 2023).

 

As disclosed in Note 37, 63,322,989 were issued in June 2024 as part of a share placing. If these shares were in issue prior to 31 December 2023, they would have affected the calculation of the weighted average number of shares in issue for the purposes of calculating both the basic and diluted loss per share by 5,276,916 (assuming the shares were issued in December 2023).

 

Retrospective Adjustments

The comparative earnings per share figures have been restated to reflect:

(1)    The disposal of a subsidiary in 2023, leading to a restatement of comparative figures to reflect discontinued operations (see Notes 34 and 35); and

(2)    The capital reorganisation that took place in the current financial year, leading to a decrease in the number of ordinary shares outstanding (see Note 28).

 

 

18.

PROPERTY, PLANT AND EQUIPMENT

 

		Right of Use Assets	Office equipment	Construction in Progress	Total
Group		€	€	€	€
Cost
At 1 January 2022		579,316	63,342	192,757	835,415
Additions		4,042	29,199	50,000	83,241
Disposals		-	-	(192,757)	(192,757)
Exchange differences		(11,420)	-	-	(11,420)
At 31 December 2022		571,938	92,541	50,000	714,479
Additions		706,705	6,265	-	712,970
Disposal of subsidiary		-	-	(50,000)	(50,000)
De-recognition of assets		(575,620)	-	-	(575,620)
Exchange differences		4,365	-	-	4,365
At 31 December 2023		707,388	98,806	-	806,194
Accumulated depreciation
At 1 January 2022		325,212	63,342	-	388,554
Charge for the financial year		197,016	3,666	38,551	239,233
Charge on disposal		-	-	(38,551)	(38,551)
Exchange differences		(7,810)	-	-	(7,810)
At 31 December 2022		514,418	67,008	-	581,426
Charge for the financial year		168,187	13,397	-	181,584
De-recognition of assets		(575,620)	-	-	(575,620)
Exchange differences		3,170	-	-	3,170
At 31 December 2023		110,155	80,405	-	190,560
Carrying amount
At 31 December 2022		57,520	25,533	50,000	133,053
At 31 December 2023		597,233	18,401	-	615,634

 

 

Included in the net carrying amount of property, plant and equipment are right-of-use assets as follows:

 

		2023		2022
		€		€
Leasehold buildings			597,233		57,520
			Office Equipment	Total
Company			€	€
Cost
At 1 January 2022, at 31 December 2022 and at 31 December 2023			1,233	1,233
Accumulated depreciation
At 1 January 2022, at 31 December 2022 and at 31 December 2023			1,233	1,233
Carrying amount
At 1 January 2023			-	-
At 31 December 2023			-	-

 

 

19.	INTANGIBLE ASSETS
	Group			Goodwill	Other intangibles		Patents		Total
	Cost			€	€		€		€
	As at 1 January 2022			16,710,497	-		-		16,710,497
	Additions, separately acquired			-	-		2,492,059		2,492,059
	As at 31 December 2022			16,710,497	-		2,492,059		19,202,556
	Additions, separately acquired			-	7,300		-		7,300
	As at 31 December 2023			16,710,497	7,300		2,492,059		19,209,856
	Amortisation and Impairment As at 1 January 2022			1,427,038	-		72,685		1,499,723
	Amortisation			-	-		124,602		124,602
	As at 31 December 2022			1,427,038	-		197,287		1,624,325
	Amortisation			-	61		124,603		124,664
	Impairment			5,283,459	-		-		5,283,459
	As at 31 December 2023			6,710,497	61		321,890		7,032,448
	Carrying value
	As at 31 December 2022			15,283,459	-		2,294,772		17,578,231
	As at 31 December 2023			10,000,000	7,239		2,170,169		12,177,408

 

 

Company				Patents	Total
Cost				€	€
As at 1 January 2022				-	-
Additions				2,492,059	2,492,059
As at 31 December 2022 and as at 31 December 2023				2,492,059	2,492,059
Amortisation and Impairment As at 1 January 2022				72,685	72,685
Amortisation				124,602	124,602
As at 31 December 2022				197,287	197,287
Amortisation				124,603	124,603
As at 31 December 2023				321,890	321,890
Carrying value
As at 31 December 2022				2,294,772	2,294,772
As at 31 December 2023				2,170,169	2,170,169

 

Patents

During the year ended 31 December 2021, the Group acquired patents from a company controlled by one of the directors. Patent are amortised over their estimated useful lives, which is on average 20 years. The average remaining amortisation period for these patents is 17.4 years (2022: 18.4 years).

 

             Goodwill

             Cash-generating units

Goodwill acquired in business combinations is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination. A CGU is the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets. The CGUs represent the lowest level within the Group at which the associated goodwill is assessed for internal management purposes and are not larger than the operating segments determined in accordance with IFRS 8 Operating Segments. A total of 1 CGUs (2022: 1) have been identified and these are all associated with the Technology Sales Segment. The carrying value of the goodwill within the Technology Sales Segment is €10,000,000 (2022: €15,283,459).

 

In accordance with IAS 36 Impairment of Assets, the CGUs to which significant amounts of goodwill have been allocated are as follows:

	2023		2022
	€		€
Eqtec Iberia SLU		10,000,000	15,283,459

 

For the purpose of impairment testing, the discount rates applied to this CGU to which significant amounts of goodwill have been allocated was 12.39% (2022: 11.78%) for the Eqtec Iberia CGU.

 

                Annual test for impairment

Goodwill acquired through business combinations has been allocated to the above CGU for the purpose of impairment testing. Impairment of goodwill occurs when the carrying value of the CGU is greater than the present value of the cash that it is expected to generate (i.e., the recoverable amount). The Group reviews the carrying value of each CGU at least annually or more frequently if there is an indication that a CGU may be impaired.

 

The recoverable amount of the CGU (2023: €10,000,000; 2022: €15,283,459) is determined from value-in-use calculations.  The forecasts used in these calculations are based on a financial plan approved by the Board of Directors, plus 5-year projections forecasted by management, and specifically excludes any future acquisition activity.

 

The value in use calculation represents the present value of the future cash flows, including the terminal value, discounted at a rate appropriate to each CGU. The real pre-tax discount rates used is 12.39% (2022: 11.78%). These rates are based on the Group's estimated weighted average cost of capital, adjusted for risk, and are consistent with external sources of information.

 

The cash flows and the key assumptions used in the value in use calculations are determined based on management's knowledge and expectation of future trends in the industry. Expected future cash flows are, however, inherently uncertain and are therefore liable to material change over time. The key assumptions used in the value in use calculations are subjective and include projected EBITDA margins, net cash flows, discount rates used and the duration of the discounted cash flow model.

 

The directors performed sensitivity analysis to account for changes in value in use calculation due to potential delays in commencement of the projects. The following are the sensitivities performed:

 

·      Revenues being risk adjusted between 30% to 80% based on the project specific probabilities.

·      Reduction in gross margin to 11%

·      5% increase in discount rate

·      Zero percentage long term growth rate (year 6 onwards)

 

All of these sensitivity analysis resulted in an impairment loss of €5,283,459 (2022: €Nil) calculated for the financial year ended 31 December 2023.

 

 

20.	INVESTMENT IN SUBSIDIARY UNDERTAKINGS

  

COMPANY

				2023	2022
	Investment in subsidiary undertakings		€		€
	At beginning of financial year		19,729,486		17,994,504
	Contribution to capital in Eqtec Iberia		1,000,000		1,550,000
	Impairment of investment in subsidiaries		(15,783,854)		-
	Foreign currency movement		2,904		(3,864)
	Share options and awards		-		188,846
	At end of financial year		4,948,536		19,729,486
	The share options and awards addition reflect the cost of share-based payments attributable to employees of subsidiary undertakings, which are treated as capital contributions by the Company.

Details of EQTEC plc subsidiaries at 31 December 2023 are as follows:

 

	Country of
Name	Incorporation	Shareholding	Registered Office	Principal activity
Eqtec Iberia SLU	Spain	100%	5	Provision of technical engineering services
EQTEC Holdings Limited	Republic of Ireland	100%	1	Development of building projects
EQTEC UK Services Limited	United Kingdom	100%	2	Development of building projects
Haverton WTV Limited	United Kingdom	100%	2	Waste-to-energy developer
Deeside WTV Limited	United Kingdom	100%	2	Waste-to-energy developer
Southport WTV Limited	United Kingdom	100%	2	Waste-to-energy developer
EQTEC Southport H2 MDC Limited	United Kingdom	100%	2	Waste-to-energy developer
Newry Biomass No. 1 Limited	Republic of Ireland	100%	1	Dormant company
React Biomass Limited	Republic of Ireland	100%	1	Dormant company
Reforce Energy Limited	Republic of Ireland	100%	1	Dormant company
Grass Door Limited	United Kingdom	100%	3	Dormant company
Newry Biomass Limited	Northern Ireland	50.02%	4	Dormant company
Enfield Biomass Limited	United Kingdom	100%	3	Dormant company
Moneygorm Wind Turbine Limited	Republic of Ireland	100%	1	Dormant company
Eqtec No. 1 Limited	Republic of Ireland	100%	1	Dormant company
Eqtec Strategic Project Finance Limited	United Kingdom	100%	3	Dormant company
Clay Cross Biomass Limited	United Kingdom	100%	3	Dormant company
Altilow Wind Turbine Limited	Republic of Ireland	100%	1	Dormant company
Synergy Projects d.o.o.	Croatia	100%	6	Waste-to-energy developer
EQTEC France SAS	France	100%	7	Waste-to-energy developer

 

The shareholding in each company above is equivalent to the proportion of voting power held.

 

Key to registered offices:

1.                                                 Building 1000, City Gate, Mahon, Cork T12 W7CV, Ireland.

2.                                                 Acre House, 11/15 William Road, London NW1 3ER, England.

3.                                                 Labs Triangle, Camden Lock Market, Chalk Farm Road, London NW1 8AB, England.

4.                                                 68 Cloughanramer Road, Carnmeen, Newry, Co. Down BT34 1QG, Northern Ireland.

5.                                                 Rosa Sensat nº 9-11 Planta 5ª, 08005 Barcelona, Spain.

6.                                                 Zagorska 31, HR-10000 Zagreb, Croatia.

7.                                                 28 Cours Albert 1er, 75008 Paris, France.

 

During the year, the Group disposed of its investment in Grande-Combe SAS. Details of this disposal are set out in Note 34.

 

Subsequent to the financial year-end, three dormant subsidiaries (Enfield Biomass Limited, Clay Cross Biomass Limited and EQTEC  Strategic Project Finance Limited) were voluntarily struck off the Company Register.