Final Results

RNS Number : 9848S

EQTEC PLC

29 June 2018

 

29 June 2018

EQTEC plc

 ("EQTEC" or the "Company" or the "Group")

Final Results for six months ended 31 December 2017

EQTEC plc (AIM: EQT), the technology solution company for waste gasification to energy projects, today announces its Final Results for the six months ended 31 December 2017.

Acquisition successfully completed

●	Acquisition of Eqtec Iberia was successfully completed on 28 December 2017 for a total consideration of £14 million
●	Change of financial year end to 31 December to harmonise year ends within the Group

Financial summary

●	Administrative costs for the 6-month period were €0.788 million (Year to 30 June 2017: €1.007 million). The significant driver of this comparative increase was costs associated with the acquisition including employee rationalisation costs
●	Loss before tax for the period was €6.002 million compared to a loss of €1.792 million for the year to 30 June 2017. The increased loss is after taking into account an impairment provision of €4.985 million on equipment and assets held in the Company's Newry project
●	Decision taken in principle to sell these Newry assets for approximately €4 million as part of the equipment for the proposed PT CITRA project in Vietnam leading to possible cash flows arising from these assets earlier than anticipated
●	At the period end, Group cash was €1.8 million (30 June 2017: €0.3 million) reflecting the net proceeds from the equity placing made as part of the re-admission of the enlarged group's shares to the AIM Market

Post period highlights  

●	Signed a Strategic Alliance Agreement with Cobra Instalaciones Y Servicios SA ("COBRA") a worldwide leader in developing, building and operating infrastructure projects, to identify and collaborate on waste-to-energy projects
●	Signed a Memorandum of Understanding ("MOU") with PT. CITRA METRO JAYA ENERGI ("CITRA"), to supply its EQTEC Gasifier Technology ("EGT") for a 12 MWe power plant in Vietnam
●	Usk Project - signed MOU with consortium containing Brooke, RAFAKO, SA and EXERGON for use of its proprietary EGT for the gasification and gas cleaning process for a 6.4 MWe power plant
●	Currently concluding legally binding agreements with a number of parties for the provision of a funding package for a minimum of £2 million

Luis Sanchez, CEO of EQTEC plc, commented: "2017 was a transformational year for the Group with the acquisition of Eqtec Iberia. The combined group brings together patented EGT technology with a strong pipeline of projects and puts us in a position to become a leading technology provider in the energy-from-waste sector.

"Looking to 2018, the pipeline of projects is increasing in size and quality, we are making good progress and expect to sign contracts on two projects and subsequently start design and construction of at least one waste-to-energy gasification facility in the UK as well as another project overseas. In addition, we have several other longer-term projects at various levels of advancement, all of which gives the Board confidence going forward."

Enquiries

EQTEC plc	[phone]
Luis Sanchez - Chief Executive Officer Gerry Madden - Finance Director
Northland Capital Partners Limited - Nomad and Joint Broker	[phone]
Tom Price / Dugald J. Carlean
VSA Capital Limited - Joint Broker	[phone]
Andrew Monk / Andrew Raca
Luther Pendragon - Financial PR	[phone]
Harry Chathli / Alexis Gore / Ana Ribeiro

The Annual Report is available for viewing on the Company's website: www.eqtecplc.com.

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

 

Overview

In December 2017 EQTEC completed the acquisition of Eqtec Iberia, refocusing the Group's strategy on the energy-from-waste ("EfW") market in the UK and globally.  The EQTEC Gasifier Technology has been developed over 20 years and has over 150,000 operating hours on commercial projects. With the combination of EGT and a strong pipeline of projects, the Group has positioned itself to become a leading technology provider in the EfW sector using its progressive energy recovery technology.

Operational Review

Strategy

EQTEC is positioning itself to be a Design, Build and Operator ("DBO") on the larger commercial waste projects.  The focus for EQTEC is to win and successfully deliver gasification projects in the Group's core waste gasification market.  EQTEC will provide and design the gasification part of these sites.  The second element will be for EQTEC to lead the gasification build phase using in-house expertise and, in coordination with Engineering, Procurement and Construction ("EPC") contractors, choose the right manufacturing sub-contractors. The final element is the long-term operation and maintenance ("O&M") support. Most plants undergo an annual shut down maintenance programme along with more routine support either on-line or at site.  

EQTEC may be an owner or part equity holder in certain projects and this is more likely to occur in smaller, less complex biomass projects where EQTEC has sufficient resource and knowledge to oversee the entire project, the benefit of the ownership being to secure the recurrent income derived from O&M works and sales of energy.

A final potential revenue source is the provision of ancillary equipment such as gas engines, pellet plant or heat recovery equipment. Whilst this is non-core equipment to EQTEC, it is a route to leveraging the Group's supply chain and client relationships to earn add-on margins. 

Strategic partnerships with EPC contractors

EQTEC strategically decided to work with a number of key partners to assist in the larger EPC contracts. 

The key relationships are Cobra, a large infrastructure provider in Spain with the ability to deliver a complete solution for customers, including the technical solution as well as providing customers with project financing and equity in most cases; Rafako, a Polish engineering company supplying energy projects with a core strength in steam boiler systems; and China Energy, which is the biggest power contractor in China with more than 200,000 employees worldwide.

The agreements with EPC contractors allow EQTEC to tender its EQTEC Gasifier Technology in waste-to-energy projects with an extremely solid financial and technological proposal.

EQTEC Projects

The pipeline of projects under development by the Company is increasing in size and quality and during 2018 the Company expects the materialisation of the first contracts.

PT CITRA, a project in Vietnam

As announced on 14 June 2018, EQTEC signed an MOU with CITRA, which is part of the Energy division of the Citra Metro Group, a leading group of companies headquartered in Indonesia involved in Energy, Technology and Telecommunications, to supply its EGT for a 12 MWe power plant in Hanoi, Vietnam. Under the MOU, CITRA considers EQTEC as the exclusive technology supplier of the 12 MWe gasification plant for the 12 months from the date of the MOU. This project will give the Company the opportunity to monetise part of the assets held in Newry. The customer has envisaged the signature of the Power Purchase Agreement ("PPA") and issue of permits by authorities in Q3 2018, with construction potentially starting in Q4 2018.

Expected turnover for EQTEC is in the range of €20 - €22 million for the gasification plant from an estimated €70 million total investment by the customer in this waste-to-energy facility.

Brooke Energy Project, a project in the UK

The Usk Project (previously known as Zebec Energy project), located in the municipality of Usk, Wales, is for a facility which will have a capacity to process ca. 42,000 tonnes of wood waste per year and a power output of 6.4 MWe. Early in 2018 the Company was informed by Brooke Energy, Ltd ("Brooke") that the Usk Project in south-east Wales is now to be built and operated by a consortium led by Brooke, a company that builds, operates and manages biomass fuelled power plants.

EQTEC renewed its agreements with the new operator of the project and in March 2018 announced it had signed an MOU with the consortium containing Brooke, RAFAKO, SA as EPC contractor and EXERGON as technical consultant.

Under the terms of the MOU, EQTEC will sell its patented EQTEC Gasifier Technology to RAFAKO who is the EPC contractor for the whole power plant and will exclusively use its proprietary EGT for the gasification and gas cleaning process. The Usk site already has in place gas engines, a biomass drier, absorption chiller and grid connection among other equipment and the new owner has chosen EGT to complete the project. The financial close and start of the project is now expected in Q1 of 2019.

In addition, EQTEC, together with its partners RAFAKO and EXERGON, is working to deliver a solution for a second project in Brooke Energy's pipeline. The Company will update the market as appropriate on developments regarding this second project.

Reliable projects, two projects in the UK

During 2018, EQTEC and Energy China have been working on the engineering of a revised scheme for the application of EGT coupled to a steam turbine instead of the previous scheme of coupling to a gas engine. The shift to a steam turbine is because initial indications show an increase in the projected returns of the project. A future benefit of this revised scheme is that the additional engineering work will enable the Company to compete in a wider range of projects. There has been a delay on the projects due to the change of configuration of the power plants. The Company now expects to conclude the contracts and start construction in Q1 2019.

Catfoss projects

In the longer term, EQTEC has two earlier stage projects, Catfoss Newcastle and Renewables (Catfoss) Hull, in the pipeline in conjunction with Energy China. These projects will be developed at a later stage.

Serbia and Croatia

The Company has previously stated that it had been approached with proposals for a number of projects in Serbia and together with a local partner in the region developed an advanced project pipeline in Croatia. The Company has decided to review its allocation of resources to these potential projects and to develop them at a slower pace for the time being.

South East Asia

The Company had previously notified that it was developing a pipeline of projects in Thailand. The Company has recently expanded its vision to include all of South East Asia. EQTEC's recent signing of an MOU with PT Citra, who operate throughout South East Asia, for a project in Vietnam supports the view that there is potential for more projects in this region.

Proven Technology

Eqtec Iberia was formed in 1997 in Barcelona to focus on a range of clean energy gas projects. The Group's development team has created an industry leading "bubbling fluidised bed" gasification technology which provides clients with "green" renewable gas from biomass or commercial and domestic waste processed as solid recovered fuel/refuse derived fuel (SRF/RDF).  The use of EGT allows energy generation through traditional steam boilers or more efficiently through gas reciprocating engines.

The Company has protected IP with a suite of patents covering the most valuable and relevant parts of the technology.  With over 20 years of knowledge and experience, EQTEC is well placed to provide its EGT to commercial waste-to-energy projects. EQTEC has successfully built and commissioned EQTEC Gasifier Technology for different projects and these sites have amassed more than 150,000 working hours.

EQTEC has developed a robust, modular standardised model that can be scaled to client waste needs and this model is aimed at giving capital cost savings to clients along with scalability and flexibility.

R&D

R&D has always been a key activity for EQTEC. Together with the Group's partners, the University of Lorraine (France) and the University of Badajoz (Spain), EQTEC has concluded the adaptation of two pilot gasification facilities with its EGT to be able to use RDF and a wider range of feedstocks. As a result, the Group will now have the ability to offer customers the possibility of testing a given feedstock and monitoring the behaviour of EGT in a real environment.

Waste Industry

EQTEC is in a position to work with biomass waste products or with commercial and domestic waste processed as SRF/RDF.  The use of waste as a fuel source for gasification is a double win.  It helps tackle the global waste problem and provides a much-needed energy source to supply local power markets.

The system can also provide a combined heat and energy plant if it is co-located with a heat demand.  These further boost efficiency rates above simple energy projects.

The UK generates around four million tonnes per annum of RDF/SRF, of which more than three million tonnes per annum are exported to continental Europe to be used as fuel to produce heat and power.   This gives an indication of the potential size of the market open to EQTEC's technology in the UK.  Based on the Group's average project size, EQTEC could potentially build as many as 20 gasification power plants in the UK alone.

Acquisition of Eqtec Iberia SL

The acquisition of the entire issued share capital of EQTEC Iberia was successfully completed on 28 December 2017. EQTEC Iberia was 66.99 percent owned by EBIOSS Energy SE, which at 28 December 2017 also held 50.03 percent of the share capital of EQTEC plc. The total consideration for the acquisition was £14 million which was satisfied by the issue of Ordinary Shares in the Company. As of today's date, EBIOSS Energy SE holds 50.06% of the issued share capital of EQTEC plc.

Financial Review

For the six months to 31 December 2017 (and prior to the acquisition of Eqtec Iberia SL), the Company reported a loss of €6.002 million compared to a loss of €1.792 million for the year to 30 June 2017. The increased loss is after taking into account an impairment provision of €4.985 million on equipment and assets held in the Company's Newry project. EQTEC has taken the decision in principle to sell these assets for approximately €4 million as part of the equipment for the proposed PT CITRA project in Vietnam leading to possible cash flows arising from these assets earlier than anticipated.

Administrative costs for the six-month period were €0.788 million (year to 30 June 2017: €1.007 million). The significant driver of this comparative increase was costs associated with the acquisition including employee rationalization costs.

The Group had Net Debt at 31 December 2017 of €2.7 million (30 June 2017: €3.2 million). The Net Debt to Equity Ratio fell to 13% from 75% at 30 June 2017 as a result of the acquisition of Eqtec Iberia SL for shares.

At the period end, Group cash was €1.8 million (30 June 2017: €0.3 million) reflecting the net proceeds from the equity placing made as part of the re-admission of the enlarged group's shares to the AIM Market offsetting Group administrative costs, and a significant portion of the costs incurred as a result of the acquisition and the re-admission to the AIM Market.

After the acquisition, the Group had Net Assets of €16.6 million at 31 December 2017 compared to €5.7 million at 30 June 2017.

Cash management and cost control remain key priorities for the Company and the Board believes it now has an appropriate platform which will support the accelerated growth of the business over the coming years without any other material increases in central administrative costs apart from those reflecting the establishment of the new Board.

Outlook

EQTEC is making good progress and 2018 is shaping up to be a promising year for the Group.  Management expects to sign contracts and subsequently start design and construction of at least one waste-to-energy gasification facility in the UK as well as another project overseas with a total capacity of ca. 18.5 MWe.  These two projects are in a well-advanced stage of negotiations with the clients and the EPC contractors.

In addition, the Company has recently started work together with Cobra on two identified projects and negotiations are ongoing to obtain exclusivity over these. The total power of both projects is ca. 35 MWe. EQTEC is also working with different partners at a set of three projects in France and two projects in California (USA), with a total power of the projects of ca. 8.5 MWe.

EQTEC also expects to start the manufacturing activities in its ongoing project in Poland later this year, where together with the Group's partners at the POLYGEN Consortium, EQTEC aims to produce bio - Synthetic Natural Gas (bioSNG) in 2019.  This will open a new vast market opportunity for the Company's EQTEC Gasifier Technology which will be used not only to produce syngas on a power and heat facility but also to produce clean and renewable fuels such as bioSNG, which will be injected into the grid.

 

EQTEC plc 

Consolidated statement of profit or loss

for the financial period ended 31 December 2017

		6 months ended	12 months ended
	Notes	31 Dec 17	30 Jun 17
		€	€
Revenue		20,200	40,762
Cost of sales		-	-
Gross profit		20,200	40,762
Operating expenses
Administrative expenses		(778,006)	(1,007,363)
Impairment of property, plant and equipment		(4,984,561)	(180,640)
Impairment of amounts due under construction costs		-	(151,722)
Foreign currency gains		9,906	42,096
Operating loss		(5,732,461)	(1,256,867)
Finance costs and income		(271,398)	(559,978)
Loss before taxation		(6,003,859)	(1,816,845)
Income tax		-	-
Loss for the period from continuing operations		(6,003,859)	(1,816,845)
Profit for the period from discontinued operations		1,590	24,575
LOSS FOR THE FINANCIAL PERIOD		(6,002,269)	(1,792,270)
Loss attributable to:
Owners of the company		(3,330,090)	(1,590,914)
Non-controlling interest		(2,672,179)	(201,356)
		(6,002,269)	(1,792,270)

		6 months  ended	12 months  ended
		31 Dec 17	30 Jun 17
		€ per share	€ per share
Basic loss per share:
From continuing operations	2	(0.009)	(0.014)
From continuing and discontinued operations	2	(0.009)	(0.013)
Diluted loss per share:
From continuing operations	2	(0.009)	(0.014)
From continuing and discontinued operations	2	(0.009)	(0.013)

EQTEC plc 

Consolidated statement of other comprehensive income

for the financial period ended 31 December 2017

		6 months ended	12 months ended
		31 Dec 2017	30 June 2017
		€	€
Loss for the financial period		(6,002,269)	(1,792,270)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Exchange differences arising on retranslation
of foreign operations		(92,774)	(389,829)
		(92,774)	(389,829)
Total comprehensive loss for the financial period		(6,095,043)	(2,182,099)
Attributable to:
Owners of the company		(3,381,312)	(1,815,266)
Non-controlling interests		(2,713,731)	(366,833)
		(6,095,043)	(2,182,099)

EQTEC plc 

Consolidated statement of financial position

At 31 December 2017

		31 December		30 June
		2017		2017
ASSETS		€		€
Non-current assets
Property, plant and equipment		4,468,180	9,464,911
Intangible fixed assets		16,051,766	-
Other financial investments		18,934	-
Deferred taxation		658,731	-
Total non-current assets		21,197,611	9,464,911
Current assets
Inventories		167,124	-
Trade and other receivables		499,264	293,482
Cash and cash equivalents		1,804,943	286,769
		2,471,331	580,251
Assets included in disposal group classified as held for resale		1,309,633	1,344,503
Total current assets		3,780,694	1,924,754
Total assets		24,978,575	11,389,665
EQUITY AND LIABILITIES
Equity
Share capital		18,724,196	17,563,409
Share premium		44,574,164	28,678,913
Retained earnings/(deficit)		(45,335,750)	(41,954,438)
Equity attributable to the owners of the company		17,962,610	4,287,884
Non-controlling interests		(1,335,784)	1,377,947
Total equity		16,626,826	5,665,831
Non-current liabilities
Borrowings		3,891,080	893,622
Deferred Tax		33	-
Total non-current liabilities		3,891,113	893,622
Current liabilities
Trade and other payables		2,766,985	1,143,755
Borrowings		646,857	2,606,203
		3,413,842	3,749,958
Liabilities included in disposal group classified as held for resale		1,046,794	1,080,254
Total current liabilities		4,460,636	4,830,212
Total equity and liabilities		24,978,575	11,389,665

EQTEC plc 

Consolidated statement of cash flows

for the financial period ended 31 December 2017

		6 months ended	12 months ended
		31 Dec 2017	30 June 2017
		€	€
Cash flows from operating activities
Loss for the financial period		(6,003,859)	(1,816,845)
Adjustments for:
Depreciation of property, plant and equipment		-	24
Impairment of property, plant and equipment		4,984,561	180,640
Impairment of amounts due from customers under construction contracts		-	151,722
Unrealised foreign exchange movements		(123,923)	20,706
Operating cash flows before working capital changes		(1,143,221)	(1,463,753)
Decrease/(Increase) in:
Amounts due from customers under construction contracts		-	(875)
Trade and other receivables		145,475	(158,014)
Increase in:
Trade and other payables		267,161	206,464
Cash used in operating activities - continuing operations		(730,585)	(1,416,178)
Finance costs		271,398	559,978
Net cash used in operating activities - continuing operations		(459,187)	(856,200)
Net cash generated from operating activities - discontinued operations		49,820	124,298
Cash used in operating activities		(409,367)	(731,902)
Cash flows from investing activities
Net cash inflow in acquisition of subsidiaries		13,728	-
Amounts advanced to related parties		(60,000)	-
Net cash (used in)/generated from investing activities - continuing operations		(46,272)	-
Net cash generated from investing activities - discontinued operations		3	11
Net cash (used in)/generated from investing activities		(46,269)	11
Cash flows from financing activities
Proceeds from borrowings		596,597	293,000
Loan issue costs		(31,266)	(33,750)
Proceeds from issue of ordinary shares		1,816,761	1,142,690
Share issue costs		(274,336)	(259,351)
Interest paid		(84,475)	(206,081)
Net cash generated from financing activities - continuing operations		2,023,281	936,508
Net cash used in financing activities - discontinued operations		(61,584)	(125,864)
Net cash generated from financing activities		1,961,697	810,644
Net increase in cash and cash equivalents		1,506,061	78,753
Cash and cash equivalents at the beginning of the financial period		402,402	323,649
Cash and cash equivalents at the end of the financial period		1,908,463	402,402
Cash and cash equivalents included in disposal group		(105,138)	(116,899)
Cash and cash equivalents for continuing operations		1,803,325	285,503

EQTEC plc 

Extract from the notes to the consolidated financial statements

for the financial period ended 31 December 2017

1.       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 2017 for all periods presented as issued by the International Accounting Standards Board.

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 periods presented in these consolidated financial statements.

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 2017 for all periods presented as issued by the International Accounting Standards Board and Irish Statute comprising the Companies Act, 2014.

The Group incurred a loss of €6,002,269 (12 months ended 30 June 2017: €1,792,270) during the 6-month period ended 31 December 2017 and had net current liabilities of €679,942 (30 June 2017: €2,905,458) and net assets of €16,626,826 (30 June 2017: €5,665,831) at 30 June 2017. 

The Directors have considered carefully the financial position of the Group and, in that context, have prepared and reviewed financial forecasts to estimate the likely cash requirements of the Group over the next 12 months.  The Group continues to invest capital in developing and expanding its pipeline of waste to energy projects. The nature of the Group's business model means that the sales and project pipeline depend upon counterparties commissioning and financing major projects, the timing of which is subject to many uncertainties and is not under the Company's control. This implies that the timing of funds generated from projects can be difficult to predict. The forecasts which Management have prepared include certain assumptions with regard to future funding from third parties the costs of business development, overheads and the timing and amount of any funds generated from developments.

The Company is currently concluding legally binding agreements with a number of parties for the provision of a funding package for a minimum of £2 million. The validity of the going concern basis is dependent upon the successful completion of the proposed financing to fund the working capital needs of the Group and the continued development of its near-term sales pipeline. After making enquiries and considering the matters referred to above, the Directors are highly confident that the finance will be secured and the Group will have adequate resources to continue in operational existence for the foreseeable future.

For these reasons the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

EQTEC plc 

Extract from the notes to the consolidated financial statements

for the financial period ended 31 December 2017

2.	LOSS PER SHARE	6 months	12 months
		ended 31	ended 30
		Dec 2017	Jun 2017
	Basic loss per share	€ per share	€ per share
	From continuing operations	(0.009)	(0.014)
	From discontinued operations	-	0.001
	Total basic loss per share	(0.009)	(0.013)
	Diluted loss per share
	From continuing operations	(0.009)	(0.014)
	From discontinued operations	-	0.001
	Total diluted loss per share	(0.009)	(0.013)

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

		6 months	12 months
		ended 31	ended 30
		Dec 2017	Jun 2017
		€	€
	Loss for year attributable to equity holders of the parent	(3,330,090)	(1,590,914)
	Profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations	1,590	24,575
	Losses used in the calculation of basic loss per share from continuing operations	(3,331,680)	(1,615,489)
	Weighted average number of ordinary shares for
	the purposes of basic loss per share	378,767,831	118,378,906
	Weighted average number of ordinary shares for
	the purposes of diluted loss per share	378,767,831	118,378,906

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.

		31 Dec 2017	30 June 2017
	Share warrants in issue	55,486,204	39,088,960
	Convertible loans in issue	10,000,000	10,000,000
	Total anti-dilutive shares	65,486,204	49,088,960

EQTEC plc 

Extract from the notes to the consolidated financial statements

for the financial period ended 31 December 2017

2.

LOSS PER SHARE - continued

Events after the period-end

As disclosed in Note 3, 74,475,000 Ordinary Shares were issued on 26 April 2018 as part of a process to convert debt held by the Company. If these shares were in issue prior to 31 December 2017, 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 12,412,500 (assuming the shares were issued in December 2017).

As disclosed in Note 3, 62,333,333 Ordinary Shares were issued on 31 May 2018 as part of a process to convert debt held by the Company. If these shares were in issue prior to 31 December 2017, 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 10,388,889 (assuming the shares were issued in December 2017).

3.       EVENTS AFTER THE BALANCE SHEET DATE

Loan Facilities


The Company announced on 19 January 2018 that it had made a partial repayment of £378,882 on its Secured Loan Facility ("SLF"), which comprises a five-year term loan of £1,000,000 at 15% per annum fixed rate of interest. The SLF, commencing in 2015, was repayable in full in July 2020. The Company, with the agreement of the lender had decided to repay £378,882 of capital and £2,958 in accrued interest to the lender, earlier than scheduled, in order to reduce the cost of debt to the Group. The remaining balance of £621,118 is repayable in July 2020.

Unsecured Convertible Loan Note Facility

On 28 February 2018, the Company announced that it had agreed an Unsecured Convertible Loan Note facility of up to £7.5 million ("Loan Notes") with one investor ("the Investor") to help accelerate its growth strategy. The proceeds of the Loan Notes were to be used to execute and accelerate EQTEC's growth strategy. In addition, the Company would allocate the proceeds of the issue of the Loan Notes towards furthering its existing project portfolio, to avail of possible investment opportunities and for general working capital.

The issue of the first tranche of Loan Notes having an aggregate principal amount of £1.5 million was completed and the Company received subscription proceeds of £1,350,000 for the issue.

On 16 March 2018, the Company announced that the Board of Directors has decided not to proceed with any further draw down amounts under the Unsecured Convertible Loan Note Facility Agreement of up to £7.5 million ("Loan Notes"). This decision not to draw down further on the Loan Note was taken by the Company in light of the negative market sentiment and share price reaction that followed the convertible loan note issue. It also received clear indications from the loan note investor of an unwillingness to proceed with further tranches under the circumstances. 

On 19 April 2018, the Company received a conversion notice pursuant to the Unsecured Loan Note Facility for the principal amount of £150,000 to be converted at 0.4p per share into 37,500,000 new ordinary shares in the Company. These shares were allotted on 26 April 2018.

EQTEC plc 

Extract from the notes to the consolidated financial statements

for the financial period ended 31 December 2017

3.       EVENTS AFTER THE BALANCE SHEET DATE - continued

Unsecured Convertible Loan Note Facility - continued

On 26 April 2018, the Company announced that it had agreed with EBIOSS Energy SE ("EBIOSS"), its major shareholder, to convert a receivable owned by EBIOSS in the amount of £147,900 into 36,975,000 ordinary shares in the Company at a conversion price of 0.4p.

On 23 May 2018, the Company announced that, it had agreed with the Investor a partial redemption of the Loan Notes amounting to £157,500 to be paid immediately. This amount will be the initial payment ahead of the full redemption of the remainder of outstanding Unsecured Convertible Loan Notes ("UCLN"). Additionally, the Investor has also agreed, on full redemption of the remaining UCLN, to give up any future or past equity rights in the Company in the form of warrants that were attached to the original UCLN.

On 24 May 2018 a conversion notice pursuant to the Unsecured Loan Note Facility announced on 28 February 2018 was issued for the principal amount of £100,000 to be converted at 0.3p per share into 33,333,333 new ordinary shares in the Company. The shares were allotted on 31 May 2018.

On 31 May 2018 the Company announced that it had agreed with EBIOSS Energy SE ("EBIOSS"), its major shareholder, to convert a receivable owned by EBIOSS in the amount of £87,000 into 29,000,000 ordinary shares in the Company at a conversion price of 0.3p.

The balance of the UCLN will be redeemed once final negotiations are completed between the Company and a new debt provider and a drawdown is made on the new facility.

 

END

 

 

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