TIDMEQT
RNS Number : 9417O
EQTEC PLC
06 February 2023
6 February 2023
EQTEC plc
("EQTEC", the "Company" or the "Group")
2022 Trading Update
EQTEC plc (AIM: EQT), a global technology innovator powering
distributed, decarbonised, new energy infrastructure through its
waste-to-value solutions for hydrogen, biofuels, and energy
generation is pleased to provide an update on its 2022 unaudited
results and its progress in 2023.
Highlights
-- 2022 revenues expected to meet guidance
-- Business plan adapted to meet changing market conditions
-- Three Market Development Centres progress steadily
-- Technology innovation and application reinforce EQTEC leadership
-- Strategic focus on Deeside and delegated approach to other projects
2022 unaudited results
The Company is pleased to report successful achievement of 2022
revenues in line with its guidance published on 01 December 2022.
The Company is undertaking its annual audit imminently and expects
to report its fully audited 2022 results in Q2 2023.
Strategic focus and business continuity
In response to changing market conditions in early 2022, the
Company updated its business plan to: focus its portfolio of active
projects on the strategically most important; reduce its project
development liabilities; and engage project developers and
owner-operators in actively leading development activities (the
"Focus Plan").
To ensure business continuity in the face of the economic
downturn and tighter capital markets, the Company agreed two loan
facilities, one as a convertible loan facility with the Company's
largest shareholder, Altair Group Investment Limited. The Company
also raised GBP3.75 million (before expenses) through the placing
of new ordinary shares, with the majority of the Board
participating.
Market Development Centres (MDCs)
The Company continued to prioritise development of its MDCs as
live, profitable reference plants that demonstrate a range of EQTEC
solutions for different business models for waste conversion and
syngas application. Three priority plants will demonstrate EQTEC
capabilities for Agricultural, Industrial and Utility business
models.
In Italy, the Company completed construction and started final
commissioning toward commercial operation of its Italy MDC. The
Company expects full operation of the plant imminently and already
has prospective, strategic partners and investors scheduling visits
to the plant.
In Croatia, the Group confirmed completion of manufacturing for
key components and continued progress with investors in and
operators of the recommissioned plant. The Company expects
financial close, commissioning and live operation of the plant in
2023.
In France, the Group confirmed the French state's approval of
its acquisition of an existing waste-to-energy facility with a
previously failed gasification technology and its intention to
retrofit the plant with its own technology. Since late 2022, the
Company has been making progress with a large infrastructure
investor and owner-operator toward acquiring the project and
recommissioning the facility. The Company expects live operation of
the plant in 2024.
Technology innovation and application
The Company made strong progress advancing the capabilities and
application of EQTEC technology, making three major announcements
in 2022.
First, the Company upgraded its R&D facility housed at the
Université de Lorraine ("UL") for steam-oxygen gasification, which
will allow trials for advanced applications such as hydrogen,
renewable natural gas ("RNG") and liquid biofuels. This gives the
Company a unique, applied R&D capability and will support its
growth into these new applications, with trials for prospective
customers and partners already planned for 2023.
Second, the Company received third-party validation of EQTEC
technology's suitability for clean conversion of contaminated
plastic waste into synthesis gas ("syngas"), resulting in a formal
agreement with a French industrial waste management company for
joint pursuit of contaminated waste-to-energy projects in France,
starting with an initial project already secured by the partner
company.
Third, the Company announced a formal collaboration with a
gas-to-liquids technology company, for joint development of an
integrated low-carbon waste-to-liquid fuels solution, with a
synthetic aviation fuels (SAF) reference plant already targeted by
the two companies for development.
Strategic project at Deeside, UK
At its Deeside, Flintshire, UK project, the Company progressed
design work through to completion of front-end engineering design
by EQTEC, with global engineering company Black & Veatch. EQTEC
and technology partner Anaergia, Inc. are together reviewing design
options for simplification and refinement of the financial model.
In parallel, the Company and its partners, including landowners
Logik Developments, are pursuing investors in the project. The
Company intends to sell the SPV and ensure the project secures full
funding in 2023.
Negotiations with the first prospective investor did not reach
mutually acceptable terms and on this basis the Company was forced
to adjust its revenue expectations for 2022 and issue new guidance.
Discussions with and pursuit of other investors continue, with both
owner-operators and financial investors expressing interest.
Other projects
In line with its Focus Plan, the Company packaged up two other
UK projects for funding, and delegated projects in USA and Greece
to development partners in those markets. The Group's partners in
the USA are pursuing COD in 2023 for the North Fork Community Power
(NFCP) plant in North Fork, California and financial close on the
Blue Mountain Electric Company (BMEC) project in Wilseyville,
California. The Group's joint venture in Greece, Synergy Projects
Limited, is pursuing financial close of a project in Livadia,
Boeotia.
Engaging strategic investors
To support acceleration of EQTEC's growth and addressing the
strong market demand for its solutions, the Company has launched a
project for engaging large-scale, strategic investors. The Company
has engaged a top-tier investment bank and is approaching large
owner-operators and other infrastructure investors toward securing
strategic investment at the project level for a pipeline of
projects with strategic priority.
The Company has in recent weeks led two visits with prospective
investors to the EQTEC installation at Mostos, Vinos y Alcoholes,
S.A. ("Movialsa") in Spain and other investors have expressed
interest in visiting the Italy MDC.
David Palumbo, CEO of EQTEC, commented:
"At a time when the world is finally accepting the challenges of
securing energy supply and handling a wide variety of waste types
cleanly and sustainably, we recognise the need to meet market
headwinds with even greater determination and dexterity than
before. EQTEC's technology is one of the best solutions for both
challenges. It addresses the baseload challenge, it supports energy
security and independence, and it is clean, proven and scalable.
The market opportunity is vast, our technology is at the core of
new energy infrastructure that can produce decarbonised power, heat
and fuels and it is ready to be deployed, profitably, now. The
challenges of 2022 have strengthened our resolve to deliver EQTEC
solutions to the world, and we are engaging bigger, more capable,
better financed businesses who are now driving the demand. In many
ways, 2022 was a catalyst for us in accelerating our strategy
toward working with stronger partners for development of projects
and plants that run on EQTEC solutions, and the progress we
unlocked in the second half of 2022 suggest that will bear fruit
for us in 2023."
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014, as it
forms part of United Kingdom domestic law by virtue of the European
Union (Withdrawal) Act 2018, as amended, and has been announced in
accordance with the Company's obligations under Article 17 of that
Regulation.
ENQUIRIES
EQTEC plc
David Palumbo / Nauman Babar +44 20 3883 7009
Strand Hanson - Nomad & Financial
Adviser
James Harris / Richard Johnson +44 20 7409 3494
------------------------
Panmure Gordon - Broker
John Prior / Hugh Rich +44 20 7886 2500
------------------------
Instinctif - Media & investor relations EQTEC@instinctif.com
enquiries +44 791 717 8920 / +44
Guy Scarborough / Tim Field 788 788 4794
------------------------
2022 performance and EQTEC's response
2022 revenues declined versus the prior year due to a slowdown
in project progress driven by the dramatically reduced capital
available to fund them. Geopolitical and post-pandemic economic
challenges combined to restrict both the number of prospective
investors and the size of their investments. Importantly, several
of the Company's projects require only project finance to proceed,
with many of them fully permitted, designed and otherwise packaged
for financial close.
The Company responded to these pressures by implementing a Focus
Plan, which reduced its portfolio of active projects to a small
number of near-term, strategically important projects including
Market Development Centres ("MDCs") in Italy, France and Croatia
and the Deeside project in the UK ("Focus Plan"). In addition to
reducing its workforce of external contractors supporting projects,
the Company redeployed several of its permanent staff, including
Company directors, onto critical projects. As part of the Focus
Plan, the Company also renegotiated key contracts, which released
it from large capital commitments. This reduced the Company's
liabilities and accelerated its business strategy toward becoming
exclusively a technology innovator and licensor by moving it away
from project development obligations.
Additionally, the Company undertook a number of actions in 2022
to ensure business continuity in light of the economic downturn and
tighter capital markets. On 29 March 2022, the Company announced
that it had agreed provision of a new unsecured loan facility for
up to GBP10 million with an initial advance of GBP5 million. On 14
July 2022, the Company announced that it had successfully raised
GBP3.75 million (before expenses) through the placing of shares.
This included subscriptions by five of six directors on the Board
of Directors and followed investment in shares earlier in the year
by CEO David Palumbo and COO Jeffrey Vander Linden. On 09 December
2022, the Company announced that it had entered into a loan
facility with Altair Group Investment Ltd., the Company's largest
shareholder. The facility provides the Company with an up to GBP2.0
million unsecured loan that may be paid back for all or part in
shares, at the Company's own discretion.
R&D and innovation
On 30 May 2022, the Company announced that the Université de
Lorraine ("UL") had released a report verifying that EQTEC's
Advanced Gasification Technology successfully converts contaminated
plastic waste into synthesis gas ("syngas") cleanly, stably and
efficiently. The tests were a final step for the Company in
formalising its collaboration with SEPS SAS ("SEPS"), a French
company specialising in the management and recycling of industrial
waste. The Company and SEPS will combine their technologies to
pursue a pipeline of projects, starting with an on-premises,
industrial facility in Haute-Garonne, France.
On 07 July 2022, the Company announced that it had signed a
collaboration framework agreement with CompactGTL Limited
("CompactGTL"), another technology innovator that specialises in
the production of synthetic fuels from gases, including syngas. The
Company and CompactGTL agreed to collaborate on design,
development, construction, and operation of waste-to-fuel projects
and to share commercial opportunities, starting with a
reference-demonstration project already identified by the
parties.
On 31 October 2022, the Company announced the successful
completion of steam-oxygen gasification tests that confirm the
suitability of EQTEC's syngas technology for advanced biofuels
production. The tests were performed following an upgrade by EQTEC
to the Laboratoire d'Etudes et de Recherche sur le Matériau Bois
("LERMAB") facility at UL that houses EQTEC's R&D technology.
The upgraded R&D capabilities are commercially significant for
the Company, as steam-oxygen gasification enables hydrogen,
renewable natural gas ("RNG") and other advanced biofuel
applications.
Additionally, the Company announced on 30 June 2022 that it had
selected global technology and engineering company Wood and its
VESTA technology as the technology partner for design and
deployment of a clean, waste-to-hydrogen solution at Southport
Hybrid Energy Park, Merseyside.
Market Development Centres
MDCs are live, profitable plants that demonstrate EQTEC
solutions, attract investment and incubate new demand. The Company
is working on at least three MDCs: in Italy, Croatia and
France.
On 22 December 2022, the Company confirmed mechanical and
electrical completion at its Italy MDC in Castiglione d'Orcia,
Italy, indicating closure of construction and start of
commissioning of the plant, including enhancements to the original
plant design that will further improve the profitability and
resilience of its business model. In mid-January 2023, the Company
and plant operations team ran the full gasification process on
manual controls and is now setting it up for automatic mode. As
part of its tests, the Company also produced biochar from the
plant.
On 08 September 2022, the Group confirmed that it had received
final approval from France's Ministère de l'économie, des finances
et de l'industrie ("MINEFI") to acquire an existing, 6.5MWe
waste-to-energy gasification plant in Villers-sous-Montrond,
France. The Company intends to retrofit the failed technology with
its own and position it as its France MDC. Once recommissioned, the
Plant is expected to be France's largest ever combined heat and
power ("CHP") gasification project, transforming c. 45,000 tonnes
of mixed and contaminated wood waste and refuse-derived fuel
("RDF") for export of clean electricity to the national grid, with
the option of increasing its production capacity in future. The
Company is making good progress with a large infrastructure
investor and owner-operator toward acquiring the project and
recommissioning the facility with EQTEC solutions and engineering.
The Company expects the France MDC to be operational in 2024.
On 29 September 2022, the Group confirmed that key components
had been manufactured to support upgrade of the Croatia MDC in
Belišće, Croatia to 1.5MWe from the original 1.2MWe. It further
confirmed that discussions with investors and operators for the
sale of the project were continuing productively. Those discussions
continued through to the end of the year and the prospective
investors have confirmed that they intend to visit the Italy MDC as
part of finalising their interest in the project. The Company
expects financial close, construction and commissioning of the
Croatia MDC in 2023.
Deeside, UK project
On 01 April 2022, the Company announced its appointment of Black
& Veatch ("B&V") to review its project at Deeside
Industrial Estate, Deeside, Flintshire, with a particular focus on
integration risks in light of the multiple technologies for the
plant, provided by EQTEC and technology partner Anaergia, Inc.
("Anaergia"). The proposed plant, aimed primarily at supplying
energy to Toyota Motor Company's ("Toyota") neighbouring Deeside
engine plant, would house a 2MW anaerobic digestion facility built
around Anaergia technology and a 9.9MWe syngas production facility
built around EQTEC technology.
The Company further confirmed on 01 April 2022 that, based on
successful completion of feasibility work for hydrogen production
from syngas expected in future phases of development, EQTEC had
received proposals from prospective partners for provision of
syngas-to-hydrogen technology.
On 11 July 2022, the Company announced its appointment of
B&V as front-end engineering and design ("FEED") partner with
the added remit of preparing an engineering, procurement and
construction ("EPC") cost estimate for power generation equipment
and systems. FEED work has now completed, and the Company is
working closely with Anaergia and other project partners to
consider its options for proceeding at the site, including
appointment of an EPC partner.
On 07 October 2022, Company executives joined Toyota's
celebration of 30 years of operation of their engine production
facility at Deeside. In addition to having the opportunity to
participate in celebration of the facility's performance and
contributions to the local communities, the Company heard
reiterated Toyota's expectations for the Deeside waste-to-energy
facility through the words of its President and CEO of Toyota
Europe, Matt Harrison, who said to the Deeside Toyota team, "On top
of your efforts for biodiversity and onsite renewable energy, you
are contributing to a new circular economy through your
collaboration with EQTEC....These efforts firmly place Deeside as
the front runner to be our first global carbon neutral plant
globally by 2025."
On 01 December 2022, the Company revealed that discussions with
a prospective, corporate investor had not reached mutually
acceptable commercial terms. This concluded a process and
commitment by the investor to the Company and development partners
Logik Developments Limited that had commenced in September 2022.
The Company further confirmed that it is responding to additional
interest in the Project from other, prospective investors.
As indicated in the Company's interim results published on 29
September 2022, the Deeside project would have been the single,
largest contributor to the Company's 2022 revenues. Given that,
stoppage of initial negotiations resulted in the greatest single
impact on the Company's revenue pursuits for the year and resulted
in the final update to its revenue guidance on 01 December
2022.
Other projects
UK
The Company announced on 24 June 2022 that Anaergia, also a
technology partner at the Company's project at Southport Hybrid
Energy Park in Southport, Merseyside, had agreed to be the EPC
partner for construction of the facility housing its technology and
to be the operations & maintenance ("O&M") partner for the
resulting plant running its technology.
On 21 September 2022, the Company announced that it had agreed
with Rotunda Group Limited ("Rotunda") a new agreement under which
Rotunda would retain the Anaerobic Digestion (AD) Project and
deploy Anaergia technology, releasing the Company from liabilities
for acquisition of project scope deploying non-EQTEC technology,
whilst securing all development services fees due to the Company
for the development of the AD plant in the form of a secured
Convertible Loan Note (CLN) with Shankley Biogas Limited. The
Company also entered into an Option to Lease with Form of Lease
agreed with Rotunda for the development of UK's first
waste-to-hydrogen plant, deploying EQTEC technology. The Company is
now working with Wood plc on the integrated technical solution
whilst seeking investment for the development of the project.
The Company also confirmed on 15 February 2022 that it had a
fully consented scheme for advanced thermal conversion at its
Haverton Hill, Billingham, Teesside site and that it was exploring
a range of additional solutions on the 17-acre site. The Company
has since finalised its strategy for a multi-technology,
waste-to-energy park with a complete review and renewal of the
financial model and business case for the up to 25 MWe / 34 MWth
RDF-to-electric power and thermal energy plant that would occupy
just under half of the land at the site. Following its confirmation
at its May AGM that it was developing financial models for a
variety of scenarios at the site, the Company can confirm that
additional uses considered for the site include a waste-to-hydrogen
facility, a battery storage park, a battery disposal facility and a
hydrogen refuelling station for lorries and buses in Teesside.
On 18 July 2022, the Company announced its selection of Petrofac
Limited ("Petrofac") as FEED contractor and potential EPC partner.
With multiple feedstock term sheets at attractive gate fees,
established grid connection and highly favourable power purchase
agreement, the Company is now pursuing investment into the site,
with optionality around its configuration around the anchor plant
with EQTEC technology. Once funded, the project is expected to move
quickly into FEED work with Petrofac. Petrofac has confirmed it
will support the Company's efforts with engagement of funding
candidates toward that end.
On 20 December 2022, the Group announced that it had executed
with Billingham site landowners Scott Bros. Enterprises Limited
("Scott Bros") an option for the grant of a lease in respect of the
project land, releasing the Company from liabilities for
acquisition of the project land and enabling it to focus on
funding, detailed design and financial close of the project.
USA
The Company is, with development partner Phoenix Biomass Energy
Inc. ("Phoenix") pursuing commissioning and start-up of the North
Fork Community Power LLC ("NFCP") plant and business, and financial
close of the Blue Mountain Energy Company LLC ("BMEC") project.
On 12 October 2022, the Company announced that, following many
months of delay due to a combination of local forest fires,
pandemic-related challenges in labour and supply chain and the
ensuing need to re-finance the project to address delays, NFCP had
entered into an agreement for financial restructuring with the
project lenders towards full funding of the project up to the
commercial operations date ("COD") of the North Fork, California
plant. It further revealed that the third-party funding had been
agreed through pre-negotiated, Chapter 11 bankruptcy arrangements.
The restructure project finance has enabled work to restart at the
site and the Company anticipates that NFCP will reach COD later in
2023. Three of the Company's executive directors will be on site
there in February, toward development of the plan for both
technical and business readiness of the plant.
Phoenix is also pursuing development of the BMEC project in
Wilseyville, California. In its interim results on 29 September
2022, the Company revealed that development funding had been
secured to support concept design work toward application for a
large, federal loan to support construction of the plant and that
additional term sheets had been received from both equity investors
and lenders. The Company understands that the concept design work
was completed, and the federal loan application submitted in
January 2023 and that a response is expected by early April 2023.
Subject to achievement of full funding by Phoenix, the Company is
told to expect by May 2023 a contract for detailed design and
technology sales.
Greece
The Company's joint venture Synergy Projects Limited ("Synergy
Projects Greece") is pursuing a project in Livadia, Boeotia. The
Company announced on 21 June 2022 that its partners ewerGy GmbH and
ECO Hellas M IKE had confirmed a new debt facility with Optima Bank
S.A ("Optima") to support construction of the plant, making it 80
per cent funded. The Optima facility is backed in part by the
Recovery and Resilience Facility for Greece. Since that time, due
diligence work has been completed by the appointed third parties
and Synergy Project Greece is pushing for release of funding, while
advancing with equity investors to provide the following 20% of
funding. The Company expects to start detailed design work on the
Livadia project later in 2023 with construction to start in the
second half of the year and COD in early 2024.
About EQTEC plc
As one of the world's most experienced thermochemical conversion
technology and engineering companies, EQTEC delivers waste
management and new energy solutions through best-in-class
innovation and infrastructure engineering and value-added services
to owner-operators. EQTEC is one of only a few technology providers
directly addressing the challenge of replacing fossil fuels for
reliable, baseload energy. EQTEC's proven, proprietary and patented
technology is at the centre of clean energy projects, sourcing
local waste, championing local businesses, creating local jobs and
supporting the transition to localised, decentralised and resilient
energy systems.
EQTEC designs, specifies and delivers clean, syngas production
solutions in the USA, EU and UK, with highly efficient equipment
that is modular and scalable from 1MW to 30MW. EQTEC's versatile
solutions process 60 varieties of feedstock, including forestry
waste, agricultural waste, industrial waste and municipal waste,
all with no hazardous or toxic emissions. EQTEC's solutions produce
a pure, high-quality synthesis gas ("syngas") that can be used for
the widest range of applications, including the generation of
electricity and heat, production of renewable natural gas (through
methanation) or biofuels (through Fischer-Tropsch, gas-to-liquid
processing) and reforming of hydrogen.
EQTEC's technology integration capabilities enable the Group to
lead collaborative ecosystems of qualified partners and to build
sustainable waste reduction and green energy infrastructure around
the world.
The Company is quoted on AIM (ticker: 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.
Further information on the Company can be found at www.eqtec.com
.
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