Eqtec Regulatory News (EQT)

25 September 2019

EQTEC plc

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

Interim results for the six months ended 30 June 2019

EQTEC plc (AIM: EQT), the technology solution company for waste gasification to energy projects today announces its unaudited interim results for the six months ended 30 June 2019.

Operational Highlights

·; Business Strategy updated and refined to focus on three key verticals

1. Recovery of clean energy from biomass

2. Industry specific elimination of waste streams

3. Elimination of waste streams

·; Conditional MOU signed with COBRA Instalaciones Y Servicios and Scott Bros. Enterprises Limited to jointly develop the proposed 25MW Billingham Energy waste gasification and power plant

·; Framework agreement signed with Phoenix Biomass Energy Inc. ("Phoenix") to jointly develop biomass gasification power projects in the US, with five projects already identified, including North Fork and NAPA

·; Agreement with Phoenix to acquire a 19.99% ownership of North Fork Community Power LLC ("NFCP") for the development of a 2MW biomass project in North Fork, California for a consideration of US$2.5m to be satisfied by the supply of certain items of the existing equipment currently held at EQTEC's Newry site

Financial Highlights

·; Revenues of €1.56m (HY 2018: €0.55m)

·; Loss for the period of €1.96m (HY 2018 Loss: €1.87m)

·; Debt restructuring and placing announced in June 2019

- Debt for equity swap for, in aggregate, approximately £2.70m of existing debt, resulting in a reduction of approximately 60% in the Group's debt obligations

- Raised £0.75m with new and existing shareholders

- Implementation of a cost reduction programme to reduce cash costs through to July 2020

·; Net current assets at period end €0.53m (31 December 2018: net current liabilities of €2.65m)

·; Net assets at period end €15.80m (31 December 2018: €11.87m)

Post 30 June 2019 highlights

·; David Palumbo appointed to the Board in August 2019 and appointed as CEO in September 2019

·; Dr Yoel Aleman appointed to the Board as Chief Technical Director in August 2019

·; Cash cost reduction initiatives, including certain cash salary reductions for Directors and senior managers of the Company, currently being implemented

·; Equipment Sale and Services Contract with NFCP signed, with a sales value of €2.2m to EQTEC, payable in stages according to a schedule of certain agreed milestones, with the first payment being €880,000 on NFCP's financial close

·; NAPA Project SPV to be relocated to an adjacent site to accommodate a larger 2MW capacity power plant, with planning having already been resubmitted in July 2019. Planning permits are expected to be in place in Q1 2020 and construction and installation is intended to start immediately after receipt

·; SI Capital appointed as sole broker

The Chairman's Statement and the unaudited interim results for the six months ended 30 June 2019, which are contained below and form part of this announcement, include further important information and disclosures. The announcement should be read in its entirety.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). 

Enquiries

Notes to Editors

About EQTEC plc

EQTEC's business model involves sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its EQTEC Gasifier Technology ("EGT") and O&M services. EGT enables project developers to construct waste elimination plants and recover electrical and thermal energy from the waste streams.

EQTEC sources projects that have a local supply of waste in need of elimination and conversion. It builds relationships and brings together the developers, the waste owners, the building contractors and funders. It then supplies the energy recovery technology and provides engineering services to the projects.

EQTEC also seeks to provide Operation & Maintenance services to established operating co-generation plants generating recurring revenues over the life of the projects.

The Company is quoted on AIM and trades as EQT. Further information on the Company can be found at www.eqtecplc.com.

Chairman's Statement

Introduction

The Company presents the 2019 Interim Report, which gives an update on the activities of the Group over the six month financial period to 30 June 2019, as well as providing an update on post-period developments. 

The Company has made important progress on a number of fronts in the year to date and enters the remainder of the year with new leadership, a targeted and focused business strategy, a strengthened balance sheet together with reduced operating costs.

The progress being made in our key verticals, in particular in the US, is encouraging and we are focused on building on this foundation to become a reference technology partner across our key verticals.

During the financial period in question

·; The Company restructured its balance sheet in June 2019

- Debt for equity swap, resulting in a reduction of approximately 60% in the Group's debt obligations

- Raised £750,000 via a placing with new and existing shareholders

·; The Company continues to be able to draw down a further £1.08 million pursuant to the revised facility agreement with Altair Group Investment Ltd ("Altair"), entered into at the time of the balance sheet restructuring in June 2019 (the "2019 Altair Facility").

·; A conditional memorandum of understanding was signed with COBRA Instalaciones Y Servicios ("COBRA"), the Company's strategic partner for the development of the waste-to-energy projects, and Scott Bros. Enterprises Limited ("Scott Bros"), to jointly develop the proposed 25MW Billingham Energy waste gasification and power plant

·; A framework agreement was signed with Phoenix Biomass Energy Inc. ("Phoenix") to jointly develop biomass gasification power projects in the US, with five projects already identified; and

·; The Company entered into an agreement with Phoenix to acquire a 19.99% ownership of North Fork Community Power LLC ("NFCP") for the development of a 2 MW biomass project in North Fork, California for a consideration of US$2.5m, to be satisfied by the supply of certain items of the existing equipment currently held at EQTEC's Newry site

Post period end

·; The Company identified a series of cash cost reduction initiatives, including cash salary reductions currently agreed through to July 2020, which are being implemented and which the Board believes will lead to an eventual current annualised cash cost reduction of approximately 30%

·; In order to preserve cash and further align senior managements' interests with shareholders

- the Executive Team (consisting of Messrs Price, Madden, Aleman and Palumbo) agreed to take shares in lieu of 40% of their cash remuneration until 30 June 2020

- Thomas Quigley, Non-Executive Director, agreed to take shares in lieu of his entire cash remuneration until 30 June 2020

·; David Palumbo and Yoel Aleman were appointed to the Board in August 2019, with Mr Palumbo taking over the role of CEO in September 2019

·; Equipment Sale and Services Contract signed with NFCP, with a sales value of €2.2m to EQTEC, payable in stages according to a schedule of certain agreed milestones, with the first payment being €880,000 on NFCP's financial close

·; NAPA Project SPV relocated to an adjacent site to accommodate a larger 2MW capacity power plant, with planning having already been resubmitted in July 2019. Planning permits are expected to be in place in Q1 2020 and construction and installation is intended to start immediately after receipt of the permits

·; The Company appointed SI Capital as its broker in August 2019

Business Strategy

The Group's business model involves sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its EQTEC Gasifier Technology ("EGT") and provide Operation & Maintenance ("O&M") services. EGT enables project developers to construct waste elimination plants and recover electrical and thermal energy from the waste streams.

EQTEC sources projects that have a local supply of waste in need of elimination and conversion. It builds relationships and brings together the developers, the waste owners, the building contractors and funders. It then supplies the energy recovery technology and provides engineering services to the projects.

EQTEC also seeks to provide O&M services to established operating co-generation plants generating recurring revenues over the life of the projects.

We spent time during the period refocusing our business to ensure that we remain a progressive technology partner to those in the waste to energy sector.

Based on our extensive knowledge of the sector and our close relationships with operators, developers, contractors and funders we have focused our activities on three key verticals:

Recovery of Clean Energy from Biomass - this involves a focus on the recovery of energy from biomass feedstocks with projects in the 2.5-5 MW project size, primarily in the US, and in particular California which has a significant need for waste wood solutions, where we have entered into a framework agreement with Phoenix jointly develop biomass gasification projects ion the US.

Industry Specific Elimination of Waste Streams - this involves a focus on energy recovery, typically in the 2-10 MW project size, initially focusing on the elimination of olive pomace waste in the Mediterranean area.

Elimination of Waste Streams - this involves Municipal Solid Waste (MSW) and Refuse Derived Fuel (RDF) with a focus on projects typically in the 10-30 MW range, such as the proposed 25 MW Billingham Energy waste gasification and power plant announced in May 2019.

Current Trading and Prospects

The Group is concentrating on the three abovementioned verticals in the highly attractive waste to energy market. We have made progress in all three and specifically in the recovery of clean energy from biomass for projects in California.

Our framework agreement with Phoenix, which involves five identified projects, has already demonstrated progress for EQTEC, with the Group engaged to provide its proprietary EGT to Phoenix for two power plants in California. The design work for the first power plant in Napa County has already been completed and paid for and the Company has also agreed with Phoenix to acquire a 19.99% ownership of NFCP on financial close, for a consideration of US$2.5m to be satisfied by the supply of certain items of the existing EGT equipment currently held at our Newry site.

In September 2019, we entered into an Equipment Sale and Services Contract with NFCP, with a sales value of €2.2m to EQTEC, payable in stages according to a schedule of certain agreed milestones, with the first payment being €880,000 on NFCP's financial close, which is currently anticipated to occur in October 2019.

With over 90,000 hours of operational data at the Movialsa plant in Spain which eliminates olive pomace waste and recovers energy, we believe we are the reference gasification technology for this waste stream and believe we are well positioned to secure new projects. EQTEC is in continued discussions with a major Spanish business group, which is active in the sector, to partner and collaborate on potential projects in Spain. We are also seeking other partnerships in the space to supply technology and services to other olive pomace waste producers in the greater Mediterranean area.

Outlook

During the first half of 2019, we continued to make strong progress in developing our project pipeline in all targeted sectors and this has continued into the second half of the year with the signing of the NFCP Equipment Sales and Services contract, which, assuming financial close, will represent a significant milestone for the Group.

The focus of the Board will be on building on the foundation for growth, focusing on increasing sales in the context of a leaner organisation, continuing to solidify the capital structure of the Group and focus on funding requirements including establishing new funding structures for project finance and additional funds to continue with its activities and its planned development programme.

We look forward to keeping shareholders updated on key developments going forward.

Ian Pearson

Non-Executive Chairman

EQTEC plc

Unaudited Condensed Consolidated Income Statement

for the six months ended 30 June 2019

EQTEC plc

Unaudited Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2019

EQTEC plc

Unaudited Condensed Consolidated Statement of Financial Position

As at 30 June 2019

EQTEC plc

Unaudited Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2019 and the six months ended 30 June 2018

EQTEC plc

Unaudited Condensed Consolidated Statement of Cash Flows

for the six months ended 30 June 2019

EQTEC plc

Notes to the Unaudited Condensed Consolidated Financial Statements

for the six months ended 30 June 2019

1. CORPORATE INFORMATION

The unaudited interim condensed consolidated financial statements of EQTEC plc ("the Company") and its subsidiaries ("the Group") for the six months ended 30 June 2019 were authorised for issue in accordance with a resolution of the directors on 24 September 2019.

EQTEC plc is domiciled in the Republic of Ireland. The Company's registered office is at Building 1000, City Gate, Mahon, Cork T12 W7CV, Ireland. The Company's shares are quoted on the AIM market of the London Stock Exchange plc.

The principal activities of the Company and the Group involve sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its technology and Operation & Maintenance ("O&M") services. The Group sources projects that have a local supply of waste in need of conversion. It builds relationships and bring together the developers, the waste owners, the building contractors and funders and provides the technology and engineering services to the projects. EQTEC also seeks to provide O&M services to established operating co-generation plants generating recurring revenues over the life of the projects.

2. BASIS OF PREPARATION

The unaudited interim condensed consolidated financial statements are for the six months ended 30 June 2019 and are presented in Euro, which is the functional currency of the parent company. They have been prepared on a going concern basis in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. The condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2018, except for the adoption of new standards effective as of 1 January 2019. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The financial information contained in this interim statement, which is unaudited, does not constitute statutory accounts as defined by the Companies Act, 2014. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's financial statements for the year ended 31 December 2018. The financial statements of the Group were prepared in accordance with IFRSs as adopted by the European Union and can be found on the Group's website at www.eqtecplc.com.

The financial information for the six months ended 30 June 2019 and the comparative financial information for the six months ended 30 June 2018 have not been audited or reviewed by the Company's auditors pursuant to guidance issued by the Auditing Practices Board. The comparative figures for the financial year ended 31 December 2018 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and will be delivered to the Company's Registration Office in due course. The audit report on those statutory accounts was unqualified, with an emphasis of matter paragraph referring to a material uncertainty in relation to going concern.

The Group incurred a loss on continuing operations of €1,970,200 (1H 2018: €1,898,169) during the six-month period ended 30 June 2019 and had net current assets of €528,599 as at 30 June 2019 (31 December 2018: net current liabilities of €2,659,683).

Prior to the publication of the Group's report and accounts for the financial year ended 31 December 2018, the Company completed a restructuring of its balance sheet in June 2019, which included a debt for equity swap for, in aggregate, approximately £2.70m of its existing debt, resulting in a reduction of approximately 60% in the Group's debt obligations, together with a £0.75m fundraise with new and existing shareholders to provide general working capital and the implementation of a cost reduction programme to reduce ongoing cash costs.

The Company continues to be able to draw down a further £1.08 million pursuant to the revised facility agreement with Altair Group Investment Ltd ("Altair"), entered into at the time of the balance sheet restructuring in June 2019 (the "2019 Altair Facility").

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. Accordingly, the timing of revenues generated by the Company from its pipeline can be subject to change and 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.

After making enquiries and considering the matters referred to above, the Directors have gained reasonable assurance that 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. The validity of the going concern basis is dependent upon finance being available for the Group's working capital requirements and for the continued development and expansion of its pipeline of waste to energy projects so that the Group can continue to realise its assets and discharge its liabilities in the normal course of business.

3. BASIS OF CONSOLIDATION

The unaudited interim condensed consolidated financial statements include the financial statements of the Group and all subsidiaries. The financial period ends of all entities in the Group are coterminous.

4. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies used in preparing the unaudited interim condensed consolidated financial information are consistent with those disclosed in the Annual Report and Accounts of EQTEC plc for the six months ended 31 December 2018, except for the adoption of new standards and interpretations and revisions of existing standards as of 1 January 2019 noted below.

New/revised standards and interpretations adopted in 2019

The following amendments to existing standards and interpretations were effective in the period to 30 June 2019, but were either not applicable or did not have any material effect on the Group:

·; IFRS 16 Leases;

·; Amendments to IFRS 9 Prepayment Features with Negative Compensation;

·; Amendments to IAS 19 Plan Amendment, Curtailment or Settlement;

·; Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures;

·; Annual Improvements to IFRS Standards 2015-2017 Cycle - minor amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23;

·; IFRIC Interpretation 23 Uncertainty over Income Tax Treatment

The directors do not expect the adoption of the above Standards and interpretations to have a material effect on the interim condensed financial statements in the period of initial application.

5. ESTIMATES

The preparation of the interim condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of certain assets, liabilities, revenues and expenses together with disclosure of contingent assets and liabilities. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions of accounting estimates are recognised in the period in which the estimate is revised.

The judgements, estimations and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 December 2018.

6. SEGMENT REPORTING

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the products sold to customers. The Group's reportable segments under IFRS8 Operating Segments are as follows:

Power Generation: Being the development and operation of renewable energy electricity and heat generation plants; and

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

The Chief Operating Decision maker is defined as the Board of Directors.

Information regarding the Group's reportable segments is presented below.

The following is an analysis of the Group's revenue and results from continuing operations by reportable segment:

Revenue reported above represents revenue generated from external customers. Inter-segment sales for the six months ended 30 June 2018 amounted to €Nil (2018: €Nil). Included in revenues arising from sales in the Power Generation segment is €21,531 (2018: €20,697) arising from sales to an associated undertaking, GG Eco Energy Limited.

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 losses of jointly controlled entities, investment revenue and finance costs. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Other segment information:

In addition to the depreciation and amortisation reported above, impairment losses of €Nil (2018: €Nil) were recognised in respect of property, plant and equipment. These impairment losses were attributable in full to the Power Generation segment.

The Group operates in three principal geographical areas: Republic of Ireland (country of domicile), Spain 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:

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

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.

7. INCOME TAX EXPENSE

An income tax charge does not arise for the six months ended 30 June 2019 or 30 June 2018 as the effective tax rate applicable to expected total annual earnings is Nil as the Group has sufficient tax losses coming forward to offset against any taxable profits. A deferred tax asset has not been recognised for the losses coming forward.

8. LOSS/(EARNINGS) PER SHARE

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

Anti-dilutive Potential Ordinary Shares

The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted loss per share:

As set out in note 19 below, 15,151,515 ordinary shares were issued after the period end. If these shares were in issue prior to 30 June 2019, they would have affected the calculation of the weighted average number of shares in issue for the purposes of calculating both the basic loss per share and diluted loss per share by 2,525,253 (assuming the shares were issued in June 2019).

9. INVESTMENT IN ASSOCIATE UNDERTAKINGS

Details of the Group's interests in associated undertakings at 30 June 2019 are as follows:

Summarised financial information in respect of the group's interests in associate undertakings is as follows:

The investment in GG Eco Energy Limited is accounted for using the equity method in accordance with IAS 28.

10. GOODWILL

Included in intangible assets are the following amounts relating to goodwill:

Accumulated impairment losses

11. PROPERTY, PLANT AND EQUIPMENT

During the six-month period to 30 June 2019, the Group acquired assets at a cost of €15,391 (30 June 2018: €1,233).

12. INTANGIBLE ASSETS

During the six-month period to 30 June 2019, the Group acquired other intangible assets excluding Goodwill at a cost of €4,606 (30 June 2018: €Nil).

13. SHARE CAPITAL

During the six-month period to 30 June 2019, 1,272,610,068 shares (6 months to 30 June 2018: 136,808,333 shares) were issued for cash and to satisfy conversion options granted under various borrowing arrangements.

Included in current assets at 30 June 2019 is €791,759 (31 December 2018: Nil) with respect to amounts receivable from the issuance of shares on 28 June 2019.

14. BORROWINGS

During the six months ended 30 June 2019, the following occurred in relation to debt securities:

·; On 21 January 2019, EQTEC, Altair and Ecofinance (GLI) Limited ("Ecofinance") agreed to consolidate the £2.0 million of secured convertible loan notes ("CLNs") and the £1.0 million loan with Ecofinance into one facility with Altair as the lender (the "Altair Facility") and on 24 January 2019, the aggregate amount available for drawdown under the Altair Facility was increased to £3.5 million.

·; During the period, the Company repaid US$832,317 in principal and accrued interest to Riverfort Global Opportunities PCC Ltd (formerly Cuart Investments Fund) and YA II PN, Ltd (collectively, Riverfort Opportunities and YA II being the "Riverfort Lenders") under the US$10 million facility with the Riverfort Lenders as amended in October 2018 (the "Riverfort Facility").

·; On 24 May 2019, the Company issued 33,767,588 new ordinary shares to the Riverfort Lenders in settlement of US$300,362 of principal and accrued interest due in May under the Riverfort Facility.

·; On 3 June 2019, the Company announced that it had drawn down an additional £0.2 million under the increased Altair Facility.

·; On 28 June 2019, as part of a debt restructuring, the Company redeemed £2,026,118 of the outstanding principal owed by the Company under the Altair Facility and paid Altair an early redemption fee of £101,306, being 5 per cent. of the value of the debt redeemed, through the issue of the 644,673,909 new ordinary shares. Following the debt restructuring, £1,083,882 remains available for drawdown under the 2019 Altair Facility. The remaining, unredeemed amount of £795,000 under the previous Altair facility is now governed by the amended and restated secured 2019 Altair Facility.

·; On 28 June 2019, the Riverfort Lenders, pursuant to a further amendment to the Riverfort Facility, converted US$800,000 of its debt into 191,515,152 new ordinary shares and received a debt conversion fee of £31,600, being 5 per cent. of the value of the debt converted, to be satisfied by the issue of 9,575,757 new Ordinary Shares. Following the conversion, US$1,582,993 remains outstanding under the Riverfort Facility.

15. COMMITMENTS AND CONTINGENCIES

There have been no other changes in commitments and contingent liabilities since the end of the previous reporting period, 31 December 2018.

16. DISPOSAL GROUP CLASSIFIED AS HELD FOR RESALE AND DISCONTINUED OPERATIONS

The Group is in negotiations with certain parties with respect to the sale of its subsidiary, Pluckanes Windfarm Limited, which is involved in the generation of electricity through wind. The disposal is consistent with the Group's long-term policy to focus its activities as a technology solution company for waste gasification to energy projects. The disposal is expected to be complete in Q4 2019.

Consequently, assets and liabilities allocable to Pluckanes Windfarm Limited were classified as a disposal group. Revenues and expenses, gains and losses relating to the discontinuation of this subgroup have been eliminated from profit or loss from the Group's continuing activities and are shown as a single line item on the face of the statement of profit or loss. The combined results of the discontinued operations included in the loss for the financial period are set out below.

Cash flows generated by Pluckanes Windfarm Limited for the periods under review are as follows:

The carrying amount of assets and liabilities in this disposal group are summarised as follows:

17. RELATED PARTY TRANSACTIONS

During the period ended 30 June 2019, the Group realised €21,531 (2018: €20,687) from its associated undertaking, GG Eco Energy Limited, on consultancy fees associated with the generation of heat. Included in trade and other receivables at 30 June 2019 is €Nil due from GG Eco Energy Limited (31 December 2018: €Nil).

During the period ended 30 June 2019, the Group recharged costs of €30,000 (2018: €Nil) to EBIOSS Energy SE. Included in trade and other receivables at 30 June 2019 is €90,000 due from EBIOSS Energy SE (31 December 2019: €90,000).

During the period ended 30 June 2019, the Group incurred costs of £50,000 (€56,553) (2018: €Nil) from a director, Thomas Quigley, with respect to corporate advisory fees in relation to the Debt Restructuring. Included in trade and other payables at 30 June 2019 is €55,836 payable to Thomas Quigley (31 December 2019: €Nil). Post period end, the balance owed was settled in full via the issue of 15,151,515 new ordinary shares in the Company.

18. 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.

Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date. The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at period-end.

The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value:

·; trade and other receivables;

·; cash and cash equivalents;

·; trade and other payables; and

·; borrowings.

19. EVENTS AFTER THE REPORTING DATE

·; On 9 July 2019, the Company announced that, further to its announcement of 28 June 2019, certain Directors and senior managers of the Company had agreed certain cash reductions to their remuneration.

·; On 9 July 2019, the Company issued 15,151,515 new Ordinary Shares to a director, Thomas Quigley, trading as Cloudberry Corporate Advisers, in lieu of corporate advisory fees in relation to the debt restructuring announced on 28 June 2019.

·; On 3 September 2019, the Company announced that, further to the Company's announcement of 4 June 2019, it had signed an Equipment Sale and Services Contract with North Fork Community Project LLC ("NFCP"). As announced on 4 June 2019, the Company entered into a legally binding agreement to acquire a 19.99% interest in NFCP, a special purpose vehicle formed to build and operate a 2MW biomass project in North Fork, California (the "Project"). The Equipment Sale and Services Contract, with a sales value of €2.2 million to the Company, has now been executed by all parties, and is conditional on the Project achieving financial close.

20. APPROVAL OF FINANCIAL STATEMENTS

The condensed consolidated financial statements for the six months ended 30 June 2019, which comply with IAS 34, were approved by the Board of Directors on 24 September 2019.