TIDMEQT
RNS Number : 9466S
EQTEC PLC
22 March 2021
22 March 2021
EQTEC plc
("EQTEC", the "Company" or the "Group")
Trading Update
EQTEC plc (AIM: EQT), a world leading gasification technology
solutions company for sustainable waste-to-energy projects , is
pleased to provide the following trading update.
Highlights
-- Partnerships deliver 80%+ growth in pipeline
-- EQTEC development capital to accelerate deal conversion and enhance EBITDA
-- Financial forecasts indicate profitability in 2021
-- Innovation projects futureproof EQTEC technology leadership
-- Aries Clean Energy patent infringement complaint dismissed
Pipeline Growth
In line with its go-to-market strategy of working with local
partners in target markets, EQTEC has experienced considerable
growth in its non-contracted project pipeline, especially in
Europe, with notable, new interest from Asia, the Middle East and
Australia. Since the announcement of the Group's interim results in
September 2020, the number of opportunities has grown from 41 to
75, an increase of 83% over six months. Additionally, between July
2020 and February 2021, the Company added non-contracted tender
opportunities worth a total potential of EUR316 million for a total
potential pipeline value of EUR657 million. Over the same period
the Company sent full commercial offers worth a total of EUR246
million.
Of 14 pipeline opportunities prioritised by the Company for
immediate pursuit, 12 have been introduced through five partners.
This indicates that at the heart of EQTEC's growth is a core group
of go-to-market partners that bring local pipeline, local
relationships and local delivery team candidates to accelerate
entry and expansion into markets actively seeking newer and cleaner
solutions for waste management and energy production. These key
relationships are expected to assist the Company in driving rapid
pipeline conversion, quality project delivery and sustainable
operations that can prove the value and capability of EQTEC's
advanced gasification technology in a variety of environments, with
a variety of feedstock and offtake applications.
Adding to acceleration of deal conversion with these partners is
investment of development capital by EQTEC ("EQTEC Capital").
Injection of this investment at the earliest stage of deal pursuit
accelerates development, engineering and project planning work
toward Financial Close of the project and allows the Company to
direct and assure the quality of preparations and mitigation of
risks. Assuming a projected healthy return on capital deployed,
EQTEC Capital can also generate additional income and support
EBITDA. The Company's growth forecast for 2021 - 23 is built on
success with this approach.
-- Biomass-to-Energy. EQTEC has two plants currently under
construction. The Agrigas 1 agricultural waste project in Larissa,
Greece is establishing that country's first, advanced gasification
waste-to-energy plant. The North Fork Community Power forestry
waste project in California, USA is also under construction,
supported by extension through 2025 of the Bioenergy Market
Adjusting Tariff (BioMAT), which incentivises installation of
small-scale bioenergy renewable generators smaller than 5 MW.
Pipeline growth has been especially strong in Greece and Croatia
for biomass-to-energy projects, with additional opportunities
emerging in Italy, Spain, France and the USA. In Greece, partner
ewerGy GmbH is driving pursuit of the Nobilis project, for which
project delivery team and permissions are now in place and planning
application has been made for a grid connection. Over a dozen new
opportunities in Greece are identified for 2021 - 23 with a handful
of those targeted for 2021. In Croatia, the Company is finalising
legal execution of a joint venture with local partner Sense ESCO
d.o.o. that will pursue a portfolio of projects there including two
in 2021 and a further two in 2022.
-- RDF-to-Energy . The UK's first plant employing EQTEC
technology will be in Billingham, Teesside. The development is
advancing at pace, with the land purchase agreement completed,
additional planning approval achieved and pre-enablement works
underway. Additionally, the Company is pleased to confirm that the
deal is currently under review by Idex Group ("Idex"), a European
owner-operator of waste-to-energy infrastructure. Idex has become a
leading name in the renewable energy industry with over 40
energy-from-waste plants in France. Idex has succeeded in
anticipating and taking action in response to climate change and
has always taken a progressive stance with innovative technologies.
It is currently expected that, subject to completion of a final
review and requisite documentation, Idex would provide the
financing required for the construction phases and then own and
commercially operate the plant. Assuming the requisite funding is
provided, EQTEC expects to act as the co-developer on the project,
providing the design and core advance gasification technology and
retain the maintenance portion of the O&M contract.
Two other UK RDF projects are expected to progress in 2021 with
similar milestones to the Billingham project: one in Deeside,
Flintshire with co-developer Logik Developments Limited and one in
Southport, Merseyside with co-developer Rotunda Group Limited. The
Company also recently announced that it has agreed to collaborate
to explore an innovative, circular and sustainable waste-to-energy
solution for Toyota's engine manufacturing plant in Deeside.
Subject to Financial Close, construction is expected to commence at
Deeside and Southport in 2022.
-- Biomass-to-Bioenergy. The Company is pleased to report
progress toward application of its Advanced Gasification technology
capabilities to the production of biofuels including bio-SNG,
starting with opportunities in Ireland. Within the Company's
collaboration agreement with Carbon Sole Group Limited two
biomass-to-bioenergy plants are being developed, with one
additional site under review. These projects will focus on
production of advanced biofuels as well as electricity and heating.
Discussions with strategic technology partners are progressing for
joint development of biomass-to-biofuels solutions based on EQTEC
technologies. A planning application has been submitted for the
first project, in Shannon. Updates on technology partners and
planning progress are expected shortly.
-- Recommissioning EQTEC technology. The Company is excited to
announce that it is pursuing recovery of two plants built with
EQTEC technology where operations were previously suspended by
their owner-operators for lack of technical integration
capabilities . Not only does this demonstrate the Company's
commitment to ensuring its technology sustainably delivers value
for communities, but it will see EQTEC lead consortia to acquire,
repower, own and operate its technology in target markets such as
Italy and Croatia. The two plants are expected to be acquired in
2021, with the first acquisition nearing contract completion.
New partnerships continue to be established and the Company is
pleased to announce that it has entered into a Framework
Partnership Agreement (FPA) with MetalNRG plc (LON:MNRG)
("MetalNRG"), to develop biomass-to-energy, RDF-to-energy and
sustainable, clean energy projects in the UK and Europe. MetalNRG's
Special Purpose Vehicle, MetalNRG Eco Limited, will participate in
the equity of shovel-ready projects in EQTEC's pipeline. EQTEC will
advise the SPV technically, financially and operationally, becoming
MetalNRG's preferred technology partner. To strengthen and add
substance to the relationship, the Parties have agreed that when
MetalNRG finalises its prospectus, EQTEC will acquire GBP500,000 in
value of MetalNRG shares through the exchange of the same value of
EQTEC shares with MetalNRG, based on the respective share prices at
that time.
In terms of new markets, the Company has seen a significant
increase in new interest from Asia, the Middle East and Australia,
including direct approaches by potential delivery partners,
including EPC companies and their suppliers.
Financial outlook
The Company's annual results for the financial year ending 31
December 2020 will be announced in April 2021. Revenue for
financial year ending 31 December 2020 is expected to be broadly in
line with market expectations, and the Company expects to report a
loss not lower than EUR4 million before any potential one-off
adjustments.
For 2021, the Group is targeting considerable, contracted sales
growth from 6 - 8 projects across Europe, including new technology
collaborations and the Company's biggest project yet, the
RDF-to-energy facility at Billingham, UK, a single project valued
in excess of EUR30 million in engineering and technology sales to
the Group over the construction phase of the project. Invoiced
sales from each project, linked to milestones, will be realised as
revenue over the entirety of the respective project delivery
periods following Financial Close. Depending on the size of the
plant, the project delivery period may be anywhere from 12 to 36
months.
Revenues from inflight projects, new projects and gradual growth
from maintenance and consulting contracts are forecast to be
approximately EUR15 million in 2021, with positive EBITDA, which
would make 2021 EQTEC's first year of profitability.
Covid-19, Brexit and forest fires have all impacted the pace of
business. Whilst no deals dropped from the Company's pipeline, some
were delayed. Lockdowns, furloughing, home working and impacts from
domestic and international travel restrictions have prevented
physical site visits and adversely impacted logistics and progress
with documentation, financial approvals, planning or other
administration. These in turn added delays to progress of specific
projects. With operations in Ireland, the UK and Spain, the Group
has been well-placed to mitigate impacts of the Brexit process in
relation to political, administration and policy changes. However,
some delays were experienced with regard to timely approvals of
documentation, funding, planning or other administration. In
California, the added complication of forest fires, some of which
occurred on the boundaries of the project site, caused delays with
building work and further slowdowns with future projects in that
pipeline.
The Company anticipates that these impacts will subside through
2021 and therefore expect significant growth in the number, size
and types of deals that were closed in this period, with further
growth forecast again for 2022 and 2023, based on the breadth and
variety of deals in the Company's pipeline.
Innovation Projects
Even as EQTEC pursues projects to further demonstrate its
strengths with biomass-to-energy and RDF-to-energy, the Company
remains committed to keeping its position as a leader with advanced
gasification technology development. The Company expects to
co-invest with partners in a number of significant R&D projects
in 2021.
With long-standing partners, the University of Lorraine (France)
and the University of Extremadura (Spain), as well as with private
sector partners with whom the Company is currently finalising
collaboration agreements, it will pursue tests and research to
enable usage of new types of feedstock, including all variations of
RDF, sludge and plastics; as well as a range of joint technologies
for applications in biofuel, bio-SNG and green hydrogen.
Aries Clean Energy patent infringement complaint dismissed
EQTEC is pleased to announce that Aries Clean Energy LLC
("Aries") of Franklin, Tennessee, USA has withdrawn its patent
infringement complaint. The joint stipulation that the action be
voluntarily dismissed with prejudice was filed in the United States
District Court Eastern District of California on 19 March 2021 and
operates as a final determination on the merits of the case,
forbidding Aries from filing another lawsuit on the same grounds.
The with-prejudice dismissal will thus confer upon EQTEC a right to
continue producing, using, and selling the relevant EQTEC
technology without further harassment from Aries, either directly
or through suits against EQTEC's customers for using that
technology.
The move follows EQTEC's filing in December 2020 of a Motion to
Dismiss the lawsuit for failure to state a claim. EQTEC had
steadfastly asserted that the case lacked any merit, and that the
Company's technology did not infringe Aries' patents, particularly
given that EQTEC's own accused technology was actually prior art to
every patent claim that Aries asserted.
Since early in 2020, and well before Aries filed its complaint,
EQTEC had offered repeatedly to provide Aries' outside legal
counsel with EQTEC's technology specifications that would prove
non-infringement. Aries resisted that review through most of 2020,
continuously requesting that its own engineers and even its CTO be
given direct access to EQTEC's specifications, which are subject to
EQTEC's own confidentiality and intellectual property ("IP")
protections. Such sharing of IP under legal pressure was never
warranted and would not have been required even by the Courts. In
January 2021, Aries finally agreed to have its outside counsel
review EQTEC's IP under a strict nondisclosure agreement and Aries'
legal team completed that review in February. Following the review,
EQTEC received Aries' proposal to dismiss the case "with
prejudice," which EQTEC accepted.
EQTEC does not expect to give any further attention to the
matter.
David Palumbo, CEO of EQTEC, commented:
"I am pleased with our progress to date - not only because amid
a global pandemic crisis we grew the influence and reach of our
business by further developing partnerships, pipeline and impact of
EQTEC development capital, but also because of the increasing
operational and managerial discipline we established. The business
platform we now have in place is exactly what we set out to build
and has grown our reach and impact toward building more advanced
gasification plants in more markets with a greater, cleaner impact
on local communities and greater returns for our shareholders.
Supported by our strategic partners, we are better positioned than
ever for growth and profitability in 2021 and beyond."
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.
ENQUIRIES
EQTEC plc +353 21 2409 056
David Palumbo / Gerry Madden
------------------------------
Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
------------------------------
James Harris / James Dance / Jack Botros
------------------------------
Arden Partners - Broker +44 20 7614 5900
------------------------------
Paul Shackleton (Corporate) / Simon Johnson
(Sales)
------------------------------
Maitland/AMO - Communications & PR/IR adviser +44 20 7379 5151
------------------------------
James Benjamin / Rhys Jones EQTEC-maitland@maitland.co.uk
------------------------------
About EQTEC plc
As the world's leading experts in gasification for sustainable
waste-to-energy projects, EQTEC is building the future of the
sector, combining its technology innovation and engineering with
expert plant construction and project deliveries, to help drive the
global energy transition. EQTEC's proven, proprietary and patented
technology is at the centre of projects that aim to enhance local
communities and champion local businesses with an improved
environmental impact.
EQTEC designs and supplies advanced gasification solutions that
have a higher efficiency product offering and are modular and
scalable from 1MW to 30MW. EQTEC's versatile solutions are
independently proven to process over 50 different types of
feedstock, including municipal waste, agricultural waste, biomass
and plastics with no hazardous waste or toxic emissions . EQTEC's
solutions produce a uniquely pure high-quality synthesis gas
(syngas), that is capable of being used for the widest applications
in the creation of energy, hydrogen and biofuels.
EQTEC's proprietary technology design together with deployment
and maintenance capabilities mitigate the risks when using third
party equipment. EQTEC's Technology Integration capabilities enable
the Group to lead collaborative ecosystems that build sustainable
waste elimination and green energy infrastructure.
The Company is quoted on AIM (ticker: EQT) and the London Stock
Exchange awarded EQTEC the Green Economy Mark that 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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