Exhibit 99.1

 

ESGL Holdings Limited

 

Unaudited Condensed Interim Consolidated Financial Statements

June 30, 2025 and June 30, 2024

 

  

ESGL Holdings Limited

Consolidated Statement of Financial Position

As at June 30, 2025 and December 31, 2024

 

						Unaudited
						June 30, 2025				December 31, 2024
		Note				US$				US$
ASSETS
Current assets
Cash and cash equivalents							141,804				634,882
Trade and other receivables			12				1,118,218				1,040,542
Inventories			13				453,860				440,194
Total current assets							1,713,882				2,115,618
Non-current assets
Property, plant and equipment, net			10				20,134,853				20,762,483
Intangible assets, net			11				3,389,962				2,977,311
Total non-current assets							23,524,815				23,739,794
Total assets							25,238,697				25,855,412
LIABILITIES
Current liabilities
Trade and other payables			16				5,172,836				4,449,950
Lease liabilities			15				239,551				221,254
Borrowings			17				3,929,917				4,319,182
Tax liabilities							67,100				92,211
Total current liabilities							9,409,404				9,082,597
Non-current liabilities
Lease liabilities (non-current)			15				2,024,345				1,926,702
Deferred tax liabilities			18				270,809				133,000
Total non-current liabilities							2,295,154				2,059,702
Total liabilities							11,704,558				11,142,299
Net assets							13,534,139				14,713,113
EQUITY
Share Capital			19				13,832				13,616
Accumulated losses							(103,186,391	)			(100,619,185	)
Other reserves							3,422,799				3,422,799
Share premium reserve			14				99,004,833				97,047,941
Exchange Reserves							(692,074	)			(123,198	)
Revaluation Surplus			14				14,971,140				14,971,140
Total equity							13,534,139				14,713,113

 

The accompanying notes form an integral part of these consolidated financial statements

 

 

ESGL Holdings Limited

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Financial

Periods ended June 30, 2025 and 2024

 

		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Revenue			2,716,369				3,487,879
Other income			465,604				282,213
Cost of inventory			(138,444	)			(78,366	)
Logistics costs			(446,806	)			(264,638	)
Depreciation of property, plant and equipment			(807,756	)			(781,394	)
Amortization of intangible assets			(604,652	)			(559,340	)
Employee benefits expense			(2,129,031	)			(1,049,897	)
Finance expense			(122,217	)			(147,128	)
Other operating expenses			(1,398,746	)			(1,212,273	)
Loss before income tax			(2,465,679	)			(322,944	)
Income tax expense			(101,527	)			(148,480	)
Net loss			(2,567,206	)			(471,424	)
Other comprehensive (loss)/income :			-
Items that will not be reclassified subsequently to profit or loss:
Net (loss)/surplus on revaluation of leasehold land and buildings			-				(186,684	)
Items that may be reclassified subsequently to profit or loss:
Exchange difference on revaluation of leasehold land and buildings			-				337,283
Foreign currency translation adjustments			(568,876	)			-
Total comprehensive (loss)/income			(3,136,082	)			(320,825	)
Loss per share			(0.07	)			(0.03	)

 

The accompanying notes form an integral part of these consolidated financial statements

 

 

ESGL Holdings Limited

Consolidated Statement of Changes in Equity for the Financial Periods ended June 30, 2025 and 2024

 

		Unaudited
		Share capital				Revaluation reserve				Exchange reserve				Share premium reserve				Other reserve				Accumulated losses				Total equity
			US$				US$				US$				US$				US$				US$				US$
2024
Beginning of financial year			10,892				14,971,140				(123,198	)			89,725,052				3,422,799				(99,985,928	)			8,020,757
Issuance of new shares			1,000				-				-				2,458,675				-				-				2,459,675
Share issuance expense			-				-				-				-				-				-				-
Loss for the year			-				-				-				-				-				(471,424	)			(471,424	)
Balance as of June 30, 2024			11,892				14,971,140				(123,198	)			92,183,727				3,422,799				(100,457,352	)			10,009,008
2025
Beginning of financial year			13,616				14,971,140				(123,198	)			97,047,941				3,422,799				(100,619,185	)			14,713,113
Balance			13,616				14,971,140				(123,198	)			97,047,941				3,422,799				(100,619,185	)			14,713,113
Issuance of new shares			216				-				-				1,997,660				-				-				1,997,876
Share issuance expenses			-				-				-				(40,768	)			-				-				(40,768	)
Movements in translation reserves			-				-				(568,876	)			-				-				-				(568,876	)
Loss for the year			-				-				-				-				-				(2,567,206	)			(2,567,206	)
Balance as of June 30, 2025			13,832				14,971,140				(692,074	)			99,004,833				3,422,799				(103,186,391	)			13,534,139
Balance			13,832				14,971,140				(692,074	)			99,004,833				3,422,799				(103,186,391	)			13,534,139

 

The accompanying notes form an integral part of these consolidated financial statements

 

 

ESGL Holdings Limited

Consolidated Statement of Cash Flows for the Financial Periods ended June 30, 2025 and 2024

 

						Unaudited
						June 30, 2025				June 30, 2024
		Note				US$				US$
Cash flows from operating activities
Loss before income tax							(2,465,679	)			(322,944	)
Adjustments for:
- Prepaid forward purchase agreement written-off							-				969
- Depreciation of property, plant and equipment			10				807,756				781,394
- Amortisation of intangible assets			11				604,652				559,340
- Interest income							(6	)			(3	)
- Interest expense			8				122,217				147,128
- Employee equity incentive plan							1,237,876				-
- Foreign exchange adjustment							(35	)			(191,391	)
Total adjustments							306,781				974,493
Changes in operating assets and liabilities :
- Trade and other receivables							(77,676	)			40,746
- Inventories							(13,666	)			(14,498	)
- Trade and other payables							722,885				(1,043,521	)
Net cash used in operating activities							938,324				(42,780	)
Cash flows from investing activities
Purchase of property, plant and equipment							(180,126	)			(38,697	)
Additions to intangible assets							(1,017,303	)			(653,849	)
Interest received							6				3
Net cash used in investing activities							(1,197,423	)			(692,543	)
Cash flows from financing activities
Proceeds from bank borrowings							-				747,197
Repayment of bank borrowings							(680,821	)			(1,691,453	)
Shares issuance							760,000				2,459,675
Shares issuance expense							(40,768	)			-
Repayment of underwriting fees							-				(600,000	)
Repayments of lease liabilities							(150,173	)			(143,228	)
Interest paid							(122,217	)			(147,128	)
Net cash (used in)/generated from financing activities							(233,979	)			625,063
Net decrease in cash and bank balances							(493,078	)			(110,260	)
Cash and cash equivalents
Beginning of the financial year							634,882				366,761
End of the financial period							141,804				256,501

 

The accompanying notes form an integral part of these consolidated financial statements

 

 

ESGL Holdings Limited

Consolidated Statement of Cash Flows for the Financial Periods ended June 30, 2025 and 2024

 

Reconciliation of liabilities arising from financing activities

 

		Unaudited
						Interest-
						bearing bank
		Lease				and other
		liabilities				borrowings					Total
		US$				US$					US$
At January 1 2024			2,166,806				5,778,479				7,945,285
Changes from financing cash flows:
Repayment of bank loans			-				(1,380,703	)			(1,380,703	)
Principal element of lease payments			(195,785	)			-				(195,785	)
Borrowing cost paid			(53,725	)			(296,420	)			(350,145	)
Total change from financing cash flows			(249,510	)			(1,677,123	)			(1,926,633	)
Other changes:
Exchange adjustments			(96,524	)			(78,594	)			(175,118	)
New lease			273,459				-				273,459
Interest expenses			53,725				296,420				350,145
Total other changes			230,660				217,826				448,486
At December 31, 2024			2,147,956				4,319,182				6,467,138
Beginning balance			2,147,956				4,319,182				6,467,138
Changes from financing cash flows:
Repayment of bank loans			-				(680,821	)			(680,821	)
Principal element of lease payments			(150,173	)			-				(150,173	)
Borrowing cost paid			(30,611	)			(91,606	)			(122,217	)
Total change from financing cash flows			(180,784	)			(772,427	)			(953,211	)
Other changes:
Exchange adjustments			266,113				291,556				557,669
Interest expenses			30,611				91,606				122,217
Total other changes			296,724				383,162				679,886
At June 30, 2025			2,263,896				3,929,917				6,193,813
Ending balance			2,263,896				3,929,917				6,193,813

 

The accompanying notes form an integral part of these financial statements.

 

 

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

 

1. General information

 

ESGL Holdings Limited

 

ESGL Holdings Limited (“ESGL” or the “Company”) was incorporated in the Cayman Islands on November 18, 2022. Following the successful completion of a business combination on August 3, 2023, ESGL listed on Nasdaq and is a publicly traded company. ESGL’s stock commenced trading August 4, 2023.

 

ESGL’s subsidiaries are as follows:

 

Environmental Solutions Group Holdings Limited

 

Environmental Solutions Group Holdings Limited is a holding company incorporated under the laws of the Cayman Islands as an exempted company with limited liability on June 14, 2022. The address of its registered office is 71 Fort Street, PO Box 500, George Town, Grand Cayman, KY1-1106, Cayman Islands. As a holding company with no material operations of its own, ESGH conducts all of its operations through its operating entity incorporated in Singapore, Environmental Solutions (Asia) Pte. Ltd.

 

Environmental Solutions Asia Holdings Limited (“ESAH”)

 

ESAH, a wholly-owned subsidiary of the ESGH, was incorporated on June 29, 2022 and domiciled in the British Virgin Islands with its registered office at Mandar House, 3rd Floor, Johnson’s Ghut, Tortola, British Virgin Islands.

 

Environmental Solutions (Asia) Pte. Ltd. (“ESA”)

 

ESA was incorporated and domiciled in Singapore, with its registered office at 101 Tuas, South Avenue 2, Singapore 637226. ESA is a waste management, treatment and recycling company involved in the collection and recycling of hazardous and non-hazardous industrial waste from customers such as pharmaceutical, semiconductor, petrochemical and electroplating companies.

 

ESG Chemicals Sdn. Bhd. (“ESGC”)

 

ESGC, a wholly owned subsidiary of ESA, was incorporated and domiciled in Malaysia, with its registered office at 07-01 Jalan Sagu 10, Taman Daya, 81100 Johor Bahru, Johor, Malaysia. Its principal activities include storing and distribution of circular products manufactured by ESA.

 

2.1 Basis of preparation

 

The consolidated financial statements of the Group have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB).

 

These financial statements have been prepared on a historical cost convention, except for leasehold land and buildings which are measured at fair value.

 

The preparation of financial statements in conformity with IFRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions.

 

The financial statements of the Group have been prepared on a going concern basis notwithstanding that the net current liabilities as of June 30, 2025 amounted to approximately US$7.7 million (December 31, 2024: US$7.0 million). As of June 30, 2025, the Group’s current assets were approximately US$1.7 million (December 31, 2024 :US$2.1 million) and its current liabilities were approximately US$9.4 million (December 31, 2024 :US$9.1 million).

 

 

2.	Significant accounting policies (continued)

 

2.1	Basis of preparation (continued)

 

The negative working capital was primarily attributable to higher trade payables and the classification of certain bank loan balances of approximately US$1.9 million as current liabilities as the relevant bank loan agreements allow the banks to demand immediate repayments even though they were not due for repayment within a year. To date, the Group has been able to service its loan repayments and there were no indications that the banks intend to recall the loans.

 

The Group’s ability to continue as a going concern is largely dependent on its ability to reduce operation costs and grow its revenue to fully utilize its production capacity as well as raising funds from the capital market. The Group successfully raised US$7.5 million via share issuance during the financial year ended December 31, 2024 and US$0.8 million in the first six months of 2025.

 

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

 

2.2 Basis of Consolidation

 

The financial statements are presented in United States Dollars (“US$”), which is the Group’s functional currency. All financial information presented in United States Dollars has been rounded to the nearest dollar, unless otherwise indicated.

 

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at June 30, 2025 and 2024. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Company the current ability to direct the relevant activities of the investee).

 

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:-

 

	●	Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
	●	Exposure, or rights, to variable returns from its involvement with the investee; and
	●	The ability to use its power over the investee to affect its returns.

 

The financial statements of subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases.

 

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

	●	The contractual arrangement(s) with the other vote holders of the investee;
	●	Rights arising from other contractual arrangements;
	●	The Company’s voting rights and potential voting rights.

 

The Company assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Company gains control until the date the Company ceases to control the subsidiary.

 

 

2.	Significant accounting policies (continued)

 

2.2	Basis of Consolidation (continued)

 

Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of the parent of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.

 

2.3 Revenue recognition

 

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

 

Revenue is recognized when the Group satisfies a performance obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the goods or services. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognized is the amount allocated to the satisfied performance obligation.

 

Revenue from contracts with customers

 

(a)

Rendering of services

 

Revenue from rendering of services is recognized when the entity satisfies the performance obligation at a point in time, generally when the significant acts have been completed and when transfer of control occurs, or for services that are not significant, transactions revenue is recognized as the services are provided. The Group’s primary service consists of collecting and disposing of industrial wastes for its customers.

 

(b)

Sale of goods

 

Revenue from sale of goods is recognized at a point in time when the performance obligation is satisfied by transferring a promised good to the customer. Control of the goods is transferred to the customer, generally on delivery of the goods (in this respect, incoterms are considered).

 

Other revenue

 

Interest income

 

Interest income is recognized using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or where appropriate, a shorter period.

 

Contract assets

 

The contract assets are for the Group’s rights to consideration for work completed but not billed at the reporting date on its contracts; costs incurred to obtain or fulfil a contract with a customer; and any impairment losses recognized in the reporting year. The contract assets are transferred to the receivables when the right to payment becomes unconditional.

 

 

2.	Significant accounting policies (continued)

 

2.4 Government grants

 

Grants from the government are recognized as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions.

 

Government grants receivable are recognized as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income.

 

Government grants relating to non-monetary assets are deducted against the carrying amount of the non-monetary assets.

 

2.5 Property, plant and equipment

 

(a)

Measurement

 

(i)

Property, plant and equipment

 

Property, plant and equipment other than leasehold land and buildings are initially recognized at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

 

Leasehold land and buildings are measured at fair value less accumulated depreciation and impairment losses recognized after the date of the revaluation. Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any revaluation surplus is credited to the property revaluation reserve in equity, except to the extent that it reverses a revaluation decrease of the same asset previously recognized in the Statement of Profit or Loss and Other Comprehensive Income, in which case the increase is recognized in the statement of profit or loss.

 

A revaluation deficit is recognized in the statement of profit or loss, except to the extent that it offsets an existing surplus on the same asset recognized in the asset revaluation reserve.

 

An annual transfer from the property revaluation reserve to accumulated losses is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the assets original cost. Upon disposal, any revaluation reserve relating to that particular asset being sold is transferred to retained profits.

 

(ii)

Components of costs

 

The cost of an item of property, plant and equipment initially recognized includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

 

(b)

Depreciation

 

Depreciation is calculated using the straight-line method to allocate depreciable amounts over the estimated useful lives as follows:

Schedule of property, plant and equipment depreciation, estimated useful lives 

			Useful lives
	Leasehold land and buildings		Over the lease term period ranging from 2 to 30 years
	Plant and equipment		3 to 5 years
	Machineries		2 to 10 years
	Renovation		5 years
	Motor vehicles		10 years
	Furniture and fittings		5 years

 

 

The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each reporting date. The effects of any revision are recognized in profit or loss when the changes arise.

 

Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use.

 

 

2.	Significant accounting policies (continued)

 

2.5	Property, plant and equipment (continued)

 

(c)

Subsequent expenditure

 

Subsequent expenditure relating to property, plant and equipment that has already been recognized is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognized in profit or loss when incurred.

 

(d)

Disposal

 

On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognized in profit or loss.

 

2.6 Intangible assets

 

Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss in the year in which the expenditure is incurred.

 

Intangible assets with finite useful lives are amortized over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

 

Amortization is calculated using the straight-line method to allocate depreciable amounts over the estimated useful lives of the assets. The estimated useful lives are as follows:

 Schedule of intangible assets depreciable, estimated useful lives 

			Useful lives
	Software		3 years

 

2.7 Borrowing costs

 

Borrowing costs are recognized in profit or loss using the effective interest method.

 

2.8 Impairment of non-financial assets

 

Intangible assets, property, plant and equipment and right-of-use assets are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired or when annual impairment testing for an asset is required.

 

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating units (“CGU”) to which the asset belongs.

 

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

 

The difference between the carrying amount and recoverable amount is recognized as an impairment loss in profit or loss.

 

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of accumulated depreciation) had no impairment loss been recognized for the asset in prior years. A reversal of impairment loss for an asset is credited to profit or loss in the period in which it arises.

 

 

2.	Significant accounting policies (continued)

 

2.9 Financial assets

 

(a)

Classification and measurement

 

The Group classifies its financial assets at amortized cost.

 

The classification of debt instruments depends on the Group’s business model for managing the financial assets as well as the contractual terms of the cash flows of the financial assets.

 

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

 

The Group reclassifies debt instruments when and only when its business model for managing those assets changes.

 

At initial recognition

 

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of the financial assets not a fair value through profit or loss, transactions costs that are directly attributable to the acquisition of the financial asset.

 

At subsequent measurement

 

Debt instruments are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt instrument that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in interest income using the effective interest rate method.

 

(b)

Impairment of financial assets

 

The Group recognizes a loss allowance for expected credit loss (“ECL”) on financial assets which are subject to impairment under IFRS 9 (including trade and other receivables). The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

 

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessments are done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

 

The Group always recognizes lifetime ECL for trade and other receivables. The ECL on these assets are assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings.

 

For all other instruments, the Group measures the loss allowance as equal to 12m ECL, unless there has been a significant increase in credit risk since initial recognition for which the Group recognizes lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

 

 

2.	Significant accounting policies (continued)

 

2.9	Financial assets (continued)

 

(b)

Impairment of financial assets (continued)

 

(i)

Significant increase in credit risk

 

In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

 

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

 

	●	An actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;
	●	Significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit spread, or the credit default swap prices for the debtor;
	●	Existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
	●	An actual or expected significant deterioration in the operating results of the debtor;
	●	An actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

 

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

 

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

 

(ii)

Definition of default

 

For internal credit risk management, the Group considers an event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collateral held by the Group).

 

Irrespective of the above, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

 

(iii)

Credit-impaired financial assets

 

A financial asset is credit-impaired when one or more events of default that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

 

	(a)	Significant financial difficulty of the issuer or the borrower;
	(b)	A breach of contract, such as a default or past due event;
	(c)	The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender(s) would not otherwise consider.

 

 

2.	Significant accounting policies (continued)

 

2.9	Financial assets (continued)

 

(b)

Impairment of financial assets (continued)

 

(iii)

Credit-impaired financial assets (continued)

 

(d)

It is becoming probable that the borrower will enter bankruptcy or other financial reorganization; or

 

(e)

The disappearance of an active market for that financial asset because of financial difficulties.

 

(iv)

Write-off policy

 

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over one year past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognized in profit or loss.

 

(v)

Measurement and recognition of ECL

 

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure to default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default representing the weights.

 

Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.

 

Where ECL is measured on a collective basis or for cases where evidence at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:

 

	●	Nature of financial instruments;
	●	Past-due status;
	●	Nature, size and industry of debtors; and
	●	External credit ratings where available.

 

The groups are regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

 

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortized cost of the financial asset.

 

(c)

Recognition and derecognition

 

Regular way purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell the asset.

 

Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

 

On disposal of a debt instrument, the difference between the carrying amount and the sale proceeds is recognized in profit or loss. Any amount previously recognized in other comprehensive income relating to that asset is reclassified to profit or loss.

 

 

2.	Significant accounting policies (continued)

 

2.10 Financial Liabilities

 

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the reporting date, in which case they are presented as non-current liabilities.

 

Borrowings are initially recognized at fair values (net of transaction costs) and subsequently carried at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

 

Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are presented as non-current liabilities.

 

Trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method.

 

(a)

Derecognition

 

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.

 

(b)

Offsetting of financial instruments

 

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

 

2.11 Leases

 

When the Group is the lessee

 

At the inception of the contract, the Group assesses if the contract contains a lease. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Reassessment is only required when the terms and conditions of the contract are changed.

 

Right-of-use assets

 

The Group recognizes a right-of-use asset and lease liability at the date at which the underlying asset is available for use. Right-of-use assets are measured at cost which comprises the initial measurement of lease liabilities adjusted for any lease payments made at or before the commencement date and lease incentive received. Any initial direct costs that would not have been incurred if the lease had not been obtained are added to the carrying amount of the right-of-use assets.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

 

Right-of-use assets are presented within “Property, plant and equipment”.

 

 

2.	Significant accounting policies (continued)

 

2.11	Leases (continued)

 

Lease liabilities

 

The initial measurement of a lease liability is measured at the present value of the lease payments discounted using the implicit rate in the lease, if the rate can be readily determined. If that rate cannot be readily determined, the Group shall use its incremental borrowing rate.

 

Lease payments include the following:

 

	●	Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
	●	Variable lease payment that is based on an index or rate, initially measured using the index or rate as at the commencement date;
	●	Amount expected to be payable under residual value guarantees;
	●	The exercise price of a purchase option if it is reasonably certain the option will be exercised; and
	●	Payment of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

 

For a contract that contains both lease and non-lease components, the Group allocates the consideration to each lease component on the basis of the relative stand-alone price of the lease and non-lease components. The Group has elected to not separate lease and non-lease components for property leases and accounts for these as one single lease component.

 

Lease liability is measured at amortized cost using the effective interest method. Lease liability shall be remeasured when:

 

	●	There is a change in future lease payments arising from changes in an index or rate;
	●	There is a change in the Group’s assessment of whether it will exercise an extension option; or
	●	There is modification in the scope or the consideration of the lease that was not part of the original term.

 

Lease liability is remeasured with a corresponding adjustment to the right-of-use assets, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. The Group presents lease liabilities as a separate line item on the statement of financial position.

 

Short-term and low-value leases

 

The Group has elected to not recognize right-of-use assets and lease liabilities for short-term leases that have lease terms of 12 months or less and leases of low value. Payments relating to these leases are expensed to profit or loss on a straight-line basis over the lease term.

 

Variable lease payments

 

Variable lease payments that are not based on an index or a rate are not included as part of the measurement and initial recognition of the lease liability. The Group shall recognize those lease payments in profit or loss in the periods that triggered those lease payments.

 

Lease modifications

 

The Group accounts for a lease modification as a separate lease if:

 

●

The modification increases the scope of the lease by adding the right to use one or more underlying assets; and

 

 

2.	Significant accounting policies (continued)

 

2.11	Leases (continued)

 

●

The consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

 

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

 

The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant right-of-use asset. When the modified contract contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

 

When the Group is the lessor

 

Classification and measurement of leases

 

Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

 

Amounts due from lessees under finance leases are recognized as receivables at commencement date at amounts equal to net investments in the leases, measured using the interest rate implicit in the respective leases. Initial direct costs are included in the initial measurement of the net investments in the leases. Interest income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

 

Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and such costs are recognized as an expense on a straight-line basis over the lease term except for investment properties measured under the fair value model. Variable lease payments for operating leases that depend on an index or a rate are estimated and included in the total lease payments to be recognized on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate are recognized as income when they arise.

 

Refundable rental deposits

 

Refundable rental deposits received are accounted for under IFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments from lessees.

 

Lease modification

 

Changes in consideration of lease contracts that were not part of the original terms and conditions are accounted for as lease modifications, including lease incentives provided through forgiveness or reduction of rentals.

 

The Group accounts for a modification to an operating lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.

 

 

2.	Significant accounting policies (continued)

 

2.12 Inventories

 

Inventories are stated at the lower of cost or net realizable value. Cost is calculated using the specific identification method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

 

When necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying values of inventories to the lower of cost and net realizable value.

 

2.13 Income taxes

 

Income tax represents the sum of current and deferred tax. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss, either in other comprehensive income or directly in equity.

 

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

 

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

 

Deferred tax liabilities are recognized for all taxable temporary differences, except:-

 

	●	When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; and
	●	In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

 

Deferred tax assets are recognized for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences, the carryforward of unused tax credits and unused tax losses can be utilized, except:

 

	●	When the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; and
	●	In respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred tax assets are only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

 

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

 

 

2.	Significant accounting policies (continued)

 

2.13	Income Taxes (continued)

 

Deferred tax is calculated, without discounting, at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

 

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

 

Current and deferred taxes are recognized as income or expenses in profit or loss, except to the extent that the tax arises from a transaction which is recognized directly in equity.

 

The Group accounts for investment tax credits similar to accounting for other tax credits where a deferred tax asset is recognized for unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax credits can be utilized.

 

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

 

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

 

2.14 Employee benefits

 

Employee benefits are recognized as an expense, unless the cost qualifies to be capitalized as an asset.

 

(a)

Defined contribution plans

 

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

 

(b)

Short-term employees benefits

 

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

 

(c)

Equity incentive plan

 

The Company maintains the 2025 Equity Incentive Plan (the “Plan”), to attract, retain and incentivize key employees, officers and directors. The Plan was approved by shareholders on December 16, 2024. Under the Plan, the Company is authorized to issue up to 1,201,821 ordinary shares which are unrestricted. The Plan has a claw-back policy to recover the incentive shares if certain conditions are not fulfilled.

 

The Company recognizes share-based compensation expense for equity awards on a straight-line basis over the requisite service period of the award.

 

 

2.	Significant accounting policies (continued)

 

2.15 Currency translation

 

The financial statements are presented in United States Dollar (“US$”), which is the functional currency of the Group.

 

Transactions in a currency other than the United States Dollar (“foreign currency”) are translated into the United States Dollar using the exchange rates at the dates of the transactions. Currency exchange differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the reporting date are recognized in profit or loss. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.

 

All foreign exchange gains and losses impacting profit or loss are presented in statement of comprehensive income within “Other operating expenses”.

 

With effect from January 1, 2025, the Company’s operating subsidiary, ESA, changed its functional currency from US dollars (US$) to Singapore dollars (S$) to better reflect the primary economic environment of its operations. This change aligns with ESA’s increasing proportion of revenue and expenses denominated in Singapore dollars, driven by its growing focus on recurring revenue from waste management services. As a result of the change, exchange reserves increased by approximately US$0.6 million, primarily arising from the translation of property, plant and equipment, intangible assets, and equity balances from S$ to US$, which remains the Company’s reporting currency.

 

2.16 Cash and cash equivalents

 

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand and deposits with financial institutions which are subject to any insignificant risk of changes in value, and have a short maturity of generally within three months when acquired.

 

2.17 Share capital

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.

 

2.18 Related parties

 

(a)

A person, or a close member of that person’s family, is related to the Company if that person :

 

(i)

Has control or joint control over the Company;

 

(ii)

Has significant influence over the Company; or

 

(iii)

Is a member of key management personnel of the Company or the Company’s parent;

 

or

 

(b)

An entity is related to the Company if any of the following conditions applies:-

 

(i)

The entity and the Company are members of the same group;

 

(ii)

One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

 

(iii)

The entity and the Company are joint ventures of the same third party;

 

(iv)

One entity is a joint venture of a third entity and the other entity is an associate of the third entity;

 

(v)

The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company;

 

(vi)

The entity is controlled or jointly controlled by a person identified in (a);

 

 

2.	Significant accounting policies (continued)

 

2.18	Related parties (continued)

 

(vii)

A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and

 

(viii)

The entity, or any member of a group of which it is a part, provides key management personnel services to the Company or to the Company’s parent.

 

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity and include:

 

	(a)	That person’s children and spouse or domestic partner;
	(b)	Children of that person’s spouse or domestic partner; and
	(c)	Dependents of that person or that person’s spouse or domestic partner.

 

2.19 Fair value measurement

 

The Group measures its properties at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

 

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

 

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:-

 

Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

 

For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

 

 

2.	Significant accounting policies (continued)

 

2.20 Newly effective or amended IFRS

 

The following are new or amended IFRSs, which are effective for the annual periods beginning on or after January 1, 2025:

 

	Effective date		New standards or amendments
	1 January 2025		Lack of Exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates
	1 January 2026		Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures
			Annual Improvements to IFRS Accounting Standards – Amendments to:
			●	IFRS 1 First-time Adoption of International Financial Reporting Standards;
			●	IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS 7;
			●	IFRS 9 Financial Instruments;
			●	IFRS 10 Consolidated Financial Statements; and
			●	IAS 7 Statement of Cash flows
			Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7

 

The application of the amendments to IFRSs in the current year has had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in these financial statements.

 

 

3. Critical accounting estimates, assumptions and judgements

 

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Critical judgements in applying the entity’s accounting policies

 

(a)

Determination of functional currency

 

In determining the functional currency of the Group, judgment is used by the management to determine the currency of the primary economic environment in which the Group operates. Consideration factors include the currency that mainly influences sales prices of goods and services and the currency of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services.

 

(b)

Determination of lease term of contracts with extension options

 

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

 

The Group has several lease contracts that include extension options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to extend the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise the extension. After the commencement date, the Group reassesses the lease term to consider whether there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to extend (e.g. construction of significant leasehold improvements or significant customization to the leased asset).

 

The Group includes the extension option in the lease term for leases of leasehold buildings because of the leasehold improvements made and the significant costs that would arise to replace the assets. The extension options for leases of motor vehicles are not included as part of the lease term because the Group typically leases motor vehicles for not more than five years and, hence, will not exercise the extension options.

 

(c)

Useful lives of property, plant and equipment

 

The useful life of an item of property, plant and equipment is estimated at the time the asset is acquired and is based on historical experience with similar assets and takes into account anticipated technological or other changes. If changes occur more rapidly than anticipated or the asset experiences an unexpected level of wear and tear, the useful life will be adjusted accordingly. The carrying amount of the Group’s plant and equipment as at June 30, 2025 was US$20,134,853 (December 31, 2024: US$20,762,483).

 

(d)

Inventory valuation method

 

Inventory write-down is made based on the current market conditions, historical experience and selling goods of a similar nature. It could change significantly as a result of changes in market conditions. A review is made periodically for excess inventories, obsolescence and declines in net realizable value and an allowance is recorded against the inventory balances for any such declines. The realizable value represents the best estimate of the recoverable amount and is based on the most reliable evidence available and inherently involves estimates regarding the future expected realizable value. The carrying amount of the Group’s inventories as at June 30, 2025 was US$453,860 (December 31, 2024: US$440,194).

 

(e)

Provision for expected credit losses of trade receivables

 

The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

 

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust historical credit loss experience with forward-looking information. At every reporting date, historical default rates are updated and changes in the forward-looking estimates are analysed.

 

 

3.	Critical accounting estimates, assumptions and judgements (continued)

 

Critical accounting estimates and assumptions

 

The assessment of the correlation between historical observed default rates, forecasted economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecasted economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customers’ actual default in the future.

 

The carrying amount of the Group’s trade receivables as at June 30, 2025 US$810,954 was (December 31, 2024: US$683,939).

 

(f)

Impairment of non-financial assets

 

The impairment testing of non-financial assets requires assumptions about the future cash flows projections as well as about the discount rate to be applied. The assumptions used to arrive at the cash flow projections are dependent on the future market shares, the market trend and the profitability of the Group’s products.

 

Impairment testing of non-financial assets requires estimates about the extent and probability of the occurrence of future events. As far as possible, estimates are derived from past experience taking into account current market conditions and the stage of technological advancement.

 

(g)

Capitalization of intangible assets

 

The costs of internally generated intangible assets are capitalized in accordance with the accounting policy in Note 2.6 to the financial statements. Initial capitalization of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of the intangible assets at the reporting date is US$3,389,962 (December 31, 2024: US$2,977,311).

 

 

4. Revenue

 

Revenue classified by type of good or service is as follows :

 Schedule of revenue classified by type of good or service 

		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
- Sales of circular products			593,290				800,129
- Waste disposal services			2,123,079				2,687,750
Revenue			2,716,369				3,487,879

 

The revenue from sales of goods and other service income is recognized based on a point in time.

 

5. Other income

 Schedule of other income 

		Unaudited
		For the Periods Ended June 30,
		2024				2023
		US$				US$
Foreign exchange gain			433,850				264,158
Interest income			6				3
Government grants			31,748				18,052
Other income			465,604				282,213

 

6. Other operating expenses

 Schedule of other operating expenses 

		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Foreign worker levy			86,287				82,944
Insurance			90,907				189,192
Professional fees			401,384				285,343
Property tax			55,248				54,293
Rental and storage			182,414				211,561
Utilities			107,756				36,889
Upkeep, repair and maintenance			116,028				58,165
Chemical and incineration fees			184,580				189,545
Bank service charges			8,041				3,528
Listing Fees and expenses			121,420				75,641
Others			44,681				25,172
Other operating expenses			1,398,746				1,212,273

 

 

7. Employee benefits expense

 Schedule of employee benefits expense 

		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Salaries, wages and bonuses			1,219,824				524,521
Directors’ remuneration			749,625				373,093
Directors’ fees			64,002				64,002
Employer’s contribution to defined contribution plans including Central Provident Fund			59,308				60,679
Other short term benefit			36,272				27,602
Employee benefits expense			2,129,031				1,049,897

 

 

8. Finance expense

 Schedule of finance expense

		June 30, 2025				June 30, 2024
		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Interest expenses:
- Lease liabilities			30,611				26,129
- Borrowings			91,606				120,999
- Loans from directors			-				-
Interest expenses			122,217				147,128

 

9. Income tax expense

 Schedule of tax expense attributable to loss 

		June 30, 2025				June 30, 2024
		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Tax expense attributable to loss is made up of:
- Current income tax			(27,473	)			146,480
- Movements in deferred tax liabilities			129,000				2,000
Tax expense attributable to loss			101,527				148,480

 

The tax on profit or loss before income tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax expense as follows :

 Schedule of income tax rates to profit or loss before income tax expense

		June 30, 2025				June 30, 2024
		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Loss before income tax			(2,465,679	)			(322,944	)
Tax calculated at tax rate of 17% (2023: 17%)			(419,165	)			(54,900	)
Effects of:
- Expenses not deductible for tax purposes			410,590				178,809
- Income not subject to tax			(65,069	)			(43,011	)
- Temporary difference			175,171				67,582
Income tax expense			101,527				148,480

 

 

10. Property, plant and equipment

 Schedule of property, plant and equipment

		Leasehold land and buildings				Plant and equipment				Machineries				Renovation				Motor vehicles				Furniture and fittings				Total
		Unaudited
		Leasehold land and buildings				Plant and equipment				Machineries				Renovation				Motor vehicles				Furniture and fittings				Total
		US$				US$				US$				US$				US$				US$				US$
2025
Beginning of financial period
Cost or valuation			19,537,807				5,264,933				1,213,687				490,239				694,591				132,100				27,333,357
Beginning of financial period			19,537,807				5,264,933				1,213,687				490,239				694,591				132,100				27,333,357
Depreciation charge			475,683				264,591				43,301				1,382				22,187				612				807,756
Additions			-				10,646				-				65,537				103,109				834				180,126
End of financial period			19,537,807				5,275,579				1,213,687				555,776				797,700				132,934				27,513,483
Accumulated depreciation
Beginning of financial year			1,673,694				2,622,248				1,070,773				488,132				587,523				128,504				6,570,874
Depreciation charge			475,683				264,591				43,301				1,382				22,187				612				807,756
End of financial period			2,149,377				2,886,839				1,114,074				489,514				609,710				129,116				7,378,630
Net book value
End of financial period			17,388,430				2,388,740				99,613				66,262				187,990				3,818				20,134,853

 

 

10.	Property, plant and equipment (continued)

 

		Leasehold land and buildings				Plant and equipment				Machineries				Renovation				Motor vehicles				Furniture and fittings				Total
		US$				US$				US$				US$				US$				US$				US$
2024
Beginning of financial period
Cost or valuation			19,264,346				4,960,307				1,213,687				490,239				694,591				131,973				26,755,143
Beginning of financial period			19,264,346				4,960,307				1,213,687				490,239				694,591				131,973				26,755,143
Additions			273,461				304,626				-				-				-				127				578,214
End of financial year			19,537,807				5,264,933				1,213,687				490,239				694,591				132,100				27,333,357
Accumulated depreciation
Beginning of financial year			732,355				2,103,927				974,802				487,530				543,149				127,015				4,968,778
Depreciation charge			941,339				518,321				95,971				602				44,374				1,489				1,602,096
End of financial year			1,673,694				2,622,248				1,070,773				488,132				587,523				128,504				6,570,874
Net book value
End of financial year			17,864,113				2,642,685				142,914				2,107				107,068				3,596				20,762,483

 

 

11. Intangible assets

 Schedule of intangible assets

		June 30, 2025				December 31, 2024
		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Cost
Beginning of financial year			6,064,363				4,349,839
Amortization			604,652				1,118,678
Additions - internal development			1,017,303				1,714,524
End of financial period and year			7,081,666				6,064,363
Accumulated amortisation
Beginning of financial year			3,087,052				1,968,374
Amortization			604,652				1,118,678
End of financial period and year			3,691,704				3,087,052
Net book value
End of financial period and year			3,389,962				2,977,311

 

12. Trade and other receivables

 Schedule of trade and other receivables 

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Trade receivables
- Non-related parties			810,954				683,939
Trade receivables			810,954				683,939
Non-trade receivables
- Advance payment to suppliers			135,514				119,745
- Deposits			170,743				108,550
- Prepayments			1,007				128,308
Non-trade receivables			307,264				356,603
Trade and other receivables			1,118,218				1,040,542

 

 

12. Trade and other receivables (continued)

 

Receivables that are past due but not impaired

 

As at June 30, 2025, the Group had trade receivables amounting to US$101,414 (2024: US$117,153) that were past due at the reporting date but were not impaired. These receivables were unsecured and the analysis of their aging based on their trade date at the reporting date is as follows:

 Schedule of components of trade receivables aging

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Less than 30 days			88,516				96,741
30 to 90 days			12,898				20,412
Trade and other receivables			101,414				117,153

 

 

13. Inventories

 Schedule of inventories

		Unaudited
		June 30, 2024				December 31, 2024
		US$				US$
Raw materials			40,342				17,368
Finished goods			413,518				422,826
Inventories			453,860				440,194

 

14. Reserve

 

(a)

Revaluation reserve

 

Revaluation reserve represents increases in the fair value of leasehold land and buildings, net of tax, and decreases to the extent that such decrease relates to an increase on the same asset previously recognized in other comprehensive income.

 

(b)

Other reserve

 

Other reserve represents member’s deemed contribution arising from reorganization.

 

(c)

Exchange reserve

 

The exchange reserve represents the exchange differences relating to the translation of the Group’s leasehold land and building from the revaluation. The exchange differences are recognized directly in other comprehensive income and accumulated in the exchange reserve. Such exchange differences accumulated in the exchange reserve are reclassified to the consolidated income statement on the disposal of the leasehold land and building.

 

(d)

Share premium reserve

 

The share premium reserve represents the excess amounts paid by shareholders above the par value of the shares issued.

 

 

15. Leases – The Group as a lessee

 

Nature of the Group’s leasing activities

 

The Group has lease contracts for land, buildings, machineries and equipment. The Group’s obligations under these leases are secured by the lessor’s title to the leased assets. The Group is restricted from assigning and subleasing the leased assets.

 

The Group regularly enters into short-term leases of 12 months or less for certain plant and equipment and machineries. The Group applies the ‘short-term lease’ recognition exemptions for these leases.

 

(a)

Carrying amounts

 

ROU assets classified within property, plant and equipment

Schedule of ROU assets classified within property, plant and equipment

 

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Carrying amounts
Leasehold land and buildings			1,919,823				2,040,813
Motor vehicles			173,999				89,683
Carrying amounts of ROU assets			2,093,822				2,130,496

 

(b) Depreciation charge during the financial year

 Schedule of depreciation charge

		2025				2024
		Unaudited
		Periods ended June 30,
		2025				2024
		US$				US$
Leasehold land and buildings			120,990				104,559
Plant and equipment			-				270
Motor vehicles			18,794				20,479
Depreciation charge			139,784				125,308

 

Interest expense

 Schedule of interest expense

		2025				2024
		Unaudited
		Periods ended June 30
		2025				2024
		US$				US$
Interest expense on lease liabilities			30,611				26,129

 

 

16. Trade and other payables

 Schedule of trade and other payables

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Trade payables
- Non-related parties			529,525				305,670
Other payables
- Amount due to shareholders			296,526				133,532
- Contract liabilities			979,157				1,009,110
- Amount due to directors			1,120,401				896,955
- Accruals and other payables			2,153,011				2,045,333
- Goods and services tax payable			78,187				43,177
- Withholding tax			16,029				16,173
Other payables			4,643,311				4,144,280
Trade and other payables			5,172,836				4,449,950

 

17. Borrowings

 Schedule of borrowings term loan

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Term loan I(i)			83,109				118,558
Term loan IV(ii)			-				108,888
Term loan V (iii)			-				137,837
Term loan VI(iv)			367,417				528,376
Term loan VII(v)			1,475,153				1,573,182
Trade receivables financing			162,256				124,780
Revolving credit(vi)			1,841,982				1,727,561
Total borrowings			3,929,917				4,319,182

 

Details of the repayment schedule in respect of the interest-bearing borrowings are as follows :

 Schedule of repayment schedule of interest-bearing borrowings

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Bank borrowings repayable :
Within one year or on demand			3,929,917				2,928,509
Within a period of more than one year but not exceeding two years			-				1,390,673
Total bank borrowings repayable			3,929,917				4,319,182

 

 

17.	Borrowings (continued)

 

 

During the current financial year, the Group entered into a trade receivables financing agreement with one of its lenders. The arrangement will provide immediate payment of up to 90% of the receivables upon presentation of relevant documents by the Group. The remaining 10% will be paid upon settlement of the receivables by the customer. This arrangement has recourse and the Group is liable for any unpaid receivables

 

Security granted

 

The Group’s borrowings are secured by:

 

(a)

A legal mortgage on the Group’s leasehold land and buildings with net book value of US$15,468,606 (2024: US$15,823,299) ;

 

(b)

Several guarantees from a director and a former director of the Group in their personal capacities.

 

 

18. Deferred tax

 

The movement in deferred tax liabilities (prior to offsetting of balances) during the financial year is as follows:

 Schedule of deferred tax liabilities

		Unaudited
		June 30, 2025				December 31, 2024
-		US$				US$
Balance as at beginning of financial year			133,000				296,000
Foreign exchange adjustments			8,809				-
Movements in deferred tax liabilities			129,000				(163,000	)
Balance as at end of financial year			270,809				133,000

 

19. Share capital

 Schedule of share capital

		June 30, 2025				December 31, 2024
No. of ordinary shares			42,391,240				40,239,419

 

20. Group information

 

Subsidiaries

 

The consolidated financial statements of the Group include :

 Schedule of consolidated financial statements of group

				Place of		Effective equity held by the Group
				incorporation
Name of subsidiary		Principal activities		and business
						2025		2024
						%		%
Held by the Company
Environmental Solutions Group Holdings Limited		Investment holding company		Cayman Island		100		100
Held by Subsidiary
Environmental Solutions Asia Holdings Limited		Investment holding company		British Virgin Islands		100		100
Environmental Solutions (Asia) Pte Ltd		Waste management and recycling of industrial wastes		Singapore		100		100
ESG Chemicals Sdn. Bhd		Warehousing and distribution of circular products		Malaysia		100		100

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This discussion contains forward-looking statements that involve risks and uncertainties. The Company and its subsidiaries’ (collectively, the “ Group”) actual results and the timing of events could differ materially from those anticipated in these forward- looking statements as a result of various factors, including those set forth under “Risk Factors” in the Company’s filings with the Securities and Exchange Commission.

 

Overview

 

ESGL is a holding company incorporated as an exempted company under the laws of the Cayman Islands. As a holding company with no material operations of its own, the Group conducts all its operations through its operating entity incorporated in Singapore, ESA.

 

The Group is a waste management, treatment and recycling company involved in the collection and recycling of hazardous and non-hazardous industrial waste from customers such as pharmaceutical, semiconductor, petrochemical and electroplating companies. The Group currently has two revenue streams, from: (i) services income which is primarily comprised of the fees charged to customers for the provision of waste collection and disposal services, which fees are similar to those charged by the Group’s competitors, and (ii) the sales and trading of its circular products made from recycled waste, which is believed to make the Group a unique and environmentally-friendly offering in the marketplace.

 

Factors Affecting the Group’s Performance and Related Trends

 

The Group believes that the key factors affecting its performance and financial performance include:

 

(i) Continuous Engagement with the Group’s Customers: The Group benefits from its unique approach to waste handling — captive consumption, which has allowed it to capture customers from the target market segment of multinational corporations that aim to meet their environmental, social and governance goals. The Group’s revenue growth largely depends on its ability to retain current customers and attract new customers, including its ability to form relationships with and manage an increasing number of customers. In addition to the traditional means of attracting potential customers via emails, business brochures and LinkedIn, ESA is also a member of the Waste Management Recycling Association of Singapore and the United Nations Global Compact where it actively participates in industry forums to promote the Group’s brand and awareness of sustainable solutions, which has resulted in a substantial increase in customer engagement.

 

(ii) Manufacturing Activities: The Group derives part of its revenue by charging a disposal fee for the use of its collection and disposal service. Since the Group’s core business is tied to the volume of waste generated by its customers, its revenue growth could be influenced by manufacturing activities which are affected by the global supply and demand, as well as macroeconomic conditions.

 

(iii) Commodities Price: The Group derives part of its revenue from the sales and trading of its circular products, which typically include zinc, precious metals and base metals. As such, the prevailing market prices and the demand of these commodities will also determine the Group’s profitability and the sale of each commodity, respectively.

 

(iv) Inflation: While many of the economies in Asia have experienced rapid growth over the last two decades, they currently are experiencing inflationary pressures, and the rate of growth is slowing down. The economy in Singapore and globally has experienced general increases in certain operating costs and expenses, such as employee compensation and office operating expenses as a result of higher inflation. Average wages in Singapore are expected to continue to increase and the Group expects that its employee costs, including wages and employee benefits, will continue to increase. Unless the Group is able to control its employee costs or pass them on to its clients, its financial condition, and results of operations may be adversely affected.

 

 

As governments in Asia (and worldwide) take steps to address current inflationary pressures, there may be significant changes in the availability of bank credit, commercial reasonability of interest rates, limitations on loans, restrictions on currency conversions and foreign investment rules, thereby restricting the availability of credit and reducing economic growth. Inflation, actions that may be implemented to combat inflation and public speculation about any possible additional actions also may contribute materially to economic uncertainty in Asia (and worldwide) and accordingly weaken investor confidence, thus adversely impacting economic growth and causing decreased economic activity, which in turn could lead to a reduction in demand for the Group’s products and services, and consequently have a material adverse effect on its businesses, financial condition and results of operations. Conversely, more lenient government policies and interest rate decreases may trigger increases in inflation and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect the Group’s business. There also may be imposition of price controls. If prices for the Group’s waste disposal services and/or its circular products rise at a rate that is insufficient to compensate for the rise in the costs of supplies and operations, it may have an adverse effect on the Group’s profitability. If these or other similar restrictions are imposed by a government to influence the economy, it may lead to a slowing of economic growth.

 

(v) Imposition of tariffs or trade barriers by the U.S. or other governments may increase the cost of goods and we import, potentially reducing our profitability or affecting the competitiveness of our products in key markets

 

(vi) Government Regulations in Singapore: The Group’s operating subsidiary, ESA, is incorporated, and its operations and assets are all located, in Singapore. Accordingly, the Group’s business could be influenced by economic policies and initiatives undertaken by the Singapore government, changes in the Singapore business or regulatory environment affecting its customers and changes in the Singapore government policy on waste management. Unfavorable changes could affect demand for services that the Group provides and could materially and adversely affect its results of operations. Although the Group has generally benefited from Singapore’s economic growth and the policies to encourage the improvement of waste management, it is also affected by the complexity, uncertainties and changes in the Singapore economic conditions and regulations governing the waste industry.

 

 

Results of operations

 

		Unaudited
		June 30, 2025				June 30, 2024				+ / -
		US$				US$				US$				%
Revenue			2,716,369				3,487,879				(771,510	)			-22.1	%
Other income			465,604				282,213				183,391				65.0	%
Cost of inventory			(138,444	)			(78,366	)			60,078				76.7	%
Logistics costs			(446,806	)			(264,638	)			182,168				68.8	%
Depreciation of property, plant and equipment			(807,756	)			(781,394	)			26,362				3.4	%
Amortization of intangible assets			(604,652	)			(559,340	)			45,312				8.1	%
Employee benefits expense			(2,129,031	)			(1,049,897	)			1,079,134				>100%
Finance expense			(122,217	)			(147,128	)			(24,911	)			-16.9	%
Other operating expenses			(1,398,746	)			(1,212,273	)			186,473				15.4	%
Loss before income tax			(2,465,679	)			(322,944	)			2,142,735				>100%
Income tax expense			(101,527	)			(148,480	)			(46,953	)			-31.6	%
Net loss			(2,567,206	)			(471,424	)			2 ,095,782				>100%
Other comprehensive (loss)/income :			265,020
Items that will not be reclassified subsequently to profit or loss:
Net (loss) on revaluation of leasehold land and buildings			-				(186,684	)			186,684				-100.0	%
Items that may be reclassified subsequently to profit or loss:
Exchange difference on revaluation of leasehold land and buildings			-				337,283				(337,283	)			-100.0	%
Foreign currency translation adjustments			(568,876	)			-				(568,876	)			nm
Total comprehensive (loss)/income			(3,136,082	)			(320,825	)			2,594,683				-808.8	%
Loss per share			(0.07	)			(0.03	)

 

nm: not meaningful

 

 

Revenue

 

The Group derives its revenue from (i) the sales and trading of its circular products and (ii) waste disposal services which generally comprise the disposal fees it charges its customers for waste collection and disposal services. For the period ended June 30, 2025 (1H 2025”), total revenue for the Group decreased by approximately US$0.8 million (-22.1%) from approximately US$3.5 million to approximately US$2.7 million. This was mainly due to lower waste disposal services which decreased by approximately US$0.6 million (-21.0%) compared to the period ended June 30, 2024 (“1H 2024”). During the first half of 2025, the Company’s waste collection capacity was affected by uncertainties surrounding tariff policies, which in turn dampened customers’ manufacturing activities. Revenue from waste collection was further impacted by ground subsidence that required remedial works and temporarily disrupted operations. In addition, sales of circular products decreased by approximately US$0.2 million, or 25.9%, compared to the first half of 2024, primarily due to lower demand for base metals.

 

Other Income

 

Other income for 1H 2025 increased by approximately US$0.2 million (65.0%) compared to 1H 2024 due mainly to gains in foreign exchange arising from revaluations of monetary assets and liabilities.

 

Cost of inventory

 

The Group’s cost of inventory represents costs and expenses attributable to the provision of its circular products Compared to 1H 2024, the cost of inventory in 1H 2025 increased by approximately US$60,000 (76.7%) from approximately US$78,000 in 1H 2024 to approximately US$138,000 in 1H 2025 mainly due to higher cost of materials used in its waste treatment processes.

 

Logistic costs

 

The Group’s logistics costs mainly relate to the collection of waste and the delivery of its circular products. For the period ended June 30, 2025, logistic costs increased by approximately US$0.2 million (68.8%) as compared to the same period last year. This was mainly as a result of higher transportation costs and costs of packaging materials such as Intermediate Bulk Containers (“IBC”).

 

Operating expenses

 

Operating expenses mainly comprise of employee benefits expense, foreign worker levy, disposal expenses, repairs and maintenance, professional fees, listing fees and expenses. Compared to 1H 2024, operating expenses in 1H 2025 increased by approximately US$1.3 million (55.9%) from approximately US$2.3 million in 1H 2024 to US$3.5 million due mainly to higher employee benefits expenses.

 

Employee benefits expense in 1H 2025 increased by approximately US$1.1 million (>100%) from approximately US$1.0 million for the period ended June 30, 2024 to approximately US$2.1 million mainly due to the implementation of the equity incentive plan that was effective February 2025.

 

Finance expense

 

Total interest expense in 1H 2025 was approximately US$25,000 (-16.9%) lower than the same period last year due mainly to interest being paid on reducing bank loan balances.

 

 

Depreciation and Amortization

 

The Group’s depreciation and amortization expenses increased by approximately US$72,000 (5.3%) mainly due to increase in intangible assets such as self-developed software tailored to our operational requirements.

 

Net Loss after Taxation

 

As a result of the foregoing, the Group recorded a net loss of approximately US$2.6 million for the period ended June 30, 2025. This was approximately US$2.1 million (>100%) more than the loss incurred in 1H 2024.

 

Non-GAAP Measures

 

EBITDA

 

The Group defines EBITDA as net income (loss) before interest, taxes and depreciation and amortization.

 

For the periods ended June 30, 2025 and 2024, EBITDA consisted of the following:

 

EBITDA (Group)		June 30, 2025				June 30, 2024
Loss before income tax			(2,465,679	)			(322,944	)			(2,142,735	)			>100%
Finance expense			122,217				147,128				(24,911	)			-16.9	%
Depreciation and amortization			1,412,408				1,340,734				71,674				5.3	%
EBITDA			(931,054	)			1,164,918				(2,095,972	)			>100%
Add : Material non-cash expense item - Equity incentive plan			1,237,876				-				1,237,876				nm
Adjusted EBITDA			306,822				1,164,918				(858,096	)			-73.7	%

 

*Non-recurring expenses mainly relate to expenses incurred for the Business Combination

 

EBITDA is a financial measure that is not calculated in accordance with IFRS, as issued by the IASB. The Group’s management uses EBITDA (i) as a measure of operating performance, (ii) for planning and forecasting in future periods, and (iii) in communications with the Group’s board of directors concerning the Group’s financial performance. The Group’s presentation of EBITDA is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation and should not be used by investors as a substitute or alternative to net income or any measure of financial performance calculated and presented in accordance with IFRS, as issued by the IASB. Instead, the Group’s management believes EBITDA should be used to supplement the Group’s financial measures derived in accordance with IFRS, as issued by the IASB, to provide a more complete understanding of the trends affecting the business.

 

Liquidity and Capital Resources

 

ESGL was incorporated in the Cayman Islands as a holding company and it did not have active business operations as of June 30, 2025. The Group’s consolidated assets and liabilities, consolidated revenue and net income are mainly the operation results of its subsidiary in Singapore. In assessing the Group’s liquidity, the Group monitors and analyzes its cash on-hand and its operating expenditure commitments. The Group’s liquidity needs are to meet its working capital requirements and operating expense obligations. Historically, the Group has financed its operations primarily through the (i) issuance of common stock, (ii) cash generated by operations, (iii) loans from Directors and (iv) borrowings from banks. The Group has no other debt instruments other than those stated here.

 

 

As of June 30, 2025, the Group’s working capital was approximately negative US$7.7 million, its cash and cash equivalents amounted to approximately US$142,000, its current assets were approximately US$1.7 million and its current liabilities were approximately US$9.4 million. The negative working capital was primarily attributable to higher trade and other payables as well as the classification of bank loan balances as current liabilities. The latter is mainly due to the impending maturity of the bank loans in the next twelve months and clauses in the relevant bank loan agreements that allow the banks to demand immediate repayments. To date, the Group has been able to service its loan repayments and there were no indications that the banks intend to recall the loans.

 

The following table illustrates the maturity profile of the Group’s borrowings:

 

		Unaudited
		June 30, 2025				2024
		US$				US$
Bank borrowings repayable :
Within one year or on demand			3,929,917				2,928,509
Within a period of more than one year but not exceeding two years			-				1,390,673
			3,929,917				4,319,182

 

On June 30, 2025, the last reported closing sales price of our Ordinary Shares was $3.15 and the exercise price per share of the Warrants is $11.50. The exercise price of the Warrants is significantly higher than the current market price of our Ordinary Shares and accordingly, it is highly unlikely that Warrant holders will exercise their Warrants in the foreseeable future. Cash proceeds associated with the exercises of the Warrants are dependent on our stock price and given the recent price volatility of our Ordinary Shares and relative lack of liquidity in our stock, we may not receive any cash proceeds in relation to our outstanding Warrants.

 

Based on the Group’s current operating plan, the Group believes that its existing cash and cash equivalents and anticipated cash generated from operating activities will be sufficient to meet its anticipated working capital and capital expenditures for at least the next 12 months. The Group’s future working capital requirements will depend on many factors, including the rate of its revenue growth, its introduction of new products and processes, and its expansion of sales and marketing and product development activities. To the extent that the Group’s cash and cash equivalents and cash flow from operating activities are insufficient to fund its future activities, the Group may need to raise additional funds through bank credit arrangements, public or private equity or debt financing.

 

The Group also may need to raise additional funds in the event it decides in the future to acquire businesses, technologies and products that will complement its existing operations. In the event additional funding is required, the Group may not be able to obtain bank credit arrangements or equity or debt financing on terms acceptable to it or at all.

 

 

Cash Flows for the Periods Ended June 30, 2025 and 2024

 

The following summarizes the key components of the Group’s cash flows for the periods ended June 30, 2025 and 2024:

 

		Unaudited
		June 30, 2025				June 30, 2024
		US$				US$
Net cash generated from/(used in) operating activities			938,324				(42,780	)
Net cash used in investing activities			(1,197,423	)			(692,543	)
Net cash (used in)/generated from financing activities			(233,979	)			625,063
Net decrease in cash and bank balances			(493,078	)			(110,260	)

 

Operating Activities

 

For the period ended June 30, 2025, the Group generated approximately US$938,000 from its operating activities arising primarily from better controls over working capital and longer repayment terms with suppliers. For the period ended June 30, 2024, the Group utilized US$42,780 for its operating activities due primarily to its loss from operating activities of approximately US$323,000 and higher repayments of trade and other payables which reduced operating cashflows by approximately US$1.04 million.

 

Investing Activities

 

Net cash used in investing activities in 1H 2025 was approximately US$1.2 million and was primarily attributable to (i) the purchase of approximately US$180,000 of property, plant and equipment, and (ii) the addition of approximately US$1.0 million of intangible assets.

 

Net cash used in investing activities for the period ended June 30, 2024 was approximately US$693,000 and was primarily attributable to the addition of approximately US$654,000 of intangible assets.

 

Financing Activities

 

Net cash used in financing activities was approximately US$234,000 for the period ended June 30, 2025. This was mainly due to repayment of bank loans, lease liabilities and interest of approximately US$953,000 offset by funds of approximately US$760,000 raised from share issuance during 1H 2025.

 

For the period ended June 30, 2024, financing activities provided net cash of approximately US$625,000 that was primarily attributable to (i) approximately US$2.5 million from the issuance of 10 million shares. The share issuance increased the weighted average number of shares from approximately 6.4 million shares as of December 31, 2023 to approximately 14 million shares as of June 30, 2024; and (ii) proceeds from bank borrowings of approximately US$747,000 offset by (i) repayment of approximately US$1.7 million of bank borrowings, (ii) repayment of approximately US$600,000 of underwriting fees, (iii) the repayment of approximately US$143,000 of lease liabilities, and (iv) the payment of approximately US$147,000 of interest.

 

 

Trade Receivables

 

The Group’s trade receivables balances increased by approximately US$127,000 (18.6%) from approximately US$684,000 as of December 31, 2024 to approximately US$811,000 as of June 30, 2025. The Group seeks to maintain strict control over its outstanding receivables, and overdue balances are reviewed regularly by its senior management. The following table sets out an ageing analysis of the Group’s trade receivables that are past due but not impaired, as of the dates indicated

 

		Unaudited
		June 30, 2025				December 31, 2024
		US$				US$
Less than 30 days			88,516				96,741
30 to 90 days			12,898				20,412
			101,414				117,153

 

As of June 30, 2025, the Group’s trade receivables that are past due but not impaired amounted to approximately US$101,000. All but one of these trade receivables, amounting to approximately US$21,000 were subsequently settled as of September 22, 2025.

 

Average trade receivables turnover days indicates the average time required for the Group to collect cash payments from its provision of goods or services. The Group’s average trade receivables turnover days were 50 and 34 respectively for the financial period and year ended June 30, 2025 and December 31, 2024 respectively. The increase in the Group’s average trade receivables turnover days was mainly attributable to customers’ request for better credit terms.

 

The Group has applied the simplified approach by using the provision matrix to measure the lifetime expected credit loss (“ECL”) for trade receivables.

 

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer rather than the industry or country in which the customers operate and therefore significant concentrations of credit risk primarily arise when the Group has significant exposure to individual customers. At the end of the financial period June 30, 2025, 68.3% of the total trade receivables were from 3 of the Group’s largest customers. For the financial year ended December 31, 2024, 76.3% of the total trade receivables were from the top 3 customers.

 

Individual credit evaluations are performed on all customers. These evaluations focus on the customer’s past history of making payments when due and current ability to pay, and take into account information specific to the customer as well as pertaining to the economic environment in which the customer operates. Unless agreed the otherwise, trade receivables are generally due within 30 days from the date of billing. Normally, the Group does not obtain collateral from customers.

 

The Group measures loss allowances for trade receivables at an amount equal to lifetime ECLs, which is calculated with reference to the credit spread for each of the groupings (which taking into consideration of historical credit loss experience, average actual date of receipt, customers’ background, listing status and size as groupings of various debtors), which reflect the credit risk of the debtors, over the expected life of the debtors and are adjusted for forward-looking information that is available without undue cost or effort. As the Group’s historical credit loss experience does not indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is not further distinguished between the Group’s different customer bases.

 

 

Expected loss rates are based on actual loss experience. These rates are adjusted to reflect differences between economic conditions during the period over which the historic data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of the receivables. The movements in loss allowance for trade receivables during the periods indicated:

 

Unaudited		June 30, 2025				Impairment				Net
Current (not past due)			709,540								709,540
Less than 30 days			88,516								88,516
30 to 90 days			12,898				-				12,898
More than 90 days			49,291				(49,291	)			-
			860,245				(49,291	)			810,954

 

		2025				2024
		US$				US$
At January 1,			47,691				46,768
Movements in provision			-				-
Foreign exchange adjustments			1,600				(478	)
At June 30,			49,291				46,290

 

Trade Payables

 

Trade payables represent primarily the Group’s obligations to pay for goods or services that have been engaged in the ordinary course of business from suppliers, including purchases of raw materials and utilities, as well as payment to its logistics providers. The Group is generally granted credit periods ranging from 30 to 60 days. Trade payables increased by approximately US$224,000 (73.2%) from approximately US$306,000 as of December 31, 2024 to approximately US$530,000 as of June 30, 2025 mainly on obtaining better credit terms from its suppliers.

 

Lease Liabilities

 

The Group recognized and measured lease liabilities in accordance with IFRS 16 “Leases”. The Group leases properties in Singapore mainly for use as factory space for the processing and storage of waste. The table below sets forth the breakdown of the Group’s lease liabilities as of the dates indicated:

		Unaudited June 30, 2025				December 31, 2024
		US$				US$
Current			239,551				221,254
Non-current			2,024,345				1,926,702
			2,263,896				2,147,956

 

The Group’s lease liabilities (comprising current and non-current liabilities) increased approximately US$116,000 (5.4%) from approximately US$2.1 million as of December 31, 2024 to approximately US$2.3 million as of June 30, 2025 due mainly to two new leases for commercial vehicles which commenced in June 2024.

 

 

Borrowings

 

		Unaudited June 30, 2025				December 31, 2024
		US$				US$
Term loan I			83,109				118,558
Term loan IV			-				108,888
Term loan V			-				137,837
Term loan VI			367,417				528,376
Term loan VII			1,475,153				1,573,182
Trade receivables financing			162,256				124,780
Revolving credit			1,841,982				1,727,561
			3,929,917				4,319,182

 

		June 30, 2025				2024
		US$				US$
Analysed as :
Non-current portion			-				-
Current portion			3,929,917				4,319,182
			3,929,917				4,319,182

-

Details of the repayment schedule in respect of the interest-bearing borrowings are as follows :

 

		June 30, 2025				2024
		US$				US$
Bank borrowings repayable :
Within one year or on demand			3,929,917				2,928,509
Within a period of more than one year but not exceeding two years			-				1,390,673
			3,929,917				4,319,182

 

The Group’s borrowings as of June 30, 2025 decreased by approximately US$389,000 (9.0%) compared to the end of last financial year. During 1H 2025, the Group fully repaid Term loan IV and V.

 

 

Off-Balance Sheet Arrangements

 

The Group has no off-balance sheet arrangements including arrangements that would affect its liquidity, capital resources, market risk support and credit risk support or other benefits.

 

Critical Accounting Estimates

 

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the financial statements, and revenues and expenses during the periods presented. On an ongoing basis, management evaluates their estimates, assumptions and judgments, and the effects of any such revisions are reflected in the financial statements in the period in which they are determined to be necessary. Management bases their estimates on historical experience and on various other factors, including expectations of future events, that they believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on the Group’s consolidated financial statements. While the Group’s significant accounting policies are more fully described in the notes to its consolidated financial statements appearing elsewhere in this prospectus, the Group believes that the following accounting policies and estimates are critical to the process of making significant judgments and estimates in the preparation of the Group’s financial statements and understanding and evaluating its reported financial results.

 

Revenue recognition

 

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

 

Revenue is recognized when the Group satisfies a performance obligation by transferring a promised good or service to the customer, which is when the customer obtains control of the good or service. A performance obligation may be satisfied at a point in time or over time. The amount of revenue recognized is the amount allocated to the satisfied performance obligation.

 

Revenue from contracts with customers

 

(a) Rendering of services

 

Revenue from rendering of services is recognized when the entity satisfies the performance obligation at a point in time, generally when the significant acts have been completed and when transfer of control occurs, or for services that are not significant, transactions revenue is recognized as the services are provided. The Group’s primary service consists of collecting and disposing of industrial wastes for its customers.

 

(b) Sale of goods

 

Revenue from sale of goods is recognized at a point in time when the performance obligation is satisfied by transferring a promised good to the customer. Control of the goods is transferred to the customer, generally on delivery of the goods (in this respect, incoterms are considered).

 

 

Other revenue

 

(c) Interest income

 

Interest income is recognized using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or where appropriate, a shorter period.

 

Critical judgements in applying the entity’s accounting policies

 

(a) Determination of functional currency

 

In determining the functional currency of the Group, judgment is used by the management to determine the currency of the primary economic environment in which the Group operates. Consideration factors include the currency that mainly influences sales prices of goods and services and the currency of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services.

 

Transactions in a currency other than the United States Dollar (“foreign currency”) are translated into the United States Dollar using the exchange rates at the dates of the transactions. Currency exchange differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the reporting date are recognized in profit or loss. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.

 

All foreign exchange gains and losses impacting profit or loss are presented in statement of comprehensive income within “Other operating expenses”.

 

With effect from January 1, 2025, the Company’s operating subsidiary, ESA, changed its functional currency from US dollars (US$) to Singapore dollars (S$) to better reflect the primary economic environment of its operations. This change aligns with ESA’s increasing proportion of revenue and expenses denominated in Singapore dollars, driven by its growing focus on recurring revenue from waste management services. As a result of the change, exchange reserves increased by approximately US$0.6 million, primarily arising from the translation of property, plant and equipment, intangible assets, and equity balances from S$ to US$, which remains the Company’s reporting currency

 

(b) Determination of lease term of contracts with extension options

 

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

 

The Group has several lease contracts that include extension options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to extend the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise the extension. After the commencement date, the Group reassesses the lease term to consider whether there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to extend (e.g., construction of significant leasehold improvements or significant customization to the leased asset).

 

The Group includes the extension option in the lease term for leases of leasehold buildings because of the leasehold improvements made and the significant costs that would arise to replace the assets. The extension options for leases of motor vehicles are not included as part of the lease term because the Group typically leases motor vehicles for not more than five years and, hence, will not exercise the extension options.

 

 

(c) Useful lives of property, plant and equipment

 

The useful life of an item of property, plant and equipment is estimated at the time the asset is acquired and is based on historical experience with similar assets and takes into account anticipated technological or other changes. If changes occur more rapidly than anticipated or the asset experiences an unexpected level of wear and tear, the useful life will be adjusted accordingly. The carrying amount of the Group’s property, plant and equipment as of June 30, 2025 was US$20,134,853 (as of December 31, 2024: US$20,762,483).

 

(d) Inventory valuation method

 

Inventory write-down is made based on the current market conditions, historical experience and selling goods of a similar nature. It could change significantly as a result of changes in market conditions. A review is made periodically for excess inventories, obsolescence and declines in net realizable value and an allowance is recorded against the inventory balances for any such declines. The realizable value represents the best estimate of the recoverable amount and is based on the most reliable evidence available and inherently involves estimates regarding the future expected realizable value. The carrying amount of the Group’s inventories as of June 30, 2025 was US$453,860 (as of December 31, 2024: US$440,194).

 

(e) Provision for expected credit losses of trade receivables

 

The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns.

 

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust historical credit loss experience with forward-looking information. At every reporting date, historical default rates are updated and changes in the forward-looking estimates are analyzed.

 

The assessment of the correlation between historical observed default rates, forecasted economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecasted economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customers’ actual default in the future.

 

The carrying amount of the Group’s trade receivables as of June 30. 2024 was US$810,954 (as of December 31, 2024: US$683,939).

 

(f) Impairment of non-financial assets (g) Capitalization of intangible assets

 

The impairment testing of non-financial assets requires assumptions about the future cash flows projections as well as about the discount rate to be applied. The assumptions used to arrive at the cash flow projections are dependent on the future market shares, the market trend and the profitability of the Group’s products.

 

Impairment testing of non-financial assets requires estimates about the extent and probability of the occurrence of future events. As far as possible, estimates are derived from past experience taking into account current market conditions and the stage of technological advancement.

 

 

 

The costs of internally generated intangible assets are initially capitalized based on management’s judgement that technological and economic feasibility is confirmed, and usually when a development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of the intangible assets as of June 30, 2025 was US$3,389,962 (as of December 31, 2024: US$2,977,311).

 

The Group’s internally generated intangible assets consist of software development projects. These include an inventory management system, a proprietary software for tracking real time used catalytic converters to facilitate buying and selling decisions, a database to facilitate reporting, analysis and certification in its laboratory, a thermal treatment and desiccation system, an acid treatment and renewal system and a system to convert waste plastics to oil. These intangible assets were developed to improve efficiency, increase productivity and generate circular products. The costs incurred for each project consist principally of the salaries of the employees working directly on the projects and include time to develop business requirements, programming and coding, software architecture design and version deployment and testing.

 

Emerging Growth Company Status

 

ESGL is an “emerging growth company”, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, the Group is eligible to take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to SEC reporting companies that are not emerging growth companies. For so long as ESGL remains an emerging growth company, it will not be required to, among other things:

 

	present more than two years of audited consolidated financial statements and two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosure;
	have an auditor report on its internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and
	disclose certain executive compensation related items.

 

ESGL will remain an emerging growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the closing of the Business Combination, (ii) the last day of the fiscal year during which ESGL has total annual gross revenue of at least US$1.07 billion, (iii) the date on which ESGL is deemed to be a “large accelerated filer” under the Exchange Act, which means the market value of its ordinary shares that are held by non-affiliates exceeds US$700.0 million as of the last business day of its most recently completed second fiscal quarter, and (iv) the date on which ESGL has issued more than US$1.0 billion in non-convertible debt during the prior three-year period.

 

ESGL has taken advantage of certain of the reduced reporting requirements as a result of being an emerging growth company and a foreign private issuer. Among those advantages, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. ESGL has elected not to opt out of such extended transition period. Accordingly, when a standard is issued or revised and it has different application dates for public or private companies, ESGL, as an emerging growth company, can defer adopting the new or revised standard until the later of the two application dates. As a result, the information that ESGL provides here may be different than the information you may receive from other public companies in which you hold equity interests. If some investors find ESGL’s securities less attractive as a result, there may be a less active trading market for its securities and the prices of its securities may be more volatile.

 

 

Quantitative and Qualitative Disclosures about Market Risk

 

Risk management overview

 

The Group has exposure to market risk (including currency risk and interest rate risk), credit risk, liquidity risk, capital risk and commodity price risk. The Group’s exposure to each of these risks, and its objectives, policies and processes for measuring and managing risk are more fully described in the notes to its consolidated financial statements appearing elsewhere in this report.

 

Market Risk

 

(i) Currency Risk

 

While the Group’s reporting currency is the U.S. dollar, almost all of its sales and purchases are denominated in Singapore dollars. As a result, the Group is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and Singapore dollar. If the Singapore dollar depreciates against the U.S. dollar, the value of the Group’s Singapore dollar revenues, earnings and assets as expressed in the Group’s U.S. dollar consolidated financial statements will decline. The Group does not have a policy to hedge its exposure to foreign exchange risk.

 

(ii) Interest Rate Risk

 

The Group is exposed to interest rate risk on its non-current borrowings at variable rates.

 

The Group’s borrowings at variable rates are denominated mainly in Singapore dollars. At June 30, 2025, if the Singapore dollar interest rates had increased/decreased by 0.5% with all other variables including tax rate being held constant, the loss after tax for the financial period would have been lower/higher by approximately US$8,300 as a result of higher/lower interest expense on these borrowings.

 

Credit risk

 

The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group performs ongoing credit evaluation of its counterparties’ financial conditions and generally do not require collateral.

 

Financial assets are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner. These arise principally from cash and cash equivalents, receivables and other financial assets. The maximum exposure to credit risk is the total of the fair value of the financial assets at the end of the reporting year. Credit risk on cash balances with banks and any other financial instruments is limited because the counter-parties are entities with acceptable credit ratings.

 

Liquidity risk

 

The Group is exposed to liquidity risk, which is risk that it will be unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Group will turn to other financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.

 

 

Capital risk

 

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and a net current asset position to support its business and maximize its shareholders’ value. The capital structure of the Group comprises issued share capital and retained earnings.

 

The Group manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

 

The Group is in compliance with all externally imposed capital requirements for the financial period and year ended June 30, 2025 and December 31, 2024.

 

Commodity Price Risk

 

As the Group derives part of its revenue from the sales and trading of its circular products, which typically include zinc, precious metals and base metals, the Group is exposed to commodity price risk, which is risk on its financial performance and profitability upon fluctuations in the prevailing market prices of these commodities that are out of its control since they are primarily driven by external market forces