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Ecoslops – 1st Half-Year 2021

Friday, 24 September 2021 | 00:00

Ecoslops (Euronext, FR0011490648 – ALESA), the cleantech that brings oil into the circular economy, announces its unaudited results for the first half of the current year ending June 30th, 2021, approved by the Board of Directors at its meeting on September 17th, 2021.

Vincent Favier, Chairman and CEO of Ecoslops, reports:

During the first half of 2021, Ecoslops recorded a gradual return to normality of its activity in Portugal. The Marseille unit, helping to double production capacity in Europe, was completed successfully and has been operational since the beginning of July 2021. Meanwhile, construction of the first Scarabox unit is underway. This innovative waste-recovery solution, adapted for use in emerging countries, marks the company’s entry into a new market and a strategic shift towards balancing its activity between the operation of its own units (P2R) and the sale of equipment and turnkey services (Scarabox).
At operational level, the first half-year is reflected by:

Activity at the Sines unit which, while comparable overall with the first half of 2020, masks a strong recovery in the second quarter. The first quarter was negatively impacted by the renewal and extension of the operating license (obtained on February 25th, 2021) and by planned ten- yearly maintenance work on some tanks. The second quarter, meanwhile, marked a swift return to operational normality, in line with 2019 volumes and prices, the plant’s best year since its launch in 2015. Over the first half of this year, the Sines P2R unit produced 8,071 tons (66% of which was in the second quarter) and sold 6,816 tons (68% in the second quarter), versus 11,872 and 9,887 tons respectively at June 30th, 2020.

Work to complete the Marseille unit (in which Ecoslops holds a 75% stake and TotalEnergies a 25% stake) proceeded as expected, with delivery of the unit on July 2nd, 2021, in the presence of Patrick Pouyanné, Chairman and CEO of TotalEnergies. The summer months were put to good use to perform all the operational and safety tests, as well as to recycle several hundred tons of residues from local suppliers and meet the quality standards set by customers. It was also a time to prepare the Ecoslops Provence and TotalEnergies teams and fine-tune the logistics and customs operations. The set-up and adjustment phase should be completed over the coming weeks, ready for the first production delivery to customers.

Construction of the first Scarabox (for Cameroon) continued. The design studies have been completed, pipeline components and equipment are currently being manufactured and the three modules are being assembled at the sub-contractor’s premises in the PACA region. Construction completion and delivery are anticipated for the end of the year.

As explained earlier, turnover remains stable compared with the same period last year, with a significant difference in performance between the first and second quarters. Operating income is up, reflecting the amount of production inventory associated with construction of the Scarabox. Excluding purchases associated with the Scarabox, operating expenses are contained and under control, with an improvement in EBITDA and EBIT.

Group EBITDA is broken down into +€0.1 million (-€0.3 million and +€0.4 million for the first and second quarters respectively) for the Sines unit in Portugal (versus -€0.3 million for the same period last year), -€0.2 million for the Marseille unit (versus 0 last year) and -€1.2 million for the headquarters’ overhead costs (same as last year).
The financial result includes a €0.4 million provision for European Investment Bank royalty fee interests which will come into effect in June 2022, based on the 2021 annual accounts.

Financial structure:

At June 30th, 2021, available cash amounts to €2.7 million, versus €8.0 million at December 31st, 2020.
Gross debt stands at €27.5 million and equity at €13.7 million. It should be noted that, as of this date, no down payment against the sale of the Scarabox has been received. The company expects to bill for this unit in the second half of the year, once the customer’s bank financing is in place.

Net indebtedness at June 30th, 2021, thus amounts to €24.8 million compared with a net indebtedness of €18.6 million at December 31st, 2020, mainly reflecting the period of investment in the Marseille site (€2.7 million in the first half-year) and construction of the first Scarabox unit (€1.4 million disbursed in the first half-year).

The cash flow statement at June 30th, 2021, is as follows:

Developments in first half-year New P2R projects

The Group continued to work on the Singapore, Antwerp and Suez Canal projects in spite of the difficult travel restrictions. At this stage, the Singapore project seems the most promising for several reasons:

-Singapore is the world’s largest bunkering port (supply of marine fuel) and accounts for about 20% of the global market
-It also ranks first globally for maritime waste collection, handling 150,000-200,000 tons per year (equivalent to all Europeans ports combined)
-Two local companies are responsible for this collection and manage the entire waste stream, unlike in Europe where waste is collected by dozens of small-sized companies across the continent.
-Local regulations require, as in Europe, the commercialization of products that are identical in quality to those from traditional refineries, which can only be achieved with P2R technology
-The annual capacity target of the Singapore P2R would be at least 90,000 tons, generating substantial economies of scale and maximizing profitability
-Ecoslops has acquired excellent knowledge of the local market and has engaged in a partnership approach with a major player in Singapore

Work on the Antwerp project also continued. The design and across-the-board studies were finalized and are being aligned with the Singapore project.

The Suez Canal project awaits on its part approval from the Egyptian authorities regarding the exact method of financing for this infrastructure.

As previously announced, Ecoslops will select one or more of the most sound and cost-effective projects and will focus on working with local, well-established partners in order to reduce the equity financing requirements and tie up all construction and operational aspects (access to waste deposits, qualified staff, operating licenses, etc.).

Scarabox

Activity was intense in the first half-year with numerous commercial contacts made at the announcement of the first sale of this unit, designed to recycle oil residues and waste lube oil into 100% circular fuel.
For the first time, an innovative and customized process will be used to handle these pollution sources that are endemic in emerging countries. This solution has been very well received by major oil distributors and local, heavy users of lube oil (mining and transport companies, etc.) in these countries and promises to open up many opportunities for expansion. Ecoslops is actively seeking to build partnerships with these stakeholders to advance development of the Scarabox internationally.

Alongside its commercial activities, the company is continuing its R&D efforts to maintain its technical lead and bolster its position as an innovative market leader.

Outlook and subsequent events

At Sines, the second half-year is set to be one of the best since 2015 and should see the site achieve a production figure of 21,000 tons for the year (i.e. approximately 25,000 tons in a complete year). Improvements in the product mix and sales prices are important margin drivers for the second half of the year.

With a return to normality for our operations in Portugal, the commercial start-up of Marseille and delivery of the first Scarabox should see a sharp improvement in turnover for 2021, anticipated at over €12 million compared with less than €6 million last year. Although the launch of the Marseille plant will weigh on profitability in 2021, the group does anticipate a positive consolidated EBITDA margin in the second half of the year.

Full Report

Source: Ecoslops

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