REG - Scirocco Energy PLC - EAG Investment Update

Scirocco EnergyAnnouncement

06/04/2023 07:00

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RNS Number : 5355V  Scirocco Energy PLC  06 April 2023

06 April 2023

Scirocco Energy plc

("Scirocco" or the "Company")

EAG Investment Update

Scirocco Energy (AIM: SCIR), the AIM investing company targeting
attractive assets within the European sustainable energy and circular economy
markets, is pleased to provide the following update regarding the Company's
investment in Energy Acquisitions Group Ltd ("EAG").  Scirocco owns 50% in
the EAG Joint Venture which wholly owns and operates Greenan Generation
Limited ("GGL"), a 0.5MW Anaerobic Digestor ("AD") plant in Northern Ireland.
 

In Q4'22 GGL performed strongly, exceeding the key performance indicators of
production, revenue and EBITDA achieved in Q4'21. The enhanced operational and
financial performance is largely due to high operational efficiencies and
strong revenue arising from NI Renewable Obligation Certificates (NIROC) in
December 2022.

Key operational and financial highlights associated with this period
include:

·    Greenan continued to operate at the top end of capability, with
operational efficiencies of 96.35%, 98.09% and 97.57% in October, November,
and December respectively

·    Revenues for the period increased 26% to £423k  (£334k in Q4'21)

·    EBITDA for the period increased 48.1% to £231k (£156k in Q4'21)

·    Steady performance through Q1 2023 and a positive outlook underpinned
by:

·    consistent power pricing of around £100 and over per MW/hr; and

·    the anticipated inflation linked NIROC revenue increase in March 2023

·    Ongoing upgrade works designed to enhance operational and financial
performance continue to be carried out funded through excess operational
cashflows

·    During the period the management team upgraded all fire and gas
detection systems on site and constructed a new chicken litter storage
facility as it continues to optimise biogas yields from lower cost feedstocks.

·    GGL has also benefited from a site upgrade of new JCB ramps,
digestate sumps as well as upgrading the concrete structure around the
digesters and CHP container.

EAG Corporate Update

During the period EAG signed a long term lease and commercial agreement with a
leading UK fresh produce company and hopes to start construction on its first
biofertilizer manufacturing plant in Q2 2023. This marks the start of a roll
out of multiple similar projects which are designed to recover the nutrient
content of the biogas by-product. EAG Management hope to deliver their first
biofertilizer product to the market in Q1 2024, having signed a commercial
cooperation agreement with a major global player in the nutrients market in
2022.  Sales of this biofertilizer product will strengthen and diversify
EAG's revenue.

In addition, further to the announcement on 7 December 2022 regarding the
signing of an exclusivity agreement to negotiate the purchase of the entire
share capital of an industrial AD site in South West England, EAG is
completing its DD process and hopes to complete this acquisition in April or
May 2023. EAG has received a debt offer to support the acquisition and the
equity requirement is expected to be provided by Scirocco following the
completion of the Ruvuma sale. The target plant has delivered consistent
operational and financial results over the past 7 years, generating an EBITDA
of £567k for its last financial year. Based on the proven optimisation model
implemented on GGL, it is EAG's expectation that it can improve performance
during its ownership.

In parallel, EAG continues to develop its acquisition pipeline and is close to
entering additional exclusivity positions on at least 1 further Biogas
operation in 2023.  EAG looks forward to providing further update on the
above new ventures activities upon formalisation of firm commercial
milestones.

Commenting on the update, Scirocco's CEO Tom Reynolds said:

"We're delighted to provide this positive trading statement regarding
operational performance of EAG and GGL. GGL site has outperformed expectations
across all operational and financial KPIs and demonstrates the effectiveness
of EAG management's optimisation techniques.  This value uplift is a
repeatable model that underpins the strategic focus on this asset type and
will be applied to future plants added to the portfolio in due course.  We're
pleased to note EAG's progress on business development and look forward to
adding a second plant to the portfolio in the coming months.

As recently guided, Scirocco continues to make progress towards divestment of
its legacy investment in the Ruvuma development.  Scirocco is in dialogue
with the Tanzanian Revenue Authority in order to gain its approval for the
deal. The firm consideration, as well as the contingent consideration elements
associated with the accelerated first gas of that project, will provide funds
that can be deployed into the compelling and profitable opportunities within
EAG's deal flow pipeline."

This announcement contains inside information for the purposes of Article 7 of
EU Regulation No. 596/2014, which forms part of United Kingdom domestic law by
virtue of the European (Withdrawal) Act 2018.

 

For further information:

 Scirocco Energy plc                                 +44 (0) 20 7466 5000

 Tom Reynolds, CEO

 Doug Rycroft, COO

 Strand Hanson Limited, Nominated Adviser            +44 (0) 20 7409 3494

 Ritchie Balmer / James Spinney /  Robert Collins

 WH Ireland Limited, Broker                          +44 (0) 0207 220 1666

 Harry Ansell / Katy Mitchell

 Buchanan, Financial PR                              +44 (0) 20 7466 5000

 Ben Romney / Jon Krinks

 

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