Scirocco Energy, the AIM investing company targeting attractive assets within the European sustainable energy and circular economy markets, has provided the following update regarding the Company's investment in Energy Acquisitions Group ('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.'
Source: Scirocco Energy
