EUROPLASMA Press release •Bordeaux, 30 October 2015
Commenting on the first-half results, CEO Jean-Eric Petit said:
'I am very pleased to announce that the strategies we set as a new management team early 2014 are delivering strong results across our portfolio of businesses. Inertam (Treatment of Asbestos) is delivering strong and sustainable profits, Europlasma Industries (Plasma Solutions) is recording a significant order growth, and CHO Power (Renewable Energies) has started executing the FAR protocol at Morcenx, which will be a lever for its future growth as a development platform for renewable energy plants globally.
The ambitious plan for Inertam we embarked upon as a new management team early 2014 has finally yielded, making S1 2015 a profitable semester delivering €1.4m Ebitda. The key drivers of this result have been the combination of tighter operational controls and investment plan laid out late 2014, both of which underpin future performance of this business. This outcome sets the foundations for new developments for Inertam, such as new geographies and waste streams.
The growth of Europlasma Industries further illustrates the positive results of the geography and sector diversification plans in plasma solutions set out in 2014. It also fully validates the business model of converting small-scale engineering studies into full high-margin systems sales.
CHO Power constitutes a highly disruptive technology platform, which has required years of development. This continued and costly investment in Morcenx, evidenced by the CHO Power S1 losses, represents major steps towards executing the FAR protocol (Final Acceptance with Reserves). It also solidifies our market position with unique IP and expertise-based barriers to entry, as evidenced by the signs of interest we are frequently receiving from around the world. FAR will propel CHO Power into its next stage of development on its active and near-term pipe line, including CHO Tiper, CHO Locminé and CHO Brocéliande.
Progress made over the last 18 months is very encouraging and I thank the teams for their full commitment on delivering the strategic plan across the 3 business units.'
Activity and results (*)
(*): see note on segment names at the end of the press release.
Recovery of the 'Treatment of asbestos' activity and 'Plasma Solutions' activity
in € thousands | 30/06/2015 | 30/06/2014 | Difference |
Revenue | 6,903 | 4,754 | 2,149 |
EBITDA | -4,887 | -5,280 | 393 |
Net income, Group share | -9,749 | -7,961 | -1,788 |
Earnings per share (in euros per share) | -0.14 | -0.37 | 0.23 |
Operating income | -8,835 | -7,446 | -1,389 |
Financial income | 224 | -553 | 777 |
Net income for the year | -9,768 | -7,973 | -1,795 |
Source: 2015 half-yearly consolidated financial statements closed by the Board of Directors on 26 October 2015, after limited review by the Statutory Auditors.
Activity and Revenue
Revenue for the first half of 2015 increased by 45% compared with the first half of 2014, i.e. an uplift of €2,149K in value: The Treatment of Asbestos and Plasma Solutions activities increased, whereas revenue for the Renewable Energies sector was down.
This performance reflects the progress made through more effective operations and will be perpetuated through reliability investments made at the end of 2014 and which will continue until 2016.
The positive revenue of €560K in S1 2015 therefore illustrates the progression since previous estimates were set. This progression is controlled, with a view to optimizing cash balance.
Results and operational performance:
The operating loss during the first half of 2015 amounted to €8,835K, compared with €7,446K at 30 June 2014.
The Treatment of Asbestos activity recorded Ebitda of €1,381K and operating profit of €249K, compared with a negative Ebitda of €186K and operating loss on €1,413K at 30 June 2014. This strong performance reflects the progress made, which has resulted in increased volumes processed, due to improved management and tighter controls of the production facility as well as sustained commercial momentum.
The Plasma Solutions segment, which accounts for the full extent of the Group's corporate expenses, reduced its operating loss to €1,515K compared with €2,015K at 30 June 2014, thanks in particular to the positive contribution of engineering activities, thus evidencing the recognition of our know-how and commercial dynamism.
The bulk of the group loss was mainly attributable to the Renewable Energies segment, whose operating expenses reflect the ramp-up of the CHO Morcenx plant and the numerous related tests. The results in this segment were also affected by additional provisions for losses upon completion and additional provisions for warranty, representing a total of €1,638K on the EPC contract (having no impact on the cash position of the period). Accordingly, the operating losses recorded by the Renewable Energies segment amounted to €7,471K at 30 June 2015, compared with €3,994K at 30 June 2014.
After the recognition of €224K in financial earnings, €1,160K in tax expenses (including write-off of a €1,250K active differed tax) and minorities interests, the net loss amounted to €9,749K compared with €7,961K at end of June 2014.
Consolidated financial position
In thousands of euros (T€) | 30/06/15 | 31/12/14 | Difference |
Non-current assets | 25,218 | 22,641 | 2,576 |
Current assets (non-cash) | 13,369 | 24,021 | -10,652 |
Cash | 6,653 | 13,640 | -6,987 |
Consolidated equity - Group share and Non- Controlling interests | 7,422 | 16,921 | -9,499 |
Non-current financial liabilities | 7,303 | 7,982 | -679 |
Other non-current liabilities | 728 | 673 | 55 |
Current financial liabilities | 1,374 | 1,359 | 15 |
Other current liabilities | 28,412 | 33,366 | -4,954 |
Balance sheet total | 45,240 | 60,302 | -15,062 |
Net debt | 2,024 | -4,299 | 6,322 |
Net debt | 27% | -25% | 53% |
Shareholders' equity - Group share, in euros per share | 0.11 | 0.24 | -0.14 |
Source: 2015 half-yearly consolidated financial statements closed by the Board of Directors on 26 October 2015, after limited review by the Statutory Auditors.
The balance sheet total stood at €45,240K, versus €60,302K at 31 December 2014, i.e. a decrease of €15,062K.
In the balance sheet assets, the cash position at €6,653K recorded a decrease of €6,987K corresponding to net consumption over the period, and was mainly affected by the requirements of the 'Renewable Energies' segment.
In the non-cash current assets, the complementary financial guarantee of €4,000K that was granted to CHO Morcenx on the EPC contract in 2014 has been reimbursed to €3,870K over the period.
Under liabilities, consolidated equity (Group share) at €7,422K was down €9,499K compared with 31 December 2014, due to the loss of €9,749K over the period, partially offset by the capital increases associated with the conversion of redeemable share purchase warrants (BSAR) for €261K, issue premium included.
The changes in liabilities were partially offset by the increase in current provisions of €2,026K, of which €1,638K is related to the construction project for the CHO Morcenx plant.
The evolution of the other assets and liabilities are detailed in the notes of the financial report (notes § 6.4.6 for the other assets and § 6.4.12 for the other liabilities)
Group net debt amounted to €2,024K at 30 June 2015, versus negative net debt of €4,299K at 31 December 2014 (excess of cash). This debt increase was a result of the reduced cash position. The Group did not resort to additional loans during the period; moreover, it settled the instalments of its various moratoriums (obtained in 2013 and 2014) in the amount of €720 K for the half year.
Net debt ratio at 27% remains limited.
Cash position: operating cash flows
In thousands of euros (T€) | 30/06/15 | 30/06/14 Difference |
Operating cash flows Net disinvestments/(Investments) | -4,903 1,921 | -5,126 223 -150 2,071 |
Operating cash flows at - €4,903K recovered slightly, reflecting the improved performance of the 'Plasma Solutions' and 'Treatment of Asbestos' segments. However, the progress made in these segments was not enough to offset the operating cash burn in the 'Renewable Energies' sector.
Please note that the group's current cash consumption is directly related to ramp-up and final delivery of CHO Morcenx, and therefore remains very dependent upon the timely achievement of the EPC various milestones.
Outlook
The development of the other plants' projects such as CHO Tiper, CHO Locminé and CHO Brocéliande is underway, each following its proper schedule.
CHO Tiper has received a clean (unqualified) favourable opinion from the investigating commissioner and the project is moving to the next steps. The 'Arrêté Préfectoral' (Operating Licence) is expected in Q1 2016, after a complementary 'public enquiry', thus enabling CHO Power to secure financing and start construction.
In addition to the projects already communicated upon, the selective development of new renewable energy projects was continued, meeting the twofold objective of (i) providing CHO Power with a sustained level of activity from 2016 and (ii) preventing the dispersion of teams, whose main priority remains the final delivery of CHO Morcenx. Other projects are currently in the early stages of development and will be announced in due course.
These projects rely on a network of waste depositor or developer partners, and will be structured on a 'BOO' model (Build Own Operate), where the plant will be built by CHO Power and operated by its subsidiary CHOPEX.
CHO Power responds to export requests by producing studies. Although foreign markets are not currently a strategic priority for the Group in terms of project execution, the demand is likely to generate partnership or licence sale opportunities in due course.
Treatment of Asbestos2015 should enable Inertam to confirm its profitability. This target was achieved in the first half of 2015 thanks to more effective production management, and will be perpetuated through structural investments already made or under way.
Furthermore, the recognition of environmental and health risks resulting from the landfill of 'unbound' asbestos by some European countries (Italy, Switzerland, Germany) makes it possible envisage foreign commercial opportunities in due course.
Plasma SolutionsIn January 2015, Europlasma signed a contract with a Chinese manufacturer for the supply of engineering services and equipment for a vitrification unit targeting fly ash produced by waste incineration plants. This plasma unit, with a 30 tonnes/day capacity, will be installed in the Guangdong province, the most populated province of the People's Republic of China, and delivered in early 2016. The equipped incineration plant will be the first Chinese facility able to neutralise and recover fly ash, meeting the Chinese government's requirements regarding environmental protection.
From a business perspective, Europlasma Industries' dual deployment strategy (by sector and region) gave excellent results. In particular:
On the Chinese market, the project launched in 2015 already led to the sale of additional equipment. Besides, a new technical and economic feasibility study on ash vitrification was ordered by another Chinese client. Advanced contacts with several Chinese companies in the area of pollution control could indicate a new sales agreement for plasma equipment and engineering services by 2016.
In the radioactive waste market, Europlasma Industries pursued its technology valorisation work and is currently in contact with key French players to develop solutions addressing the issue of sustainable radioactive waste management and storage
Lastly, the steel sector showed a great deal of interest in plasma technology, in particular to reduce its CO2 emissions, and has led Europlasma Industries to foresee the development of its activity in this area over the next two years. Tests will soon be performed on behalf of a European client on the Morcenx R&D platform, to validate and pre-industrialise the encouraging results of the preliminary study.
As decided by the Board of Directors and in order to improve the understanding of the Europlasma Group's different activities, the various activity names have been changed as follows:
The 'Studies and Engineering, Torches and Processes' segment has been renamed 'Plasma solutions for gases and hazardous waste' or 'Plasma Solutions' and is operated under the 'Europlasma Industries' trade name. This segment also includes the Holding and Corporate Costs.
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