EAG Investment Update

RNS Number : 7164C

Scirocco Energy PLC

13 October 2022

 

13 October 2022

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"), and progress through the first year of that investment.

On 25 August 2021, Scirocco announced the completion of its £1.2 million investment into EAG, a specialist acquisition and operating vehicle in the sustainable energy sector, and in which Scirocco holds 50% interest.  EAG subsequently used the funds to acquire 100% of Greenan Generation Limited (GGL) and its 0.5MWe Anaerobic Digestion (AD) plant in Northern Ireland, completing that deal on 1 October 2021.

In the 12 months since completing that investment, GGL has performed strongly, surpassing revenue and EBITDA projections set at the point of acquisition.  Key operational and financial highlights associated with the first year of GGL ownership include:  

· GGL delivered c. 4 million kWh during 12 month period of EAG ownership (equivalent to annual usage of 1,250 homes on average)

· Operational availability in excess of 93%

· EBITDA estimate for 12 months to 30 September 2022 of £602,000 (unaudited)

· The above EBITDA estimate is after c. £295,000 of mechanical upgrades and improvements made to future proof the GGL asset

· The above EBITDA estimate is also after GGL provided c. £80,000 of support to EAG for running costs and in support of BD activity to grow the wider business and identify further investment opportunities

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

"We're delighted to provide an update covering the first year of the JV with EAG and its ownership of GGL.  As noted, GGL has performed strongly, exceeding projections at the point of acquisition and demonstrating the highly cash generative, profitable nature of the asset acquired. This strong cash flow profile has meant that EAG/GGL is self-sustaining and has enabled re-investment into the asset to enhance operational performance and improve EBITDA margins, with no further investment from Scirocco. Surplus cash generated by GGL will now be available to support further acquisitions.

The initial investment in EAG/GGL has validated the strategic focus on this asset type, and the EAG team is actively assessing a highly attractive pipeline of additional investments.  The proposed business model benefits from economies of scale, as operating techniques and technologies are utilised to improve performance, and the inaugural investment in GGL provides a strong template to replicate as we seek additional value accretive investments of this kind.

This now presents Scirocco and its stakeholders a superb opportunity to invest in a growing, profitable asset base which in due course will deliver further cash flow for re-investment.  Scirocco's divestment of legacy oil and gas investments supports the Company's strategic focus on energy transition opportunities, and will provide the Company with additional liquidity to pursue compelling opportunities."

Commenting on the update, Chris Kerr, MD of EAG, said:

" Given the pipeline of projects that EAG has secured in the green gas and circular economy spaces over the last 12 months, we are looking forward to the continued support of Scirocco as our primary investor. Delivering even half of our current pipeline will create a business of significant scale which we can all be hugely proud of. Optimisation of the Greenan asset by the EAG team has delivered excellent numbers in our first year of ownership, and we are excited to deliver additional similar projects in 2023, as well as partnering with a global nutrient manufacturer to deliver phase one of our bio-fertiliser plant roll out. With the technical pathway to upgrade our AD residues into high value growth media and fertiliser, EAG is in the perfect position to serve the ever growing demand for sustainable gas and fertiliser."

For further information:

Scirocco Energy plc Tom Reynolds, CEO Doug Rycroft, COO	[phone]
Strand Hanson Limited, Nominated Adviser Ritchie Balmer / James Spinney /  Robert Collins	[phone]
WH Ireland Limited, Broker Harry Ansell / Katy Mitchell	[phone]
Buchanan, Financial PR Ben Romney / Jon Krinks	[phone]

 

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