Phoslock Environmental Technologies’ Business Updates From The AGM

  • May 03, 2019 AEST
  • Team Kalkine
Phoslock Environmental Technologies’ Business Updates From The AGM

Phoslock Environmental Technologies Limited (ASX: PET), a provider of water technologies and engineering solutions, organised its Annual General Meeting on 3rd May 2019. The group presented its financial and operational summaries and laid down the key drivers of its business. The company also provided an insight on a few of its projects.

The FY18 total revenue was recorded at $18.7 million, and the NPBT was $3.5 million. The company’s cash flow from operations for the period of January-March 2019 was $6.0 million. The company’s balance sheet appeared to be strong with the net assets approximating to $27 million. The group’s total cash balance stands at $12 million, and it is entirely debt free.

It is, hence, fostering good investor relations with the market cap above $200m and improved liquidity. The Board and Senior Management hold more than 29% of the group’s shares (more than $156 million).

For FY19, the forecasted revenue is expected to be in the range of $27 million to $30 million. The NPBT is likely to fall under the bracket of $6 million to $8 million.

In the China market, the company received an initial contract of $8 million to $10 million for the Beijing canals and rivers, and the maintenance revenue of between $20 million to $40 million is expected over the next 18 years. Besides this, there are over $20 million of Wetland Projects in Beijing. The company has already delivered 130,000 tons of materials (zeolites and volcanic materials) for construction along with a Geo-Textile protective cover.

Addressing the two years old China business, Chairman, Laurence Freedman stated that in the first 18 months of the business, China sales were $20 million, with a gross profit margin in excess of 50%.

Adding on, Deputy Chairman, Zhigang Zhang admitted that China is a great market and water quality has improved in the last few years. As China has the largest number of reservoirs in the world (23,842), PET has set up its wholly-owned subsidiaries in Beijing and Shanghai, and a factory in Changxing. He drew attention to the 2018 annual report, and stated that as per the numbers mentioned in the Annual report, 70% of PET’s revenue comes from the Chinese market, with high returns.

For marketing and sales, PET China has sales channels and marketing networks in Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta and Yunnan-Guizhou regions.

The management also discussed a few key drivers to accelerate its future financial performance. There has been an increment in sales in China and other international markets with a comprehensive product and scientific and engineering solutions, driving the new sales. The increased maintenance revenue contributes to re-occurring income. Over 60% of the company’s projects and applications have had repetitive customers.

Recent International Projects of the Company Include:

The Serpentine in London, UK; Drinking water reservoir in Belgium; Drinking water reservoir in Brazil and Pampulha in Brazil. The South China lakes, a government-funded project with nine highly polluted lakes, are amongst the major new project areas.

On the applications side, in the US Wetland/ Everglades Trial, the company has a huge potential but is required to absorb phosphorus before entering the area. Besides this, the increasing number of drinking water reservoir projects is a major recent breakthrough application.

The new products of the company include bacterial products, reusable filter material, constructed wetlands, Phoslock and Bacteria Brick and high-speed aerators. The company uses environmentally friendly products and is on track on the ethical investment front too.

Stock Price Information:

As on 3rd May 2019, the stock is priced at A$0.435, up 4.819% compared to its previous day’s price.


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