Petrotec AG

Corporate News

Results of first half year 2015 (Jan. 1 to Jun. 30)

PETROTEC AG: Weaker H1 results due to low biodiesel prices and lower trading and tolling volumes

- Net loss of EUR 2.3m for H1

- Net cash flow from operating activities of EUR -5.4m in H1 (H1 2014: EUR 4.8m)

- Equity ratio declined to 44.6 % (Dec. 31, 2014: 51.2 %)

Borken, August 12^th, 2015 - PETROTEC AG (ISIN DE000PET1111), the largest European producer of waste-based biodiesel predominantly from used cooking oil, reports group sales of EUR 60.9m, down 36.5 % compared with the prior year (H1 2014: EUR 96.0m) in the first half (Jan. 1 to Jun. 30) of 2015. The company generated an operating loss (EBIT) of EUR 1.6m (H1 2014: KEUR 9). Net loss reached EUR 2.3m (previous year: EUR 0.9m) and earnings per share (EPS) went down to approx. EUR - 0.10 (H1 2014: approx. EUR -0.04).

Weak market conditions in H1 2015 pushed sales volumes of biodiesel down to 64,542 tons, down approx. 30 % compared with the prior year H1 2014: 92,972 tons, mainly due to the significant drop in trading activity to 2,860 tons (down 81.3 %) vs. 15,275 tons in H1 2014. The trading spreads almost completely disappeared mainly due to regulation changes in the German market. The average selling price for the company's product declined by more than 10 % compared to the second quarter last year, and more than 12 % in H1 2015 compared to H1 2014, having a negative impact on the company's revenues. Unfortunately, the above trends in the UCOME market were not reflected in the feedstock market and the decrease in feedstock prices did not fully compensate the decrease in the UCOME price.

In Spain, the management decided in mid 2014 to stop local tolling production due to the decreasing trend in UCOME prices. Therefore, in terms of biodiesel sales for 2015, the company is missing the 7,700 tons it had produced in Spain in the first half of 2014. Production volumes in H1 2015 declined by 7,026 tons (down 10.1 %) to 62,381 tons (H1 2014: 69,407 tons) due to tighter feedstock supply as well as production slow-downs and interruptions for different technical reasons.

Equity ratio decreased to 44.6 %

As of Jun. 30, 2015 total assets have increased by EUR 1.9m to EUR 49.0m. The increase from year end 2014 is primarily due to the increase in inventories by EUR 4.3m. Cash and cash equivalents decreased from EUR 11.1m as of Dec. 31, 2014 to EUR 7.9m as of Jun. 30, 2015. The new major shareholder, REG European Holdings B.V. (REG), took over the role of the supportive shareholder from IC Green Energy Ltd. As of June 2015, REG has provided PETROTEC with financial debt amounting to EUR 11.5m compared to EUR 12.9m at year end 2014 after a principle payment of EUR 1.0m and Q4 interest (EUR 0.4m) for the year 2014 were paid during the first three months of 2015. On top of that PETROTEC AG paid interest for its outstanding loans on H1 2015 in the amount of EUR 0.7 mill, most of which was paid to REG. Total liabilities increased by EUR 4.2m to EUR 27.2m as of Jun. 30, 2015 compared to EUR 23.0m as of Dec. 31, 2014, mainly due to short term working capital financing. PETROTEC's equity ratio declined to 44.6 % compared to 51.2 % as of the balance sheet date on Dec. 31, 2014, which is mainly attributable to the accumulated loss of the period 2015 and the increase in total assets.

Compared to 2014 year end PETROTEC's working capital increased by EUR 5.2 m to EUR 11.4m due to the development of inventories and trade receivables. Due to the negative income of the period and higher inventory position, PETROTEC generated a negative cash flow from operating activities amounting to EUR -5.4m in H1 2015 (H1 2014: EUR 4.8m).

Delisting of PETROTEC AG

On April 8, 2015, the Frankfurt Stock Exchange approved the application of the company, dated March 24, 2015, for the revocation of the admission of its shares to trading in the regulated market of the Frankfurt Stock Exchange and published this revocation on the same date so that the revocation of the admission of the shares to trading in the regulated market of the Frankfurt Stock Exchange will become effective as of the end of October 8, 2015. Accordingly, the PETROTEC AG shares will no longer be traded on any regulated market of any stock exchange as of the day-end of October 8, 2015.

Regulation Update

The de-carbonization regulation which has been effective in Germany since January 1, 2015 introduced the following CO2 reduction targets for marketers of fossil fuels: 2015: 3.5 %, 2017: 4 %, 2020: 6 %. Obligated parties (= oil companies) seem to be able to comfortably reach the 3.5 % target which reduces demand on the market. The waste-biodiesel association MVaK has intervened with the authorities in order to safeguard the high CO2 emissions reduction in the application of the law as there were some practices by auditors slightly limiting this advantage. Given the "right" price, UCOME remains the undisputed leader in biodiesel CO2 reduction.

After continuous negotiations in Q1, on April 1, 2015 EU Member State ambassadors gathering at the Council of permanent Representatives reached a new deal on the ILUC proposal. This latest negotiating position notably i) maintains a 7 % cap for crop-based biofuels, ii) rejects the inclusion of ILUC factors, iii) and clarifies that double counting for non-commercially available advanced biofuels in part A of Annex IX should be counted towards the 2020 10% target of use of renewable energy in transport, as it is the case with the double counting for part B of Annex IX, which includes UCO-based biodiesel.

After a final positive vote by the European Parliament's Plenary Session on April 29, 2015, the EU Council (= 28 Member States) approved the same text in July 2015.

Status for UCO: the double counting for UCO-based biofuels is maintained until 2020 and after 2020 (when the RED targets expire) only low ILUC biofuels with high GHG savings will be promoted.

Outlook

In the longer term, the management believes that the company holds the necessary competitive attributes, compared to other waste-based biodiesel producers, to recover from the losses it has experienced in the past few quarters. The management holds a positive view of the ability of the company to achieve this recovery as soon as supply and demand in the market rationalize.

On the short term, due to the term decreasing trend of the waste-based biodiesel prices driven by the weaker demand for the product, the management expects a relatively weak second half-year. The company management has revised its guidance for the financial year 2015 as announced on March 18, 2015 and still expects the annual sales to meet its original guidance of EUR 100 m to 150 m, however expects the EBIT margin to drop to a range of -2 and -4 %.

Report download

The full H1 2015 financial report can be found in the following link:
http://www.petrotec.de/core/cms/front_content.php?idart=386&changelang=2&lang=2

PETROTEC group financial figures

Disclaimer

This corporate news contains forward looking statements, which are based on assumptions and estimates of the management of PETROTEC AG. Although PETROTEC management believes that these assumptions and estimates are correct, actual future developments and results can deviate substantially from these assumptions and estimates due to many factors. These factors can include alteration of the economic situation, legal and regulatory constraints in Germany and the EU, and changes in PETROTEC's general business and competitive environment. PETROTEC assumes no liability and provides no warranty that future developments and actual future results will conform with the assumptions and estimates expressed in this corporate news notification.

About PETROTEC AG

PETROTEC AG, Germany, is the largest European producer of waste-derived biodiesel, mainly based on used cooking oil. The Company owns an overall nominal production capacity of 185,000 tons per year at two locations in Germany. PETROTEC runs a vertically integrated business model including own collection of used cooking oil, treatment and refining of the raw material up to the technologically demanding production of waste-based biodiesel. The Company sells its biodiesel primarily to large mineral oil companies in northwest Europe. The usage of waste based biodiesel enjoys a preferential double counting scheme granted by major EU countries as part of the mandatory blending quotas. PETROTEC's EcoPremium biodiesel provides significant environmental and climate advantages with the highest CO2 emission reduction (compared with fossil diesel) amongst all biofuels approved by the EU Renewable Energy Directive (2009/28/EC). Since its IPO in 2006, PETROTEC cleaned more than 1m tons of waste and saved over 3m tons of CO2 emissions. PETROTEC is a public listed company (ISIN DE000PET1111) in the regulated market of Frankfurt Stock Exchange, in the Prime Standard segment, complying with high international transparency standards. It has a capital stock of EUR 24,543,741, equalling 24,543,741 shares. As at balance sheet date Dec. 31st, 2014, the main shareholder is REG European Holdings B.V., Netherlands, with a stake of 84 %, free float is approx. 10 %. In the business year 2014 (Jan. 1st to Dec. 31st) PETROTEC reached sales of EUR 167.2m and generated an EBIT of EUR -2.2 m and a net loss of EUR -3.8m The Company employs about 105 employees.

Press contact

PETROTEC AG
Vera Berlin-Knippenberg
Investor Relations
Tel.: +49 (0) 2862 910080
ir@petrotec.de

End of corporate news