29 Apr, 2022

March 2022 (Q1) Quarterly Update

Phoslock Environmental Technologies (ASX:PET) today provided a trading update for the quarter ending 31 March 2022.



PET’s quarterly cash flow report shows a net cash outflow of approximately $2 million in the March quarter.

Receipts of $2.54 million included $1.8 million from the settlement of outstanding issues with BHZQ Environmental Technology Co Ltd, a former customer and related party in China. The settlement resolves all arbitration and court cases for claims and counterclaims initiated by PET and BHZQ against one another. The settlement represents a further clean-up of legacy issues arising from PET’s operations in China.

Other receipts for the quarter came from HydroScience in Brazil and minor amounts from customers in China.

Administration and corporate costs included ongoing consulting, audit and legal expenses relating to mismanagement issues previously reported, and costs relating to the Australian Federal Police (AFP) investigation of the company’s activities under previous management, which is ongoing. Cost associated with due diligence on the previously announced manufacturing footprint analysis and R&D activities were also incurred in the period.

The company had cash and cash equivalents of over $20 million at the end of the quarter.


Business Update

Sales in the quarter were relatively small but generally in line with expectations as the company rebuilds the sales pipeline in the post pandemic era. The majority of Q1 sales were for Brazil as established and continuing projects were treated.

The company has made several key recent management appointments during the quarter.

In January, Simon Greaves was appointed as Group Executive, Operations, for PET following the retirement of Andrew Winks. The Group Executive, Operations role is a critical role for the business. Primarily this role is responsible for all sourcing, manufacturing, logistics, supply chains and distribution globally. The role also has a coordination function to ensure all global applications are delivered to agreed company standards. Prior to joining PET Simon’s previous roles covered logistics, warehousing and distribution for several large global organisations including Orica Ltd. Simon will be based in PET’s Melbourne head office.

Also in January, PET confirmed the appointment of Dr Kate Waters-Hart to the role of Group Manager, Aquatic Science. Kate is based in Dunfermline, Scotland. The Group Manager for Aquatic Science is another critical role for the business globally. This role oversees and coordinates all the science behind PET’s products, applications and data management. The seamless delivery of the scientific requirements for each project is essential in reinforcing PET as the trusted partner of choice to remediate and manage fresh water in our target markets. Prior to this appointment, Kate worked for PET as a fresh water aquatic ecologist since 2019.

In March, PET announced the preferred site for its proposed second manufacturing facility in Casper Wyoming. Casper is close to key freight hubs in the USA and offers a supportive business environment with a relatively low cost of production and supply. The company has entered into a lease so as to secure the site, pending detailed design work which will continue in the June quarter. A final decision to proceed is contingent on the preparation of a detailed business case, including firming up forecast volume requirements over future years.

On the R&D front, PET continues to make good progress in developing and testing a number of complementary products which, if successful, will expand the company’s addressable markets, such as enabling phosphorus and other nutrients to be removed from flowing water. Potential collaborations with other technology providers are being actively investigated.


Relisting on the ASX

As disclosed at the 2021 financial year business review and strategic outlook presentation on 24 March, PET has lodged a submission to the ASX in support of its objective to relist. PET has lodged audited accounts for the 12 months ending December 2021 as well as audited accounts for the half year period from 1 July to 31 December 2021.

The Company is now in dialogue with ASX in respect of its submission and related matters and is responding to requests from the ASX for additional information. PET is unable to provide any firm timetable for these matters to be resolved to the satisfaction of the ASX, but shareholders will be kept updated on the company’s progress. Having PET shares relisted on the ASX is a high priority for management.



In the short-term, management expects another challenging year as the company rebuilds the sales pipeline and diversifies into new markets globally.

Longer term, as additional resources are secured to support the company’s expansion plans and the COVID situation globally stabilises, management expects to see increased interest and opportunity for Phoslock treatments in markets around the world.

Management firmly believes the company has a clear competitive advantage and PET addresses a large and growing market globally.

Further business updates and commentary will be provided at PET’s AGM on Friday May 27th, 2022.


For full 2022 Q1 results, download PDF.