Listed climate-change aggregator Pacific Environment Limited is looking to bolster its balance sheet this FY after reporting losses of $9.14 million. Its CEO Geoff Masters has left the firm but will stay on as a non executive director. He tells Gold Coast Business News that it has been a tough year.
You attribute losses to two companies that were acquired by PEL last year. Commercial Energy Services (CES) is under a deed of company arrangement after moving out of voluntary administration, while EcoVision has also suffered impairments. Sounds like a tough space for short-term investment?
It seems everyone from employees, creditors and customers are supportive of that company (CES) coming out the other side of what has been a difficult process and time. For the broader PEL Group obviously we would like circumstances to be different.
What it has confirmed however is that the way PEL operates with each company run by its own management teams and company structures they aren’t impacted by a stumbling CES at an operating business unit level. The management teams aren’t side-tracked from running their own business that responsibility-attention goes to people like myself and the board where it should go.
EcoVision is doing very well with pilots with major players under way in Australia and projects we are still in pitching for in the Middle East and of course the ‘let’s get things happening’ approach President Obama has taken around energy efficiency at the grass root level is great news for us. How we harness and follow the right opportunities is the key here.
This technology was born and bred on the Gold Coast by Steve Miller and Rick Maddox and their small team and it never fails to impress all over the world. Choosing the right projects, selecting the right global partners are the real keys to the success of this product.
Is the investment profile shifting?
Investment profile is changing as the company (PEL) is getting older and the investment market is altering. Classic bank debt (something we haven’t had much of in the past) is very hard to come by under realistic terms. We are finding interest returning from investors who are seeking key cornerstone investments.
These investors are not spreading their funds across multiple passive type investments, they are seeking to conduct high touch, high understanding/due diligence of companies such as PEL so they can assess their risk investment profile properly. That’s good for a company like PEL because we have a clear understanding of the markets we operate in today and where bounce in markets could be coming from.
Tell us briefly PEL’s modus operandi re: acquisition?
Our founding businesses are primarily based on clients needs to assess, manage and report on their environmental impacts in order so that they can meet their operating licences or government reporting regulations. So to an extent, client’s still need to use the services we offer so they have weathered the economic storms well.
Our work profile may have changed more in the November through to February time from Environmental Impact Studies (EIS) of new construction type work to companies like mines looking to make existing facilities larger and more efficient rather than taking big new project work on.
That of course helps from a competitive position as they are already our clients so building on what we already know is more effective in both terms of cost and risk from our client’s perspective.
How difficult is it to educate brokers to get a handle on what you do?
Gaining broker support for small caps is always a challenge but again this cautious re-emerging share/investment market means that the good stock brokers are starting to engage with us on the basis that environment is a space of growth, we have been weathering a hell of a storm and they can get to know the key people behind the business and its fundamentals. Then they can take an investment to their already cautious clients. Finding one or two good brokers to work with us closely is something our chairman and acting CEO (Darren Herft) is personally focused on.
What are the challenges ahead?
Understanding risk, risk mitigation and dealing with reality, I think will be key phrases we will hear and see a lot of in the next 12 to 36 months as people start to move back into the investment markets and I believe PEL will work on these elements from an investor’s point of view. It’s certainly what our companies do for a living when it comes to the environment. Understand, mitigate and manage environmental risk.
A problem or a huge growth jump in any single PEL-owned business doesn’t become all consuming for the whole organisation. The employees and managers can be sympathetic or excited-proud of another PEL company but they don’t get washed over by another company’s state.
Where to now?
Not sure yet. Some time off planes and getting to know the family again sounds good.
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