Arverne Group (Paris:ARVEN), a French industrial company specialized in the production of underground resources, publishes its 2023 annual results:
- Increase of the Exclusive Exploration Permit portfolio (geothermal energy and geothermal lithium), raising the secured acreage from 171 km² to 2,852 km²;
- A strong financial position with net cash amounting to €131.5 million at year end;
- 9% increase in gross business volume to €11.9 million, including €1.8 million generated by the shallow drilling activities of DrillHeat, an unconsolidated subsidiary operated by Arverne Group which owns a 50% share;
- A key year of structuring, with total headcount increasing to 142 employees (160 including 18 within DrillHeat) at end of 2023, + 70% compared to the end of 2022 in order to support the Group’s 2030 targets.
- two major financial operations including a successful IPO on Euronext Paris (gross amount of around €185 million raised) with strategic financial and industrial partners;
- increase in the number of Exclusive Exploration Permits (geothermal energy and geothermal lithium), bringing the portfolio to eight PER and the total acreage from 171km² to 2,852km², in particular by completing the acquisition of GéoRhin, renamed 2gré;
- the deployment of approximately €50 million of CapEx mainly to accelerate the expansion of the drilling rig fleet;
- the ongoing testing and trials in partnership with the Norwegian group Equinor in order to select the most suitable Direct Lithium Extraction technique (DLE) for Alsace’s brines in 2024;
- the signature with Renault Group of a contract for the sale of battery-grade lithium, with the first lithium production planned for 2027;
- the implementation of Arverne Group’s mission, as a mission-driven company, with the setup of 10 operational targets and extra-financial commitments regarding climate and environment, employees’ well-being and the development of the local communities where the Group operates.
Arverne Group’s mission and the definition of extra-financial targets
2023 was the year of the implementation of Arverne Group’s mission. By deciding to become a mission-driven company voluntarily in 2022, the Group confirmed its engagement to deeply anchor CSR in its business model. Arverne Group is determined to play an active part in the ecological transition, while ensuring that it benefits as many people as possible, in particular its employees and the regions in which it operates.
After including its raison d'être in its articles of association in 2022, the Group set up its Mission Committee in 2023 (composed of 2 external members and 2 employees) and defined 10 operational targets. These extra-financial commitments are based on three pillars to which Arverne Group is committed to reinforce its actions: the climate and the environment, the well-being of its employees and the development of the regions in which the Group operates.
The implementation of Arverne Group’s mission and the deployment of its operational targets in 2023 have been audited by an independent third-party. In its audit report, which will be appended to the Group’s annual report, the auditor concluded that all the social and environmental objectives had been met.
Furthermore, in addition to implementing its roadmap as a mission-driven company, the Group has included CSR criteria in the variable part of the corporate officers’ compensation for 2024, taking into account:
- a safety target;
- a carbon assessment, followed by the definition of targets for limiting greenhouse gas emissions;
- actions aimed at promoting diversity, and
- training programs for the employees.
Strong commercial momentum driven by shallow drilling that confirms the Group’s execution capacities
| In thousands of euros | | 12/31/2023 | | 12/31/2022 | | Change |
| Deep drilling (Arverne Drilling Services) | | 9,835 | | 10,403 | | -6% |
| Other | | 258 | | 313 | | -17% |
| Consolidated revenues | | 10,092 | | 10,717 | | -6% |
| | | | | | | |
| Shallow drilling (DrillHeat) | | 1,835 | | 220 | | x8.3 |
| Gross business volume | | 11,927 | | 10,937 | | +9% |
The gross business volume shows a +9% increase to reach €11.9 million. A key indicator, this activity performance that aggregates all the billings of each subsidiary and restated for the consolidation effects, confirms the Group’s abilities to realize the coming drilling operations both internally and for external customers in accordance with its development plan.
This performance includes the business generated by DrillHeat for €1.8 million. Operated by Arverne Group which owns a 50% share, DrillHeat’s full year 2023 turnover (€3.7 million) is not recognised in the consolidated revenues for the 2023 financial year, but clearly shows the Group’s step up in the drilling segment. DrillHeat drilled more than 33,000 meters, laid 196 geothermal probes, and operated 3 drilling machines.
Consolidated revenues at the end of 2023 totalled €10.1 million, down 6% compared to the previous financial year. This is explained by the temporary suspension of a well maintenance campaign. The revenues were generated by supplying drilling equipment and skilled labour.
The subsidiaries Lithium de France (62.6% owned by Arverne Group) and 2gré (a 100% company acquired in March 2023) are continuing their investments, with the aim of producing geothermal heat for the first time in 2025 for 2gré, and geothermal lithium for the first time in 2027 for Lithium de France.
Operating income in line with the Group’s structuring strategy, non-cash items related to the merger with the SPAC Transition that impact the net income
The Company strengthened its teams with a total headcount (FTE) increasing from 86 to 142 employees between the end of 2022 and the end of 2023, resulting in an increase in personnel expenses to €13.1 million (x2.3 compared to 2022). This underscores firstly the increase in the drilling order book, and secondly the strengthening of the skills required for the investment program announced by the Group. Personnel expenses include a €2.3 million expense for the allocation of free shares to all employees.
| In thousands of euros | | 12/31/2023 | | 12/31/2022 |
| Revenues | | 10,092 | | 10,717 |
| Purchasing and subcontracting | | -11,410 | | -6,268 |
| Personnel expenses | | -13,110 | | -5,786 |
| Taxes and duties | | -292 | | -207 |
| Other income and expenses | | 2,791 | | 846 |
| Current EBITDA3 (excl. exceptional items) | | -11,928 | | -699 |
| Depreciation and provisions | | -1,898 | | -1,968 |
| Current operating income | | -13,826 | | -2,667 |
After taking into account this scheduled investment phase, in order to strengthen the Company’s headcount, the current EBITDA (excluding exceptional items) amounts to -€11,9 million. The net income stands at -€53.8 million mainly because of a -€54.1 million non-cash impact that relates to the listing costs incurred with the SPAC merger with Transition4. Excluding this non-cash impact, the net income would have been close to breakeven.
Strong growth in assets
Total assets rose sharply in 2023, from €20.7 million to €219.5 million.
This change mainly reflects:
- the investments made over the period (total fixed assets increasing from €11.2 million to €58.6 million) in particular the acquisition of new Exclusive Exploration Permits (PER) for geothermal projects by 2gré, the development of projects combining geothermal energy and geothermal lithium production (Lithium de France), as well as the acquisition of a deep drilling rig (€10.3 million);
- the successful completion of two major financial operations (gross cash flow which increases from €3.2 million to €143.2 million), which secured the required financial flexibility to pursue the investments announced by the Company:
-
a series B funding round of €44 million, with the following participants:
-
Equinor Ventures for €7 million (the investment subsidiary of the first Scandinavian energy group that had already invested in 2022 as part of a series A round);
-
Norsk Hydro as a new shareholder for €17 million (a global Norwegian player with strong presence in aluminium, energy and metal recycling sectors);
-
Arverne Group for €20 million.
-
€162 million raised from financial and industrial investors in the context of the IPO on Euronext Paris
A robust financial structure
The shareholders’ equity increased sharply to €178.4 million at the close of the financial year (-€4.9 million on December 31, 2022). The main explanation is the €162 million raised by Arverne Group.
With a low indebtedness of €11.8 million, mainly resulting from the financial liabilities (€7.5 million) taken over with the GéoRhin acquisition, the net cash position shows a large surplus of €131.5 million, allowing the Group to execute its investment program.
Targets for 2024
Arverne Group’s financial targets and operational structuring milestones for 2024 are:
- a gross business volume of between €16 million and €18 million, i.e. growth of between +35% and +50% compared to 2023. This performance will be again mainly driven by the drilling activity, which already includes strong growth secured by the signature of commercial contracts;
- CapEx deployment of around €50 million;
- a pre-feasibility study (PFS), a key step that will enable to update the technical and financial assumptions relating to geothermal lithium production, and to select the type of battery-grade lithium (hydroxide or carbonate).
- 3 new filings for drilling permits, preliminary step to sell geothermal heat;
The Group also reminds that, on the first quarter of 2024, it has been awarded a new lithium permit (Les Poteries Minérales), and announced a capitalistic partnership with Herrenknecht AG to accelerate the acquisition of drilling machines in order to meet both its own drilling needs and external customer demands.
Restatement of the 2030 ambitions
Arverne Group confirms its ambitions for 2030:
- 2024-2030: deployment of a total gross investment program of €2,400 million, including:
- €6005 million by 2gré (sale of 1.8 TWh of geothermal heat per year) and,
- €1,8006 million by Lithium de France (sale of 3 TWh of geothermal heat per year, sale of 30 kt of battery-grade lithium7 per year).
- 2025: first geothermal heat production,
- 2027: first geothermal lithium production, revenues to reach between €200million and €350 million8 with an EBITDA margin target of around 60%,
- 2030: revenues to reach between €800 million and €1.15 billion9 with an EBITDA margin target of around 70%.
| Next publication: half-year 2024 results, 25 September 2024 (after trading) |
Consolidated income statement
| In thousands of euros | | | | |
| | 2023.12 | | 2022.12 |
| | 12 months | | 12 months |
| Revenues | | 10,092 | | 10,717 |
| Other operating income | | 1,241 | | 45 |
| Capitalised production | | 2,841 | | 961 |
| Purchases consumed | | -574 | | -774 |
| External expenses | | -10,836 | | -5,494 |
| Personnel expenses | | -13,110 | | -5,786 |
| Taxes and duties | | -292 | | -207 |
| Other operating expenses | | -1,291 | | -160 |
| Current EBITDA (excl. exceptional items) | | -11,928 | | -699 |
| Depreciation and amortisation | | -1,898 | | -1,968 |
| Current operating income | | -13,826 | | -2,667 |
| Other non-current operating income | | 13,435 | | - |
| Other non-recurring operating expenses | | -60,939 | | 0 |
| Operating income | | -61,330 | | -2,667 |
| Income from cash and cash equivalents | | 4,933 | | - |
| Cost of gross financial debt | | -807 | | -125 |
| Cost of net financial debt | | 4,118 | | -125 |
| Other financial income | | 2,691 | | 954 |
| Other financial expenses | | -272 | | -18 |
| Income before tax | | -54,784 | | -1,856 |
| Income tax | | 968 | | -19 |
| Income after tax | | -53,816 | | -1,875 |
| Share of net income of equity-accounted companies | | 0 | | 0 |
| Total net income | | -53,816 | | -1,875 |
| | | | | |
| Group share | | -52,035 | | -1,646 |
| Share of non-controlling interests | | -1,782 | | -228 |
| Earnings per share | | -2.34 | | -0.11 |
| Diluted earnings per share | | -2.34 | | -0.11 |
Consolidated balance sheet assets
| In thousands of euros | | | | |
| | 2023.12 | | 2022.12 |
| | 12 months | | 12 months |
| Intangible assets | | 39,192 | | 4,475 |
| Tangible assets | | 19,445 | | 6,685 |
| Financial assets | | - | | 20 |
| Deferred tax assets | | 3,448 | | 0 |
| Non-current assets | | 62,085 | | 11,180 |
| Inventories | | 413 | | - |
| Trade receivables and others | | 15,275 | | 1,109 |
| Other financial assets | | 1,096 | | 72 |
| Cash and cash equivalents | | 143,229 | | 3,165 |
| Current assets | | 160,012 | | 4,346 |
| Assets held for sale | | - | | 5,175 |
| | | | | |
| Total Assets | | 222,097 | | 20,701 |
Consolidated balance sheet liabilities
| In thousands of euros | | | | |
| | 2023.12 | | 2022.12 |
| | 12 months | | 12 months |
| Capital and share premium | | 194,301 | | 1,157 |
| Other reserves | | 21,621 | | -7,005 |
| Accumulated results | | -51,832 | | 204 |
| Non-controlling interests | | 14,346 | | 748 |
| Total shareholders’ equity | | 178,438 | | -4,896 |
| Shareholders’ equity - Group share | | 164,092 | | -5,644 |
| Borrowings and financial debt | | 9,904 | | 2,242 |
| Other provisions | | 1,632 | | 44 |
| Other non-current liabilities | | 3,437 | | - |
| Deferred tax liabilities | | 5,465 | | 3 |
| Total non-current liabilities | | 20,438 | | 2,290 |
| Borrowings and financial debt - current | | 1,856 | | 2,934 |
| Other provisions | | 992 | | - |
| Other current liabilities | | 20,371 | | 12,972 |
| Total current liabilities | | 23,221 | | 15,906 |
| Liabilities associated with assets held for sale | | | | 7,401 |
| Total Liabilities | | 222,097 | | 20,701 |
Cash flow statement
| in thousands of euros, IFRS | | 2023 | | 2022 |
| Net income | | -53,816 | | -1,875 |
| Depreciation, amortisation and provisions net of reversals | | 2,262 | | 1,966 |
| Other changes | | 40,591 | | -667 |
| Cash flow from operations | | -10,964 | | -576 |
| Changes in trade and other receivables | | 2,053 | | 353 |
| Change in trade and other payables | | 2,121 | | -503 |
| Change in other current receivables / payables | | -8,690 | | -307 |
| Tax paid | | 130 | | -28 |
| Net cash flow from operating activities | | -15,349 | | -1,061 |
| Acquisition of fixed assets | | -15,590 | | -1,170 |
| Capitalised development expenditure | | -5,914 | | -3,978 |
| Other changes | | 1,060 | | 962 |
| Net cash flow from investing activities | | -20,444 | | -4,187 |
| Capital increases | | 114,599 | | 4,368 |
| Debt issues | | 15,499 | | 2,100 |
| Loan repayments | | -7,730 | | -130 |
| Other changes | | 53,487 | | -892 |
| Net cash flow from financing activities | | 175,856 | | 5,446 |
| Change in cash, and cash equivalents | | 140,063 | | 197 |
| Cash and cash equivalents as of January 1 | | 3,165 | | 2,654 |
| Cash and cash equivalents as of December 31 | | 143,227 | | 2,851 |
| Cash and cash equivalents associated with assets held for sale | | | | 313 |
| Cash and cash equivalents as of December 31 | | 143,227 | | 3,165 |
About Arverne Group
Arverne Group specialises in harnessing underground resources to transform them into environmentally friendly, local and renewable energy, contributing to the prosperity of local communities. As an integrated industrial player, Arverne Group spans the entire underground value chain, from exploration to drilling and production to sales to end-users. Arverne Group aims to become the French leader in geothermal energy and its by-products, including low-carbon geothermal lithium.
Founded in Pau in 2018, Arverne Group has structured its business activities around several subsidiaries, notably 2gré (sale of geothermal heat), Lithium de France (geothermal heat and extraction and sale of geothermal lithium) and Arverne Drilling Services (drilling operations).
A mission-driven company, Arverne Group is listed on the professional segment of Euronext Paris and is part of the Tech Leaders segment of Euronext Paris (ISIN FR001400JWR8, mnemonic ARVEN).
www.arverne.earth
Disclaimer
This press release contains certain forward-looking statements that should not be regarded as historical facts. These statements are not guaranteeing of the Company’s future performance. These forward-looking statements relate to the Company’s future prospects, developments and marketing strategy and are based on expectations and estimates of amounts not yet determinable. Forward-looking statements are subject to a variety of risks and uncertainties, in particular those described in the merger prospectus approved by the Autorité des Marchés Financiers on July 27, 2023 under number 23-331, as they relate to future events and are dependent on circumstances that may or may not materialise in the future. In particular, the Company’s actual financial position, results and cash flow, as well as the trends in the sector in which the Company operates, may differ materially from those proposed or reflected in the forward-looking statements contained in this press release. Even if the Company’s financial position, results, cash-flows and developments in the sector in which the Company operates were to conform to the forward-looking statements contained in this press release, such results or developments cannot be construed as a reliable indication of the Company’s future results or developments. The Company provides the information contained in this press release as of March 27, 2024, and disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Certain figures and numbers in this press release have been rounded, therefore, the totals and percentages shown in the tables do not necessarily equal the sum of the figures, amounts or percentages rounded individually. The audit procedures have been carried-out and the statutory auditors’ report on the financial statements should be released end of April 2024.
The audit procedures have been carried-out and the statutory auditors’ report on the financial statements should be released end of April 2024
______________________
1 Total acreage of the permits (PER) of which 2.530km² coming from the acquisition of Géorhin and in a renewal process
2 Includes 50% of the turnover of DrillHeat (1.8M€), unconsolidated subsidiary operated by Arverne Group who owns a 50% share
3 Corresponds to the current operating income before depreciation
4 Immediate recognition as expenses of all the preference shares not taking into account the reaching of the minimum threshold for each category of them to be converted
5 Before subsidies
6 Before subsidies and 62% to be borne by Arverne Group
7 LCE lithium carbonate equivalent
8 Company’s assumptions: €65/MWh (heat price for 2gré), €45/MWh (heat price for Lithium de France), before consolidation impact and depending on the PFS results
9 Company’s assumption: €25k/t LHM +/-20%, €65/MWh (heat price for 2gré), €45/MWh (heat price for Lithium de France), before consolidation impact and depending on the PFS results
View source version on businesswire.com: https://www.businesswire.com/news/home/20240327829020/en/
Contacts
Media Relations:
communication@arverne.earth
arvernegroup@image7.fr
Investor Relations:
investor.relations@arverne.earth
SEITOSEI.ACTIFIN - Mathilde Guillemot
mathilde.guillemot@seitosei-actifin.com
