ECT intends to sell B2C wood briquette retail business

Environmental Clean Technologies Limited (ASX: ECT) (“ECT” or “Company”) advises it has commenced a process for the sale of its retail recycled hardwood briquette business, Wood247.

Key points:

• Discontinuation of this business will mean revenues will be substantially downgraded from $202,038 in September 2021 quarter to $54,024 in the December 2021 quarter and then nil in subsequent quarters. The receipts from customers cashflow implications are consistent.
• ‘Wood 247’ business brand featuring recycled, Australian made hardwood briquettes
• Business-to-consumer (B2C) channel servicing Melbourne, Mornington, Geelong, Macedon Ranges and Ballarat areas

This business was initially established as a pilot from March 2021 to test the retail market for eco-friendly recycled wood briquettes and to gauge how that may support ECT’s broader strategy around revenue diversity.

Following the pilot’s conclusion, which covered the high-demand winter period, the Company conducted a strategic review of the results and decided that despite very promising sales and positive market response, this niche, consumer-focused business represents an unnecessary distraction to its headline projects in Bacchus Marsh and Yallourn. No material costs have been incurred to date with the sale process.

Managing Director Glenn Fozard commented:

“This business was conceived at a time in ECT’s life when we were looking for ways to diversify revenue and help us reach cash-flow positive as a company. However, now that we are focusing on our Net Zero and hydrogen technologies with the aim of developing a commercial scale Net Zero Hydrogen Refinery project in the Latrobe Valley, Wood247 represents a risk of distraction from this ultimate goal.

“The Wood247 business would ideally suit an owner-operator, and we are now seeking expressions of interest for its sale.”

About Wood247

Wood247 was established as a direct-to-consumer, discretionary goods business targeting the “circular economy” market through the sale of eco-friendly recycled hardwood briquettes as an alternative to firewood.

The distribution model features a ‘wheelie bin’ home delivery model that maximises customer convenience and storage while bridging the logistics gap between industrial suppliers of recycled sawdust waste and retail consumers.

On the supply side, the Company established access to approximately 570 tonnes of waste wood per annum, sufficient to support revenue of up to $500,000. Further waste sawdust supplies exist in the local market.

On the demand side, while the local Victorian firewood market is estimated at 500,000 tonnes per annum, it is highly seasonal, with 90% of sales projected to occur during the winter months. As such, outside this seasonal selling period, operations focus on the production and packaging of briquettes to build inventory in preparation for the peak sales period, as well as introducing other products sold via wheelie bins to smooth out the seasonal impact.

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This announcement is authorised for release to the ASX by the Board.

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