ClearFlowPlus plc, a wholly owned subsidiary of the Water Services Corporation (WSC), has seen revenue decrease to €2 million in 2023 (2022: €2.1 million) after it underwent a transition into a finance company and streamlined its portfolio of products.
This was announced in the company’s Annual Report for the financial year ended 31st December 2023, released on Wednesday. ClearFlowPlus primarily provides consultancy services and supplies, laboratory analysis and IT services tied to water production, filtration, and treatment of sewage treatment products and facilities.
During the year, the company underwent a number of significant changes to its operations, particularly tied to its green bond issue back in July, the first in Malta. The €25 million bond issue, used to finance upgrades to various parts of Malta’s water production and distribution infrastructure, as well as install photovoltaic panels, was fully subscribed within a matter of hours.
This prompted it to reposition itself as a finance company, while also simultaneously streamlining its revenue streams to its core operations revolving around sustainability. As a result, its revenue, primarily derived from the aforementioned services, decreased, reflecting the more streamlined portfolio of products. Waste management services were the biggest revenue contributor, representing 42 per cent of ClearFlowPlus’s revenue for 2023 (€830,950).
In line with the lower revenue generated during the year, cost of sales also went down to €979,797 in 2023 (2022: €1.1 million), as direct material costs decreased substantially.
In terms of the provision of its services and carrying out its operations, the company substantially relies on the resources available to WSC, and as a result, administrative expenses rose sharply to €425,269 (2022: €165,761). This was driven by the renegotiation and increase of the management fee charged by WSC to ClearFlowPlus to better reflect the increased use of operational and administrative resources in line with the company’s activities. It also incurred consultancy expenses due to its conversion to a public listed company.
Despite the drop in revenue and increase in expenses, ClearFlowPlus remained profitable, with profit before tax sitting at €945,487. This is 15.3 per cent lower than the €1.1 million pre-tax profit reported in 2022.
The company’s total assets as at the end of 2023 stood at €28.7 million (2022: €3.7 million), with non-current assets comprising 10 per cent of total assets, primarily consisting of finance lease receivables and loans receivable from related companies. Current assets were mainly made up of cash and cash equivalents amounting to €24.1 million and trade and other receivables. The substantial increase in total assets is reflective of the unutilised green bond proceeds as at the end of the year, which led to a surge in cash and cash equivalents.
The Board of Directors did not recommend the payment of a dividend, with retained earnings, amounting to €2.3 million, being carried forward to the following financial year.
In his statement, Chairman Vincent Micallef remarked that 2023 represented a “significant milestone” in ClearFlowPlus’s journey, having undertaken a strategic transformation that positions the company as a “pioneer in the realm of sustainable finance.”
Referring to the shift to a finance company, he stated that this change is rooted in ClearFlowPlus’s “unwavering commitment to sustainability,” adding that this now stands “at the core” of all its operations.
“By streamlining our activities, we ensure that every aspect of our business is aligned with the principles of environmental stewardship and sustainability. This strategic pivot is not merely a response to the growing demand for green practices; it is a forward-looking move to place ourselves at the forefront of a sustainable future,” Dr Micallef continued.
He added that the issuance of the green bonds was “a pivotal element” in the company’s transformation. “This venture into the green finance arena is a testament to our innovative spirit and our dedication to sustainability,” Dr Micallef added.
The proceeds from the bonds were advanced to the parent company, WSC, in order to fund projects that are “green at their core,” hence directly contributing to environmental sustainability, he remarked.
“It is with pride to report that the bond issue was fully subscribed in a matter of hours, showing an astounding investor confidence from 1,600 retail investors,” he revealed.
Dr Micallef said that he is “filled with optimism” about the company’s future, adding that this transformation into a finance vehicle focused on sustainability, “marks the beginning of an exciting phase” in its journey. “We are not just responding to the call for sustainability; we are leading the change, demonstrating that financial success and environmental stewardship can go hand in hand,” he concluded.
