I appreciate your optimism @emptytrolly - and indeed there is...

I appreciate your optimism @emptytrolly - and indeed there is some good to take from this report - but let's also be a bit honest. $10m statutory loss; $1.4m underlying EBITDA loss; no financing; no disclosure to the market; mounting losses on existing engineering contracts; not a lot to be proud of here by management. Two key issues: operational execution and financing. One option: restructure the management to maximise the value of their pipeline.

Operational execution
They have fundamentally miscalculated the costings and timing of delivering Ecogas in NZ and Blue Lake Milling in SA. It's fair to state that Covid has had a series of one-off impacts on the contracting, but clearly their risk management process were not good enough. However, dig into the 13 reasons they provide for their "several unforseen one-off costs", and A LOT of those are poor design issues. Wrong materials for tanks; incorrect calibration for the feedstock; etc. These are design flaws and operational problems, and are NOT related to Covid. That accounts for the lion's share of the -$8m "one off". My concern however is that maybe this is a problem with the Delorean engineering team? Maybe it's not one-off? Maybe this will continue in all of their future projects? It's hard to gauge to be honest, and anyone who claims they have insight in to this is perhaps underestimating the challenges.

Financing
On 23 August 2021, we were informed by Delorean management that the DESAO and DEVO would be completed by 1Q23 with the support of Planum Partners' financing. After spending $221k on them this year, we have $0 of financing to show. Moreover, the DESAO and DEVO have only minor site works being done because of financing limitations, and are pushed back to mid 2024 (at least 15 month delays).

To be fair, ARENA has a fair chunk of blame. They are 18months behind in their announcement of bioenergy financing, $5m of which Delorean was intending to use as equity for those projects. Furthermore, it's been 10months since the Bioenergy Roadmap was released. They have provided a total of $0 to bioenergy since that time. Maybe new government, new direction, etc etc - but this predates things, and I don't see any urgency coming from them.

Restructure the Business Model
It is my belief that Delorean now needs to restructure the business model. In fact, complete overhaul. They pivoted to this Delorean Engineering approach at exactly the wrong time unfortunately. It was meant to give them higher returns, but in fact it's just given them higher risk. They should be looking at joint venture and equity partners, where the returns may seem lower, but they do not need to face as much financing risk. They could also reduce their operational risk with JVs. I think this is where they are heading, but would be good to know more. In essence, they need to work out a way to monetise their $200m pipeline.

I remain more uncertain on Delorean than ever, though still very confident in the macro tailwinds, technology and pipeline.