REG - eEnergy Group PLC - Preliminary Results
25/11/2022 17:45
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RNS Number : 6892H eEnergy Group PLC 25 November 2022
25 November 2022
eEnergy Group plc
("eEnergy" or "the Group")
Preliminary Results
eEnergy (AIM: EAAS), the Net Zero energy services provider, is pleased to
announce its preliminary results for the year ended 30 June 2022 ("FY22").
Financial highlights
· Revenue up 63% to £22.1 million (2021: £13.6 million)
o Energy Management revenues of £11.6 million (2021: £2.2 million)
o Energy Services revenues of £10.5 million (2021: £11.4 million)
· Adjusted EBITDA((1)) up 264% to £3.0 million (2021: £0.8 million)
· Profit before tax and exceptional items ((2)) of £1.6 million (2021: profit
of £0.1 million)
· Contracted future revenues increased 384% to £25.3 million (2021: £5.2
million)
· Energy Management revenues 20% higher than pre-acquisition revenues of Utility
Team and Beond combined
· A year of significant investment in launching the integrated eEnergy
proposition
· Today, separately announced a £2.5 million capital raise through a new
sub-ordinated debt facility from Hawk Investment Holdings, an existing
shareholder of eEnergy, FFIH, a new strategic investor, and all Directors of
the company in order to strengthen the Group's balance sheet to address a
tightened liquidity position and to support growth of the business and
continued investment in eEnergy's market leading platform
Operational achievements
· Margins maintained or improved across Energy Management and Energy Services
divisions
· The launch of a single, clear and integrated proposition, under the eEnergy
brand
· Established robust cross-sell proposition and process
· Acquisition of UtilityTeam completed in September 2021 and integrated into a
single Energy Management business during the year
· Increased ownership stake in measurement platform MY ZeERO from 51% to 85.5%
· Delivered commercial launch of MY ZeERO with 898 smart meters ordered for a
total contract value of £1.1 million with 559 installed as at 30 June 2022
· Launched new services eCharge and eSolar, both of which have delivered strong
organic growth
· Strengthening of the leadership team of both Energy Management and Energy
Services
· Extension of the project funding facility with SUSI Partners
FY2023 Trading and Outlook
· The Board believes the business has seen an inflection point in revenue and
earnings as a result of the energy crisis which has driven strengthening
customer appetite through enhanced financial returns from tackling energy
waste and migrating to Net Zero
· This has contributed to a strong start to the year with Q1 £7.6 million
revenue, up 90% on prior year
· Q1 Energy Services sales of £4.1 million TCV, up 120% on same period last
year, record month in October with sales of £3 million in the month. This
equates to average TCV sales per quarter since January of £4.6 million
· TCV of £15.6 million signed since 1 January 2022 up 77% on same period last
year, including £5.3m TCV with existing customers
· Contracted future revenues ('Forward Order Book') in Energy Management at 30
September 2022 of £25.4 million, up 39% since 31 December 2021 and 18% since
30 June 2022
· Contracted future revenues in Energy Services of £3.1 million at 30 September
2022, implying c.69% coverage of Q2 revenue budget. "Forward Order Book"
increased in Q2 to imply 100% coverage for Q2 revenue target
· Total value of proposal pipeline (excluding Solar) for installation this
financial year up 16% year-on-year (as at 30 September 2022), with 42% of the
pipeline from repeat customers and 51% in Education.
· 8.9 MW of solar projects under Heads of Terms as at end September 2022,
forecast to convert to c. £1.5 million margin contribution during H2
· Awarded a framework agreement with a multi-academy trust for LED lighting
projects over 48 academies for an estimated £2.5 million in revenues, subject
to survey and contracts, expected in the coming months (to be funded using
trade creditor facilities)
· Average contract duration in Energy Management of 28 months at 30 June 2022,
up 27% from prior year
· Strong contracted forward order book and year-to-date trading gives visibility
on delivering H1 budgeted revenue
· However, the Company has experienced a tightened liquidity position subsequent
to the year-end. As at 31 October 2022, prior to drawdown on the new
subordinated debt facility, the Company had a cash balance of £114k
· In addition to the new £2.5 million subordinated debt facility, the Board has
taken a number of working capital and trading initiatives in order to mitigate
this and improve cash generation going forward
· The Group continues to expect material year-on-year Revenue and EBITDA growth
for FY23, benefiting from strong organic growth
Commenting on the results, Harvey Sinclair, CEO, said: "This financial year
has been pivotal for eEnergy as we have invested in launching our unified
proposition under a single integrated brand. We have continued to grow
organically and through acquisition, and the volatility seen across the energy
sector has only made our offering more attractive. These huge tailwinds
continue to present the Company with significant opportunities and our forward
order book has never been stronger.
"We have continued to launch innovative products and services allowing our
customers to accelerate their Net Zero strategies with no upfront capital
investment. Following record revenues in Q4, we entered the new financial year
with a strong new business pipeline and a contracted forward order book of
£25 million. Post year-end we have raised additional capital through a new
subordinated debt facility in order to strengthen the Group's tightened
liquidity position. The Board is encouraged by the macroeconomic outlook and
is confident in the long term prospects of the business as the UK continues on
its journey to be Net Zero by 2050."
Note: (1) Adjusted EBITDA is EBITDA excluding Exceptional Items. Exceptional
Items are those items which, in the opinion of the Directors, should be
excluded in order to provide a consistent and comparable view of the
underlying performance of the Group's ongoing business, including the costs
incurred in delivering the 'Buy & Build' strategy associated with
acquisitions and strategic investments, costs of restructuring and
transforming acquired businesses and share-based payments.
Note: (2) Profit before tax and Exceptional Items includes within Exceptional
Items brand impairment charges shown below EBITDA.
Contacts:
eEnergy Group plc Tel: +44 20 7078 9564
Harvey Sinclair, Chief Executive Officer info@eenergyplc.com (mailto:info@eenergyplc.com) ; www.eenergyplc.com
(http://www.eenergyplc.com/)
Crispin Goldsmith, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Joint Broker) Tel: +44 20 7496 3000
Justin McKeegan, Asha Chotai, James Maxwell (Corporate Finance)
Tom Salvesen (Corporate Broking)
Canaccord Genuity Limited (Joint Broker) Tel: +44 20 7523 8000
Max Hartley, Tom Diehl (Corporate Broking)
Kit Stephenson (Sales)
Tavistock (Financial PR & IR) Tel: +44 207 920 3150
Jos Simson, Heather Armstrong, Katie Hopkins eEnergy@tavistock.co.uk (mailto:eEnergy@tavistock.co.uk)
About eEnergy Group plc
eEnergy (AIM: EAAS) is a Net Zero energy services provider, empowering
organisations to achieve Net Zero by tackling energy waste and transitioning
to clean energy, without the need for upfront investment. It is making Net
Zero possible and profitable for all organisations in four ways:
· Transition to the lowest cost clean energy through our digital procurement
platform and Energy Management services.
· Tackle energy waste with granular data and insight on energy use and dynamic
Energy Management.
· Reduce energy use with the right energy efficiency solutions without upfront
cost.
· Reach Net Zero with onsite renewable generation and electric vehicle (EV)
charging.
eEnergy is a Top 5 B2B energy company and has been awarded The Green Economy
Mark by London Stock Exchange.
Chairman's statement
Introduction
I am pleased to report on what has been a pivotal year for eEnergy, as we
established an integrated proposition under the eEnergy brand, enabling us to
fulfil our vision to make Net Zero both possible and profitable for
organisations.
With the foundations of our business model set last year, we have focused on
integrating UtilityTeam and the other business units into a single, clear
customer proposition; positioning eEnergy as a unique, end to end energy
services business.
Our vision is clear, to enable every business to access the lowest cost clean
energy, identify and tackle energy waste, reduce energy consumption and
transition to an EV charging model through zero capital solutions.
While COVID-19 presented challenges for the business, including prolonged
lockdowns in Ireland, eEnergy has weathered the storm from the pandemic and
emerged stronger and well positioned to execute its growth strategy.
Energy Markets
Across Europe, wholesale energy prices have hit record highs, principally
caused by Russia's invasion of Ukraine and the resulting effects to gas
supply. Many countries across the continent have moved away from Russian gas
sources both as a response to the war and in a move to diversify sources of
supply. These macroeconomic changes have triggered an inflection point for all
organisations across the world as they now attempt to mitigate energy costs
and accelerate a move to, not just Net Zero but, energy independence away from
the grid.
These massive tailwinds are now well established, and they provide a
significant opportunity for eEnergy to accelerate its growth and to capture a
share of this huge market opportunity which we predict will see explosive
growth over the coming decade.
Strategy
Following a transformational year, eEnergy has continued to evolve its
strategy and business model with the launch of its Solar and EV charging
propositions and has now established a true end to end solution for
organisations looking to transition to Net Zero.
The Company has invested considerable resource into its market leading
platform in order to truly differentiate both its products but equally its
operating model, which has enabled efficiencies and perfectly positions
eEnergy for scalable growth.
eEnergy is establishing itself as a platform business within the Energy
Management sector with many unique and innovative digital products that enable
its customers to transition to Net Zero faster without the need for capital
investment. Coupled with our Energy-as-a-Service model, it has never been
easier for an organisation to transition to Net Zero.
We see great parallels with the way the Software-as-a-Service model
revolutionised the IT and telecoms sector for businesses of all sizes. This
revolution was not achieved overnight but today it is the new normal.
Our Energy-as-a-Service model is a significant enabler for customers adopting
energy reduction solutions which we see as a major factor in driving future
growth to the business, and as we continue to evolve our funding models for
projects, we believe there is an exciting opportunity to start building
forward recurring revenue streams, in particular within the metering and EV
charging spaces.
While the adoption of this "As-a-Service" model in the UK's energy transition
sector lags behind our international counterparts, in the United States, who
have seen explosive growth in the last few years, we are now starting to see
increased levels of education and awareness, in both the public and private
sectors which together with the energy crisis, we believe will now accelerate
adoption on a large scale.
Following the integration of its various services into a combined proposition
under a single eEnergy brand, the business has embarked on a strategy of cross
selling its energy reduction services to its more than 2,000 retained Energy
Management customers. Although this takes time, we have been very encouraged
by the levels of engagement and we are now securing much larger contracts to
both existing and new clients, with Energy Services average project value up
44% and Energy Management average contract duration up 27%.
In May, eEnergy increased its ownership in the Group's MY ZeERO intelligent
smart metering and analytics platform from 51% to 85.5%. We made our initial
investment in MY ZeERO after we identified the opportunity to integrate
proprietary energy analytics hardware and software into our Energy services
division. The rollout of the smart meters has been hugely successful and
further underpins eEnergy's differentiated and valuable proposition in the
market.
Post year end, we have announced an additional £2.5 million investment in the
business through a new subordinated debt facility in order to give the
business additional cash resources to continue to navigate the working capital
cycle of our growing business. Following this new investment in the company,
the Board believes we are well positioned to benefit from the robust
structural and regulatory drivers in the market. The Board are supporting this
investment through a c. £0.5m participation in the debt facility.
People
The eEnergy team has seen significant growth in the last two years following
the acquisitions of RSL, Beond, UtilityTeam and Measure My Energy growing from
33 to 128 people in less than 24 months with all teams now fully integrated
into the wider eEnergy business. We are very pleased to have retained all the
key talent across the divisions, as well as hiring top tier talent across the
industry.
Furthermore, we have strengthened our senior leadership team within the year,
with the addition of Delvin Lane, ex CEO of UtilityTeam, who is now MD of the
Energy Management business, Simon Smith as MD of Energy Services. Louisa
Gregory joined in September this year and stepped into the role of Chief
People Officer and is a pivotal hire to the C suite as we develop our people
strategy.
On the finance side, Crispin Goldsmith has been appointed as CFO of the Group
and to the Board, previously holding the role of Chief Strategy &
Commercial Officer. Crispin brings valuable experience and knowledge to
eEnergy which has already benefited the continued growth of the business.
Outlook
eEnergy is very well positioned to benefit from exposure to significant
regulatory and structural growth drivers in addition to tailwinds created by
the energy crisis.
Energy security, consumption and management have become absolutely critical
areas of focus for all organisations over the last 12 months, with the current
environment providing increased levels of opportunity and awareness in the
market for eEnergy's products and services to both new and existing customers.
The final quarter of the financial year was a record period for the business
with revenues of £8.3 million and Adjusted EBITDA of £2.0 million. This
momentum has continued into the new financial year providing a strong pipeline
and the Board remains encouraged by the Group's progress to date and prospects
for the future as eEnergy's proposition becomes ever more relevant.
I'd like to take this opportunity to thank the team for their hard work, our
customers for their loyalty and our shareholders and debt provicers for their
continued support.
David Nicholl
Non-Executive Chairman
25 November 2022
Chief Executive Officer's report
Introduction
Our mission to make Net Zero both possible and profitable for all
organisations, has come of age this year. We are seeing sustained high energy
prices which are expected to be prolonged as a result of the energy crisis
across the UK and Europe, caused by a multitude of factors, none larger than
the reduction of gas supply from Russia.
Alongside these high and increasing energy prices, the drive to tackle climate
change has never been more prevalent; together these two market forces have
provided a genuine inflection point for eEnergy and the Group is experiencing
a huge increase in demand for our integrated Net Zero offering, with record
growth in our new business pipeline as we enter the new financial year.
Following a busy FY21 where we successfully executed on our stated M&A
strategy and cemented the foundations of our evolved business model, the focus
for FY22 was to:
1. Fully integrate our acquisitions through a single operating model;
2. Invest in both our digital platform and our technology solutions; and
3. Integrate our end to end proposition under the single eEnergy brand.
Significant investment was made in the year in order to deliver these
objectives. The integration of the various businesses has been a huge success
and the single, clear and integrated proposition, under the eEnergy brand has
been well received by customers, who are looking for an end to end solution to
tackle energy costs and achieve Net Zero. This combined with the market
drivers of high energy costs and an obligation to Net Zero resulted in a
record Q4, which followed record contract signings achieved in Q3.
We successfully launched two new services:
1. A renewables proposition in eSolar, providing funded roof top solar solutions
to our customers; and
2. An EV charging division with eCharge, both of which have surpassed
expectations, since their launch in March 2022.
Additionally, we strengthened the management team welcoming Delvin Lane and
Simon Smith as Managing Directors for each of the Energy Management and Energy
Service businesses respectively.
Having secured additional debt funding subsequent to the year-end, eEnergy is
ideally positioned to take advantage of these powerful market tailwinds as
businesses and organisations seek to tackle high energy costs and the urgent
need to cut carbon, in order to achieve stated Net Zero objectives. We believe
we can deliver strong adoption in a challenging economic backdrop through our
capital free energy conservation measures.
Results
For the year ended 30 June 2022 we posted results in line with revised market
expectations as we continued to invest in our innovative suite of products and
services. We have started to capitalise upon the increased cross-selling
opportunities which exist across our existing in-contract client base,
executing our strategy of delivering a holistic Net Zero market leading
solution.
The year resulted in revenues of £22.1 million (2021: £13.6 million), split
between Energy Management and Energy Services divisions 53% and 47%
respectively. I am particularly pleased to report that this led to a 264%
increase in Adjusted EBITDA of £3.0 million (2021: £0.8 million).
The performance of Energy Services during H1, impacted by the tail-end of
Covid-related restrictions, was disappointing and weighed on the full-year
performance. However, strong and consistent contract sales have been delivered
since the start of H2, which drove record revenues for Q4 and a strong
pipeline and continuing momentum into FY23.
Net Debt increased during the year as a result of increased levels of
investment in software and one-off integration costs, together with an
increased working capital requirement as we transitioned to new payment cycles
with key partners. Net Debt (including lease liabilities) at the year end was
£4.5 million (2021: net cash of £0.8 million) and our cash position
(excluding restricted cash balances) was £1.4 million (2021: £3.3 million).
In February, we were pleased to announce the new revolving credit facility
with Silicon Valley Bank, providing a revolving credit facility of £5.0
million over three years, with potential for additional capital facilities as
eEnergy delivers on its growth plan in the future.
In April, we announced that we had entered into a new €10.0 million
committed project funding facility to extend both the scope and scale of our
financing arrangements with SUSI Partners AG ("SUSI"), extending the current
relationship in Ireland to include the rest of the UK.
These partnerships, with a renowned growth investor and premier fund manager,
validate the strength of eEnergy's proposition.
After eEnergy's first investment in MY ZeERO in April 2021, we were pleased to
announce in May 2022 that we increased our ownership from 51% to 85.5%. The
integration of this proprietary energy analytics hardware and software into
our Energy Services division and rollout of the smart meters gives eEnergy a
differentiated and valuable proposition in the market.
Offering
Our purpose is to make Net Zero both possible and profitable for businesses
and organisations, without the need for capital investment.
We do this by enabling our customers to access the lowest cost, clean energy
available, tackling energy wastage, reducing consumption and transitioning to
lower cost, onsite energy generation and EV charging solutions.
We are a technology enabled, innovative platform business which differentiates
us in the market and enables scalable long term growth.
We own and operate a proprietary marketplace procurement platform which
provides "whole of market" pricing through an innovative reverse auction
service.
We also own My ZeERO, which provides us with proprietary, intelligent smart
metering technology and a cloud based analytics platform which allows circuit
level energy monitoring and data insights which is central to tackling energy
wastage and delivering validation of energy savings.
In parallel, our Energy Services division offers capital free energy reduction
solutions, onsite renewable generation and EV charging solutions. We call this
"energy as-a-service" which unlocks energy savings from which a service charge
is payable, releasing net cash flow from day one to our clients.
In summary, we provide customers with an end to end solution to achieving Net
Zero, reducing energy costs without the need for capital investment, in a
capital constrained economic environment.
Strategy
After a transformative FY22, we now have a single clear proposition under the
eEnergy brand, and a fully integrated operating model poised and ready for
growth.
We have acquired a loyal and contracted customer base of over 2,000 clients
which have a strong demand for energy and cost reduction and accessing lower
cost energy through on site generation, which we expect to now leverage fully.
Our EV charging solution is well poised for rapid scale in what we expect to
be a huge growth market opportunity for both new and existing customers.
Post year-end we announced a £2.5 million investment in the business through
a new subordinated debt facility with the goal to give the business additional
capacity and working capital headroom to benefit from the significant
opportunities available as a result of the powerful market tailwinds and
macroeconomic environment and continue to invest in growth.
Following this new debt funding, the Board expects to fund current forecast
organic growth through operating cash generation. There may also be the
potential to expand debt facilities from existing providers if appropriate.
Outlook
We are very pleased to see new business opportunities across both our Energy
Management and Energy Services divisions grow during Q4 and we enter FY23
benefitting from a robust forward contracted order book, standing at £25.3
million at year end, and a strong sales pipeline. This positive start to FY23
underpins current market expectations for the year.
Looking ahead, the Board remains confident that eEnergy is well placed to
utilise the opportunities available resulting from the macroeconomic trends
and that we will continue to deliver on our strategic objectives.
Harvey Sinclair
Chief Executive Officer
25 November 2022
Chief Financial Officer's report
Group key performance indicators
· Full year revenue of £22.1 million, 63% growth on FY21 revenue of £13.6
million
· Adjusted EBITDA((1)) of £3.0 million (FY21 £0.8 million)
· Profit before tax and exceptional items((2)) of £1.6million (FY21 £0.1
million)
· Cash balance (excluding restricted cash balances) at 30 June 2022 of £1.4
million (30 June 2021 - £3.3 million)
· Net Debt (including £0.8 million of IFRS 16 lease liabilities) at 30 June
2022 was £4.4 million (30 June 2021 - Net cash of £0.8 million, including
£0.7 million of lease liabilities)
Note: (1) Adjusted EBITDA is EBITDA excluding Exceptional Items. Exceptional
Items are those items which, in the opinion of the Directors, should be
excluded in order to provide a consistent and comparable view of the
underlying performance of the Group's ongoing business, including the costs
incurred in delivering the 'Buy & Build' strategy associated with
acquisitions and strategic investments, costs of restructuring and
transforming acquired businesses and share-based payments.
Note: (2) Profit before tax and Exceptional Items includes within Exceptional
Items brand impairment charges shown below EBITDA.
Summary performance
FY22 was a year of significant progress for the Group, delivering revenues of
£22.1 million (up 63% from £13.6 million in FY21) and Adjusted EBITDA of
£3.0 million (up 264% from £0.8 million in FY21) in the face of
unprecedented volatility in the energy markets.
Since coming to market in January 2020, eEnergy has completed four
acquisitions including UtilityTeam, the Group's largest acquisition to date,
which was completed in H1 FY22. These acquisitions have been complemented by
organically developed new product opportunities to assemble a compelling and
integrated customer proposition - helping organisations achieve Net Zero
without the need for capital investment. eEnergy is now uniquely placed to
support its customer base in their transition to Net Zero. And, with a
backdrop of record energy prices, saving the customer significant cost while
doing so.
Following the acquisition of UtilityTeam, FY22 saw rigorous focus on
integrating the Group's people, products and operations. The benefits of this
strategy are reflected in recent financial performance, with record Q4
revenues of £8.3 million and Adjusted EBITDA of £2.0 million, supported by
the conversion of multi-product opportunities with new customers, the adoption
of multiple new services by existing accounts and the benefits of scale
efficiencies.
FY22 also saw substantial progress on balance sheet management, with an
additional committed project funding facility with SUSI Partners AG and a
successful refinancing of the Group's corporate debt facilities with Silicon
Valley Bank both completed during H2 FY22. Both facilities have allowed
eEnergy to benefit from increased access to funding at lower cost than
previously.
The new corporate debt facility has facilitated improved balance sheet
gearing, enabling deferred consideration from the acquisition of UtilityTeam
and further investments in MY ZeERO to be funded through debt rather than
equity. Net Debt excluding lease liabilities of £3.6 million at 30 June
equated to 1.2x Adjusted EBITDA.
The Group ended the year well placed to deliver continued strong organic
growth in FY23 with a Forward Order Book of £25.3 million (up from £18.3
million at 31 December 2021 and £5.2 million at 30 June 2021) and a strong
pipeline of new business opportunities across both Energy Management and
Energy Services expected to close early in FY23.
Net Debt increased by £5.2 million during the period as a result of
investments made in our proprietary technology platforms and MY ZeERO eMeters,
one-off costs of acquiring and integrating UtilityTeam, and the one-off impact
of lengthened cash collection cycles in both Energy Management and Energy
Services. Whilst this has led to reduced cash inflows in the short term, this
will largely be offset going forward by increased cash flows from an enhanced
contracted Forward Order Book.
Post year-end we announced an additional £2.5 million in debt funding into
the business through a new subordinated debt facility in order to give the
business the working capital headroom to continue to invest in growth, and
benefit from the robust market tailwinds. We have also instigated a number of
working capital initiatives to mitigate the Company's increased working
capital requirement going forward, including progressing an off-balance sheet
funding solution for MY ZeERO and diversifying supply chains.
Divisional performance
Energy Services
FY22, whilst disappointing from a P&L perspective, was nevertheless a
pivotal year for Energy Services. H1 was impacted by an interrupted
origination pipeline as a result of the aftereffects of Covid-related
lockdowns. However momentum built strongly through H2 as surging energy prices
and a widespread acknowledgement, following the Russian invasion of Ukraine,
that these higher energy prices represented a 'new normal'. These factors
substantially enhanced the economic case for the Energy Service solutions
offered by eEnergy.
Aided by these favourable macroeconomic tailwinds, and complemented by the
launch of eSolar and eCharge products during the period, the business secured
sales with Total Contract Value ("TCV") of £9.7 million in H2, 64% up on the
same period last year (H2 FY21 £5.9 million). This drove a 10% increase in
TCV secured for the full year to £14.0 million (up from £12.7 million in
FY21).
Performance in the UK was particularly strong with TCV secured in H2 of £8.5
million, up 100% on the same period last year, and full year TCV secured up
35% at £12.1 million (representing 87% of the total for the division).
Revenue performance was more modest, reflecting the lag between signing
contracts and recognising the revenue associated with them. Full year revenues
were marginally down on the previous year at £10.5 million (FY21 £11.4
million) with Ireland, where lockdowns were harsher and lifted later than in
the UK, accounting for 90% of the shortfall. However the strong sales
performance was evident during H2 with revenues of £5.8 million up 14% on
last year (H2 FY21 £5.1 million) and the business delivering record revenues
in Q4.
The business ended the year with a contracted Forward Order Book of £3.8
million (June 2021: £0.1 million) giving strong coverage for Q1 FY23
revenues.
Gross Margin after commissions for the year of 34.2% was consistent with FY21.
Operating costs were allowed to increase by £0.1 million, in part reflecting
investment in a new divisional leadership team which has been instrumental in
driving the improved sales momentum during H2 2022.
Energy Management
Likewise, FY22 was a year of significant change in Energy Management. The
acquisition of UtilityTeam, completed in September 2021, established the Group
as a Top 5 B2B energy company in the UK.
UtilityTeam contributed strategic relationships with an attractive customer
base and a strong pool of talent which complemented eEnergy's existing
capabilities and resources in Beond. The combined businesses have been
operating as a single, integrated customer offering from February 2022.
Subsequent to the year-end, a new financial reporting platform has been
launched for the combined entity.
Through the integration both employee and customer retention has remained
strong. During the year 85% of customers were retained on renewal equating to
a churn rate of only 6% per annum.
Financial performance for the combined business exceeded the targets set at
the time of the acquisition. Energy Management revenues of £11.6 million for
the full year were 432% up on FY21, reflecting the annualisation effect of the
Beond acquisition (completed December 2020), the acquisition of UtilityTeam
(completed September 2021), as well as strong organic growth in the business.
This organic growth is reflected in 18% growth in the contracted order book
from £18.3 million at 31 December 2021 (after the acquisition of UtilityTeam)
to £21.6 million at 30 June 2022.
Gross Margin increased by 770bps during the period to 80.7% reflecting
improved management of the partnerships sales channel.
Operating costs were held flat as a percentage of revenues, reflecting
investment of efficiency savings into growth and customer service delivery.
MY ZeERO, reported as part of the Energy Management division, successfully
completed development of the next generation proprietary eMeter during the
year with commercial launch during Q3 due to strong customer demand. By 30
June 2022, 898 meters with a TCV of £1.1 million were under contract with 559
of these installed.
Accelerated through acquisitions
FY22 saw both the acquisition of UtilityTeam, our largest acquisition
completed to date, and an increase in ownership to take control of eEnergy
Insights (the holding company for MY ZeERO) through exercise of our warrants
in October 2021 and subsequent acquisition of minority investor stakes in May
2022 to take our ownership to 85.5% at the year-end.
The acquisition of UtilityTeam transformed eEnergy into a Top 5 B2B energy
company and has given the opportunity to unlock £0.5 million operating
efficiencies through leveraging the Energy Management platform built since the
acquisition of Beond in December 2020. UtilityTeam further brought embedded,
strategic relationships with an attractive customer base and a strong pool of
talent into the eEnergy Group.
Integration completed
Subsequent to completing the acquisition of UtilityTeam, a significant
investment was made in integrating the business into a single compelling
platform with the key goals of:
· Optimising customer-facing activities (sales and account management)
· Sharing best practice capabilities
· Unlocking platform synergies between the two legacy entities
Key milestones delivered during the period included:
· Customer-facing teams merged from February with a single integrated sales
platform
· All clients migrated to eEnergy's proprietary reverse auction platform in
March, with all auctions undertaken in the platform subsequently
· Proprietary client portal launched to all auction customers in March
· Annualised efficiency savings of £0.5 million realised, re-invested in growth
and customer service delivery
To mark completion of the integration, the business adopted the 'eEnergy'
brand from 1 July 2022 with the legacy brands of Beond and UtilityTeam both
being retired from that point.
Through the integration, both customer and employee retention has remained
strong and financial performance for the combined business has exceeded the
targets set at the time of the acquisition.
Improved profitability
Growth in revenues has delivered significant scale benefits to the business.
Adjusted EBITDA of £3.0 million represents a margin of 13.6% on revenue in
FY22, up from 6.1% for FY21.
Profit before exceptional items, including impairment of acquired brand as
part of the Energy Management integration, of £1.6 million was up 2,190%
(FY21 £0.1 million).
These improvements were driven through scale efficiencies delivered in both
the operating businesses and at Group level and an increased share of revenues
from the higher margin Energy Management division (given annualisation of
Beond performance and the mid-year acquisition of Beond).
Cash flow and working capital
Net Bank Debt (excluding lease liabilities) of £3.6 million at 30 June 2022
was £5.2 million higher than at 30 June 2021 following investment and
inventory build in MY ZeERO, the development of our proprietary technology
platforms and the one-off costs of acquiring and integrating UtilityTeam.
Gross cash was £1.4 million as at 30 June 2022, a decrease from £3.3 million
at 30 June 2021.
After exceptional costs, and adjusting for certain non-cash items, the
business delivered a "cash loss", reflecting reported earnings, rent, finance
costs and effects of non-cash items, of £0.5 million for the year.
Further organic growth investments totalled £1.4 million, including £0.6
million in platform development and £0.8 million in eMeter stock-build.
Moreover, both Energy Management and Energy Services divisions have
experienced lengthened cash collection cycles resulting in lower cash
generated in the period, but a higher contracted cash forward order book at
period end to be collected in the future.
In Energy Management, availability of 'upfront' payments from energy suppliers
has been more restricted. This resulted in lower cash receipts from completed
contract signings in the year, with a correspondingly richer cash collection
profile over the life of the contract. The net impact of this has been to push
a net £3.4 million of cash collections from FY22 into future periods. This
was partially mitigated by £1.2 million of net cash acquired with Utility
Team.
In Energy Services, the move to a new committed financing facility announced
in April 2022 came with a need to 'batch fund' once a month (rather than on an
ad hoc basis once each deal completes), adding an estimated c. 2.5 weeks to
the cash collection cycle. Additionally, success in winning larger, more
valuable projects has increased average installation times. A particularly
strong revenue month in June, with cash therefore collected after the
year-end, had a net £1.6 million impact on cash collections in the period. In
addition, c. £1.2 million of projects (including MY ZeERO) were held on the
balance at the year-end, generating long-term recurring cash receipts beyond
the period end. The overall impact was £3.0 million in working capital
outflow.
This was mitigated by a £2.0 million net cash benefit from other working
capital items in the period.
Cash at bank at 30 June 2022 of £1.4 million (excluding £0.4 million of
restricted cash balances) was £1.9 million down on the year (30 June 2021
£3.3 million) as a result of these dynamics.
Funding
In February the Group completed a re-financing of the Group's corporate debt
facilities, consolidating previous facilities with Beach Point Capital, Lloyds
and Coutts into a single Revolving Credit Facility with Silicon Valley Bank.
The initial committed facility is for £5.0 million and there is the potential
to extend this, subject to credit approval, to support growth investments and
bolt-on acquisitions in the future.
On completion of the re-financing the new facility delivered a 270bps
reduction in interest costs compared to the blended cost of the previous
facilities.
In April we entered into a new €10.0 million committed project funding
facility with SUSI Partners AG. This facility extended both the scope and the
scale of the Group's existing financing arrangements with SUSI, who were
already the Group's funding partner in Ireland. Importantly, the facility
allows funding of eEnergy's range of energy efficiency and onsite generation
technologies, enabling eEnergy to continue to create innovative, market
leading, capital free solutions for its customers.
The Board believes it is important to maintain a robust level of cash headroom
in the business to allow the business to continue to deliver on its growth
objectives. As such, the Company has taken a number of working capital
initiatives, in addition to trading initiatives detailed above, in order to
mitigate the tightened working capital position experienced following the
period end. The Company has made good progress in securing off-balance sheet
funding for MY ZeERO eMeters from an existing funding partner, and the
Directors expect this, once implemented, to release additional cash for the
Company from existing completed and contracted projects. The Company is also
planning a measured rollout of eMeters with a strategy of this being
self-funded through third party financing, rather than through the Group's
balance sheet, going forward. Further, the Company continues successfully to
diversify its supply chains across the business as part of the Company's
inflation mitigation strategy, with additional benefits expected for working
capital.
In order to strengthen the balance sheet further given the extended cash
collections cycles, MY ZeERO investment, payment of liabilities and general
working capital, subsequent to the year-end we announced a £2.5 million new
subordinated debt facility in order to give the business the cash headroom to
continue to invest in growth and benefit from the robust market tailwinds. As
at 31 October 2022, prior to drawdown on the new subordinated debt facility,
the Company had a cash balance of £114k.
Conclusion
FY22 has been a pivotal year for both the Group and the individual operating
divisions. Successful completion of the integration of the two acquired Energy
Management businesses, strong and accelerating customer engagement across
multiple Group products and highly favourable market tailwinds mean the
eEnergy Group ended the year with a strong platform to deliver continued rapid
growth, both for the current year and into the future.
Crispin Goldsmith
Chief Financial Officer
25 November 2022
Consolidated statement of comprehensive income
For the year to 30 June 2022
Year to Period to 30 June 2021
30 June 2022 £'000
£'000
Note
Continuing operations
Revenue from contracts with customers 5 22,096 13,596
Cost of sales 6 (9,131) (8,059)
Gross profit 12,965 5,537
Operating expenses 7 (12,233) (4,955)
Included within operating expenses are:
Exceptional items 7 2,289 248
Adjusted operating expenses (9,944) (4,707)
Adjusted earnings before interest, taxation, depreciation and amortisation 3,021 830
Earnings before interest, taxation, depreciation and amortisation 732 582
Depreciation, amortisation and impairment (2,636) (333)
Finance costs - net 10 (323) (426)
Loss before tax (2,227) (177)
Income tax 11 736 205
(Loss) / profit for the year from continuing operations (1,491) 28
Attributable to:
Members of the parent entity (1,431) 28
Non-controlling interests (60) -
(1,491) 28
Other comprehensive income - items that may be reclassified subsequently to
profit and loss
Change in the fair value of other current assets - 34
Translation of foreign operations (125) 102
Total other comprehensive (loss) / profit (125) 136
Total comprehensive (loss) / profit for the year (1,616) 164
Total comprehensive (loss) / profit for the year attributable to:
Members of the parent entity (1,556) 164
Non-controlling interests (60) -
(1,616) 164
Basic and diluted earnings / (loss) per share from continuing 12 (0.72p) 0.01p
operations (pence)
Consolidated statement of financial position
As at 30 June 2022
As at As at 30 June 2021
30 June 2022 Restated
£'000
£'000
Note
NON-CURRENT ASSETS
Property, plant and equipment 13 458 80
Intangible assets 14 28,733 10,503
Right of use assets 21 777 610
Deferred tax asset 24 1,071 415
Investment in associate 15 - 155
Total non-current assets 31,039 11,763
Inventories 17 809 371
Trade and other receivables 18 16,022 5,513
Financial assets at fair value through profit or loss 26 21 140
Cash and cash equivalents 19 1,802 3,332
Total current assets 18,654 9,356
TOTAL ASSETS 49,693 21,119
NON-CURRENT LIABILITIES
Lease liability 21 399 434
Borrowings 22 5,011 1,245
Other liabilities 23 2,252 468
Deferred tax liability 24 1,318 415
Provision 25 860 -
Total non-current liabilities 9,840 2,562
CURRENT LIABILITIES
Trade and other payables 20 16,802 7,819
Lease liability 21 492 264
Borrowings 22 11 601
Total current liabilities 17,305 8,684
TOTAL LIABILITIES 27,145 11,246
NET ASSETS 22,548 9,873
Equity attributable to owners of the parent
Issued share capital 27 16,373 16,071
Share premium 27 47,360 33,014
Other reserves 28 261 601
Reverse acquisition reserve 28 (35,246) (35,246)
Foreign currency translation reserve (138) (13)
Accumulated losses (5,985) (4,554)
Equity attributable to equity holders of the parent 22,625 9,873
Non-controlling interest (77) -
Total equity 22,548 9,873
Company statement of financial position
As at 30 June 2022
As at As at 30 June 2021
£'000
30 June 2022
£'000
Note
NON-CURRENT ASSETS
Property, plant and equipment 13 28 -
Intangible assets 14 34 18
Right of use assets 20 279 -
Investment in associate 21 - 155
Investment in subsidiary 16 6,574 17,947
Total non-current assets 6,915 18,120
Loan to subsidiaries 24,380 579
Trade and other receivables 18 863 153
Cash and cash equivalents 19 91 1,187
Total current assets 25,334 1,919
TOTAL ASSETS 32,249 20,039
NON-CURRENT LIABILITIES
Deferred tax liability 24 - -
Borrowings 22 - -
Total non-current liabilities - -
CURRENT LIABILITIES
Trade and other payables 20 2,114 1,003
Lease liability 21 265 -
Loans from subsidiaries - 1,452
Total current liabilities 2,379 2,455
TOTAL LIABILITIES 2,379 2,455
NET ASSETS 29,870 17,584
Equity attributable to owners of the parent
Issued share capital 27 16,373 16,071
Share premium 27 47,360 33,014
Other reserves 28 1,087 567
Accumulated losses (34,950) (32,068)
Total equity 29,870 17,584
Statements of cashflows
For the year ended 30 June 2022
Group Company
Note Year to 30 June 2022 Year to 30 June 2021 Year to 30 June 2022 Year to 30 June 2021
£'000
£'000
£'000
£'000
Cash flow from operating activities
Operating profit (loss) - continuing operations (1,491) 28 (2,882) (1,507)
Adjustments for:
Depreciation, amortisation and impairment 2,636 332 159 -
Finance cost (net) 264 376 (24) (3)
Shares and warrants issue to settle expenses - 486 - 485
Share based payments 520 301 520 301
Share of loss in associate - 34 - 34
Foreign exchange movement - 33 - -
Gain on derecognition of contingent consideration (1,032) (1,444) (1,032) (1,444)
Operating cashflow before working capital movements 897 146 (3,259) (2,134)
Increase in trade and other receivables (9,857) (2,406) (706) (127)
(Decrease) / increase in trade and other payables 165 2,761 (15) 504
(Increase) in inventories (95) (23) - -
Increase / (decrease) in deferred income 2,650 (264) - -
Net cash inflow (outflow) from operating activities (6,240) 214 (3,980) (1,757)
Cash flow from investing activities
Amounts received from (paid to) group undertakings - - (8,448) 1,299
Acquisition of subsidiaries (11,081) (2,395) - (2,395)
Cash acquired on acquisition of subsidiaries 4,007 1,218 - -
Cash from exercise of options in acquired business - 521 - -
Expenditure on intangible assets (401) (217) (16) (18)
Purchase of property, plant and equipment (294) (134) (34) -
Net cash inflow (outflow) from investing activities (7,769) (1,007) (8,498) (1,114)
Cash flows from financing activities
Interest (paid) received (188) (319) - -
Repayment of lease liabilities (347) (163) - -
Proceeds from the issue of share capital, net of issue costs 11,382 3,149 11,382 3,149
Proceeds from loans and borrowings 4,891 294 - -
Repayment of borrowings (3,287) (314) - -
Net cash inflow from financing activities 12,451 2,647 11,382 3,149
Net (decrease) / increase in cash & cash equivalents (1,558) 1,854 (1,096) 278
Effect of exchange rates on cash 28 - - -
Cash & cash equivalents at the start of the period 3,332 1,478 1,187 909
Cash & cash equivalents at the end of the year 18 1,802 3,332 91 1,187
The non cash consideration issued to acquire subsidiaries during the year was
£3.0 million (2021: £9.0 million) and is disclosed for each acquisition in
note 30.
Refer note 33 for net debt reconciliation.
Consolidated statement of changes in equity
For the year ended 30 June 2022
Share Capital Share Premium Reverse Acq-uisition Reserve Other Reserves Foreign Currency Reserve Accum-ulated Non-controlling interest Total Equity
Losses
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 June 2020 15,725 22,375 (35,246) 82 (115) (4,582) - (1,761)
Other comprehensive loss - - - - 102 - - 102
Change in fair value of other current assets - - - 34 - - - 34
Profit for the year - - - - - 28 - 28
Total comprehensive profit for the year attributable to equity holders of the - - - 34 102 28 - 164
parent
Issue of shares for cash 96 3,104 - - - - - 3,200
Issue of shares for acquisition of subsidiary 235 7,299 - - - - - 7,534
Issue of shares in settlement of fees 9 293 - - - - - 302
Share based payment - - - 485 - - - 485
Exercise of warrants 6 159 - - - - - 165
Cost of share issue - (216) - - - - - (216)
Total transactions with owners 346 10,639 - 485 - - - 11,470
Balance at 30 June 2021 16,071 33,014 (35,246) 601 (13) (4,554) - 9,873
Other comprehensive loss - - - - (125) - - (125)
Loss for the year - - - - - (1,431) (60) (1,491)
Total comprehensive loss for the year attributable to equity holders of the - - - - (125) (1,431) (60) (1,616)
parent
Issue of shares for cash 240 11,760 - - - - - 12,000
Issue of shares for acquisition of subsidiary 55 2,903 - - - - - 2,958
Issue of shares in exchange for loan notes 7 301 - - - - - 308
Acquisition of non-controlling interest - - - - - - (17) (17)
Acquisition of put option relating to non-controlling interests - - - (3,921) - - - (3,921)
Utilisation on acquisition of non-controlling interests - - - 3,061 - - - 3,061
Share based payment - - - 520 - - - 520
Cost of share issue - (618) - - - - - (618)
Total transactions with owners 302 14,346 - (340) - - (17) 14,291
Balance at 30 June 2022 16,373 47,360 (35,246) 261 (138) (5,985) (77) 22,548
Company statement of changes in equity
For the year ended 30 June 2022
Share Capital Share Premium Other Reserves Accum-ulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000
Balance at 30 June 2020 15,725 22,375 82 (30,561) 7,621
Loss for the year - - - (1,507) (1,507)
Total comprehensive loss for the year attributable to equity holders of the - - - (1,507) (1,507)
parent
Issue of shares for cash 96 3,104 - - 3,200
Issue of shares for acquisition of subsidiary 235 7,299 - - 7,534
Issue of shares in settlement of fees 9 293 - - 302
Share based payment - - 485 - 485
Exercise of warrants 6 159 - - 165
Cost of share issue - (216) - - (216)
Total transaction with owners 346 10,639 485 - 11,470
Balance at 30 June 2021 16,071 33,014 567 (32,068) 17,584
Loss for the year - - - (2,882) (2,882)
Total comprehensive loss for the year attributable to equity holders of the - - - (2,882) (2,882)
parent
Issue of shares for cash 240 11,760 - - 12,000
Issue of shares for acquisition of subsidiary 55 2,903 - - 2,958
Issue of shares in exchange for loan notes 7 301 - - 308
Share based payment - - 520 - 520
Cost of share issue - (618) - - (618)
Total transaction with owners 302 14,346 520 - 15,168
Balance at 30 June 2021 16,373 47,360 1,087 (34,950) 29,870
Notes to the financial information
For the year ended 30 June 2022
1 GENERAL INFORMATION
eEnergy Group plc ("the Company") is a public limited company with its shares
traded on the AIM Market of the London Stock Exchange. eEnergy Group plc is a
holding company of a group of companies (the "Group"). eEnergy is a digital
energy services company, empowering organisations to achieve Net Zero by
tackling energy waste and transitioning to clean energy, without the need for
upfront investment. It is making Net Zero possible and profitable for all
organisations in four ways:
• Transition to the lowest cost clean energy
through our digital procurement platform and Energy Management services.
• Tackle energy waste with granular data and
insight on energy use and dynamic Energy Management.
• Reduce energy use with the right energy
efficiency solutions without upfront cost.
• Reach Net Zero with onsite renewable
generation and electric vehicle (EV) charging.
The Company is incorporated and domiciled in England and Wales with its
registered office at 20 St Thomas Street, London, England, SE1 9RS. The
Company's registered number is 05357433.
2 ACCOUNTING POLICIES
IAS 8 requires that management shall use its judgement in developing and
applying accounting policies that result in information which is relevant to
the economic decision-making needs of users, that are reliable, free from
bias, prudent, complete and represent faithfully the financial position,
financial performance and cash flows of the entity.
2.1 Basis of preparation
The financial statements have been prepared in accordance with UK adopted
international accounting standards ("UK IFRS") and with the requirements of
the Companies Act 2006.
The financial statements have been prepared under the historical cost
convention as modified by financial assets and liabilities at fair value
through profit or loss and other comprehensive income, and the recognition of
net assets acquired under the reverse acquisition at fair value.
The preparation of financial statements in conformity with UK IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions or estimates are significant to the financial statements, are
disclosed in note 2.23.
The financial statements present the results for the Group and Company for the
year ended 30 June 2022. The comparative period is for the year ended 30 June
2021.
The principal accounting policies are set out below and have, unless otherwise
stated, been applied consistently in the financial statements. The
consolidated financial statements are prepared in Pounds Sterling, which is
the Group's functional and presentation currency, and presented to the nearest
£'000.
2.2 New standards, amendments and interpretations
The Group and Company have adopted all of the new and amended standards and
interpretations issued by the International Accounting Standards Board that
are relevant to its operations and effective for accounting periods commencing
on or after 1 July 2021.
No standards or Interpretations that came into effect for the first time for
the financial year beginning 1 July 2021 have had an impact on the Group or
Company.
2.3 New standards and interpretations not yet adopted
At the date of approval of these financial statements, the following standards
and interpretations which have not been applied in these financial statements
were in issue but not yet effective (and in some cases have not yet been
adopted by the UK):
Standard Impact on initial application Effective date
Annual Improvements 2018-2020 Cycle 1 January 2023
IFRS 17 Insurance Contracts 1 January 2023
IAS 1 Classification of liabilities as Current or Non-current 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 12 Deferred tax arising from a single transaction 1 January 2023
The effect of these new and amended Standards and Interpretations which are in
issue but not yet mandatorily effective is not expected to be material.
2.4 Going concern
The financial information has been prepared on a going concern basis, which
assumes that the Group and Company will continue in operational existence for
the foreseeable future. In assessing whether the going concern assumption is
appropriate, the Directors have taken into account all relevant information
about the current and future position of the Group and Company, including the
current level of resources and the ability to trade within the terms and
covenants of its loan facility over the going concern period, being at least
12 months from the date of approval of the financial statements. The Directors
have also taken into account the expected ability of the Group to raise
additional equity or debt capital if required.
The directors note that the macroeconomic and geo-political environment have
become less stable during the period. Increasing energy prices reinforce the
importance of reducing consumption, and the directors therefore believe the
business is well placed to continue to deliver strong growth despite this
backdrop. However the directors note the environment does create heightened
risk and uncertainties, including from inflationary pressures.
The Group has prepared budgets and cash flow forecasts covering the going
concern period which have been stress tested for the negative impact of
possible scenarios. The Group has identified additional working capital
funding requirements and has secured a new £2.5 million subordinated loan
facility to improve working capital headroom. £2.0m of this is unconditional
with the balance subject to shareholders approving additional capacity to
issue warrants attaching to the subordinated loan facility.
Taking these matters into consideration, the Directors consider that the
continued adoption of the going concern basis is appropriate having prepared
cash flow forecasts for the relevant period. The financial statements do not
reflect any adjustments that would be required if they were to be prepared
other than on a going concern basis.
2.5 Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. The group recognises any non-controlling interest in the acquire on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
acquiree's identifiable net assets.
Any contingent consideration to be transferred by the Group is recognised at
fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability is
recognised either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not
re-measured, and its subsequent settlement is accounted for within equity.
Acquisition-related costs are expensed as incurred. Inter-company
transactions, balances and unrealised gains on transactions between group
companies are eliminated. Unrealised losses are also eliminated.
2.6 Associates
An associate is an undertaking in which the Group holds an equity investment
and where the Group exercises significant influence over the operational and
financial management of the undertaking, but not control. Associates are
included in the financial statements and accounted for using the equity
method. Under the equity method, the investment is initially recognised at
cost, and the carrying amount is increased or decreased to recognise the
investor's share of the profit or loss of the investee after the date of
acquisition. The Group's investment in associates includes goodwill identified
on acquisition.
2.7 Foreign currency translation
(i) Functional and presentation currency
Items included in the individual financial statements of each of the Group's
entities are measured using the currency of the primary economic environment
in which the entity operates ('the functional currency'). The consolidated
financial statements are presented in £ Sterling, which is the Company's
presentation and functional currency. The individual financial statements of
each of the Company's wholly owned subsidiaries are prepared in the currency
of the primary economic environment in which it operates (its functional
currency). IAS 21 The Effects of Changes in Foreign Exchange Rates requires
that assets and liabilities be translated using the exchange rate at period
end, and income, expenses and cash flow items are translated using the rate
that approximates the exchange rates at the dates of the transactions (i.e.
the average rate for the period).
(ii) Transactions and balances
Transactions denominated in a foreign currency are translated into the
functional currency at the exchange rate at the date of the transaction.
Assets and liabilities in foreign currencies are translated to the functional
currency at rates of exchange ruling at the balance sheet date. Gains or
losses arising from settlement of transactions and from translation at
period-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement for the period.
(iii) Group companies
The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
- assets and liabilities for each balance sheet
presented are translated at the closing rate at the date of the balance sheet;
- income and expenses for each income statement
are translated at the average exchange rate; and
- all resulting exchange differences are
recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations are taken to shareholders' equity. When a
foreign operation is partially disposed or sold, exchange differences that
were recorded in equity are recognised in the income statement as part of the
gain or loss on sale.
2.8 Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision makers. The chief operating
decision maker, who are responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
Board of Directors.
2.9 Impairment of non-financial assets
Non-financial assets and intangible assets not subject to amortisation are
tested annually for impairment at each reporting date and whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment review is based on discounted future cash flows. If the expected
discounted future cash flow from the use of the assets and their eventual
disposal is less than the carrying amount of the assets, an impairment loss is
recognised in profit or loss and not subsequently reversed.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are largely independent cash flows (cash generating
units or 'CGUs').
2.10 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and demand
deposits with banks and other financial institutions and bank overdrafts.
2.11 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
a) Classification
The Group classifies its financial assets in the following measurement
categories:
• those to be measured at amortised cost; and
• those to be measured subsequently at fair
value through profit or loss.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
The Group classifies financial assets as at amortised cost only if both of the
following criteria are met:
• the asset is held within a business model
whose objective is to collect contractual cash flows; and
• the contractual terms give rise to cash flows
that are solely payment of principal and interest.
b) Recognition
Purchases and sales of financial assets are recognised on trade date (that is,
the date on which the Group commits to purchase or sell the asset). Financial
assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit
or loss.
The Group classifies energy credits as FVPL assets. Information about the
method used in determining fair value is provided in note 25.
Debt instruments
Debt instruments are recorded at amortised cost: Assets that are held for
collection of contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost. Interest
income from these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other gains/(losses)
together with foreign exchange gains and losses.
d) Impairment
The Group assesses, on a forward looking basis, the expected credit losses
associated with any debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk. For trade receivables, the Group applies the simplified
approach permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Impairment losses are
presented as a separate line item in the statement of profit or loss.
2.12 Revenue recognition
Under IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1: Identity the contract(s) with a customer;
Step 2: Identity the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the
entity, and specific criteria have been met for each of the Group's
activities, as described below.
The Group bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each
arrangement. Where the Group makes sales relating to a future financial
period, these are deferred and recognised under 'accrued expenses and deferred
income' on the Statement of Financial Position.
The Group derives revenue from the transfer of goods and services overtime and
at a point in time in the major product and service lines detailed below.
Energy Services
Revenues from external customers come from the provision of Energy Services
(Energy Efficiency solutions, PV generation and EV charging capability) which
will typically include the provision of technology at the outset of the
contract and then an additional ongoing service over the term of the contract.
The Group may assign the majority or all of its right and obligations under a
client agreement to a Finance Partner but that assignment does not change the
recognition of revenue under the contract..
a) As a Service
The Group will undertake to install technology which either delivers energy
savings, generates energy or provides a service proposition to customers over
the term of a contract, typically between 5 -10 years. The Group will design
the solution to deliver the desired outcomes over the contract term, source
and then install that technology. Once the installation has been accepted the
customer will make payments monthly or quarterly over the contract term. The
installation of the technology by the Company is typically considered to be
the principal performance obligation.
Included within the agreement is an undertaking to ensure that the agreed
outcomes are delivered and this may require the repair or replacement of
faulty products. Where this performance obligation is not a material element
of the client agreement revenue is not separately recognised and an accrual
for the expected future costs is recognised as part of the cost of sale pro
rata to the aggregate revenue that is recognised. Where this performance
obligation is material the revenue is recognised rateably over the term of the
contract as the performance obligation is satisfied.
b) Supply and installation of equipment
The Group will supply and install equipment for customers. Payment of the
transaction price is typically due in instalments between the customer order
and the installation being accepted or upon installation acceptance. Revenue
is recognised as installations are completed.
c) Energy credits
From time to time the Group will receive consideration for both LaaS and
supply & install contracts in Ireland in the form of energy credits.
Energy credits are financial assets that are valued at fair value through
profit or loss and their initial estimated value is included as part of the
transaction price recognised as revenue. Energy credits are validated by the
SEAI (the Irish regulator) and once validated are transferred to an
undertaking that needs those energy credits, typically a power generation
company. Any changes in the fair value of the energy credits between initial
recognition and their realisation for cash are recorded as other gains or
losses.
Energy Management
Revenue is comprised of fees received from customers or commissions received
from energy suppliers, net of value-added tax, for the review, analysis and
negotiation of gas and electricity contracts on behalf of clients in the UK.
To the extent that invoices are raised in a different pattern from the revenue
recognition policy described below, entries are made to record deferred or
accrued revenue to account for the revenue when the performance obligations
have been satisfied.
All of the Group's Energy Management clients receive Procurement Services and
many also receive Risk management, consulting and advisory services (together
"Management Services"). These services will often be combined into a single
contract but the Group separately identifies the relevant procurement
obligations and recognises revenue when the relevant performance obligations
have been satisfied. Revenue is recognised for each of these as follows:
a) Procurement services
Procurement revenue arises when the Group provides services that lead to the
client entering into a contract with an energy supplier. The Group typically
receives a commission from the energy supplier based upon the amount of energy
consumed by the client over the life of the contract. As the services
provided by the company are completed up to the point that the contract is
signed between the client and the energy supplier the performance obligation
is considered to be satisfied at that point and the revenue is recognised
then. Contract signature may be considerably in advance of the date at which
the supply contract will commence. The total amount of revenue recognised is
based upon applying the historical energy consumption of the client to
estimate the expected energy consumption over the term of the contract with
the energy supplier. This revenue is then limited by an allowance for actual
consumption to be lower than originally estimated and an allowance for the
contract term not being completed. The balance of revenue not recognised at
the point the energy supply contract is signed is recognised over the life of
the contract in line with the client's actual consumption.
b) Energy Management services
As well as Procurement services the Group provides clients with a range of
risk management, consulting and advisory services which include Bill
Validation, Cost recovery, compliance services, ongoing market intelligence,
ongoing account management and the development of hedging strategies. These
services are typically provided evenly over the term of the contract and are
therefore recognised rateably over the contract life.
Client segmentation
The Group's Energy Management clients are segmented into four categories based
upon the balance of services they contract to receive from the Group. These
categories are:
SME: Small & Medium enterprise clients who typically only take procurement
services.
Fixed: Clients who typically take fixed procurement contracts with a limited range of
management services.
Fixed Plus: Clients who take a wider range of management services, including Bill
Validation and / or Budget Management reporting.
Flex: Clients who typically procure using a flex model with regular retrading of the
procurement contract and more advanced risk management services.
Managed: Clients who take one or more of the services above that have integrated EEaaS
services (i.e. LaaS, MY ZeERO etc).
The overall proportion of revenue attributed by management to Procurement
Services and recognised at the point the energy supply contract is signed
ranges from 70% of the total expected contract value for SME to 17% for Flex
and the average recognised across the portfolio for FY22 was 23%.
Cost of sales
Cost of sales represents internal or external commissions paid in respect of
sales made. The Cost of sale is matched to the revenue recognised so for
Procurement Services is recognised at the time the contract is signed and for
Management Services rateably over the contract term. To the extent the
pattern of payment for these commissions is different from the costs being
recognised accruals or prepayments are recorded in the balance sheet.
Other
a) Management services
The Group provides management services to customers and certain other parties
under fixed fee arrangements. Efforts to satisfy the performance obligation
are expended evenly throughout the performance period and so the performance
obligation is considered to be satisfied evenly over time and accordingly the
revenue is recognised evenly over time.
2.13 Share based payments
The cost of equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments granted at the date at
which they are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant employees become fully
entitled to the award. In valuing equity-settled transactions, no account is
taken of any vesting conditions, other than conditions linked to the price of
the shares of a group company (market conditions) and non-vesting conditions.
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market or non-vesting condition,
which are treated as vesting irrespective of whether or not the market or
non-vesting condition is satisfied, provided that all other vesting conditions
are satisfied. At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting period has
expired and management's best estimate of the achievement or otherwise of
non-market conditions and of the number of equity instruments that will
ultimately vest or in the case of an instrument subject to a market condition,
be treated as vesting as described above. The movement in cumulative expense
since the previous balance sheet date is recognised in the income statement,
with a corresponding entry in equity.
Where the terms of an equity-settled award are modified, or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative. Where an
equity-settled award is cancelled, it is treated as if it had vested on the
date of cancellation, and any cost not yet recognised in the profit and loss
account for the award is expensed immediately. Any compensation paid up to the
fair value of the award at the cancellation or settlement date is deducted
from equity, with any excess over fair value expensed in the profit and loss
account.
2.14 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any accumulated impairment losses.
When the Group acquires any plant and equipment it is stated in the financial
statements at its cost of acquisition.
Depreciation is charged to write off the cost less estimated residual value of
Property, plant and equipment on a straight line basis over their estimated
useful lives which are:
- Plant and equipment 4 years
- Computer equipment 4 years
Estimated useful lives and residual values are reviewed each year and amended
as required.
2.15 Intangible assets
Intangible assets acquired as part of a business combination or asset
acquisition, other than goodwill, are initially measured at their fair value
at the date of acquisition. Intangible assets acquired separately are
initially recognised at cost.
Amortisation is charged to write off the cost less estimated residual value of
plant and equipment on a straight line basis over their estimated useful lives
which are:
- Brand and trade names 10 years
- Customer relationships 11 years
- Software 5 years
Estimated useful lives and residual values are reviewed each year and amended
as required.
Indefinite life intangible assets comprising goodwill are not amortised and
are subsequently measured at cost less any impairment. The gains and losses
recognised in profit or loss arising from the derecognition of intangible
assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset.
Other intangible assets are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount might not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or group of assets
(cash-generating units).
Goodwill impairment reviews are undertaken annually, or more frequently if
events or changes in circumstances indicate a potential impairment. The method
and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or period.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the first-in, first-out (FIFO) method. The cost of finished
goods and work in progress comprises design costs, raw materials, direct
labour and other direct costs. It excludes borrowing costs. Net realisable
value is the estimated selling price in the ordinary course of business, less
applicable variable selling expenses.
2.17 Leases
The Group leases properties and motor vehicles. Leases are recognised as a
right-of-use asset and a corresponding lease liability at the date at which
the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
- Fixed payments (including in-substance fixed
payments), less any lease incentives receivable;
- Variable lease payment that are based on an
index or a rate, initially measured using the index or rate as at the
commencement date;
- Amounts expected to be payable by the Group
under residual value guarantees;
- The exercise price of a purchase option if the
Group is reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease,
if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period. Right-of-use assets
are measured at cost which comprises the following:
- The amount of the initial measurement of the
lease liability;
- Any lease payments made at or before the
commencement date less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Right-of-use assets are depreciated over the shorter of the asset's useful
life and the lease term on a straight line basis. If the Group is reasonably
certain to exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life.
Payments associated with short-term leases (term less than 12 months) and all
leases of low-value assets (generally less than £5k) are recognised on a
straight-line basis as an expense in profit or loss.
2.18 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The Share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the Share premium account, net of any
related income tax benefits.
The Reverse Acquisition reserve includes the accumulated losses incurred prior
to the reverse acquisition, the share capital of eLight Group Holdings Limited
at acquisition, the reverse acquisition share based payment expense as well as
the costs incurred in completing the reverse acquisition.
Put options in relation to acquisitions where it is determined that the
non-controlling interest has present access to the returns associated with the
underlying ownership interest the Group has elected to use the present-access
method. This results in the fair value of the option being recognised as a
liability, with a corresponding entry in other equity reserves.
Accumulated losses includes all current and prior period results as disclosed
in the income statement other than those transferred to the Reverse
Acquisition reserve.
2.19 Taxation
Taxation comprises current and deferred tax.
Current tax is based on taxable profit or loss for the period. Taxable profit
or loss differs from profit or loss as reported in the income statement
because it excludes items of income and expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The asset or liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial information and the corresponding tax
bases used in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises
from initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
2.20 Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs.
Borrowings are subsequently carried at amortised cost. Any difference between
the proceeds (net of transaction costs) and the redemption value is recognised
in the income statement over the period of the borrowings using the effective
interest method. Fees paid on the establishment of loan facilities are
capitalised as a prepayment for liquidity services and amortised over the
period of the loan to which it relates.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the end of the reporting period.
2.21 Exceptional items and non-GAAP performance measures
Exceptional items are those items which, in the opinion of the Directors,
should be excluded in order to provide a consistent and comparable view of the
underlying performance of the Group's ongoing business. Generally, exceptional
items include those items that do not occur often and are material.
Exceptional items include i) the costs incurred in delivering the "Buy &
Build" strategy associated with acquisitions and strategic investments; (ii)
incremental costs of restructuring and transforming the Group to integrate
acquired businesses and (iii) share based payments.
We believe the non-GAAP performance measures presented, along with comparable
GAAP measurements, are useful to provide information with which to measure the
Group's performance, and its ability to invest in new opportunities.
Management uses these measures with the most directly comparable GAAP
financial measures in evaluating operating performance and value creation.
The primary measure is Earnings before Interest, Tax, Depreciation and
Amortisation ("EBITDA") and Adjusted EBITDA, which is the measure of
profitability before Exceptional items. These measures are also consistent
with how underlying business performance is measured internally. We also
report our Profit before Exceptional items which is our net income, after tax
and before exceptional items as this is a measure of our underlying financial
performance.
The Group separately reports exceptional items within their relevant income
statement line as it believes this helps provide a better indication of the
underlying performance of the Group. Judgement is required in determining
whether an item should be classified as an exceptional item or included within
underlying results. Reversals of previous exceptional items are assessed based
on the same criteria.
Non-GAAP financial measures should not be considered in isolation from, or as
a substitute for, financial information presented in compliance with GAAP.
2.22 Critical accounting judgements and key sources of
estimation uncertainty
In the process of applying the entity's accounting policies, management makes
estimates and assumptions that have an effect on the amounts recognised in the
financial statements. Although these estimates are based on management's best
knowledge of current events and actions, actual results may ultimately differ
from those estimates. The following are the critical judgement the directors
have made in the process of applying the Group's accounting policies.
Impairment assessment
In accordance with its accounting policies, each CGU is evaluated annually to
determine whether there are any indications of impairment and a formal
estimate of the recoverable amount is performed. The recoverable amount is
based on value in use which require the Group to make estimates regarding key
assumptions regarding forecast revenues, costs and pre-tax discount rate.
Further details are disclosed within note 14. Uncertainty about these
assumptions could result in outcomes that require a material adjustment to the
carrying amount of goodwill in future periods.
Energy credits
Energy credits are valued based on management's assessment of market price
fair value underlying the energy credit. Such assessment is derived from
valuation techniques that include inputs for the energy credit asset that are
not based on observable market data. Further details are disclosed within note
25. Uncertainty about the market price fair value used in valuing the energy
credit assets could result in outcomes that require a material adjustment to
the value of these energy credits assets in future periods.
Intangible assets
On acquisition, specific intangible assets are identified and recognised
separately from goodwill and then amortised over their estimated useful lives.
An external expert is engaged to assist with the identification of material
intangible assets and their estimated useful lives. These include items such
as brand names and customer lists, to which value is first attributed at the
time of acquisition. The capitalisation of these assets and the related
amortisation charges are based on judgements about the value and economic life
of such items.
The economic lives for customer relationships, trade names and computer
software are estimated at between five and eleven years. The value of
intangible assets, excluding goodwill, at 30 June 2022 is £4,917,000 (2021:
£1,890,000).
Contingent consideration
An element of consideration relating to certain business acquisitions made is
contingent on the future EBITDA targets being achieved by the acquired
businesses. On acquisition, estimates are made of the expected future EBITDA
based on forecasts prepared by management. These estimates are reassessed at
each reporting date and adjustments are made where necessary. Amounts of
deferred and contingent consideration payable after one year are discounted.
The carrying value of contingent consideration at 30 June 2022 is £868,000
(2021: £nil).
Any gain or loss on revaluation of contingent consideration does not adjust
the carrying value of goodwill and is treated as an exceptional item in the
income statement.
Procurement services revenue
When assessing the recognition of Procurement Services revenue within the
Energy Management division the Group estimates the degree to which expected
energy consumption is constrained by reductions in energy consumption over the
term of the contract when compared to the historical energy consumption of the
client and by the risk of supply contracts being terminated by clients before
the end of the contract term. These constraints reduce the extent to which
Procurement Service revenue is recognised on signing whether the client
contract is purely for Procurement Services or a combination of Procurement
and Energy Management Services.
3. PRIOR YEAR ADJUSTMENT
In the prior year the Group acquired Beond Group Limited on which the Group
estimated the fair value of assets and liabilities acquired. During the
current year, and within the measurement period of one year as permitted by
IFRS 3, the Group finalised the provisional fair values acquired and as a
result has increase the accrued revenue at the acquisition date by
£1,190,000, with a corresponding reduction in Goodwill. This has been
recorded in the prior year balance sheet and has no impact on the statement of
comprehensive income, cashflows or reserves.
4. SEGMENT REPORTING
The following information is given about the Group's reportable segments:
The Chief Operating Decision Maker is the Board of Directors. The Board
reviews the Group's internal reporting in order to assess performance of the
Group and has determined that in the year ended 30 June 2022 the Group had
three operating segments, being Energy Services, Energy Management and Group.
The Board considers that the Group operates in two business segments, Energy
Management and Energy Services, which predominantly comprised of LED lighting
solutions. With the strengthening of the management team following the
acquisition of UtilityTeam in September 2021 and the appointment of Managing
Directors to lead each of the operating segments the Board now primarily
reviews Energy Services as a single segment whereas in the prior year the
Board reviewed the operations in the UK and Ireland separately. Accordingly,
the comparative figures have been restated to be consistent with the current
management of the Group.
2022 Energy Mgmt Energy Services Group 2022
Central
£'000 £'000 £'000 £'000
Revenue - UK 11,634 8,518 - 20,152
Revenue - Ireland - 1,944 - 1,944
Revenue - Total 11,634 10,462 - 22,096
Cost of sales (2,251) (6,880) - (9,131)
Gross Profit 9,383 3,582 - 12,965
Operating expenses (5,709) (2,607) (1,628) (9,944)
Adjusted EBITDA 3,674 975 (1,628) 3,021
Depreciation and amortisation (789) (124) (159) (1,072)
Finance and similar charges (82) (244) 3 (323)
Profit (loss) before exceptional items and tax 2,803 607 (1,784) 1,626
Impairment of brands (1,564) - - (1,564)
Exceptional items (797) (346) (1,146) (2,289)
Loss before tax 442 261 (2,930) (2,227)
Income tax 736 - - 736
Profit (loss) after exceptional items and tax 1,178 261 (2,930) (1,491)
Net Assets
Assets: 33,930 12,930 2,833 49,693
Liabilities (10,483) (8,702) (7,960) (27,145)
Net assets (liabilities) 23,447 4,228 (5,127) 22,548
2021 Energy Mgmt Energy Services Group 2021
Central
£'000 £'000 £'000 £'000
Revenue - UK 2,187 8,511 - 10,698
Revenue - Ireland 2,898 2,898
Revenue - Total 2,187 11,409 13,596
Cost of sales (590) (7,469) - (8,059)
Gross Profit 1,597 3,940 - 5,537
Operating expenses (862) (2,550) (1,295) (4,707)
Adjusted EBITDA 735 1,390 (1,295) 830
Depreciation and amortisation (233) (100) - (333)
Finance and similar charges (14) (416) 4 (426)
Profit (loss) before exceptional items and tax 488 874 (1,291) 71
Exceptional items - - (248) (248)
Loss before tax 488 874 (1,539) (177)
Income tax 170 - 35 205
Profit (loss) after exceptional items and tax 658 874 (1,504) 28
Net Assets
Assets: 9,197 8,681 3,141 21,019
Liabilities (2,322) (7,820) (1,004) (11,146)
Net assets (liabilities) 6,875 861 2,137 9,873
5. REVENUE FROM CONTRACTS WITH CUSTOMERS
2022 2021
£'000
£'000
Sales revenue 22,181 13,478
Energy credits (85) 118
22,096 13,596
In the current year, there were no customers accounting for greater than 10%
of the Group's revenue.
In the prior year, more than 10% of the Group's revenue was accounted for by 1
UK customer (£1.6 million).
6. COST OF SALES
2022 2021
£'000
£'000
Cost of sales - labour 1,745 2,320
Cost of sales - commissions 1,148 564
Cost of sales - technology 4,377 2,479
Cost of sales - other 1,861 2,696
9,131 8,059
7. OPERATING EXPENSES
The breakdown of operating expenses by nature is as follows:
2022 2021
£'000
£'000
Wages and salaries 7,039 3,625
Rent, utilities and office costs 1,165 253
Professional fees 503 464
Travel and motor vehicle expenses 442 175
Foreign exchange (2) (2)
Share of loss on investment in associate - 34
Realised gain on sale of other assets - (304)
Adjustment of assets recorded at fair value through profit or loss (41) -
Exceptional items (see below) 2,289 248
Other expenditure 838 462
12,233 4,955
The Directors consider the following expenses (credits) within operating
expenses to be exceptional:
Note 2022 2021
£'000
£'000
Changes to the initial recognition of contingent consideration 30 (1,032) (1,444)
Integration costs 891 -
Other strategic investments 347 -
Restructuring costs 290 113
Acquisition related costs 1,273 1,094
Share based payment expense 34 520 485
2,289 248
8. AUDITORS REMUNERATION
2022 2021
£'000
£'000
Fees payable to the Company's auditor for the audit of parent company and 80 41
consolidated financial statements
Tax compliance services - 7
80 48
9. STAFF COSTS AND DIRECTORS' EMOLUMENTS
The aggregate staff costs for the year were as follows:
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Directors' remuneration 932 648 932 648
Other staff wages and salaries 4,556 2,569 - 81
Social security costs 1,031 408 169 89
Share based payment expense 520 485 - -
7,039 4,110 1,101 818
On average, excluding non-executive directors, the Group and Company employed
23 technical staff members (2021: 25), 43 sales staff members (2021: 26) and
62 administration and management staff members (2021: 21).
10. FINANCE COSTS - NET
2022 2021
£'000
£'000
Interest expense - borrowings (266) (361)
Finance charge on leased assets (57) (65)
Finance costs - net (323) (426)
11. TAXATION
2022 2021
£'000
£'000
The charge / (credit) for year is made up as follows:
Current tax charge / (credit)
Current year 159 (36)
Deferred tax credit (note 24)
Origination and reversal of temporary differences (895) (169)
Total tax credit for the year (736) (205)
Reconciliation of effective tax rate
Loss before income tax (2,227) (177)
Income tax applying the UK corporation tax rate of 19% (2021: 19%) (423) (34)
Effect of tax rate in foreign jurisdiction 85 28
Non - deductible expenses 11 95
Impact of tax rate change (102) 44
Movement in unrecognised deferred tax asset (322) (303)
Other tax differences 15 (35)
Income tax credit for the year (736) (205)
The movements in Deferred Tax are described in Note 24.
Factors affecting the future tax charge
The standard rates of corporation tax in the UK and Ireland are 19% and 12.5%
respectively.
A reduction in the UK corporation tax rate from 19% to 17% effective 1 April
2020 was substantively enacted on 6 September 2016. The March 2020 Budget
announced that a rate of 19% would continue to apply with effect from 1 April
2020. An increase in the UK corporate tax rate from 19% to 25% (effective from
1 April 2023) was substantively enacted on 14 May 2021. This will increase the
Company's future current tax charge accordingly.
12. EARNINGS PER SHARE
The calculation of the Basic and diluted earnings per share are calculated by
dividing the profit or loss for the year by the weighted average number of
ordinary shares in issue during the year.
2022 2021
(Loss) profit for the year from continuing operations - £'000 (1,431) 28
Weighted number of ordinary shares in issue 208,451,471 199,038,204
Basic earnings per share from continuing operations - pence (0.69) 0.01
Weighted number of dilutive instruments in issue - 11,504,993
Weighted number of ordinary shares and dilutive instruments in issue 208,451,471 210,543,197
Diluted earnings per share from continuing operations - pence (0.69) 0.01
Share options and warrants could potentially dilute basic earnings per share
in the future but were not included in the calculation of diluted earnings per
share in the current year as they are anti-dilutive. See note 34 for further
details.
13. PROPERTY, PLANT AND EQUIPMENT
GROUP Property, plant & equipment £'000 Computer equipment £'000 Total £'000
Cost
Opening balance 107 70 177
Additions on acquisition 153 10 163
Additions in the year - 125 125
Transfer to intangibles - (176) (176)
At 30 June 2021 260 29 289
Additions on acquisition (note 30) 306 - 306
Additions in the year 240 47 287
At 30 June 2022 806 76 882
Depreciation
Opening balance (39) (8) (47)
Additions on acquisition (104) (10) (114)
Charge for the year (48) (22) (70)
Transfer to intangibles - 22 22
At 30 June 2021 (191) (18) (209)
Additions on acquisition (note 30) (108) - (108)
Charge for the year (95) (12) (107)
At 30 June 2022 (394) (30) (424)
Net book value 30 June 2021 69 11 80
Net book value 30 June 2022 412 46 458
COMPANY Property, plant & equipment £'000 Total £'000
Cost
Opening balance 72 72
Additions in the year 34 34
At 30 June 2022 106 106
Depreciation
Opening balance (72) (72)
Charge for the year (6) (6)
At 30 June 2022 (78) (78)
Net book value 30 June 2021 - -
Net book value 30 June 2022 28 28
14. INTANGIBLE ASSETS
The intangible assets primarily relate to the Goodwill and separately
identifiable intangible assets arising on the Group's acquisitions. See note
30 for further details of the acquisitions made in the current year. The Group
tests the intangible asset for indications of impairment at each reporting
period, in line with accounting policies.
Goodwill £'000 Software £'000 Customer Relation-ships Brand Total
£'000 £'000 £'000
Cost
Opening balance 211 - - - 211
Additions on acquisition (restated) (note 3) 8,402 411 824 555 10,192
Additions in the year - 77 - - 77
Transfer from PP&E - 154 - - 154
At 30 June 2021 (restated) 8,613 642 824 555 10,634
Additions on acquisition (note 30) 15,203 215 3,487 1,039 19,944
Additions in the year - 401 - - 401
At 30 June 2022 23,816 1,258 4,311 1,594 30,979
Amortisation
Opening balance - - - - -
Additions on acquisition - - - - -
Charge for the year - (60) (41) (30) (131)
At 30 June 2021 - (60) (41) (30) (131)
Additions on acquisition - - - - -
Impairment - - - (1,564) (1,564)
Charge for the year - (159) (392) - (551)
At 30 June 2022 - (219) (433) (1,594) (2,246)
Net book value 30 June 2021(restated) 8,613 582 783 525 10,503
Net book value 30 June 2022 23,816 1,039 3,878 - 28,733
The Group completed a strategic review of its brands and trading names and on
1 July 2022 aligned all of the trading businesses under the master "eEnergy"
brand. Accordingly, the carrying value of the Beond and the UtilityTeam brand
names were fully impaired as at the year end.
The recoverable amount of each cash generating unit was determined based on
value-in-use calculations which require the use of assumptions. The
calculations use cash flow projections based on financial budgets approved by
management which are built "bottom up" for the next three years. Within those
cash flow projections revenues increase at a compound annual growth rate of
20% (2021: 20%). The annual discount rate applied to the cash flows is 13%
(2021: 13%) which is the same rate used by our valuation adviser to value the
separably identifiable intangible assets in the year.
The directors have considered and assessed reasonably possible changes in key
assumptions and have not identified any instances that could cause the
carrying amount to exceed recoverable amount.
15. INVESTMENT IN ASSOCIATE
During the prior year, the Group entered into various agreements to acquire,
in April 2021, an initial 33.3% interest which was increased to 37.5% interest
in eEnergy Insights Ltd ("EIL") in June 2021. EIL was a newly formed
specialist smart metering measurement equipment and analytics business which
acquired certain trade assets out of the administration process of Measure
My Energy Limited ("MME") and certain associated intellectual property
assets in April 2021.
As part of the agreement entered into in June 2021 the Group received nil cost
warrants to raise its interest to 51% of the equity, subject to certain
operational targets being achieved. In addition, agreement was reached on a
mechanism to acquire the remaining 49% of the equity under a pre agreed
valuation method after three years.
The Group exercised it warrants in October 2021 taking its ownership interest
to 51%. It subsequently acquired the shareholdings of certain minority
investors in May 2022, taking its ownership interest to 85.5%.
In the prior year, the Group held EIL as an equity accounted investment in
associate. Following the acquisition in October 2021 the Group was considered
to have assumed control and EIL has been subsequently accounted for as a
consolidated subsidiary, with the acquisition treated as a step acquisition.
2022 2021
£'000
£'000
Interest in associate at beginning of the year 155 -
Investment in associate during the year - 189
Derecognition following step acquisition (155) -
Share of loss on investment in associate - (34)
Interest in associate at end of the year - 155
In the prior year EIL's loss from April 2021 until June 2021 was £91,000 of
which the Group recognised its share of loss of £34,000. No share of the
result of EIL was recognised in the current year until the date of the step
acquisition on the basis the company is in a net liabilities position.
16. INVESTMENT IN SUBSIDIARIES
COMPANY ONLY 2022 2021
£'000 £'000
Opening balance 17,947 6,574
Additions during the year:
- consideration paid RSL - 2,238
- consideration paid Beond (note 30) - 9,135
Transfer to intermediate holding company (11,373) -
Closing balance 6,574 17,947
The full list of subsidiary undertakings of the Company are listed in note 39.
17. INVENTORY
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
The balance at year end comprised:
Work in progress 403 153 - -
Finished goods 406 218 - -
809 371 - -
18. TRADE AND OTHER RECEIVABLES
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Trade receivables 3,827 2,090 - -
Prepayments 726 543 574 111
Accrued revenue 9,892 2,056 - -
Other receivables 1,577 824 289 42
16,022 5,513 863 153
All trade receivables are short term and are due from counterparties with
acceptable credit ratings so there is no expectation of a credit loss.
Accordingly, the Directors consider that the carrying value amount of trade
and other receivables approximates to their fair value. The value of inventory
expensed as part of Cost of Sales in the year and prior year is disclosed in
Note 6. Inventories are stated at the lower of cost and net realisable value.
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and short term deposits. The
carrying value of these approximates to their fair value. Cash and cash
equivalents included in the cash flow statement comprise the following balance
sheet amounts.
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Cash at bank and in hand (excluding restricted cash) 1,380 3,332 91 1,187
Restricted cash 422 - - -
Cash and cash equivalents 1,802 3,332 91 1,187
Restricted cash relates to financing arrangements and customer collections.
20. TRADE AND OTHER PAYABLES
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Current liabilities
Trade payables 4,196 4,064 609 564
Accrued expenses 2,610 1,143 313 116
Deferred income 2,809 159 - -
Social security and other taxes 2,790 1,959 324 323
Contingent consideration 868 - 868 -
Other payables 3,529 494 - -
16,802 7,819 2,114 1,003
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and continuing costs. The Directors consider that the carrying value
amount of trade and other payables approximates to their fair value. Refer
Note 31.
Deferred income represents revenues collected but not yet earned as at the
year end.
Other payables primarily relates to provisions for under consumption or
cancelled contracts.
21. LEASES
The Group had the following lease assets and liabilities at 30 June:
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Right of use assets
Properties 774 579 279 -
Motor vehicles 3 31 - -
777 610 279 -
Lease liabilities
Current 542 264 265 -
Non-current 350 434 - -
892 698 265 -
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Maturity on the lease liabilities are as follows:
Current 492 264 265 -
Due between 1-5 years 176 194 - -
Due beyond 5 years 224 240 - -
892 698 265 -
Right of use assets
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Properties
Opening balance 579 477 - -
Additions 487 215 431 -
Additions on acquisition 135 - - -
Depreciation (427) (102) (152) -
Impact of foreign exchange - (11) - -
Closing balance 774 579 279 -
Motor vehicles
Opening balance 31 61 - -
Additions - - - -
Depreciation (28) (27) - -
Impact of foreign exchange - (3) - -
Closing balance 3 31 - -
22. BORROWINGS
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Current
Borrowings 11 601 - -
11 601 - -
Non-current
Borrowings 5,011 1,245 - -
5,011 1,245 - -
In February 2022 the Group refinanced substantially all of its existing bank
indebtedness and consolidated its borrowings into a single £5 million, four
year, revolving credit facility provided to eEnergy Holdings Limited, an
intermediate holding company in the Group. The new facility is secured by way
of debentures granted to the lender by all of the Group's trading
subsidiaries. The facility includes covenants relating to debt service cover
and gearing.
Maturity on the borrowings are as follows:
Maturity on the borrowings are as follows: 2022 2021
£'000
£'000
Current 11 589
Due between 1-2 years 11 913
Due between 2-5 years 5,000 300
Due beyond 5 years - 44
5,022 1,846
23. OTHER LIABILITIES
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Income and other taxes - 468 - -
Other non-current liabilities 2,252 - -
2,252 468 - -
Other non-current liabilities relates to amounts owed to external funding
providers in relation to customer receivables not yet received by the Group
and paid on in respect of multi-year contracts.
24. DEFERRED TAX
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following
Assets Liabilities Total
2022 2021 2022 2021 2022 2021
£'000
£'000
£'000
£'000
£'000
£'000
Intangible assets - - 1,060 415 1,060 415
Tangible assets - - 258 - 258 -
Losses (925) (415) - (925) (415)
Other (146) - - - (146) -
Total (assets) liabilities (1,071) (415) 1,318 415 247 -
Movement in temporary difference during the year
The following are the major deferred tax liabilities and assets recognised by
the Group and movements thereon during the current and prior reporting period:
2022 2021
£'000
£'000
Balance at 1 July - -
Acquired on acquisition - liability 1,142 169
Credit for the year (895) (169)
Balance at 30 June 247 -
Unrecognised deferred tax assets
At 30 June 2022, the Group had tax losses in the UK and Ireland totalling
£11.7 million and £3.2 million respectively (2021: £8.5 million and £2.3
million) for which deferred tax assets have been recognised to the extent that
it is expected to be future taxable profits against which the Group can use
the benefit therefrom.
25. PROVISIONS
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Put option 860 - - -
860 - - -
During the year, the Group entered into a put option agreement in respect of
the step acquisition of EIL to acquire further shares in the company, see note
15. The fair value of this option at acquisition was £3,921,000, of which
£3,061,000 was utilised following exercise of options to acquire shares and
discount rate unwind.
26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group classifies the following financial assets at fair value through
profit or loss:
Group Company
2022 2021 2022 2021
£'000
£'000
£'000
£'000
Energy credits 21 140 - -
21 140 - -
The energy credits are measured under level 2 of the fair value hierarchy as
described in note 31.
27. SHARE CAPITAL AND SHARE PREMIUM
GROUP AND COMPANY Ordinary Shares (1) # Share Capital £'000 Share Premium £'000 Total £'000
As at 30 June 2020 (ordinary shares of £0.003 each) 130,926,167 392 22,375 22,767
Issue of shares for acquisition of RSL 13,333,333 40 744 784
Issue of shares at placing price of £0.10 32,000,000 96 3,104 3,200
Issue of initial shares for acquisition of Beond 63,771,130 191 6,441 6,632
Issue of shares for acquisition of minority interest in Beond 1,177,326 4 114 118
Issue of shares in lieu of settlement of fees 2,841,801 8 293 301
Issue of shares upon exercise of warrants 2,208,333 7 159 166
Cost of share issue (216) (216)
As at 30 June 2021 (ordinary shares of £0.003 each) 246,258,090 738 33,014 33,752
Issue of shares at placing price of £0.15 80,000,000 240 11,760 12,000
Issue of shares for the acquisition of Utility Team 18,031,249 55 2,903 2,958
Issue of shares in exchange for loan notes from eEnergy Insights Ltd 2,490,620 7 301 308
Cost of share issue - (618) (618)
As at 30 June 2022 (ordinary shares of £0.003 each) 346,779,959 1,040 47,360 48,400
Deferred share capital 15,333
Total share capital 16,373
The deferred shares have no voting, dividend, or capital distribution (except
on winding up) rights. They are redeemable at the option of the Company
alone.
There has been no movement in the number of deferred shares during the current
and prior years.
Details of share options and warrants issued during the year and outstanding
at 30 June 2022 are set out in note 34.
The share premium represents the difference between the nominal value of the
shares issued and the actual amount subscribed less; the cost of issue of the
shares, the value of the bonus share issue, or any bonus warrant issue.
28. OTHER RESERVES
GROUP 2022 2021
£'000
£'000
Share based payment reserve 1,087 567
Revaluation reserve - other current assets 34 34
Other equity reserve (860) -
261 601
COMPANY 2022 2021
£'000
£'000
Share based payment reserve 1,087 567
1,087 567
Share based payment reserve Cumulative charge recognised under IFRS 2 in respect of share‐based payment
awards.
Reverse acquisition reserve Substantially represents the preacquisition value of the equity of the parent
company and the investment in eLight, net of expenses that was made when
eLight reversed into the company then known as Alexander Mining plc in January
2020 to create eEnergy Group plc.
Revaluation reserve The increase in the assessed carrying value of other current assets.
Other equity reserve This relates to the fair value of the put option liability in relation to the
EIL acquisition in October 2021, which under the present access method is
recognised against an other equity reserve.
29. NON-CONTROLLING INTERESTS
Non-controlling interests relates to the Group's investment in eEnergy
Insights Limited ("EIL"). In the prior year, the Group acquired 37.5% of the
shares in EIL and this was accounted for as an equity accounted associate. The
Group acquired additional shares in the year which took the Group's investment
to 85.5% of the company and is now a consolidated subsidiary.
The non-controlling interest at FY22 was negative equity of £77,000 (2021:
£nil), being negative equity of £16,000 on acquisitions in October 2021 and
May 2022 with a further loss recognised for the post-acquisition period of
£60,000.
30. BUSINESS COMBINATIONS
UtilityTeam TopCo Limited
On 17 September 2021 the Company completed the acquisition of all of the share
capital of UtilityTeam TopCo Limited ("UTT"). At the same time the Company
completed the Placing of 80 million shares which were issued at 15 pence per
share, raising £12.0 million for the Company. The Placing proceeds have been
primarily used to settle the initial cash consideration for the acquisition of
UTT.
UTT is a UK-based, top 20 energy consulting and procurement business, whose
services aim to reduce costs and support clients' transition to Net Zero.
The initial consideration of £14.0 million was satisfied as follows:
• cash consideration of £9.5 million, payable on
completion with further cash consideration of £2.0 million, payable on or
before 31 December 2021; and
• the issue of 18.0 million Ordinary Shares, which had a
fair value of £3.0 million based on the closing share price on the day prior
to completion.
• In April 2022, a reduction in consideration of
£500,000 was agreed with the vendors to reflect the difference between the
level of net working capital and debt in UTT when compared to that estimated
in the Sale & Purchase Agreement. This amount was repaid by the vendors in
cash during FY22 and is reflected in the table below. The final working
capital adjustment was finalised subsequent to the year end and a further
£280,000 reduction in will be recorded in FY23.
It was initially agreed that further earn-out consideration of up to a maximum
of £5.1 million may be payable, based on a multiple of 7.0x UTT's EBITDA, for
the year ending 31 December 2021. eEnergy agreed to pay £7 for every £1 of
EBITDA generated in excess of £2.3 million, up to a maximum EBITDA of £3.0
million ("Earn-Out Consideration").
The Earn-Out Consideration would be satisfied as follows:
• the first £1.5 million of Earn-Out Consideration will
be paid in cash; and
• any balance, up to £3.6 million, will be satisfied by
the issue of new Ordinary Shares at a price that is the higher of 24p and the
30 day volume weighted average price prior to 31 December 2021.
The Earn Out Consideration was agreed in July 2022 and it was further agreed
that it would be satisfied by the issue of 4,000,000 Ordinary Shares to the
vendors. Subsequently, the deferred consideration of £1,900,000 referred
below was reduced by £1,032,000 to a value of £868,000 - refer to Note 20.
The fair value of the assets acquired and liabilities assumed of UTT at the
date of acquisition based upon the UTT consolidated balance sheet at 17
September 2021 are as follows:
£'000
Property, plant and equipment 191
Right of use assets 135
Cash at bank 3,994
Inventory 27
Trade and other receivables 1,279
Trade and other payables (4,269)
Lease liabilities (141)
Other liabilities (2,190)
Loans and other borrowings (1,450)
Intangible assets 4,526
Deferred tax liability (1,132)
Total identifiable net assets acquired 970
Goodwill 14,970
Consideration
Initial consideration (shares issued recorded at the market value) 2,958
Cash 11,081
Contingent consideration 1,900
Total consideration 15,940
Goodwill relates to the accumulated "know how" and expertise of the business
and its staff. None of the goodwill is expected to be deducted for income tax
purposes. A purchase price allocation was performed during the year which
recognised specific identifiable intangible assets which are deductible for
income tax purposes. These separately identified intangible assets were:
- Brand names - £1,039,000; and
- Customer relationships - £3,487,000
eEnergy Insights Limited
In April 2021, the Group acquired 33.3% of eEnergy Insights Limited ("EIL")
which was increased to 37.5% in June 2021. The Group exercised warrants in
October 2021 taking ownership to 51% with a further acquisition to 85.5% in
May 2022. See note 15 for further information.
The fair value of the assets acquired and liabilities assumed of EIL at the
date of acquisition are as follows:
£'000
Property, plant and equipment 11
Computer software 215
Cash at bank 13
Trade and other receivables 60
Inventory 317
Borrowings (822)
Trade and other payables (44)
Total gross identifiable net assets (250)
Non-controlling interests 16
Total identifiable net assets acquired (234)
Goodwill 234
Consideration
Cash (£28) -
Total consideration -
31. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The Company manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and the Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, foreign exchange
reserves and retained earnings as disclosed in the Consolidated Statement of
Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange and liquidity
risks. The management of these risks is vested to the Board of Directors.
The sensitivity has been prepared assuming the liability outstanding was
outstanding for the whole period. In all cases presented, a negative number in
profit and loss represents an increase in finance expense / decrease in
interest income.
Fair Value Measurements Recognised in the Statement of Financial Position
The following provides an analysis of the Group's financial instruments that
are measured subsequent to initial recognition at fair value, grouped into
Levels 1 & 2 based on the degree to which the fair value is observable.
• Level 1 fair value measurements are those
derived from inputs other than quoted prices that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
• Level 2 fair value measurements are those
derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
• Level 3 assets are assets whose fair value
cannot be determined by using observable inputs or measures, such as market
prices or models. Level 3 assets are typically very illiquid, and fair values
can only be calculated using estimates or risk-adjusted value ranges.
Equity Price Risk
The Group is exposed to equity price risks arising from equity investments.
Equity investments are held for strategic purposes.
Interest Rate Risk
The Group is exposed to interest rate risk whereby the risk can be a reduction
of interest received on cash surpluses held and an increase in interest on
borrowings the Group may have. The maximum exposure to interest rate risk at
the reporting date by class of financial asset was:
2022 2021
£'000
£'000
Bank balances 1,802 3,332
Given the extremely low interest rate environment on bank balances, any
probable movement in interest rates would have an immaterial effect.
The maximum exposure to interest rate risk at the reporting date by class of
financial liability was:
2022 2021
£'000
£'000
Borrowings 5,022 1,846
The borrowings attract interest rates between 2.5% and 4.9% (2021: between
3.4% and 13.5%). Assuming the amount at period end was held for a year, a 10%
movement in this rate would have a £502,000: (2021: £18,000) effect on the
amount owing.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables from
customers. Indicators that there is no reasonable expectation of recovery
include, amongst others, failure to make contractual payments for a period of
greater than 120 days past due.
The carrying amount of financial assets represents the maximum credit
exposure.
The principal financial assets of the Company and Group are bank balances,
trade receivables and energy credits. The Group deposits surplus liquid funds
with counterparty banks that have high credit ratings and the Directors
consider the credit risk to be minimal.
The Group's maximum exposure to credit by class of individual financial
instrument is shown in the table below:
2022 2022 2021 2021
Carrying Value Maximum Exposure Carrying Value Maximum Exposure
Group £'000 £'000 £'000 £'000
Cash and cash equivalents 1,802 1,802 3,332 3,332
Trade receivables 4,022 4,022 2,090 2,090
Energy credits 21 21 140 140
5,845 5,845 5,562 5,562
2022 2022 2021 2021
Carrying Value Maximum Exposure Carrying Value Maximum Exposure
Company £'000 £'000 £'000 £'000
Cash and cash equivalents 91 91 1,187 1,187
Trade receivables - - - -
91 91 1,187 1,187
No aged analysis of financial assets is presented as no financial assets are
past due at the reporting date.
Trade receivables
The Group has applied IFRS 9 Financial Instruments and the related
consequential amendments to other IFRSs. IFRS 9 introduces requirements for
the classification and measurement of financial assets and financial
liabilities as well as the impairment of financial assets.
In relation to the impairment of financial assets, IFRS 9 requires an expected
credit loss model as opposed to an incurred credit loss model under IAS 39.
The expected credit loss model requires the Group to account for expected
credit losses and changes in those expected credit losses at each reporting
date to reflect changes in credit risk since initial recognition of the
financial assets. In other words, it is no longer necessary for a loss event
to have occurred before credit losses are recognised.
The group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivables. During the period, there were no credit losses experienced and no
loss allowance being recorded.
Currency Risk
The Group operates in a global market with income and costs arising in a
number of currencies and is exposed to foreign currency risk arising from
commercial transactions, translation of assets and liabilities and net
investment in foreign subsidiaries. Exposure to commercial transactions arise
from sales or purchases by operating companies in currencies other than the
Company's functional currency. Currency exposures are reviewed regularly.
The Group has a limited level of exposure to foreign exchange risk through its
foreign currency denominated cash balances, trade receivables and payables:
2022 2021
£'000
£'000
EURO
Cash and cash equivalents 317 58
Trade receivables 3,091 674
Trade payables (255) (252)
3,153 480
The table below summarises the impact of a 10% increase / decrease in the
relevant foreign exchange rates versus the €EUR rate for the Group's pre-tax
earnings for the period and on equity:
2022 2021
£'000
£'000
Impact of 10% rate change
Euro 350 57
350 57
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
The Group seeks to manage liquidity risk by regularly reviewing cash flow
budgets and forecasts to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably. The Group
deems there is sufficient liquidity for the foreseeable future.
The Group had cash and cash equivalents at period end as below:
2022 2021
£'000
£'000
Cash and cash equivalents 1,802 3,332
32. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
2022 - GROUP Financial assets at fair value through profit or loss Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets (liabilities) £'000 £'000 £'000 £'000
Fair value assets through profit or loss 21 - - 21
Trade and other receivables - 5,599 - 5,599
Cash and cash equivalents - 1,802 - 1,802
Trade and other payables - - (16,264) (16,264)
Lease liabilities (current and non-current) - - (892) (892)
Borrowings (current and non-current) - - (5,022) (5,022)
21 7,401 (22,178) (14,756)
2022 - COMPANY Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets / liabilities £'000 £'000 £'000
Trade and other receivables 863 - 863
Cash and cash equivalents 91 - 91
Trade and other payables - (921) (921)
954 (921) 33
2021 - GROUP Financial assets at fair value through profit or loss Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets (liabilities) £'000 £'000 £'000 £'000
Fair value assets through profit or loss 140 - - 140
Trade and other receivables - 2,867 - 2,867
Cash and cash equivalents - 3,332 - 3,332
Trade and other payables - - (5,859) (5,859)
Lease liabilities (current and non-current) - - (698) (698)
Borrowings (current and non-current) - - (1,846) (1,846)
140 6,199 (8,403) (2,064)
2021 - COMPANY Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets (liabilities) £'000 £'000 £'000
Trade and other receivables 153 - 153
Cash and cash equivalents 1,187 - 1,187
Trade and other payables - (680) (680)
1,340 (680) 660
33. RECONCILIATION OF MOVEMENT IN NET DEBT
At 1 July 2021 New borrowing Interest added to debt Debt repaid Other cashflows On acquisition At 30 June 2022
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank 3,332 4,890 - (3,634) (7,215) 4,007 1,380
Borrowings (1,846) (4,890) (123) 3,287 - (1,450) (5,022)
Net Cash (debt) excluding lease liabilities 1,486 - (123) (347) (7,215) 2,557 (3,642)
Lease liabilities (698) (484) (57) 347 - - (892)
Net Cash (debt) 788 (484) (180) - (7,215) 2,557 (4,534)
At 1 July 2020 New borrowing Interest added to debt Debt repaid Other cashflows On Acquisition At 30 June 2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank 1,478 286 - (558) 915 1,211 3,332
Borrowings (1,424) (286) (97) 470 - (509) (1,846)
Net Cash (debt) excluding lease liabilities 54 - (97) (88) 915 702 1,486
Lease liabilities (582) (160) (44) 88 - - (698)
Net Cash (debt) (528) (160) (141) - 915 702 788
34. SHARE BASED PAYMENTS AND SHARE OPTIONS
(i) Executive Share Option Plan
The Group operates an Executive Share Option Plan, under which directors,
senior executives and consultants have been granted options to subscribe for
ordinary shares. All options are share settled.
The fair value of services received in return for share options granted is
measured by reference to the fair value of the share options granted. This
estimate is based on the Black-Scholes model which is considered most
appropriate considering the effects of vesting conditions, expected exercise
period and the payment of dividends by the Company.
(ii) Management Incentive Plan ("MIP")
On 7 July 2020 the Company made a series of awards under the eEnergy Group
Management Incentive Plan.
The MIP is linked to the growth in the value of the Company. The forms of
incentive award to be implemented as part of the MIP comprise:
(a) "Growth Share Awards": awards granted in the form of
an immediate beneficial interest to be held by participants in a discrete and
bespoke class of ordinary shares ("Growth Shares") in eEnergy Holdings
Limited, a wholly owned subsidiary of the Company. After a minimum period of
three years, the Growth Shares may be exchanged for new ordinary shares of 0.3
pence each in the Company ("Ordinary Shares"), subject to meeting performance
conditions.
(b) "Share Options": awards granted in the form of a share
option with an exercise price equal to the market value of an Ordinary Share
at the date of Grant. These are structured to qualify for the tax advantaged
Enterprise Management Incentive ("EMI Share Options").
Under the MIP, the aggregate value of EMI Share Options and the Growth Shares
is capped at 12.5% of the Company's market capitalisation on conversion of the
Growth Shares.
Malus, clawback and leaver provisions apply to the MIP as outlined in the
Admission Document.
Growth Shares
As at 30 June 2022 the following Directors ("Participants") had subscribed for
Growth Shares in eEnergy Holdings Limited for their tax market value as set
out in the table below. This value was determined by the Company's independent
advisers, Deloitte LLP. Payment of the subscription monies by the
Participants is a firm commitment, with payment normally deferred until the
MIP matures.
Director Number of Growth shares Aggregate Subscription Price
Harvey Sinclair 5,500 £298,650
Andrew Lawley 1,000 £54,300
David Nicholl 1,000 £54,300
Total 7,500 £407,250
The Participants earn a percentage share of the "Value Created", being the
difference between the Group's market capitalisation (one-month average) at
the start and end of the measurement period (which is at least three years)
adding any returns to shareholders such as dividends and deducting the value
of new shares issued for cash or otherwise. The percentage share of the Value
Created is subject to a minimum Total Shareholder Return ("TSR") hurdle of 5%
and up to 15% TSR is equal to the annual TSR realised by shareholders over the
measurement period, and thereafter increased on a straight line basis so that
at 25% TSR the share of the Value Created is 20%, which is the maximum
percentage of the Value Created allocated to the MIP.
Growth Shares can be exchanged for Ordinary Shares after three or four years
at the Company's or Participant's option, based on the Value Created at that
time. The value of any EMI Share Options held by a Participant are deducted
from the value of their Growth Shares before conversion to Ordinary Shares.
The Remuneration Committee must be satisfied that the gains on the Growth
Shares are justified by the underlying financial performance of the Group.
Participants will be required to hold 50% of any Ordinary Shares acquired on
conversion of the Growth Shares until the end of the fourth year (30 June
2024).
On a change of control, the TSR growth rate up to that date is measured and if
the 5% minimum is achieved, Participants will share in the value created.
The fair value of the Growth Shares over the vesting period being three years
grant date was deemed to be £833,000, with £214,000 (2021: £419,000) fair
value expensed during the year.
EMI options
The Company granted the following EMI Share Options over Ordinary shares at an
exercise price of 6.12 pence, based on the closing price on Monday 6 July
2020:
Director Number of Options
Harvey Sinclair 4,084,960
Ric Williams 4,084,960
Total 8,169,920
The EMI options are exercisable when the MIP matures, being after a minimum
period of three years. The Remuneration Committee must be satisfied that the
returns are justified by the underlying financial performance of the Group.
Ric Williams resigned as a director during the year and the Remuneration
Committee agreed that his EMI Share Options will either vest or lapse at the
end of his notice period. As a result, the vesting period for his award has
been deemed to reduce from three years to two years and three months and the
value that has been expensed has been accelerated accordingly.
The fair value of the EMI Options over the vesting period being three years
grant date was deemed to be £200,000, with £91,000 (2021: £66,000) fair
value expensed during the year.
(iii) EMI Share Option Awards and non advantaged Share
Option Awards
On 7 December 2021 the Company granted share options over 13,800,000 Ordinary
Shares at an exercise price of 0.3 pence per share. The majority of the awards
were structured so that the following vesting criteria applied:
• 1/3rd with an exercise condition of the share
price being above 24p at vesting;
• 1/3rd with an exercise condition of the share
price being above 20p at vesting; and
• 1/3rd with no exercise price condition
2.5 million of the Options were awarded to Crispin Goldsmith, who is now a
director of the Company. 2/3rd of his award has an exercise price condition at
15p at the vesting date and the remainder has no exercise price condition.
(iv) Other share options or warrants
On 9 January 2020 the Company issued 1,575,929 warrants to a number of
advisors as part of the reverse acquisition transaction completed on that date
which are exercisable for the 4 years following the anniversary of the date of
issue at 7.5p per share. These advisor warrants had an estimated value of
£45,544 which is based on the Black-Scholes model which is considered most
appropriate considering the effects of vesting conditions, expected exercise
period and the payment of dividends by the Company.
The estimated fair values of warrants which fall under IFRS 2, and the inputs
used in the Black Scholes Option model to calculate those fair values are as
follows:
Date of grant Number of warrants Share Price Exercise Price Expected volatility Expected life Risk free rate Expected dividends
9 Jan 2020 1,575,929 £0.075 £0.075 45.00% 5 0.00% 0.00%
Total contingently issuable shares
2022 2021
Executive Share Option Plan 471,000 471,000
Other share options and warrants 25,570,849 1,452,596
26,041,849 1,923,596
The number and weighted average exercise price of share options and warrants
are as follows:
2022 2021
Weighted average exercise price Number of options Weighted average exercise price Number of options
Outstanding at the beginning of the year 17.887p 1,923,596 27.955p 4,308,262
Granted during the year (acquisitions) 16.2p 2,000,000 - -
Granted during the year 2.5p 22,118,253 - -
Lapsed during the year (Warrants) - - (45p) (133,333)
Lapsed during the year (Options) - - (1,476p) (43,000)
Exercised during the year - - (7.5p) (2,208,333)
Outstanding at the end of the year 4.969p 26,041,849 17.887p 1,923,596
Exercisable at the end of the year 20.961p 2,046,929 17.887p 1,923,596
Share options and warrants outstanding at 30 June 2022, had a weighted average
exercise price of 20.961 pence (2021: 17.887 pence) and a weighted average
contractual life of 3.01 years (2021: 3.04 years). To date no share options
have been exercised. There are no market based vesting conditions attaching to
any share options outstanding at 30 June 2022.
35. CAPITAL COMMITMENTS
There were no capital commitments at 30 June 2022 or 30 June 2021.
36. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 June 2022 or 30 June 2021.
37. RELATED PARTY TRANSACTIONS
The remuneration of the Directors and their interest in the share capital is
disclosed in the Remuneration Committee report in the Annual Report
Balances and transactions between companies within the Group that are
consolidated and eliminated are not disclosed in these financial statements.
[Certain of the Directors have committed to invest a total of £0.5m in the
new subordinated loan facility, subject only to shareholders approving
additional capacity to issue the warrants attaching to the subordinated loan
facility.]
38. EVENTS SUBSEQUENT TO PERIOD END
Post year end the Group commenced a process to raise capital to support the
ongoing working capital requirements of the Group. Following this process the
Group secured a new £ 2.5 million subordinated loan facility to improve
working capital headroom. £ 1.9 m of this is unconditional with the balance
subject to shareholders approving additional capacity to issue warrants
attaching to the subordinated loan facility.
39. CONTROL
In the opinion of the Directors as at the period end and the date of these
financial statements there is no single ultimate controlling party.
40. LIST OF SUBSIDIARY UNDERTAKINGS
As at 30 June 2022, the Group owned interests in the following subsidiary
undertakings, which are included in the consolidated financial statements:
Name Holding 2022 Holding 2021 Business Activity Country of Incorporation Registered Address
Direct subsidiary undertaking
eEnergy Holdings Limited 100% 100% Holding Company England & Wales 20 St Thomas Street, London, SE1 9RS
Indirect subsidiary undertakings
eLight Group Holdings Limited 100% 100% Holding Company Ireland 1-3 The Green, Malahide, Co. Dublin K36 N153
eEnergy Services N.I. Limited 100% - Trading Company Northern Ireland 19 Arthur Street, Belfast, BT1 4GA
e-Light Ireland Limited 100% 100% Trading Company Ireland 1-3 the Green, Malahide, Co. Dublin K36 N153
eLight EAAS Projects Limited 100% 100% Trading Company Ireland 1-3 the Green, Malahide, Co. Dublin K36 N153
eEnergy Services UK Limited 100% 100% Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy EAAS Projects UK Limited 100% 100% Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy Services RSL Limited 100% 100% Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
Smartech Energy Projects Limited 100% 100% Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy Consultancy Limited 100% 100% Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
Energy Centric Limited 100% 100% Dormant England & Wales 20 St Thomas Street, London, SE1 9RS
Zero Carbon Projects Limited 100% 100% Non-trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
Zero Carbon Projects Pty Limited 100% 100% Non-trading Company Australia Suite 4, 142 Spit Rd, Mosman, NSW, 2088
eEnergy Insights Limited 85.5% 37.5% Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy Management Limited 100% - Trading Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy Management Topco Limited 100% - Holding Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy Management Holdings Limited 100% - Holding Company England & Wales 20 St Thomas Street, London, SE1 9RS
eEnergy Management USA Limited 100% - Non-trading Company United States 20 St Thomas Street, London, SE1 9RS
UtilityTeam US Inc 100% - Non-trading Company United States 919 North Market Street, Suit 950 Wilmington, DE 19801
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