REG - eEnergy Group PLC - Results for the six months ended 31 December 2021
16/03/2022 07:00
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RNS Number : 9115E eEnergy Group PLC 16 March 2022
16 March 2022
eEnergy Group plc
("eEnergy" or "the Group")
Results for the six months ended 31 December 2021
eEnergy Group plc (AIM: EAAS), the digital energy services company, is pleased
to announce its interim results for the six months ended 31 December 2021.
Financial Highlights for the six months ended 31 December 2021:
· Revenue for the enlarged Group up 42% to £9.6 million (H1 FY21:
£6.8 million).
· Energy Management revenue increased to £4.8 million (H1 FY21: £0.2
million) through underlying annualised growth of 25%, the inclusion of Beond
for the full period and the acquisition of UtilityTeam in September 2021.
· Energy Efficiency revenue of £4.8 million was stable with H2 FY21
but down 28% on H1 FY21 (£6.6 million), primarily as a result of the catch up
effect in H1 FY21 of projects delayed from the first Covid lockdown.
· Group gross margin increased in the period to 57.6 % (H1 FY21: 38.2%)
due to the change in sales mix towards Energy Management.
· Adjusted EBITDA((1)) up 117% to £0.8 million (H1 FY21: £0.4
million).
· Profit before exceptional items((2)) of £0.2 million (H1 FY21 £0.1
million).
· Cash at bank £2.6 million (30 June 2021: £3.3 million) and net debt
(including IFRS 16 lease liabilities) of £1.1 million (30 June 2021: net cash
£0.8 million).
Operational Highlights:
· Successful integration of Beond and advanced integration of
UtilityTeam, both performing ahead of management's expectations.
· Increased stake in MY ZeERO from 37.5% to 51% following the
successful completion of specific development milestones.
· Contracted forward revenue((3)) increased 205% to £18.3 million (31
December 2020: £6.0 million).
· Accelerating pipeline for Energy Efficiency projects - higher value
of investment grade proposals((4)) issued in H1 FY22 than in the whole of
FY21.
· Now ranked as a Top 5 Energy Management provider in the UK by
Cornwall Insight.
· Delivered the first integrated onsite solar generation and lighting
replacement project
· Secured and installed the first standalone energy data and insights
contract for a multi academy trust.
· 108 LED lighting installations completed at schools and businesses in
the UK & Ireland in H1 FY22 (H1 FY21: 111).
· 132 MY ZeERO eMeters installed and a further 260 installed or
awaiting installation at 28 February 2022.
Highlights post period end
· Successfully refinanced all our secured debt with Silicon Valley Bank
in February 2022. The £5 million revolving credit facility is at a
significantly lower average cost of finance and provides much more
flexibility.
· The Company is now able to provide its clients with onsite solar
generation and intends to add electric vehicle charging solutions to its
offering by the end of FY22.
Full year outlook
· The Group has a growing pipeline of opportunities, which is expected
to generate incremental revenue in H2 FY22.
· There are clearly risks outside of the Group's control, including
challenges to contracting new energy supply contracts in the current market
environment and timing of customer decisions on Energy Efficiency contracts
and installations. However, on balance, and given the full period contribution
from UtilityTeam and the strength of the Group's pipeline of opportunities,
the Board expects to trade in line with the current market expectations for
FY22.
Harvey Sinclair, CEO of eEnergy, commented:
"eEnergy has made robust progress over the last six months, having
successfully integrated the teams at Beond and UtilityTeam, both of which are
performing well and ahead of our expectations. Moreover, we are seeing
strong momentum with our customers engaging with our newly rolled outsmart
metering and energy efficiency as-a-service solutions.
Whilst the volatile market environment represents risks for our business, the
ongoing energy crisis and the resulting increase in energy prices has provided
an inflection point for our business. Our customers recognise the commercial
significance of reducing energy wastage now more than ever. We are one of
the only businesses that enable customers to reduce their energy consumption
as well as generate their own energy without the need for capital
investment.
Additionally, the broader macro conditions and clear regulatory drivers
continue to be a tailwind for the business, and the Board believes this
provides the Group with improved organic structural growth drivers."
Investor Presentation
CEO Harvey Sinclair and CFO Ric Williams will provide a live presentation
relating to the interim results via the Investor Meet Company platform on 16
March 2022 at 09:00am GMT.
The presentation is open to all existing and potential shareholders. Questions
can be submitted at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet
eEnergy Group plc via:
https://www.investormeetcompany.com/eenergy-group-plc/register-investor
(https://www.investormeetcompany.com/eenergy-group-plc/register-investor)
Note: (1) Adjusted EBITDA is Earnings before interest, tax, depreciation and
amortisation before exceptional items, which are transaction-related items,
incremental integration and restructuring costs and share based payment
expenses.
Note (2) Profit before exceptional items is the profit before tax and before
the exceptional items listed in Note 1.
Note (3) Contracted forward revenue is based upon our expectations of energy
consumption by our clients under contract plus the revenue to be earned from
energy efficiency contracts that have been signed but not yet installed.
Note (4) An investment grade proposal is a written proposal issued to an
engaged client after we have completed an investment grade audit of the
client's site.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in the public
domain. The person responsible for arranging for the release of this
announcement on behalf of eEnergy is Ric Williams, Chief Financial Officer.
Contacts:
eEnergy Group plc Tel: +44 20 7078 9564
Harvey Sinclair, Chief Executive Officer info@eenergyplc.com (mailto:info@eenergyplc.com)
Ric Williams, Chief Financial Officer www.eenergyplc.com (http://www.eenergyplc.com)
Crispin Goldsmith, Chief Strategy & Commercial Officer
Singer Capital Markets (Nominated Adviser and Joint Broker) Tel: +44 20 7496 3000
Justin McKeegan/Mark Taylor/Asha Chotai (Corporate Finance)
Tom Salvesen (Corporate Broking)
Turner Pope Investments (Joint Broker) Tel: +44 20 3657 0050
Andy Thacker/James Pope info@turnerpope.com (mailto:info@turnerpope.com)
Tavistock (Financial PR and IR) Tel: +44 20 7920 3150
Jos Simson/Heather Armstrong/Katie Hopkins eEnergy@t (mailto:eEnergy@tavistock.co.uk) avistock.co.uk
(mailto:eEnergy@tavistock.co.uk)
About eEnergy Group plc
eEnergy (AIM: EAAS) 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 EV charging.
eEnergy currently manages 5.3TWh of energy for 2,200 customers across the
public and private sectors.
eEnergy has been awarded The Green Economy Mark by London Stock Exchange.
https://eenergyplc.com/ (https://eenergyplc.com/)
Chief Executive's Statement
The first half of our FY22 financial year has been a period in which we have
made significant steps in integrating the Group. We have expanded our
services and customer base and aligned our broader strategy to become a
leading integrated energy efficiency and management business. The
acquisition of UtilityTeam has brought us a commercial edge to our Energy
Management business, including scale and a significant opportunity to
cross-sell our products and services to our growing customer base. Whilst H1
FY22 may have felt like we were "treading water" in Energy Efficiency, the
resumption of face to face marketing to the education sector and the success
in establishing a broader set of channels to market means that our pipeline of
proposals and opportunities is at a record high.
Strategy
Our strategy since Admission has been to assemble, through organic growth and
acquisition, a balanced portfolio of energy and carbon reduction solutions, to
diversify the Group, improve its quality of earnings and generate scale with a
view to helping schools and businesses achieve the Net Zero goals. eEnergy
now has the ability to offer customers a broad range of products and services
and expertise in energy management and efficiency and intelligent measurement
and analysis, cultivating a large and relevant customer base to which the
Group is cross-selling by delivering its end-to-end offering. 44% of our Top
50 clients are actively engaged in procuring significant additional services
from the Group.
With the acquisition and integration of UtilityTeam we have established the
foundation for how we support our clients in their journey to Net Zero across
the business. With this now complete, we continue to build upon this base
with an increased focus on channel partners and relationships which means we
can scale the business more effectively and build relationships with customers
who can benefit from the breadth of our offering rather than just a single
solution.
We completed our first integrated onsite solar generation and LED lighting
project in H1 FY22 and we have proposals of significant value that include
onsite solar generation which we hope to secure and deliver before the end of
FY22. As energy prices move inexorably higher we believe that the
combination of being able to install local solar generation alongside energy
reduction projects like LED, all on a capital free basis, is a compelling
proposition for the market. Onsite solar generation is relevant to the vast
majority of our clients and we have active engagement with clients for
projects worth over £7 million. We are also exploring opportunities to
ensure that we secure more of the value gained through the installation of
onsite solar generation, which may include acquiring the right solar
partner.
As previously disclosed, the Group also intends to add electric vehicle
charging solutions to its offering by the end of FY22. The structural and
regulatory growth drivers that the Group is exposed to remain highly
attractive and will support Management's growth ambitions over the medium
term.
Acquisition criteria
We have a clearly stated acquisition strategy with focused criteria, including
to:
· building capability in renewables;
· target high growth, strong and aligned leadership ideally with
proprietary technologies; and
· execute transactions that are earnings accretive and cash generative.
We will seek to target acquisitions based on maintainable EBITDA multiples,
with earnout and lock-ins for key management.
To date, the Group has utilised flexible acquisition structures, involving a
mix of consideration shares and cash. The Group intends to continue to utilise
such structures and where cash is paid using available debt facilities, to
limit Group net leverage to no more than 2x EBITDA.
Energy Market conditions
We have seen extreme volatility in the UK and European energy markets for a
number of months, and more recently exacerbated by the war in Ukraine. We
have been advising our clients for some time that higher energy prices are
with us for the foreseeable future, and that this only makes the savings
achievable from implementing energy efficiency measures that much greater.
The volatility in the market, including the risk of failure of some energy
suppliers, also emphasises the advantage we have from our technology and
consulting led Energy Management business, where customers are increasingly
looking for greater insight on consumption, efficiency and risk management.
However, the recent issues around security of supply have meant that despite
us having consultancy agreements in place with our clients we have not always
been able to lock in their future energy supply. This is due to the
effective closure of the market with suppliers unwilling to price customers'
demand in the short term. Whilst we have seen some easing of these
conditions in the past few days, the market remains susceptible to change as
events in Ukraine trigger a broader political and economic response.
Trading performance
Energy Management
Beond's first year
We acquired Beond in December 2020 to be the bedrock for our Energy Management
business and it has performed very well, delivering Adjusted EBITDA 25% ahead
of our acquisition base case in the first year. This strong performance has
been driven by increased revenues as we have expanded the services our clients
pay for complemented by operating efficiencies in how we deliver those
services. In addition, we have delivered the automation of key data
collection and manipulation processes as well as our online customer platform.
UtilityTeam
We completed the acquisition of UtilityTeam in September 2021 and trading to
date has exceeded our expectations, although the much larger size of
UtilityTeam's key contracts brings positives and negatives. The UtilityTeam
contracts are typically longer and larger than the more diversified portfolio
of contracts in Beond and the customers demand a broader range of services.
However, whilst we have good visibility of our pipeline and have not seen any
increase in customer churn, the disruption in the marketplace we are currently
seeing has resulted in a delay in signing some larger contracts which, in
turn, has a bearing on the timing of revenue as we recognise c20% of the
contract value on signing.
MY ZeERO
Following the successful completion of specific development milestones in
October 2021 eEnergy increased its stake in MY ZeERO from 37.5% to 51%. We
signed and then installed our first standalone monitoring and data insights as
a service contract with a multi academy trust in December 2021 and at 31
December 2021 had 132 eMeters installed. Client demand is strong and we have
installed or secured orders for another 260 eMeters as at 11 March 2022 and
expect to have installed over 1,000 eMeters by the end of June from a sales
pipeline of c.£1.8 million.
Energy Efficiency
We provide schools, businesses and other organisations with the right energy
efficiency solutions (such as LED lighting) to reduce their energy usage with
no upfront cost as the client pays for our solution over a fixed term
(typically five - seven years) where the regular payment is always less than
the savings on their energy.
Due to the difficult market conditions brought about by the third national
Covid lockdown in early 2021 the financial performance of the Energy
Efficiency business in H1 FY22 was stable at the level we achieved in H2 FY21
but behind that seen in H1 FY21, a period that benefited significantly from
the "catch up" of projects from the first Covid lockdown into the summer of
2020.
Access to potential clients changed significantly in October and November 2021
as we were able to engage in face-to-face marketing at events and conferences,
which is a key direct sales channel for the education marketplace. As a
result, we achieved our lead generation targets for the whole of FY22 by
Christmas and the pipeline of proposals and opportunities at 31 December 2021
was at a record high. Momentum has continued since the end of the calendar
year and the pipeline has grown further still. The focus is now on
completing the committed installations by the end of FY22 and continuing to
develop our pipeline of opportunities. Together with securing projects
through key channel partners, the success in securing the first phase with a
number of large multi academy trusts gives us confidence in a significantly
improved outcome for H2 FY22.
In Ireland the impact of the Covid restrictions on our ability to secure
leads, convert opportunities and install projects continued throughout 2021
and were more severe than in the UK, with revenue falling 18% compared with H1
FY21. Having brought Ireland into the unified management structure and with
those Covid restrictions starting to ease, we are now seeing the volume of
sales increasing in line with our expectations.
Management team and structure
The acquisition of UtilityTeam allowed us to further strengthen the management
structure and we welcomed Delvin Lane and Simon Smith as Managing Directors
for each of the Energy Management and Energy Efficiency businesses
respectively. Whilst focused on the solutions each of these businesses
deliver Delvin and Simon work collaboratively to ensure that we are delivering
integrated solutions to our top 50 strategic clients, those who have the
greatest need for our end-to-end solutions.
Full Year Outlook
Our strategy is on track and the Group has a growing pipeline of opportunities
for the remainder of the financial year across both our Energy Efficiency and
Energy Management divisions. Our new business targets are well covered and
we have issued more Energy Efficiency proposals in H1 FY22 than in the whole
of FY21.
Our contracted forward revenues (based on current expected consumption for
Energy Management clients), as at 31 December 2021 of £18.3 million over five
years (up 205% from 31 December 2020). Of that £18.3 million, £5.3 million
is expected to be recognised as revenue in H2 FY22 and £6.5 million
recognised in FY23.
eEnergy continues to make significant strategic progress towards its stated
goal to provide a simple, end to end solution to organisations and companies
wanting an economic and effective path to Net Zero emissions. We have grown
our customer base, evolved our service offering and have exposure to some of
the largest structural growth trends in the energy segment. Our focus on
cross-selling to our existing customers (with whom we are actively engaged in
over £17 million of opportunities) and cultivating new customers across both
divisions is creating new opportunities for the Group to drive further
profitable growth.
There are clearly risks that are outside of the control of the Group,
including the global consequences of continued war in Ukraine and the timing
of customer decisions on Energy Efficiency contracting and installations but
on balance, and given the full period contribution from UtilityTeam and the
strength of our pipeline of opportunities, the Board expects to trade in-line
with market expectations for the current financial year.
Harvey Sinclair
Chief Executive Officer
16 March 2022
Note: (1) Profit before exceptional items is the profit before tax excluding
transaction-related items, incremental integration and restructuring costs and
share based payment expenses.
Chief Financial Officer's Statement
The financial performance of the Group for the interim period has been broadly
in line with our expectations. The acquisition of UtilityTeam in September
and the related Placing that we completed has strengthened our overall
financial position and has contributed to the continued growth in revenue and
profitability.
Financial position and liquidity
Our closing cash at the end of December 2021 was £2.6 million (30 June 2021:
£3.3 million) and our debt balances (£3.7 million at 31 December 2021,
including IFRS 16 lease liabilities) were predominantly long term in nature.
In February 2022 we completed the refinancing of all of our secured debt with
Silicon Valley Bank as part of a £5 million committed revolving credit
facility which provides more flexibility at a significantly lower average cost
of finance.
During H1 FY22 the impact of the shift from energy suppliers paying commission
income in advance to favouring paying in arrears became more pronounced and
was a particular factor in the reduction to our period end cash balance.
Whilst the working capital profile has changed there is no reduction to the
overall cash commission that the Group receives over the life of the effected
contracts.
The Board seeks to take a prudent approach to working capital management, with
ongoing monitoring of our financial position and scenario analysis to reflect
downside risk cases that may arise from potential disruption to the business,
whether from the consequences of the Covid-19 pandemic or the volatility in
the energy market. Having considered management's assessment of potential
scenarios, the Board is confident that the Group has sufficient financial
resources and headroom within its debt facilities (including the ability to
meet its debt covenants) for the foreseeable future.
Financial overview
The overall 42% increase in revenue reflects a stronger than expected
performance in Energy Management as well as the trading to date from the
acquisition of UtilityTeam in September 2021 and slightly weaker than expected
revenue in Energy Efficiency due to the drag on lead generation earlier in
2021.
Energy Management
· Revenue for H1 FY22 was £4.8 million (H1 FY21: £0.2 million)
reflecting strong annualised growth of 25% following the acquisition of Beond
in December 2020 and the contribution from UtilityTeam from its acquisition in
September 2021.
· Contracted forward revenues of £17.0 million at 31 December 2021, up
250% (31 December 2020 £4.9 million).
· Operating EBITDA margin for H1 FY22 was 29.8% (H1 FY21: 15.4%) as we
improved pricing and operational efficiency across the Energy Management
business.
· During H1 FY22 87% of all energy management contracts signed by
clients were for 100% renewable supply (FY21: 82%).
The Energy Management business has performed ahead of management's
expectations in terms of both revenue growth and the rate at which the
UtilityTeam business is being integrated into the Group. In the first year
within the Group Beond has increased its average contract term by 27% and
revenue per meter under management by 37%.
The contracted future revenue has grown both organically (at 27% pa) and as a
result of bringing UtilityTeam into the Group and we have already contracted
x% of our expected FY23 revenues.
MY ZeERO
· At 31 December 2021 we had 132 eMeters deployed.
· We had a further 260 eMeters either installed or under committed order
at 11 March 2022, which represents Contracted future revenue was £0.4
million.
We report the results of MY ZeERO within the Energy Management business and
see this as an integral part of the Group as allowing customers to measure
their energy consumption is at the heart of the strategy.
Energy Efficiency
· Total contract value secured in H1 FY22 was £4.9 million (H1 FY21:
£6.9 million).
· Contracted future revenue of £1.3 million at 31 December 2021 was
10% higher compared to 31 December 2020 (£1.2 million).
· Revenue for H1 FY22 was £4.8 million, the same as for H2 FY21 but
down from £6.6 million in H1 FY21, where we benefited from the catch-up of
projects delayed after the first Covid lockdown.
· Gross margin (after commission) has improved 440bps to 37.8% compared
the equivalent period of the prior year (H1 FY21: 33.4%; FY21 34.4%).
· The operating EBITDA margin declined 730bps to 5.8% (H1 FY21: 13.1%)
as a result of the lower revenue in the period and the investment in
additional sales, marketing and operational delivery resources.
· Number of projects completed in H1 FY22 was 108 (H1 FY21: 111).
The Energy Efficiency business has been stable across the whole of calendar
2021. Market conditions have remained challenging in Ireland where the
extent of Covid lockdowns have been more restrictive than in the UK.
Gross margins after commission have continued to improve over the period as a
result of the strong relationships we have with our key supply chain partners
across the UK and Ireland.
Operating expenses have increased 13% to £1.5 million (H1 FY21: £1.3
million) as we have continued to invest in our sales and marketing and
operational delivery capability in order to capture and deliver the volume and
complexity of projects we are installing.
Head office costs
Following the acquisition of Beond in December 2021 and to reflect the growing
scale of the Group's operations, we expanded the head office management team
to include our COO as well as additional Group resources in marketing and
finance. As a result our central management costs increased to £0.9 million
in H1 FY22 (H1 FY21: £0.5 million).
Working capital
As described in my year end report our two divisions operate to a different
working capital tempo. Within Energy Efficiency we typically fund our
projects with funding partners at the time of installation and our funding
partner takes the collection risk over the term of the client contract. Due
to the timing of the completion of projects in December 2021 more than usual
of our contracts completed in the month were funded during 2022 which accounts
for c£0.5 million of the increase in Trade and other receivables.
Within Energy Management we recognise a proportion of revenue when the
underlying energy supply contract is signed between our client and the energy
supplier. We also typically receive the majority of our income in the form
of commission based upon actual consumption by our client. Historically the
business has received more cash in advance from suppliers than the revenue
that has been recognised and therefore recorded a deferred income balance.
However, in light of the ongoing volatility in the energy markets we have seen
a change in receipt of supplier commissions, with energy suppliers
increasingly favouring payments in arrears, rather than offering up to 80% of
the expected commission upfront. This shift by suppliers away from upfront
commission has accelerated with the recently increased volatility in the
market. This has changed the working capital profile and delayed the
collection of cash (but not overall cash commissions to be received), for the
applicable contracts.
Borrowings
At acquisition in September 2021, UtilityTeam had a £1.45 million CBILS
loan. Throughout the period we have made scheduled repayments across our
loans and the combined effect has resulted in our borrowings increased £1.1
million between 30 June and 31 December 2021 to £2.9 million.
In February 2022 we successfully refinanced all of our secured loans with a
three year, £5 million rolling credit facility with Silicon Valley Bank which
has significantly reduced our blended cost of finance and provides us with
enhanced liquidity and more flexible financing. With Silicon Valley Bank we
have a strong partner who is very supportive of our growth strategy.
Acquisitions
In September 2021 we completed the acquisition of UtilityTeam. As described
in note 9 of the interim financial report, we expect to pay approximately
£18.0 million (assuming the maximum Earn-out consideration is payable) of
which we have already paid £14.5 million. The first £1.5 million of the
earn out consideration is payable in cash with the balance is shares.
UtilityTeam is being integrated into our Energy Management business but we are
already seeing the benefits of having broadened the capability and reach
within the business.
Ric Williams
Chief Financial Officer
16 March 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 31 December 2021
Note Period to Period to Year to 30 June 2021
31 December 2021
31 December 2020
£'000
£'000 £'000
Continuing operations
Revenue from contracts with customers 9,592 6,767 13,596
Cost of sales (4,067) (4,428) (8,059)
Gross profit 5,525 2,339 5,537
Operating expenses (5,911) (2,952) (4,955)
Included within operating expenses are:
- Other exceptional items 4 1,193 985 248
Adjusted operating expenses (4,718) (2,213) (4,707)
Adjusted earnings before interest, taxation, depreciation and amortisation 807 372 830
Earnings before interest, taxation, depreciation and amortisation (386) (613) 582
Depreciation and amortisation (401) (63) (333)
Finance costs (227) (212) (426)
Loss before taxation (1,014) (888) (177)
Income tax - - 205
Profit (Loss) for the year from continuing operations attributable to the (1,014) (888) 28
owners of the company
Attributable to:
Owners of the company (932) (888) 28
Non-controlling interest (82) - -
(1,014) (888) 28
Other comprehensive income - items that may be reclassified subsequently to
profit and loss
Change in the fair value of other current assets - 43 34
Translation of foreign operations 107 49 102
Total other comprehensive profit (loss) 107 92 136
Total comprehensive profit (loss) for the year (907) (796) 164
Total comprehensive profit (loss) attributable to:
Owners of the company (825) (796) 164
Non-controlling interest (82) - -
(1,003) (796) 164
Basic and diluted loss per share from continuing operations attributable to 5 (0.33)p (0.58)p 0.01p
owners of the company
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Note As at As at
31 December 2021
30 June 2021
£'000
£'000
NON-CURRENT ASSETS
Property, plant and equipment 296 80
Intangible assets 6 30,253 11,693
Right of use assets 622 610
Deferred Tax Asset 415 415
Investment in Associate - 155
Total non-current assets 31,586 12,953
Other current assets 44 47
Inventories 742 371
Trade and other receivables 8,049 4,276
Financial assets at fair value through profit or loss 140 140
Cash and cash equivalents 2,588 3,332
Total current assets 11,563 8,166
TOTAL ASSETS 43,149 21,119
NON-CURRENT LIABILITIES
Lease liability 376 434
Borrowings 7 2,367 1,245
Deferred Tax Liability 1,576 415
Other non-current liabilities 300 468
Total non-current liabilities 4,619 2,562
CURRENT LIABILITIES
Trade and other payables 10,019 7,819
Deferred and contingent consideration 9 4,245 -
Lease liability 343 264
Borrowings 7 579 601
Total current liabilities 15,186 8,684
TOTAL LIABILITIES 19,805 11,246
NET ASSETS 23,344 9,873
Equity attributable to owners of the parent
Issued share capital 16,367 16,071
Share premium 47,167 33,014
Other reserves 771 601
Reverse acquisition reserve (35,246) (35,246)
Foreign currency translation reserve 94 (13)
Accumulated losses (5,486) (4,554)
Total equity attributable to owners of the parent 23,667 9,873
Non-controlling interest (323) -
Total equity 23,344 9,873
CONSOLIDATED STATEMENTS OF CASHFLOWS
For the six month period ended 31 December 2021
Period to 31 December 2021 Period to 31 December 2020 Year to
£'000
£'000
30 June 2021
£'000
Cash flow from operating activities
Operating profit (loss) - continuing operations (1,014) (888) 28
Adjustments for:
Depreciation and amortisation 401 63 332
Finance cost (net) 127 131 311
Share issue to settle expenses - - 301
Share option charge 170 172 485
Share of loss in associate 30 - 34
Finance charge on lease liabilities 31 34 65
Foreign exchange movement 12 10 35
Gain on derecognition of contingent consideration - - (1,444)
Operating cashflow before working capital movements (243) (478) 147
Decrease (increase) in trade and other receivables 65 (1,652) (2,406)
(Decrease) increase in trade and other payables (2,612) 1,344 2,760
(Increase) decrease in inventories (42) 10 (23)
Decrease (increase) in deferred income (414) (140) (264)
Net cash outflow inflow from operating activities (3,246) (916) 214
Cash flow from investing activities
Cash acquired on acquisition of business 2,800 1,218 1,218
Cash from exercise of options in acquired business - 521 521
Cash paid to acquire subsidiaries (10,582) (2,395) (2,395)
Expenditure on intangible assets (457) - (217)
Purchase of property, plant and equipment (117) (122) (134)
Net cash (outflow) from investing activities (8,356) (778) (1,007)
Cash flows from financing activities
Interest (paid) received (97) (131) (319)
Repayment of lease liabilities (109) (41) (163)
Net proceeds from the issue of shares 11,382 2,985 3,149
Proceeds from loans and borrowings - 299 294
Repayment of borrowings (333) - (314)
Net cash inflow from financing activities 10,843 3,112 2,647
Net increase in cash and cash equivalents (759) 1,418 1,854
Effect of exchange rates on cash 15 (73) -
Cash and cash equivalents at the start of the period 3,332 1,478 1,478
Cash and cash equivalents at the end of the period 2,588 2,823 3,332
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 31 December 2021
Share Capital Share Premium Reverse Acqn. Reserve Other Reserves Foreign Currency Reserve Accum. Losses Non Control Interest Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2021 16,071 33,014 (35,246) 601 (13) (4,554) - 9,873
Translation of foreign operations - - - - 107 - - 107
Loss for the period - - - - - (932) (82) (1,014)
Total comprehensive loss for the period - - - - 107 (932) (82) (907)
Shares issued during the period 296 14,771 - - - - - 15,067
Cost of share issue - (618) - - - - - (618)
Share based payments - - - 170 - - 170
Acquisition of new entity - - - - - - (241) (241)
Total transactions with owners 296 14,153 - 170 - - (241) 14,378
Balance at 31 December 2021 16,367 47,167 (35,246) 771 94 (5,486) (323) 23,344
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 31 December 2020
Share Capital Share Premium Reverse Acqn. Reserve Other Reserves Foreign Currency Reserve Accum. Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2020 15,725 22,375 (35,246) 82 (115) (4,582) (1,761)
Translation of foreign operations - - - - 49 - 49
Revaluation of other assets - - - 43 - - 43
Loss for the period - - - - - (888) (888)
Total comprehensive loss for the year attributable to equity holders of the - - - 43 49 (888) (796)
parent
Shares issued during the period 328 10,301 - - - - 10,629
Share based payments - - 172 - - 172
Cost of share issue (227) - - - - (227)
Total transactions with owners 328 10,074 - 172 - - 10,574
Balance at 31 December 2020 16,053 32,449 (35,246) 297 (66) (5,470) 8,017
SELECTED NOTES TO THE FINANCIAL INFORMATION
For the six month period ended 31 December 2021
1 Basis of preparation
The condensed consolidated interim financial statements of eEnergy Group plc
(the "Group") for the six month period ended 31 December 2021 have been
prepared in accordance with Accounting Standard IAS 34 Interim Financial
Reporting.
The interim report does not include all the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the year ended 30 June 2021, which
was prepared under UK adopted international accounting standards (IFRS), and
any public announcements made by eEnergy Group plc during the interim
reporting period and since.
These condensed consolidated interim financial statements do not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 30 June 2021
prepared under IFRS have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain a statement under Section 498(2) of the Companies Act 2006. These
condensed consolidated interim financial statements have not been audited.
Basis of preparation - going concern
The interim financial statements have been prepared under the going concern
assumption, which presumes that the Group will be able to meet its obligations
as they fall due for the foreseeable future.
At 31 December 2021 the Group had cash reserves of £2,588,000 (30 June 2021:
£3,332,000; 31 December 2020: £2,823,000).
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 of at least 12 months from the date of
approval of the interim financial statements. The eEnergy group meets its
working capital requirements from its cash and cash equivalents and its loan
facilities, which are secured by a debenture over its trading subsidiaries.
Having prepared budgets and cash flow forecasts covering the going concern
period which have been stress tested for the negative impact of possible
scenarios from volatile UK energy prices which have been exacerbated by the
current war in Ukraine, the Directors believe the Group has sufficient
resources to meet its obligations for a period of at least 12 months from the
date of approval of these interim financial statements. Discretionary
expenditure will be curtailed, if necessary, in order to preserve cash for
working capital purposes and ensure compliance with covenants.
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 interim financial statements
do not reflect any adjustments that would be required if they were to be
prepared other than on a going concern basis.
Accounting policies
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period.
New and amended standards adopted by the group
A number of amended standards became applicable for the current reporting
period. These amended standards do not have a material impact on the Group,
and the Group did not have to change its accounting policies or make
retrospective adjustments as a result of adopting these standards.
3. 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. Management has determined the operating segments based on the reports
reviewed by the Board.
The Board considers that during the six month period ended 31 December 2021
and 31 December 2020, the Group operated in two business segments, the Energy
Management segment and the Energy Efficiency segment, which predominantly
comprised of LED lighting solutions. With the strengthening of the
management team following the acquisition of UtilityTeam and the appointment
of Managing Directors to lead each of the operating segments the Board now
primarily reviews Energy Efficiency as a single segment whereas in the prior
year the Board reviewed the operations in the UK and Ireland separately.
Energy Mgmt Energy Efficiency Central Group
2021 £'000 £'000 £'000 £'000
Revenue - UK 4,832 3,333 - 8,165
Revenue - Ireland - 1,427 - 1,427
Revenue - Total 4,832 4,760 - 9,592
Cost of sales (1,107) (2,960) - (4,067)
Gross Profit 3,725 1,800 - 5,525
Operating expenses (2,284) (1,524) - (3,808)
Operating EBITDA 1,441 276 - 1,717
Central management costs - - (896) (896)
Adjusted EBITDA 1,441 276 (896) 821
Depreciation and amortisation (344) (56) (1) (401)
Finance and similar charges (38) (184) (19) (241)
Profit (loss) before exceptional items 1,059 36 (916) 179
Exceptional items (139) (63) (991) (1,193)
Profit (loss) before tax 920 (27) (1,907) (1,014)
Taxation charge - - - -
Profit (loss) after tax 920 (27) (1,907) (1,014)
Non-controlling interest (82) - - (82)
Profit (loss) attributable to owners of the Company 1,002 (27) (1,907) (932)
Net Assets
Non current assets - UK 23,269 3,326 4,385 30,980
Non current assets - Ireland - 606 - 606
Current assets 6,878 4,161 524 11,563
Assets - Total 30,147 8,093 4,909 43,149
Liabilities (8,891) (6,167) (4,747) (19,805)
Net assets 21,256 1,926 162 23,344
Energy Mgmt Energy Efficiency Central Group
2020 £'000 £'000 £'000 £'000
Revenue - UK 162 4,881 - 5,043
Revenue - Ireland - 1,724 - 1,724
Revenue - Total 162 6,605 - 6,767
Cost of sales (28) (4,400) - (4,428)
Gross Profit 134 2,205 - 2,339
Operating expenses (109) (1,340) - (1,449)
Operating EBITDA 25 865 - 890
Central management costs - - (518) (518)
Adjusted EBITDA 25 865 (518) 372
Depreciation and amortisation (10) (46) (7) (63)
Finance and similar charges (6) (42) (164) (212)
Profit (loss) before exceptional items 9 777 (689) 97
Exceptional items - - (985) (985)
Profit (loss) before and after tax 9 777 (1,674) (888)
Net Assets
Non current assets - UK 1,630 195 10,314 16,014
Non current assets - Ireland - 733 - 733
Current assets 1,615 3,854 1,408 6,877
Assets - Total 3,245 4,782 11,722 19,749
Liabilities (2,132) (6,968) (2,632) (11,732)
Net assets (liabilities) 1,113 (2,186) 9,090 8,017
4. EXCEPTIONAL ITEMS
Operating expenses include items that the Directors consider to be exceptional
by their nature. These items are:
Period to Period to Year to
31 December
31 December
30 June
2021
2020
2021
£'000 £'000 £'000
Acquisition related expenses 820 813 1,094
Changes to initial recognition of contingent consideration - - (1,444)
Incremental restructuring and integration costs 198 - 113
Share based payment expense 175 172 485
Total exceptional expenses 1,193 985 248
Acquisition expenses are the costs incurred in completing the "Buy and Build"
strategy associated with acquisitions and strategic investments. The costs
incurred in completing the acquisition of UtilityTeam in September 21 are
described in Note 8.
The share based payment charge reflects the non cash cost of the Management
Incentive Plan awards made on 7 July 2020 and the award of options made to the
senior management team on 7 December 2021 which are being amortised over their
three year vesting period.
5. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is calculated by
dividing the profit or loss for the year by the weighted average number of
ordinary shares in issue during the year
Period to 31 Dec 2021 Year to 30 June 2021 Period to 31 Dec 2020
(Loss) profit for the year from continuing operations attributable to owners (1,014) 28 (888)
of the Company - £'000
Weighted number of ordinary shares in issue 304,325,269 199,038,204 152,632,932
Basic earnings per share from continuing operations - pence (0.36) 0.01 (0.58)
There is no difference between the diluted loss per share and the basic loss
per share presented. 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 as they are anti-dilutive for the periods
presented.
6. INTANGIBLE ASSETS
Goodwill £'000 Software £'000 Customer relation-ships Trade names £'000 Total
£'000
£'000
Cost
At 1 July 2021 9,803 642 824 555 11,824
Additions on acquisition 14,178 - 3,487 1,039 18,704
Additions in the period - 244 - - 244
At 31 December 2021 23,981 886 4,311 1,594 30,772
Amortisation
At 1 July 2021 - 60 41 30 131
Amortisation in the period - 182 143 63 388
At 31 December 2021 - 242 184 93 519
Net book value at 9,803 582 783 525 11,693
30 June 2021
Net book value at 23,981 644 4,127 1,501 30,253
31 December 2021
7. BORROWINGS
31 December 2021 30 June 2021 31 December 2020
£'000
£'000
£'000
Current
Borrowings 579 601 592
579 601 592
Non-current
Borrowings 2,367 1,245 1,629
2,367 1,245 1,629
The terms of the Borrowings are as disclosed in the 30 June 2021 financial
statements except that at acquisition in September 2021 UtilityTeam had a
CBILS Loan of £1,450,000. The CBILS loan was interest free for the first
twelve months and is then repaid in instalments over the following five
years. The interest rate on the UtilityTeam CBILS loans is 1.28 % above base
rate per annum. The CBILS loan was secured over the assets of UtilityTeam.
In February 2022 the Group completed the refinancing of all of its secured
borrowings and agreed a £5m secured revolving credit facility with Silicon
Valley Bank.
………………………….
Maturity of the borrowings as of 31 December 2021 are as follows:
£'000
Current 579
Due between 1-2 years 1,602
Due between 2-5 years 750
Due beyond 5 years 15
2,946
8. RELATED PARTY TRANSACTIONS
Key management personnel are considered to the Board of Directors. The
amount payable to the Board of Directors for the six months ended 31 December
2021 was £563,000 (H1 FY21: £266,000).
9. BUSINESS COMBINATIONS
Acquisition of UtilityTeam Topco Limited and related Placing
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, which raised £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 £14.5 million was satisfied as follows:
· cash consideration of £9.5 million, payable on completion with
further cash consideration of £2 million, £1 million of which was paid in
October 2021 and the final £1 million in January 2022.; 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.
There is an adjustment to the value of the initial consideration based upon
the level of net working capital and debt in UTT at the date of acquisition.
Any reduction in the fair value of the net assets acquired will result in
lower consideration being paid and lower goodwill arising on the acquisition.
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. The Company will 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 £1.5m 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. Therefore a maximum
of 15 million new Ordinary Shares may be issued.
The initial estimate of 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 180
Intangible assets 4,526
Right of use assets 135
Cash at bank 2,787
Inventory 27
Trade and other receivables 3,759
Trade and other payables (4,813)
Lease liability (141)
Deferred tax liability (1,161)
Loans and other borrowings (1,450)
Total identifiable net assets acquired 3,849
Goodwill 13,935
Consideration
Initial consideration (recorded at the market value of the shares issued) 14.539
Contingent consideration 3,245
Total consideration 17,784
The initial accounting for the acquisition of UTT is incomplete as at the date
of these interim financial statements given the short period of time since the
acquisition was completed.
10. EVENTS AFTER THE BALANCE SHEET DATE
Refinancing of all secured debt
In February 2022 the Group completed the refinancing of all of its secured
borrowings and agreed a £5m secured revolving credit facility with Silicon
Valley Bank.
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