REG - Eneraqua Technolgs. - Preliminary Results
14/06/2022 07:00
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RNS Number : 7262O Eneraqua Technologies PLC 14 June 2022
14 June 2022
Eneraqua Technologies plc
("Eneraqua Technologies", the "Company" or the "Group")
Preliminary Results
Eneraqua Technologies plc, a provider of specialist energy and water
efficiency solutions, is pleased to announce its preliminary results for the
year ended 31 January 2022.
Financial Highlights
FY to Jan 2022 FY to Jan 2021 %
change
Revenue £36.2m £14.6m 148%
EBITDA £5.55m £1.32m 319%
Adjusted EBITDA(1) £6.72m £1.32m 408%
Adjusted EBITDA margin(1) 18.6% 9.1%
Adjusted PBT(1) £5.61m £0.8 608%
Reported diluted EPS(1) 18.16p
Cash generated from operations £3.0m (£0.1m)
Cash conversion(2) 66% (9%)
ROCE 26.6% 18.0%
Maiden Dividend per share 1.0p -
Operational and Strategic Highlights
· Successful listing on AIM on 22 November 2021, raising £8 million of new
share capital to fund the next stage of growth.
· Completed two strategically important acquisitions; HaGePe International BV
(HGP), securing full control of the developers of the HL2024 technology, and
Welltherm Drilling Limited, to secure the drilling skills and capacity vital
to the Company's growth plans.
· Energy and water are delivering strong organic growth with additional
investment in business development, engineering and project management staff
and systems to support this process.
· Received the London Stock Exchange Green Economy Mark at IPO, an award to
companies which derive more than 50% of revenues from products and services
that contribute to the global green economy. Eneraqua received the Mark with
99.5% of revenue qualifying.
Current trading and outlook
· FYJan23 has started well and the Company expects to deliver on its growth
plans in the domestic and commercial energy markets as well as the water
sector.
Secured first Agritech contract to provide our ClimateSmart agricultural water
efficiency solution to the State of Uttarakhand in India.
· Awarded two English local authority contracts to deliver net water neutrality
pilot programmes.
· Focus for the year ahead to deliver strong growth and continue the expansion
of the water business's operations both in the UK and in international
markets.
· The Group is in a strong position with a healthy balance sheet and a strong
Order Book(3) providing revenue cover for 95% of the Boards' FYJan23 revenue
target.
· Maiden dividend brought forward from 2023 to 2022, reflecting progress since
IPO and strong cash performance.
Commenting on the results, Eneraqua Technologies CEO, Mitesh Dhanak, said:
"This has been a year of considerable achievement for Eneraqua. We were
delighted to successfully list on AIM and we have been able to work towards
the ambitions that were set out at IPO. We have continued to grow in both
energy and water, with the recentcontract wins in the UK and India. This,
alongside the strategically important acquisitions that we completed, shows
the quality of the services that we are now able to provide our clients.
"I am incredibly proud of everything the team has achieved to date, building a
market-leading offering with fantastic customer relationships. Whilst we are
proud of what we have achieved, we are very much still at the start of our
journey. The increasing Net Zero regulation and initiatives being introduced
across the globe provide us with confidence that we can deliver long-term
value for our shareholders."
(1)Adjusted to exclude IPO costs(
2)Cash from operating activities/EBITDA
(3)Order Book defined as Contract + Secured. Contracted = project contact
issued and signed, with work started or ready to start. Secured = sum of a)
tender process successful, awaiting project contract, and b) Directors'
assumed win rate on Framework opportunities
For more information, please contact:
Eneraqua Technologies plc Via Alma PR
Mitesh Dhanak, CEO www.eneraquatechnologies.com (http://www.eneraquatechnologies.com)
Iain Richardson, CFO
finnCap Limited - Nominated adviser and Broker +44(0)20 7220 0500
Ed Frisby / Charlie Beeson - Corporate Finance
Andrew Burdis / Sunila de Silva - ECM
Alma PR - Financial PR and IR +44(0)20 3405 0205
Justine James / Sam Modlin / Will Ellis Hancock eneraqua@almapr.co.uk
Notes to editors
Eneraqua Technologies (AIM:ETP) is a specialist in energy and water
efficiency. The Group designs and delivers improved energy and water systems
which utilise its wholly owned intellectual property, the Control Flow HL2024.
Energy was the first market the company entered and this is the larger
sector, with the Company focused on clients with end of life gas, oil or
electric heating and hot water systems. The Group provides turnkey retrofit
district or communal heating systems based either on high-efficiency gas or
ground/air source heat pump solutions that support Net Zero and
decarbonisation goals.
Water is a growing service offering focused on water efficiency upgrades for
utilities and commercial clients including hotels and care homes. It has
also expanded into agritech systems.
The activities in both areas are underpinned by the Company's wholly-owned
intellectual property, the Control Flow HL2024 family of products which reduce
water wastage and improve the performance of heating and hot water systems.
The Company's main country of operation is the United Kingdom. The Company's
head office is in London with additional offices in Leeds, Washington
(Sunderland), India, Spain and the Netherlands. The Company has 116 employees,
with the majority employed within the UK. Eneraqua Technologies has received
the London Stock Exchange's Green Economy Mark.
To find out more, please visit: www.eneraquatechnologies.com
(http://www.eneraquatechnologies.com)
Chairman's Statement
The year to 31 January 2022 was one of significant strategic and operational
progress for Eneraqua Technologies. The Company delivered an excellent
financial and operating performance in line with expectations, and we were
pleased to join AIM in November 2021.
Delivering on our financial plans
The Company achieved its key financial objectives for the year. Compared to
the previous year, the Company's turnover in the year to 31 January 2022
increased by 148% per cent to £36.2 million and EBITDA (before exceptional
costs associated with the flotation on AIM) increased by 319% per cent to
£5.55 million. These were stretching targets and it is a tribute to all those
within the Company that they were achieved.
Operating effectively
I would like to thank our executive leadership team and all of our employees
who have worked hard to not only grow and develop our business, but also to
remain flexible and adaptable during the challenges of Covid 19 and as we
managed our AIM listing.
We have patent protected technically advanced products and a highly skilled
workforce which develops and delivers solutions to meet our customers'
requirements.
The Group's target market continues to undergo substantial and sustained long
term growth to meet decarbonisation and Net Zero targets. In addition to
projects completed and started last year, the Company is in active dialogue
with a number of existing and potential clients about how its technology and
services can help them meet their decarbonisation, water efficiency and Net
Zero targets. We won several flagship contracts over the year including Leeds
City Council, Calderdale Council and Affinity Water.
These organisations have begun the journey to Net Zero and water
sustainability, and we are proud that they have chosen us to work with them
based on our technology and ability to design and deliver complex projects and
programmes.
People
Eneraqua Technologies is a young company, its operating subsidiary, Cenergist
Limited, was founded in August 2012. The Company is fortunate that its Chief
Executive is Mitesh Dhanak who founded the Company and who had the vision to
shape the business we are today.
The spirit of the founder still runs through the Company and the way it
operates. Our people share the vision, they work hard, they work as a team,
they have a can-do and do it right attitude. This spirit is incredibly
valuable to us in delivering for our customers, particularly in difficult
times.
At 31 January 2022 the Group employed 113 people, an increase of 66 people
over the year. Rapid growth creates challenges but also opportunities for our
people to learn new skills, to train others and to progress their careers
rapidly.
We take great care in recruitment to ensure that those who join the Company
share the attitudes which we think are important. At the time of the flotation
on AIM we made sure that equity-based incentive schemes were in place for all
senior staff so that they have a direct stake in delivering value for
shareholders.
A successful flotation on AIM
On 22 November 2021 the Company's shares were admitted to trading on AIM. This
was a significant milestone for the Company and allowed it to raise £8
million of new share capital to fund the next stage of growth. This strong
balance sheet allowed us to make substantial investments in people and
infrastructure to accelerate our growth.
The IPO also brought a key additional benefit to the Company - one of
transparency. Our customers and suppliers can see who we are and that we
operate to the highest standards of corporate governance, that we are socially
responsible and our whole reason for being is the environment: supporting
clients to meet their Net Zero and sustainability goals through our patented
technology and expertise. This undoubtedly helps our business.
Acquisitions
During the year we completed two strategically important acquisitions for a
combined total of £5.1 million.
The first was to take full control of HGP, the developers of the HL2024
technology, which is so important to our business.
We identified early in the year that there was a growing shortage of drilling
rigs and skilled operators to operate them. Large Ground Source Heat Pump
projects often require many boreholes to be drilled to a typical depth of 150
metres. Having both the drilling skills and capacity are vital to our growth
plans and we therefore acquired Welltherm Drilling Limited which has exactly
the skills and resources required.
In both cases the management teams remain with the Company and are integral to
our plans.
The economic background
The environment in which Eneraqua Technologies operates is complex. We provide
innovative products and design solutions for clients that need to provide
affordable heating and hot water while reducing the level of carbon emissions.
A stable legislative framework will be essential to allow clients to invest
with confidence and ensure Net Zero targets are met.
The recent increases in the prices of fossil fuels for consumers and the
exacerbating impact of Russia's attack on Ukraine illustrates the imperative
to not slow down the drive to Net Zero but to accelerate it. This will enable
society to combat global warming, provide the ability for people - especially
those on low incomes - to heat their homes at an affordable cost and protect
ourselves against the instability of fossil fuel energy markets.
Dividend
At the time of our admission to AIM we indicated that it was our intention to
pay modest dividends potentially commencing in 2023 in respect of the
financial year ending 31 January 2023. I am pleased to say that the Board,
having considered the position and particularly in light of our progress since
flotation and our strong cash performance, now intends to propose to
shareholders that a final dividend of 1p per share is paid in respect of the
year ended 31 January 2022. If approved by shareholders, this dividend would
be paid on 16 September 2022 to shareholders on the register at the close of
business on 19 August 2022, with the ordinary shares becoming ex-dividend on
18 August 2022.
Future development and outlook
Our focus for the year ahead is on delivering strong growth. The year to date
has started well and we expect to deliver on our plans based on growth in our
domestic and commercial energy markets and also the water sector.
We are achieving good progress in our water business in the UK and Europe as
well as India. Post period end, we were pleased to report in late April the
award of an Agritech contract to provide our ClimateSmart agricultural water
efficiency solution to the State of Uttarakhand, India. We also announced in
June that we had been awarded two English local authority contracts to deliver
net water neutrality pilot programmes. Both are exciting developments, and we
have a strong appetite to deliver an enhanced range of services to our
customers and to increase the diversity of our customer base both in the UK
and overseas.
We have a range of opportunities to drive growth in future years and we are
investing significantly in the quality and scale of our operating capability
to ensure that we can grasp those opportunities and deliver further value for
shareholders.
Guy Stenhouse
Chair
13 June 2022
CEO Statement
The last year has been transformational for the Group in terms of growing our
people, developing our technology and fulfilling our ambition to join AIM,
which we were delighted to achieve on 22 November 2021.
The IPO process and successful fundraise has not only given existing
colleagues and customers additional confidence in terms of management,
stability and governance but it also helped us attract some of the best talent
in the industry. Moreover, going forward it will support us as we grow both
organically and through selected acquisitions which will accelerate our client
propositions and development.
With a clear roadmap for growth, in both Energy and Water, we see exciting
opportunities for growth. In Energy we focus on clients with end-of-life gas,
oil or electric heating and hot water systems. We provide turnkey retrofit
district or communal heating systems based either on high-efficiency gas or
ground/air source heat pump solutions and are at the centre of a number of
development programmes across the UK, upgrading buildings and helping Local
Authorities achieve their Net Zero and decarbonisation goals.
In Water, we provide a growing service focused on water efficiency upgrades
for utilities and commercial clients including hotels, general residential and
care homes. Our recent contract award by The Department of Horticulture for
the State Government of Uttarakhand, India marks the extension of our
activities into agritech. This will see delivery of the first ClimateSmart
Irrigation programme to 340 horticultural farms across the state, further
highlighting the value of our IP and the potential global opportunity.
Financial performance
Our trading through FY22 was very pleasing during an extremely difficult
period for colleagues and clients who coped admirably with the challenges of
the pandemic.
Revenues increased by 148%, driven by a number of successful UK contracts and
Adjusted EBITDA reached £6.72 million, reflecting the value of our solutions
and our careful management of costs and optimised go-to-market model. The
Company generated operating cash of £3.0 million, again significantly up on
the previous year and we were very pleased to finish the year with £3.9
million in net cash after the successful fundraise.
As a Board, we were delighted to recommend a final dividend for the year of
1.0p per share. This is an acceleration of the timing of the intention to pay
a modest dividend as outlined at IPO.
The value of our solutions
Our activities in both the energy and water sectors are underpinned by the
Company's wholly owned intellectual property, the Control Flow HL2024 family
of products, which reduce water wastage and improve the performance of heating
and hot water systems.
Accurate flow control improves the performance of water systems and delivers
both capital and operating cost savings. In addition, it also improves the
end-user experience. This is essential in order to achieve long-term savings.
Climate Change is leading to increased water stress. By improving the
performance of energy systems as well as reducing water wastage, our Control
Flow HL2024 technology can play an important part for organisations seeking to
reach Net Zero.
The markets we operate in
Governments and companies around the world are investing to reduce carbon
emissions through improved energy efficiency and adopting low-carbon
solutions. The war in Ukraine has increased the desire to reduce exposure to
volatile global fossil fuel markets.
Net Zero targets require the decarbonisation of heating, moving away from
using gas or oil. We are experts in the design and implementation of heating
systems which leverage our Control Flow HL2024 technology to deliver high
efficiency outcomes, often utilising heat pump systems. Technology-agnostic,
we help clients identify the most relevant solution for their needs and then
provide a turnkey delivery. This approach is highly appealing to our clients.
Water stress is a high profile, global issue and there are growing regulatory
and environmental factors designed to ensure improved efficiency of water
collection and usage. UK water companies, for example, have regulatory water
efficiency targets to reduce household consumption by up to 30%. This focus on
water efficiency is expected to be a long-term focus for the sector as it
battles with the threat of water stress.
The two English local authority contracts that we were awarded to deliver net
water neutrality pilot programmes illustrate how our technology can facilitate
new build projects. By upgrading existing homes to reduce their water
consumption and utility bills, our HL2024 products are freeing up available
water resources to meet the needs of new build homes.
The potential of our technology globally is huge and the initial success in
India highlights this. Post period end, our ClimateSmart Irrigation solution
has been selected by The Department of Horticulture for the State Government
of Uttarakhand, India. The £0.9m contract will see us supply our water
systems to 340 horticultural farms across the state, helping to reduce carbon
emissions and improving water efficiency. This is the first major zero carbon
irrigation initiative of its kind in India.
Expanding our growth opportunities
We have a clearly defined strategy to build strong long term growth both
organically and inorganically. Energy and water are seeing strong organic
growth and we are investing in additional business development, engineering
and project management staff and systems to support this process.
In addition, by expanding our product portfolio, we are opening new markets.
At IPO we spoke about new products to allow entry into Agritech and the recent
contract in India illustrates the progress made. Our R&D work is ongoing
and allows us to refine and improve the performance of our products.
Finally, we made good progress with our M&A strategy with the completion
of two acquisitions in the period. We took full control of HGP to secure the
rights to HL2024 and this was followed by the acquisition of Welltherm
Drilling Limited. This addressed a supply chain pinch point created by the
limited borehole drilling capability in the UK.
We continue to evaluate opportunities in line with our strategy to expand our
energy offering into NW Europe and to consider bolt-on opportunities to enter
adjacent market sectors.
ESG
ESG is at the heart of everything we do through our day-to-day business
activities, delivering carbon savings through our energy and water projects.
We have generated savings of over 37,000t/CO2 during FY22 by supporting our
clients' sustainability goals; helping them to deliver their net carbon zero
strategies through renewable heating solutions and our Control Flow
water-saving technology.
Our business model helps reduce resource usage and the carbon emissions
associated with running multiple occupancy social housing and commercial
projects. Our day-to-day work alleviates everyday pressures faced by our
clients, and making water and energy usage more accessible to customers. Our
focus on energy efficiency is increasingly relevant given macroeconomic
inflationary pressures and the current cost-of-living crisis in the UK.
We are delighted that Eneraqua Technologies is recognised by the London Stock
Exchange as contributing to the global green economy. The Green Economy Mark
is given to companies which derive more than 50% of revenues from
environmental solutions, qualifying with over 99.5% of revenue.
We are rolling out initiatives to reduce our own environmental impact and
adopting sustainable practices, such as hybrid digital working, which removes
the need for unnecessary business travel, and recycling IT hardware and
general waste.
We routinely conduct environmental awareness training, to educate all our
employees on the importance of a sustainable relationship with the
environment. Environmental Management Toolbox Talks are also conducted across
our sites, to ensure we continually learn and share best practices on reducing
environmental impact.
It has always been a key part of our culture to provide a supportive work
environment for our employees and their partners and we were delighted to
receive positive feedback from our latest staff survey. Key extracts of the
annual staff survey:
- 95% of current employees believe that we go above and beyond in comparison
to other companies they have worked for.
- People are committed to quality for both clients and residents, giving us
a huge advantage in the market.
Outlook
When we started the Company nearly a decade ago, our vision was to become one
of the leading providers of highly efficient energy and water solutions. Last
year evidenced our progress and commercial traction. Looking forward, we
expect current clients to grow in size, the number of clients to grow
significantly and most importantly, we envisage new use cases for our
technology.
Our R&D teams are focused on developing new, more innovative solutions
including looking at developing a next generation unit that can be installed
alongside the water meter.
We are very pleased with the success of our recent acquisitions, and we
continue to look for opportunities which will accelerate our business in terms
of technology, geography or enhancing our delivery and service.
There are of course challenges. Like all businesses we have seen supply chain
disruption and have moved to manage the risk through identifying multiple
suppliers. Global labour shortages are making it more difficult for businesses
to hire the best people but importantly we offer an opportunity to join an
exciting business operating in an accelerating market environment. Finally,
there is a need for a stable legislative framework to give confidence for
investment. The UK and EU have set out clear targets and introduced a range of
incentives that will help organisations move forward on Net Zero.
We are confident about our prospects for the current financial year and
believe we have the right solutions to help our clients meet their Net Zero
and water sustainability challenges. This provides a strong platform for
future growth.
Mitesh Dhanak
CEO
13 June 2022
CFO Statement
CFO Statement
I am pleased to report on our inaugural results since Eneraqua's IPO in
November 2021, for the year to 31 January 2022.
Strategy
The Group's strategy is based on developing and delivering profitable
solutions and products which help our clients reduce their carbon consumption
and improve their water efficiency.
KPI's
The Group's financial Key Performance Indicators, which are aligned with its
growth strategy, are revenue growth, adjusted EBITDA, adjusted EBITDA margin,
R&D spend, cash conversion and ROCE. All six KPIs delivered well in the
year to 31 January 2022.
2022 2021
Revenue £36.2m £14.6m
Revenue growth 148% 135%
EBITDA £5.55m £1.32m
Adjusted EBITDA £6.72m £1.32m
Adjusted EBITDA margin 18.6% 9.1%
R&D spend £1.41m £1.55m
Cash conversion* 66% (9%)
ROCE 26.6% 18.0%
*Cash from operating activities/EBITDA
Revenue
Group revenues increased by 148% to £36.2m, (FY21: £14.6m). Excluding the
Welltherm acquisition, UK revenues grew by 148% to £35.9m (2021: £14.5m).
International revenues grew by 17% from £0.08m in 2021.
Profits
The improvement in revenue supported strong growth in profits and
profitability. Adjusted EBITDA increased 408% to £6.7m, (2021: £1.3m), with
the Group achieving Adjusted EBITDA margins of 18%, up from 9% in 2021.
Statutory operating profit increased to £4.4m (2021: £1.2m) and statutory
profit before tax was £4.1m (FY21: £0.8m).
Acquisitions
In line with our growth strategy, the Group completed two acquisitions. On 23
June 2021 the Group acquired the entire share capital of HaGePe International
BV ("HGP"), along with its subsidiary companies HaGePe Exploitatie BV and
HL2024 Shop BV. The total consideration was £6.15m, including deferred
consideration. The acquisition of HGP secured the intellectual property and
"know how" associated with the Control Flow HL2024 products which are now
owned and controlled by the Group, enabling it to utilise these products on an
unrestricted, global basis.
On 20 September 2021 the Group acquired Welltherm Drilling Limited
("Welltherm"). The total consideration for the acquisition, including deferred
consideration, is £1.18m. The rationale for the acquisition was to ensure the
Group has its own direct access to drilling equipment and operational know-how
to service its ground source heat pump installation projects. For the period
following acquisition, Welltherm recorded revenues of £0.4m and operating
profit of £0.05m.
Adjusting Items
The total pre-tax adjusting items in the year were £1.2m. These were £1.2m
of costs associated with the IPO (2021: Nil).
Earnings per share
Basic earnings were 18.28p and diluted earnings per share were both 18.16p.
Dividends
For the financial year ended 31 January 2022, following a strong performance
the Board is delighted to recommend a final dividend for the year of 1.0p per
share. This is an acceleration of the timing of the intention to pay a modest
dividend as outlined at IPO.
The Directors believe the markets the Company serves have very strong growth
potential and believe it is in the best interests of shareholders that the
Company prioritises the successful deployment of the Company's resources
towards growing the business both organically and through acquisitions.
Subject both to trading performance and the capital needs of the business, the
Board's intention would be to target a progressive dividend policy.
Headcount
The Group's full time equivalent (FTE) employees at 31 January 2022 were 113
(FY21: 47). This growth reflects the acceleration in recruitment in order to
support the Group's growth strategy.
Share capital & share options
Share options issued during the year under the Annual Bonus Plan were 332,673
and the total share options in issue at the year-end amounted to 332,673.
Cash flow & net cash
Thanks to the outstanding efforts of all our team, we achieved a strong
performance with good cash generation
Cash conversion improved significantly from last year at 66%, with cash
generated from operations of £3.0m (FY21: £118k outflow). This was achieved
whilst the business experienced significant growth in its operations and
corresponding changes in working capital requirements.
Total capital expenditure on property, plant and equipment amounted to £2.7m
(FY21: £1.4m). In addition there was a further outflow of £5.1m for the
acquisitions Of HaGePe International BV and Welltherm Drilling Limited
The Group ended the year with net cash (excluding IFRS 16 liabilities) of
£3.9m compared with £0.9m of net debt at 31 January 2021 following the
repayment of the Group's existing debt facility (£4.9m) upon IPO.
Post year end the Group has secured new banking facilities with HSBC UK Plc
for an aggregate of £6.0m. The new facility will support the Group in its
growth strategy, both in terms of working capital requirements and acquisition
opportunities.
Outlook
The Group is in a strong position with a healthy balance sheet and a strong
order book, which together with FY23 revenue year to date, provides 95% cover
for the Board's revenue target for our current financial year.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 January 2022
2022 2021
£'000
Unaudited
£'000
Note
Continuing operations
Revenue 4,5 36,176 14,587
Cost of sales (21,572) (7,872)
Gross profit 14,604 6,715
Administrative expenses (10,171) (5,656)
Other operating income - 113
Included within administrative expenses are:
- Exceptional costs (1,178) -
- Depreciation of property, plant and equipment (618) (46)
- Depreciation of right-of-use assets (113) (30)
- Amortisation of intangible assets (381) (75)
Adjusted administrative expenses (7,881) (5,505)
Adjusted EBITDA 6,723 1,323
Operating profit 7 4,433 1,172
Interest receivable and similar income - 4
Interest payable and other similar expenses (366) (384)
Profit before taxation 4,067 792
Income tax 8 (8) 119
Profit for the year from continuing operations 4,059 911
Total profit for the year attributable to equity holders of the parent
Other comprehensive income - (10)
Total comprehensive profit for the year attributable to equity holders of the 4,059 901
parent
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 January 2022
Note 2022 2021
£'000
Unaudited
£'000
Non-current assets
Intangible assets 7,218 578
Property, plant and equipment 3,095 2,741
Right-of-use assets 243 221
Deferred tax asset - 59
Total non-current assets 10,556 3,599
Current assets
Inventory 1,186 891
Trade and other receivables 12,389 2,849
Cash and cash equivalents 4,070 4,284
Total current assets 17,645 8,024
TOTAL ASSETS 28,201 11,623
Equity attributable to owners of the parent
Called up share capital 344 3
Share premium account 10,113 456
Other 594 56
Retained earnings 5,391 1,761
Total equity 16,442 2,276
Non-current liabilities
Borrowings 9 - 4,081
Provisions - 16
Lease liabilities 109 129
Deferred tax liability 142 -
Total non-current liabilities 251 4,226
Current liabilities
Borrowings 9 - 891
Trade and other payables 11,426 4,148
Lease liabilities 82 82
Total current liabilities 11,508 5,121
Total liabilities 11,759 9,347
TOTAL EQUITY AND LIABILITIES 28,201 11,623
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 January 2022
Note 2022 2021
£'000
Unaudited
£'000
Cash flow from operating activities
Profit for the financial year 4,059 911
Adjustments for:
Amortisation of intangible assets 381 75
Depreciation of property, plant and equipment 618 46
Depreciation on right-of-use assets 113 30
Loss on disposal of property, plant and equipment - 1
Interest payable 330 375
Lease liability finance charge 36 8
Interest receivable - (4)
Taxation charge / (credit) 8 (119)
Corporation tax received / (paid) 380 (248)
Foreign exchange (38) 59
Share based payment charge 333 69
Changes in working capital:
(Increase) in inventory (295) (458)
(Increase) in trade and other receivables (9,540) (710)
Increase / (decrease) in trade and other payables 7,278 (30)
Net cash inflow from operating activities 3,663 5
Cash flow from investing activities
Purchase of intangible assets (549) (338)
Purchase of property, plant and equipment (2,722) (1,429)
Acquisition of businesses - net of cash acquired (5,111) -
Interest received - 3
Net cash outflow from investing activities (8,382) (1,764)
Cash flows from financing activities
Proceeds from borrowings - 5,135
Repayment of borrowings (4,972) (2,283)
Net proceeds from issue of shares 9,998 -
Interest paid (330) (375)
Repayment of lease liabilities (191) (51)
Net cash inflow from financing activities 4,505 2,426
Net (decrease) / increase in cash and cash equivalents (214) 667
Cash and cash equivalents at beginning of period 4,284 3,617
Cash and cash equivalents at the end of the period 4,070 4,284
CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
For the year ended 31 January 2022
Share Capital Share Premium Merger Reserve Other Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 February 2020 3 456 - (3) 850 1,306
Profit for the year - - - - 911 911
Other comprehensive income - - - (10) - (10)
Total comprehensive income for the year attributable to equity holders of the - - - (10) 911 901
parent
Equity settled share based payments - - - 69 - 69
Total transaction with owners - - - 69 - 69
Balance at 31 January 2021 3 456 - 56 1,761 2,276
At 1 February 2021 3 456 - 56 1,761 2,276
Profit for the year - - - - 4,059 4,059
Other comprehensive income - - - - - -
Total comprehensive income for the year attributable to equity holders of the - - - - 4,059 4,059
parent
Other (3) (456) - (224) - (683)
Merger reserve - - 5,490 - (5,490) -
Issue of shares 344 11,996 - - - 12,340
Share issue costs - (1,883) - - - (1,883)
Equity settled share based payments - - - 333 - 333
Total transaction with owners 341 9,657 5,490 109 (5,919) 10,107
Balance at 31 January 2022 344 10,113 5,490 165 330 16,442
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 January 2022
1 GENERAL INFORMATION
Eneraqua Technologies plc ("the Company") was incorporated and registered in
England and Wales on 19 August 2021 as a private limited company Eneraqua
Technologies Limited with its registered office at 2 Windmill Street,
Fitzrovia, London, W1T 2HX. On 8 November 2021 the company was re-registered
as a public limited. The Company's registered number is 13575021.
The Group's principal activities is the provision of turnkey solutions for
water efficiency and decarbonisation, the latter through district heating and
ground source heat pump systems for social housing, commercial clients, and
the residential sector. These activities are underpinned by our proprietary
Control Flow HL2024 technologies, which improve the efficiency of heating and
water systems for customers across the UK and Europe.
2 ACCOUNTING POLICIES
2.1 Basis of preparation
The preliminary results (unaudited) (referred to as the 'preliminary results')
have been prepared in accordance with International Financial Reporting
Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") and the
Companies Act 2006 applicable to companies reporting under IFRS.
The preliminary results have been prepared under the historical cost
convention as modified by financial assets at fair value through profit or
loss, and the recognition of net assets acquired under the reverse acquisition
at fair value.
The information for the year ended 31 January 2022 does not constitute
statutory accounts for the purposes of section 435 of the Companies Act 2006.
The audit of the statutory accounts for the year ended 31 January 2022 is not
yet complete. These accounts will be finalised on the basis of the information
presented by the Directors in these preliminary results and will be delivered
to the Registrar of Companies following the Company's annual general meeting.
Whilst the financial information included in this announcement has been
computed in accordance with the recognition and measurement requirements of
international accounting standards in conformity with the requirements of the
Companies Act 2006 and international financial reporting standards, this
announcement does not itself contain sufficient disclosures to comply with
IFRS.
The accounting policies included herein are aligned with those presented in
the Admission Document but the following points are of note:
2.2 Basis of consolidation and acquisitions
The financial statements consolidate the financial information of the Group
and companies controlled by the Group (its subsidiaries) at each reporting
date. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity, has the rights to
variable returns from its involvement with the investee and has the ability to
use its power to affect its returns. The results of subsidiaries acquired or
sold are included in the financial information from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Acquisition costs expensed to the Statement of Comprehensive Income are
included within exceptional Costs.
Where necessary, adjustments are made to the results of acquired subsidiaries
to bring their accounting policies into line with those used by the Group. All
intra-Group transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are adjusted,
where necessary, to ensure the use of consistent accounting policies.
The Company's shares were admitted to trading on AIM, a market operated by the
London Stock Exchange, on 22 November 2021. These financial statements are the
Company's first subsequent to its admission to AIM. In connection with the
admission to AIM, the Group undertook a Group reorganisation of its corporate
structure which resulted in the Company becoming the ultimate holding company
of the Group.
Prior to the reorganisation Cenergist Limited ("Cenergist") was the ultimate
holding company of the subsidiaries, (collectively the "Cenergist Group"). The
transaction was accounted for as a capital reorganisation rather than a
reverse acquisition since it did not meet the definition of a business
combination under IFRS 3. In a capital reorganisation, the consolidated
financial statements of the Group reflect the predecessor carrying amounts of
the Cenergist Group with comparative information of the Cenergist Group
presented for all periods since no substantive economic changes have occurred.
The difference arising on acquisition has been accounted for with the
recognition of a merger reserve on the balance sheet following the
reorganisation of the share capital of the Group at the point of completion of
the transaction.
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.
Please refer to note 3 for information on the Group reorganisation.
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 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.
Acquisition-related costs are expensed as incurred.
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.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated.
2.3 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.
Indefinite life intangible assets 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.
Intangible asset 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.
Intangible assets with an estimated useful life are stated at cost less
accumulated amortisation and accumulated impairment losses. Amortisation
charges are included within administration expenses in the statement of
comprehensive income and are provided on all intangible assets with a definite
life so as to write off the cost of an asset over its estimated useful life as
follows:
Development assets - 20% straight line
Licences - 20%
straight line
Patents -
20% straight line
Asset residual values and useful lives are reviewed at the end of each
reporting period and adjusted if appropriate. The effect of any change is
accounted for prospectively.
3. GROUP RE-ORGANISATION UNDER COMMON CONTROL
The acquisition met the definition of a group re-organisation due to the
Company and the Cenergist Group being under common control at the date of
acquisition. As a result, and since the Company did not meet the definition of
a business per IFRS 3, the acquisition fell outside the scope of IFRS 3 and
the predecessor value method was used to account for the acquisition.
These consolidated financial statements represent a continuation of the
consolidated financial statements of the Cenergist Group and include:
- The assets and liabilities of the Cenergist Group at their
pre-acquisition carrying amounts and the results for both periods; and
- The assets and liabilities of the Company as at 5 October 2021 and
its results for the period from 5 October 2021 to 31 January 2022.
On 5 October 2021, pursuant to the a Share Exchange Agreement the Company
acquired the entire all of the shares in Cenergist Limited through the issue
of 25,404,900 ordinary shares to the shareholders of Cenergist Limited.
The net assets of the Cenergist Group as at 5 October 2021 were as follows:
£'000
Property, plant and equipment 1,492
Right-of-use assets 148
Investments 1,213
Current assets 14,033
Current liabilities (11,013)
Non-current liabilities (131)
Net assets 5,744
The reserve that arose from the reverse takeover is made up as follows:
Year ended 31 January 2022 £'000
As at start of year -
Cost of the investment in the Cenergist Group 254
Less:
Net assets of the Cenergist Group (5,744)
As at the end of the year (5,490)
The difference between the cost of the investment in the legal subsidiaries
and the carrying value of the net assets acquired has been recorded in a
merger reserve within equity.
4. SEGMENT REPORTING
The following information is given about the Group's reportable segments:
The Chief Operating Decision Maker is the executive Board of Directors. The
Board reviews the Group's internal reporting in order to assess performance of
the Group. Management has determined the operating segment based on the
reports reviewed by the Board.
The Board considers that during the year ended 31 January 2022 the Group
operated in the three business segments according to the geographical location
of its operations, those being:
- United Kingdom
- Europe; and
- India
2022 United Kingdom Europe India 2022
£'000 £'000 £'000 £'000
Revenue 35,918 216 42 36,176
Cost of sales (21,350) (187) (35) (21,572)
Gross profit 14,568 29 7 14,604
Administrative expenses (8.974) (1,079) (118) (10,171)
Included within administrative expenses are:
- Exceptional costs (1,178) - - (1,178)
- Depreciation of property, plant and equipment (132) (485) (1) (618)
- Depreciation of right-of-use assets (113) - - (113)
- Amortisation of intangible assets (339) (42) - (381)
Adjusted administrative expenses (7,212) (552) (117) (7,881)
Adjusted EBITDA/(loss) 7,356 (523) (110) 6,723
Operating profit/(loss) 5,594 (1,050) (111) 4,433
Interest receivable and similar income - - - -
Interest payable and similar expenses (366) - - (366)
Profit/(Loss) before tax 5,228 (1,050) (111) 4,067
Taxation (7) (1) - (8)
Profit/(Loss) after tax 5,221 (1,051) (111) 4,059
Net Assets
Assets: 24,847 3,245 109 28,201
Liabilities (9,208) (2,538) (13) (11,759)
Net assets 15,639 707 96 16,442
2021 United Kingdom Europe India 2021
£'000 £'000 £'000 £'000
Revenue 14,510 33 44 14,587
Cost of sales (7,824) (33) (15) (7,872)
Gross profit 6,686 - 29 6,715
Administrative expenses (5,475) (96) (85) (5,656)
Other operating income 113 - - 113
Included within administrative expenses are:
- Depreciation of property, plant and equipment (45) - (1) (46)
- Depreciation of right-of-use assets (27) (3) - (30)
- Amortisation of intangible assets (75) - - (75)
Adjusted administrative expenses (5,328) (93) (84) (5,505)
Adjusted EBITDA/(loss) 1,471 (93) (55) 1,323
Operating profit/(loss) 1,324 (96) (56) 1,172
Interest receivable and similar income 4 - - 4
Interest payable and similar expenses (383) - - (383)
Profit/(Loss) before tax 944 (96) (57) 792
Taxation 105 17 (2) 119
Profit/(Loss) after tax 1,049 (79) (59) 911
Net Assets
Assets: 8,745 2,824 54 11,623
Liabilities (8,026) (1,315) (6) (9,347)
Net assets 719 1,509 48 2,276
5. REVENUE
2022 2021
£'000
£'000
United Kingdom 35,918 14,510
Europe 216 33
Rest of the World 42 44
36,176 14,587
Within the sales revenue, there were 2 customers that accounted for greater
than 10% of total revenue of the Group contributing £24,049,000 (2021: 4
customers - £10,310,000).
6. 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 period.
2022 2021
Profit for the year from continuing operations - £'000 4,059 911
Weighted number of ordinary shares in issue 22,204,677 253,774
Weighted number of fully diluted ordinary shares in issue 147,183 11,500
Basic earnings per share from continuing operations - pence 18.28 358.87
Diluted earnings per share from continuing operations - pence 18.16 343.31
Prior to the acquisition, the number of shares is based on Cenergist Limited.
From the date of acquisition, the number of shares is based on the Company.
7. OPERATING PROFIT
Operating profit from continued operations is stated after (charging) /
crediting:
2022 2021
£'000
£'000
Depreciation of property, plant and equipment 618 46
Depreciation of right-of-use assets 113 30
Amortisation of fixed assets 381 75
Inventories recognised as an expense 1 2
Research and development costs 494
Exchange differences (20) (37)
Loss on disposal of tangible fixed assets - 1
8. TAXATION
2022 2021
£'000
£'000
The (charge) / credit for year is made up as follows:
Corporation tax
Corporation taxation on the results for the year (99) (246)
Adjustments in respect of previous periods 233 346
134 100
Deferred tax
Origination and reversal of temporary differences (336) 23
Changes to tax rates - (2)
Adjustments in respect of previous periods 194 (2)
(142) 19
Taxation (charge) / credit on profits on ordinary activities (8) 119
Factors affecting tax (charge) / credit for the year
The tax assessed for the year is lower than (2021: lower than) the standard
rate of corporation tax in the UK of 19% (2021: 19%). The differences are
explained below:
2022 2021
£'000
£'000
Profit on ordinary activities before tax 4,059 792
Tax on ordinary activities at the standard rate of corporation tax in the UK (771) (150)
of 19% (2021: 19%)
Effects of:
Expenses not deductible for tax purposes (192) (79)
Additional R&D tax relief 371 -
Adjustments to tax charges in respect to prior periods 427 344
Losses carried forward not recognised (175) -
Adjustments to tax charges in respect of differences between UK GAAP and IFRS 352 6
Tax rate changes (20) (2)
Taxation (charge) / credit on profits on ordinary activities (8) 119
9. BORROWINGS
2022 2021
£'000
£'000
Current - 891
Non-current - 4,081
- 4,972
Analysis of maturity of loans is given below:
2022 2021
£'000
£'000
Amounts falling due within one year
Other loans - 891
Amounts falling due 1-2 years
Other loans - 769
Amounts falling due 2-5 years
Other loans - 3,312
- 4,972
In December 2021, the Group settled its outstanding borrowings ahead of expiry
of their term, with the details of the borrowings at the date of settlement
being:
Month of initial drawdown Month for repayment Interest rate Drawdown amount
May 2017 June 2022 9.00% £515,000
July 2018 August 2023 9.00% £235,000
June 2019 July 2024 9.00% £750,000
July 2019 July 2024 9.00% £1,000,000
£2,500,000
At the time of settlement of the previous borrowings, the Group entered into
new borrowing arrangements with interest payable on the borrowings at a rate
of 7.75% and with repayment being 48 months from date of drawdown.
Other loans are secured by fixed and floating charges over the assets of the
Company and by cross guarantees from the Company's subsidiary undertakings.
The Group settled all outstanding borrowings during the current financial
year.
10. EVENTS SUBSEQUENT TO PERIOD END
On 4 February 2022, Cenergist Spain SL drew down a loan of €1.5m to invest
in manufacturing facilities in Toledo, Spain.
On 2 March 2022, Cenergist Limited drew down a loan of £6m to pay the final
deferred consideration on the HGP acquisition.
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