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EENERGY GROUP PLC Earnings Release 2023
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Earnings Release
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National Storage Mechanism | Additional information 
RNS Number : 3878U
eEnergy Group PLC
28 March 2023
28 March 2023
eEnergy Group plc
("eEnergy" or "the Group")
Results for the six months ended 31 December 2022
eEnergy Group plc (AIM: EAAS), the net zero energy services provider, is pleased to announce its interim results for the six months ended 31 December 2022.
Financial Highlights
| · | Revenue up 58% to £15.1 million (HY21: £9.6 million) - Energy Management revenues of £6.6 million (HY21: £4.8 million) - Energy Services revenues of £8.5 million (HY21: £4.8 million) |
| · | Adjusted EBITDA (1) up 87% to £1.5 million (HY21: £0.8 million) |
| · | Profit before tax of £0.4 million (HY21: loss of £1.0 million) |
| · | Profit before tax and exceptional items of £0.7 million (HY21: £0.2 million) |
| · | Contracted future revenues increased 45% to £26.4 million at 31 December 2022 (31 December 2021 £18.3 million) |
| · | Cash £1.1 million (FY22: £1.4 million) excluding £0.4 million of restricted cash balances (FY22: £0.2 million) reflecting scheduled payments of trade creditors and legacy balance sheet items following drawdown of the new subordinated debt facility |
| · | As at 24 March 2023, the Group's cash balance was £1.1 million (excluding restricted cash balances of £0.5 million). This included a payment of £0.5 million received in advance which may, in certain circumstances, be returnable in May 2023 |
Operational Highlights
| · | Key contract renewals and wins comprising healthcare and education trusts as well as two significant framework agreements |
| · | Launch of eSolar in September 2022 with 12.3 MW under HOT's as at 31 December 2022 |
| · | Cross selling proposition continues to improve, with 35% of Energy Service's TCV signed in H1 FY22 coming from existing customers |
Post Period End
| · | Q3 TCV Values: - Energy Management £3.2 million - Energy Services £4.4 million |
| · | Experiencing strong appetite and trading in eSolar |
| · | Stabilised working capital with Net Debt broadly flat during Q3, post period end |
| · | Appointment of John Foley as Non-Exec Chairman, with David Nicholl moving to Non-Executive Director |
Full Year Outlook
eEnergy continues to grow its pipeline of new business opportunities, both with existing and new customers. As at 31 December 2022, the Company had contracted forward revenues ("Forward Order Book"), of £26.4 million over four years (up 45% on HY21). Of the Forward Order Book, £8.8 million is expected to be recognised as revenue in H2 FY23 and £6.8 million recognised in FY24.
The working capital position has been stabilised during Q3 as a result of management actions and the Board are expecting healthy conversion of earnings to operating cashflow for H2 as a whole. As at 24 March 2023, the Group's cash balance was £1.1 million (excluding restricted cash balances of £0.5 million). This included a £0.5 million payment received in advance which may, in certain circumstances, be returnable in May 2023.
The first months of H2 trading have been strong as we win new clients and cross selling opportunities within our existing client base continues to bear fruit. Contract wins during Q3 give improving visibility on the remaining three month outlook for FY23, and the Board remains optimistic to deliver full year trading expectations. As previously stated, interest expense for the year will reflect the drawdown of the subordinated debt facility.
Harvey Sinclair, CEO of eEnergy, commented : "eEnergy continues to make progress towards making net zero possible and profitable. Following a transformational year in 2022 bringing our offering under one unified brand, the first half of the year has seen us grow the business across both Energy Management and Energy Services. Our financial year is traditionally second half weighted and based on the new business pipeline and a contracted forward order book of £26.4 million, with £8.8 million to be recognised in H2, we remain optimistic to deliver full year trading expectations."
Investor & Analyst presentation
Management will provide a live presentation relating to the interim results via the Investor Meet Company platform on 28 March 2023 at 11:15am 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
An online analyst briefing will be held at 10:00am GMT. Analysts wishing to attend should contact [email protected] to register.
Note: (1) Adjusted EBITDA excluding Exceptional Items. Exceptional Items are those items which, in the opinion of the Directors, should be excluded in order to provide a consistent and comparable view of the underlying performance of the Group's ongoing business, including the costs incurred in delivering the 'Buy & Build' strategy associated with acquisitions and strategic investments, costs of restructuring and transforming acquired businesses and share-based payments.
Contacts:
| eEnergy Group plc | Tel: +44 20 7078 9564 |
| Harvey Sinclair, Chief Executive Officer Crispin Goldsmith, Chief Financial Officer |
[email protected] ; www.eenergyplc.com |
| Singer Capital Markets (Nominated Adviser and Joint Broker) | Tel: +44 20 7496 3000 |
| Justin McKeegan, Asha Chotai, James Maxwell (Corporate Finance) Tom Salvesen (Corporate Broking) |
|
| Canaccord Genuity Limited (Joint Broker) | Tel: +44 20 7523 8000 |
| Max Hartley, Tom Diehl (Corporate Broking) | |
| Tavistock | Tel: +44 207 920 3150 |
| Jos Simson, Heather Armstrong, Katie Hopkins | [email protected] |
About eEnergy Group plc
eEnergy (AIM: EAAS) is a net zero energy services provider, empowering organisations to achieve net zero by tackling energy waste and transitioning to clean energy, without the need for upfront investment. It is making net zero possible and profitable for all organisations in four ways:
· Transition to the lowest cost clean energy through the Group's digital procurement platform and energy management services.
· Tackle energy waste with granular data and insight on energy use and dynamic energy management.
· Reduce energy use with the right energy efficiency solutions without upfront cost.
· Reach net zero with onsite renewable generation and electric vehicle (EV) charging.
eEnergy is a Top 5 B2B energy company and has been awarded The Green Economy Mark by London Stock Exchange.
CEO Statement
H1 FY23 has continued to build on what was a transformational FY22 for eEnergy when further investment was made in the business and the Company's business divisions unified under a single eEnergy brand. The board believes that the business is at an inflection point which has been escalated at a quicker rate due to the long term increase in energy prices, the increase in appetite for net zero solutions in conjunction with the need for improved energy security. This is evidenced by an increase in our sales both from new customers and improving our cross selling rates to existing clients following the establishment of a more integrated proposition last year.
Energy Market
According to the International Energy Agency, the increase in wholesale electricity prices in 2022 was most prominent in Europe, where on average, prices were more than twice as high as in 2021. The mild winter so far in 2022/23 has helped ease wholesale electricity prices, aided by sustained liquefied natural gas inflows and sufficient gas storage inventories. However, this status of the global gas balance is delicate and there are a number of uncertainties in the short term for the rest of 2023.
These now established tailwinds continue to provide eEnergy with significant opportunities to continue its growth trajectory as organisations globally mitigate energy costs and accelerate a move to, not just Net Zero, but to improve their security by establishing energy independence away from the grid.
Results
Revenue increased by 58% to £15.1 million, up from £9.6 million in the prior year, with Energy Management and Energy Services contributing £6.5 million and £8.5 million respectively. Adjusted EBITDA was up 87% to £1.5 million in comparison to £0.8 million in HY21.
Both Energy Services and Energy Management have seen significant contract and framework wins during the period. We continue to win significant opportunities with education trusts to support their net zero strategies with contracts for lighting services, on-site generation services with eSolar and management through My ZeERO.
In addition we are increasing our presence in new segments with a particular focus on healthcare.
Following the successful launch of eCharge in March and later eSolar in September 2022, eEnergy has seen increasing levels of appetite from its customers for on-site generation services through its capital free Electrical Vehicle ("EV") charging and solar energy offerings. In addition, eCharge has secured a contract, to install 70 chargers across 35 locations across the UK with a new customer.
In November 2022, eEnergy announced that it had raised £2.5 million through the issue of a new sub-ordinated debt facility from exiting shareholder, Hawk Investment Holdings, and a new strategic investor, FFIH, and all Directors of the company, used to fund additional Energy Services working capital as a result of lengthened cash collection cycles as well as funding the next phase of MY ZeERO stock-build, other balance sheet liabilities and general working capital. This allowed eEnergy to tackle a tightened liquidity position and to support further growth of the business and continued investment in the Company's market leading platform.
Strategy
eEnergy's new clear and integrated product and service offering remains key to delivering on our core strategy of making net zero possible and profitable businesses and organisations, without the need for capital investment. The Company's integrated end-to-end solution driven platform, which include market leading digital products, underpinned by its Energy-as-a-Service model, make it easier than ever before for an organisation to transition to Net Zero.
While new customer acquisition remains central to the Company's growth strategy, in the last 12 months we have established an integrated cross selling platform, promoting additional products and services to eEnergy's existing 2,000 strong customer base. This allows for increased re-occurring revenues streams at an improved margin, giving greater long term revenue visibility and predictability.
The Board welcomes John Foley as new Non-Executive Chair to eEnergy. John is a barrister and chartered accountant who has served on a number of public and private company boards. He was CEO of MacLellan Group plc, a UK facilities management provider, for 12 years. He was co founder of Premier Technical Services Group Ltd ("PTSG") a specialist provider of facilities services, and was its Chairman from inception in 2007 until early November 2022 (he remains a Non-Executive Director. He is also currently Chairman of SEC Newgate Spa, the parent company of a global strategic communications and advisory group and is also Chairman of Servoca Plc, a provider of staffing solutions and outsourced services.
David Nicholl will continue to make positive contributions to the Board and Group strategy in moving to the role of Non-Executive Director.
Outlook
The energy crisis, exacerbated by the war in Ukraine has put a spot light on the UK's energy security, consumption and management. It has never been more critical for organisations to ensure their ability to mitigate risk, especially during the cost of living crisis. These market conditions have driven the awareness of the benefits of energy management both from a cost and environmental perspective and eEnergy's proposition helps organisations to navigate these complicated issues.
The Group maintains its cautious optimism while international macroeconomics continue to be unpredictable. The new business pipeline and forward order book remain robust and supported by the H2 weighting and, as at 24 March 2023, there is visibility over 93% of the Full Year revenue expectation. As such, the board remains optimistic to deliver full year trading expectations. As previously stated, interest expense for the year will reflect the drawdown of the subordinated debt facility.
Harvey Sinclair
Chief Executive
28 March 2023
CFO Statement
Group key performance indicators
| Period to 31 December 2022 | Year to 30 June 2022 |
Period to 31 December 2021 | Year to 30 June 2021 |
|
| £'000 | £'000 | £'000 | £'000 | |
| Revenue | 15,124 | 22,096 | 9,592 | 13,596 |
| Adj. EBITDA | 1,508 | 3,021 | 807 | 830 |
| Adj. EBITDA% | 10.0% | 13.7% | 8.4% | 6.1% |
| Cash & cash equivalents (exc. restricted balances) | 1,050 | 1,380 | 2,430 | 3,332 |
| Net Cash / (Debt) (excl. Of IFRS16) | (6,567) | (3,642) | (516) | 1,486 |
Summary performance
H1 FY23 was another period of significant growth for the Group. Revenue of £15.1 million was up 58% from H1 FY22, driving an 87% increase in Adjusted EBITDA to £1.5 million and delivering Profit Before Tax of £0.4 million (H1 FY22: £(1.0) million Loss Before Tax).
In November, the Group announced an additional £2.5 million in debt funding into the business through a new subordinated bond in order to give the business the working capital headroom to fund additional Energy Services working capital as a result of lengthened cash collection cycles as well as funding the next phase of MY ZeERO stock-build, other balance sheet liabilities and general working capital.
Net debt increased by £2.7 million in the period, reflecting a £3.9 million increase in working capital. This was largely driven by repayment of legacy (non-trade) liabilities and increased accrued revenue balances, reflecting the scale of organic growth and a transition to lengthened cash collection cycles across both Energy Services and Energy Management.
A number of initiatives were instigated to mitigate this increased working capital requirement going forward, as a result of which net debt has stabilised during Q3 with a further £0.8m of legacy liabilities also settled.
The increase in Net Working Capital also reflected progress in strengthening the Balance Sheet. During the period £0.9 million of legacy liabilities were settled and contingent consideration of £0.4 million in relation to the acquisition of Utility Team was satisfied, primarily for shares rather than cash, with the balance of £0.5 million written back to the Balance Sheet.
As at 24 March 2023, the Group's cash balance was £1.1 million (excluding restricted cash balances of £0.5 million). This included a payment of £0.5 million received in advance which may, in certain circumstances, be returnable in May 2023.
Divisional Performance
Energy Services
The strong momentum in new contract wins built during H2 FY22 converted into accelerated revenue growth in H1 FY23, delivering revenues of £8.5 million, an impressive 79% up on the same period last year.
Strong execution and focus on cost management delivered a 60bps improvement in Gross Margins to 38.4%, despite inflationary pressures across the economy. We segment Energy Services into three verticals - Measure (primarily MY ZeERO), Reduce (primarily lighting) and Connect (eSolar and eCharge). Budgeted Gross Margins vary from 50% in Measure, 34% in Reduce to 30% in Connect.
£10.6 million of new contract signings were delivered during the period, taking the total to £20.4 million for the calendar year 2022, double that for calendar year 2021. This accelerating momentum has continued into Q3.
The Group has built a strong pipeline of Solar opportunities over the last 12 months and had12.3 MW under Heads of Terms as at 31 December 2022. Lead times on Solar projects are long given the number of stakeholders involved and consents required. After a long development cycle these projects are now poised to accelerate growth during Q4 FY23 and into FY24.
Energy Management
The Energy Management business has continued to perform well despite a challenging market backdrop of unprecedently high volatility in energy prices and a period where the primary focus has been on integration rather than growth.
Underlying organic revenue growth of 8% was boosted by annualisation of the Utility Team acquisition (completed September 2021) to record overall 37% growth year-on-year to £6.6 million for the half-year, with EBITDA up 19% to £1.7 million.
The Board believes that the quality of earnings in this business unit are strong, with 95% of revenue from commissions paid by energy suppliers linked to long-term customer supply contracts at a 77% budgeted Gross Margin.
A key part of the integration has been a focus on service delivery. The Group has invested in both the team and delivery platform to ensure a best-in-class customer experience through the life of the relationship which will maintain and enhance retention rates as well as giving a differentiated proposition for new business acquisition. This investment has led to a temporary reduction in the EBITDA margin to 25.9% in the period (from 29.8% for H1 FY22) which is expected to normalise in H2.
Cash Flow and Working Capital
Net cash outflow from operating activities for the period was £2.0 million (H1 FY22 net cash outflow of £3.2 million).
There were two key drivers of this operating cash outflow. First, the repayment of £0.9 million of legacy (non-trade) liabilities which is planned to conclude during H2. Second, the scale of organic growth led to an increase of £2.5 million in trade working capital, mainly due to an increase in accrued revenue of £3.3 million.
Accrued revenue is recognised where revenue generating activity within a given period is rewarded by cashflow in future periods. Accrued revenue therefore represents contracted future cash receipts.
As discussed in the FY22 Annual Report, the increase has been caused both by organic growth and through a transition, now-completed, to new payment cycles in both Energy Management (£2.5 million impact) and Energy Services (£0.7 million impact). This was accentuated by seasonal delays to receipts over the Christmas period.
There was also a largely non-cash reduction of £0.9 million in contingent consideration, relating to the acquisition of Utility Team.
Cash flow in the period also reflected £0.5 million investment in developing the Group's proprietary technology platforms, including a new self-service client portal in Energy Management and MY ZeERO's cloud analytics.
Initiatives implemented by management during H1, outlined below, have stabilised working capital during Q3 FY23 and, together with the completion of legacy liability repayments during Q4, are expected to deliver strong cash generation for H2 as a whole.
A focus on improving payment terms from energy suppliers has resulted in 27% of January and February TCV signed in Energy Management now being invoiced on signing, up from 2% average for H1 FY23.
Off-balance sheet funding has been secured for the first batch of MY ZeERO eMeters, giving rise to an expected £0.2m cash benefit during H2 FY23.
In Energy Services, there has been increased demand for Capex (customer-pays) projects which give a significantly improved cash collection profile to the Group compared to the zero-capital upfront product. Capex products have accounted for 45% of Q3 FY23 cash receipts to-date in Energy Services, up from 30% in H1 FY23.
The Group is working with a number of funding partners with the aim of improving cash collection cycles on funded projects.
Diversification of supply chains across the business, aimed at reducing concentration risk and mitigating inflationary pressures, have also had a secondary benefit of delivering additional working capital capacity.
Borrowings and Funding
The increase in Net Working Capital during H1 was financed through the issue of £2.5 million of subordinated bonds in November 2022.
Post period end, improved operating cash flow has contributed to a stabilised net debt position during Q3 FY23. Between 1 January and 24 March 2023 there was a modest increase of £0.1 million of net debt (to £6.7 million, including unrestricted cash of £1.1 million), after a further £0.8 million reduction in legacy liabilities. This compares to a £2.9 million increase in H1 FY23, £3.3 million increase in H2 FY22 and £1.8 million in H1 FY22. The Board believes this marks substantial progress.
The pricing and structure of the subordinated bonds reflect the fact that they are intended to be short-term in nature, with the Board expecting the Group to deliver a healthy conversion of operating profit to operating cashflow going forward.
Under the guidance of the new Chairman, the Board is addressing the structure of the Group's capital base and borrowing facilities.
H2 FY23 Outlook
Momentum across both parts of the business means that, going into Q4, the Group is well positioned to meet the Board's expectations for the full-year out-turn. As at 24 March there is good visibility on 93% of the Full Year revenue expectation.
Energy Services continue to benefit from accelerating momentum and are strengthening their presence in attractive new market segments.
Continued investment in capabilities and infrastructure is delivering an enhanced customer proposition and user experience, supporting retention and new business wins.
Revenue growth during H2 FY23 is expected to be supported by positive revenue impact from eCharge and eSolar, launched during 2022, which leverage the existing Group cost base.
A substantial improvement in operating margins is expected from H1 FY23 to H2 FY23 as a result of operating efficiencies delivered during H1 FY23 and the benefits of operational gearing.
Crispin Goldsmith
Chief Financial Officer
28 March 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 31 December 2022
| Note | Period to 31 December 2022 £'000 |
Period to 31 December 2021 £'000 |
Year to 30 June 2022 £'000 |
|
| Continuing operations | ||||
| Revenue from contracts with customers | 15,124 | 9,592 | 22,096 | |
| Cost of sales | (6,781) | (4,067) | (9,131) | |
| Gross profit | 8,343 | 5,525 | 12,965 | |
| Operating expenses | (7,085) | (5,911) | (12,233) | |
| Included within operating expenses are: | ||||
| - Other exceptional items | 4 | 250 | 1,193 | 2,289 |
| Adjusted operating expenses | (6,835) | (4,718) | (9,944) | |
| Adjusted earnings before interest, taxation, depreciation and amortisation | 3 | 1,508 | 807 | 3,021 |
| Earnings before interest, taxation, depreciation and amortisation | 1,258 | (386) | 732 | |
| Depreciation and amortisation | (684) | (401) | (2,636) | |
| Finance costs | (143) | (227) | (323) | |
| Profit / (Loss) before taxation | 431 | (1,014) | (2,227) | |
| Income tax Credit | 150 | - | 736 | |
| Profit / (Loss) for the year from continuing operations attributable to the owners of the company | 581 | (1,014) | (1,491) | |
| Attributable to: | ||||
| Owners of the company | 3 | 617 | (932) | (1,431) |
| Non-controlling interest | (36) | (82) | (60) | |
| 581 | (1,014) | (1,491) | ||
| Other comprehensive income - items that may be reclassified subsequently to profit and loss | ||||
| Translation of foreign operations | (105) | 107 | (125) | |
| Total other comprehensive (loss) / profit | (105) | 107 | (125) | |
| Total comprehensive profit / (loss) for the year | 476 | (907) | (1,616) | |
| Total comprehensive profit / (loss) attributable to: | ||||
| Owners of the company | 512 | (825) | (1,556) | |
| Non-controlling interest | (36) | (82) | (60) | |
| 476 | (907) | (1,616) | ||
| Basic and diluted earnings (loss) per share from continuing operations attributable to owners of the company | 5 | 0.15p | (0.31)p | (0.44)p |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
| Note | As at 31 December 2022 £'000 |
As at 30 June 2022 £'000 |
|
| NON-CURRENT ASSETS | |||
| Property, plant and equipment | 417 | 458 | |
| Intangible assets | 6 | 28,666 | 28,733 |
| Right of use assets | 642 | 777 | |
| Deferred Tax Asset | 1,071 | 1,071 | |
| Total non-current assets | 30,796 | 31,039 | |
| Inventories | 745 | 809 | |
| Trade and other receivables | 19,946 | 16,022 | |
| Financial assets at fair value through profit or loss | 21 | 21 | |
| Cash and cash equivalents | 8 | 1,453 | 1,802 |
| Total current assets | 22,165 | 18,654 | |
| TOTAL ASSETS | 52,961 | 49,693 | |
| NON-CURRENT LIABILITIES | |||
| Lease liability | 206 | 399 | |
| Borrowings | 7 | 7,356 | 5,011 |
| Other non-current liabilities | 2,431 | 2,252 | |
| Deferred Tax Liability | 1,169 | 1,318 | |
| Provisions | 786 | 860 | |
| Total non-current liabilities | 11,948 | 9,840 | |
| CURRENT LIABILITIES | |||
| Trade and other payables | 16,607 | 16,802 | |
| Lease liability | 492 | 492 | |
| Borrowings | 7 | 261 | 11 |
| Total current liabilities | 17,360 | 17,305 | |
| TOTAL LIABILITIES | 29,308 | 27,145 | |
| NET ASSETS | 23,653 | 22,548 | |
| Equity attributable to owners of the parent | |||
| Issued share capital | 16,386 | 16,373 | |
| Share premium | 47,667 | 47,360 | |
| Other reserves | 570 | 261 | |
| Reverse acquisition reserve | (35,246) | (35,246) | |
| Foreign currency translation reserve | (243) | (138) | |
| Accumulated losses | (5,368) | (5,985) | |
| Total equity attributable to owners of the parent | 23,766 | 22,625 | |
| Non-controlling interest | (113) | (77) | |
| Total equity | 23,653 | 22,548 |
CONSOLIDATED STATEMENTS OF CASHFLOWS
For the six month period ended 31 December 2022
| Period to 31 December 2022 £'000 |
Period to 31 December 2021 £'000 |
Year to 30 June 2022 £'000 |
||
| Cash flow from operating activities | ||||
| Operating profit / (loss) - continuing operations | 581 | (1,014) | (1,491) | |
| Adjustments for: | ||||
| Depreciation and amortisation | 684 | 401 | 2,636 | |
| Finance cost (net) | 143 | 158 | 264 | |
| Taxation | (150) | - | - | |
| Share based payment | 309 | 170 | 520 | |
| Share of loss in associate | - | 30 | - | |
| Foreign exchange movement | - | 12 | - | |
| Gain on derecognition of contingent consideration | (448) | - | (1,032) | |
| Operating cashflow before working capital movements | 1,119 | (243) | 897 | |
| (Increase) / decrease in trade and other receivables | (3,906) | 65 | (9,857) | |
| (Decrease) / increase in trade and other payables | 664 | (2,612) | 165 | |
| Decrease / (increase) in inventories | 68 | (42) | (95) | |
| Decrease / (increase) in deferred income | 53 | (414) | 2,650 | |
| Net cash (outflow) / inflow from operating activities |
(2,002) | (3,246) | (6,240) | |
| Cash flow from investing activities | ||||
| Cash acquired on acquisition of business | - | 2,800 | 4,007 | |
| Cash paid to acquire subsidiaries | - | (10,582) | (11,081) | |
| Expenditure on intangible assets | (535) | (457) | (401) | |
| Purchase of property, plant and equipment | (93) | (117) | (294) | |
| Net cash (outflow) from investing activities | (628) | (8,356) | (7,769) | |
| Cash flows from financing activities | ||||
| Interest (paid) received | (130) | (97) | (188) | |
| Repayment of lease liabilities | (39) | (109) | (347) | |
| Net proceeds from the issue of shares | - | 11,382 | 11,382 | |
| Net proceeds from loans and borrowings | 2,445 | - | 4,891 | |
| Repayment of borrowings | - | (333) | (3,287) | |
| Net cash inflow from financing activities | 2,276 | 10,843 | 12,451 | |
| Net decrease in cash and cash equivalents | (354) | (759) | (1,558) | |
| Effect of exchange rates on cash | 5 | 15 | 28 | |
| Cash and cash equivalents at the start of the period | 1,802 | 3,332 | 3,332 | |
| Cash and cash equivalents at the end of the period | 1,453 | 2,588 | 1,802 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 31 December 2022
| 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 2022 | 16,373 | 47,360 | (35,246) | 261 | (138) | (5,985) | (77) | 22,548 | ||
| Translation of foreign operations | - | - | - | - | (105) | - | - | (105) | ||
| Profit for the period | - | - | - | - | - | 617 | (36) | 581 | ||
| Total comprehensive loss for the period | - | - | - | - | (105) | 617 | (36) | 476 | ||
| Issue of shares during the period | 13 | 307 | - | - | - | - | - | 320 | ||
| Share based payments | - | - | - | 309 | - | - | - | 309 | ||
| Total transactions with owners | 13 | 307 | - | 309 | - | - | - | 629 | ||
| Balance at 31 December 2022 | 16,386 | 47,667 | (35,246) | 570 | (243) | (5,368) | (113) | 23,653 |
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 |
SELECTED NOTES TO THE FINANCIAL INFORMATION
For the six month period ended 31 December 2022
1 Basis of preparation
The condensed consolidated interim financial statements of eEnergy Group plc (the "Group") for the six month period ended 31 December 2022 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 2022, 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 2022 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 basis.
At 31 December 2022 the Group had unrestricted cash reserves of £1.1m (30 June 2022: £1.4m; 31 December 2021: £2.4m).
The Directors have a reasonable expectation that the company and Group have sufficient resources to continue to operate for the foreseeable future. The Group has shown significant improvement in revenue and operating profitability. To help facilitate the growth of the company, and finance working capital, the company raised £2.5m of additional funding in November 2022.
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.
Taking these matters into consideration, the Directors consider that the continued adoption of the going concern basis is appropriate. 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.
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 2022 and 31 December 2021, the Group operated in two business segments, the Energy Management segment and the Energy Services segment, which largely comprised of LED lighting solutions.
| Energy Mgmt | Energy Services | Central | Group | |||
| 2022 | £'000 | £'000 | £'000 | £'000 | ||
| Revenue - Total | 6,604 | 8,520 | - | 15,124 | ||
| Cost of sales | (1,532) | (5,249) | - | (6,781) | ||
| Gross Profit | 5,072 | 3,271 | - | 8,343 | ||
| Operating expenses | (3,359) | (2,291) | - | (5,650) | ||
| Operating EBITDA | 1,713 | 980 | - | 2,693 | ||
| Central management costs | - | - | (1,185) | (1,185) | ||
| Adjusted EBITDA | 1,713 | 980 | (1,185) | 1,508 | ||
| Depreciation and amortisation | (401) | (70) | (213) | (684) | ||
| Finance and similar charges | (4) | (52) | (87) | (143) | ||
| Profit / (loss) before exceptional items | 1,308 | 858 | (1,485) | 681 | ||
| Exceptional items | (134) | (129) | 13 | (250) | ||
| Profit / (loss) before tax | 1,174 | 729 | (1,472) | 431 | ||
| Taxation credit | - | - | 150 | 150 | ||
| Profit / (loss) after tax | 1,174 | 729 | (1,322) | 581 | ||
| Non-controlling interest | (36) | - | - | (36) | ||
| Profit / (loss) attributable to owners of the Company | 1,210 | 729 | (1,322) | 617 | ||
| Net Assets | ||||||
| Non current assets | 26,530 | 3,862 | 404 | 30,796 | ||
| Current assets | 7,644 | 12,079 | 2,442 | 22,165 | ||
| Assets - Total | 34,174 | 15,941 | 2,846 | 52,961 | ||
| Liabilities | (9,849) | (10,435) | (9,024) | (29,308) | ||
| Net assets | 24,325 | 5,506 | (6,178) | 23,653 |
| Energy Mgmt | Energy Services | Central | Group | |||
| 2021 | £'000 | £'000 | £'000 | £'000 | ||
| Revenue | 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 | (2,298) | (1,524) | - | (3,822) | ||
| Operating EBITDA | 1,427 | 276 | - | 1,703 | ||
| Central management costs | - | - | (896) | (896) | ||
| Adjusted EBITDA | 1,427 | 276 | (896) | 807 | ||
| Depreciation and amortisation | (344) | (56) | (1) | (401) | ||
| Finance and similar charges | (24) | (184) | (19) | (227) | ||
| 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 | 23,269 | 3,932 | 4,385 | 31,586 | ||
| 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 | ||
4. EXCEPTIONAL ITEMS
Operating expenses include items that the Directors consider to be exceptional by their nature. These items are:
| Period to 31 December 2022 £'000 |
Period to 31 December 2021 £'000 |
Year to 30 June 2022 £'000 |
||
| Acquisition related expenses | - | 820 | 1,273 | |
| Changes to initial recognition of contingent consideration | (448) | - | (1,032) | |
| Incremental restructuring and integration costs | 389 | 198 | 1,181 | |
| Share based payment expense | 309 | 175 | 520 | |
| Other strategic investments | - | - | 347 | |
| Total exceptional expenses | 250 | 1,193 | 2,289 |
Acquisition expenses are the costs incurred in completing the "Buy and Build" strategy associated with acquisitions and strategic investments.
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 2022 | Period to 31 Dec 2021 | Year to 30 June 2022 | ||
| Profit / (loss) profit for the year from continuing operations attributable to owners of the Company - £ | 617,000 | (932,000) | (1,431,000) | |
| Weighted number of ordinary shares in issue | 350,036,790 | 304,325,269 | 323,783,394 | |
| Number of shares for diluted earnings per share | 417,158,305 | - | - | |
| Basic earnings per share from continuing operations - pence | 0.18p | (0.31)p | (0.44)p | |
| Diluted Basic earnings per share from continuing operations - pence | 0.15p | (0.31)p | (0.44)p |
The comparative periods do not include a diluted earnings per share calculation, or number of shares for the diluted earnings per share calculation, since the business was loss-making in those periods.
6. INTANGIBLE ASSETS
| Goodwill £'000 | Software £'000 | Customer relation-ships £'000 |
Trade names £'000 | Total £'000 |
|||
| Cost | |||||||
| At 1 July 2022 | 23,816 | 1,258 | 4,311 | 1,594 | 30,979 | ||
| Adjustment to goodwill on acquisition | (315) | - | - | - | (315) | ||
| Additions in the period | - | 653 | - | - | 653 | ||
| At 31 December 2022 | 23,501 | 1,911 | 4,311 | 1,594 | 31,317 | ||
| Amortisation | |||||||
| At 1 July 2022 | - | (219) | (433) | (1,594) | (2,246) | ||
| Amortisation in the period | - | (164) | (241) | - | (405) | ||
| At 31 December 2022 | - | (383) | (674) | (1,594) | (2,651) | ||
| Net book value at 30 June 2022 |
23,816 | 1,039 | 3,878 | - | 28,733 | ||
| Net book value at 31 December 2022 |
23,501 | 931 | 3,637 | - | 28,666 |
7. BORROWINGS
| 31 December 2022 £'000 |
31 December 2021 £'000 |
30 June 2022 £'000 |
|||
| Current | |||||
| Borrowings | 261 | 579 | 11 | ||
| 261 | 579 | 11 | |||
| Non-current | |||||
| Borrowings | 7,356 | 2,367 | 5,011 | ||
| 7,356 | 2,367 | 5,011 |
In February 2022 the Group refinanced substantially all of its existing bank indebtedness and consolidated its borrowings into a single £5,000,000, four year, revolving credit facility provided to eEnergy Holdings Limited, an intermediate holding company in the Group. The new facility is secured by way of debentures granted to the lender by all of the Group's trading subsidiaries. The facility includes covenants relating to debt service cover and gearing and is repayable on or before 12 February 2024.
During the current period the Group secured a further £2,525,000 in subordinated debt which has been structured secured discounted capital bonds. The bonds are being issued at a 21.29% discount to their face value (equivalent to a discount rate of 1.25% per month plus a 2% repayment fee) and are due to be redeemed by the Company (through the payment of in aggregate £3,207,754) on or before 24 May 2024 (in respect of £2,000,000) and on or before 21 June 2024 (in respect of £525,000).
Maturity of the borrowings as of 31 December 2022 are as follows:
| £'000 | ||
| Current | 261 | |
| Due between 1-2 years | 7,356 | |
| Due between 2-5 years | - | |
| Due beyond 5 years | - | |
| 7,617 |
8. CASH & CASH EQUIVALENTS
| Period to 31 Dec 2022 | Period to 31 Dec 2021 | Year to 30 June 2022 | ||
| Unrestricted Cash | 1,050 | 2,430 | 1,380 | |
| Restricted Cash | 403 | 158 | 422 | |
| 1,453 | 2,588 | 1,802 |
Restricted cash relates to financing arrangements and customer collections.
9. 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 2022 was £400,509 (31 December 2021: £563,000).
10. EVENTS AFTER THE BALANCE SHEET DATE
Nothing to disclose.
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