TIDMETP
RNS Number : 7031P
Eneraqua Technologies PLC
11 October 2023
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
11 October 2023
Eneraqua Technologies plc
("Eneraqua", the "Company" or the "Group")
Interim Results
Solid performance in H1 with headwinds expected to impact
near-term outlook
Eneraqua Technologies plc, a specialist provider of energy and
water efficiency solutions, is pleased to announce its interim
results for the six months ended 31 July 2023.
Financial Highlights
- Revenue increased 7% to GBP26.0m (H1 23: GBP24.2m), reflecting
contract wins and project completions in the period.
- Gross profit of GBP8.9m (H1 23: GBP9.9m), at a margin of 34.1%
reflecting the project mix in the period.
- Adjusted EBITDA(1) GBP0.79m (H1 23: GBP3.98m) as a result of
continued investment in both the team and ongoing research and
development work.
- Adjusted loss before tax (GBP0.4m) (H1 23: GBP3.0m) which
includes the increased costs of borrowing in H1.
- Adjusted diluted EPS: 0.47p (H1 23: 6.48p).
- Net cash* of GBP0.5m (H1 23: net debt of GBP0.2m) as working
capital investment in FY23 unwound.
- Group's order book(2) across Energy and Water stands at
GBP146.2m and, taking a prudent view, approximately 25% is now
anticipated to be delivered in the remainder of H2 FY24.
Operational and Strategic Highlights
- First major NHS Trust energy project secured with the award of
an GBP11.3m contract with Kingston NHS, following the acquisition
of Mathewson (in 2022), validating Group approach on strategic
acquisitions to unlock new markets.
- Solid performance in Water as a result of new student housing
and care home customer wins in Spain, and greater awareness and
adoption of water technologies in UK.
- Following first agritech contract for the State of
Uttarakhand, two further states have now adopted the solution, with
Indian Government now trialling our technologies in its domestic
water programmes.
- Completed global production facility in Toledo, Spain, where
product assembly is now under way with manufacturing of key
components to commence in Q4.
Post period end and Outlook
We have seen a marked change in some customer behaviours
post-period end as Local Authorities and social housing landlords
have experienced further pressure on their capital budgets, as a
result of continuing increases in building costs and required spend
on Government-mandated cladding and insulation projects.
These challenges are reflected in the recent report by the
Regulator for Social Housing [3] which highlights that
approximately half of all social landlords intend to re-phase
projects.
Since the half-year end the Company has won a number of new
contracts for heat-pump systems including a GBP12.7m contract with
Royal Borough of Kensington & Chelsea and a GBP7.2m contract to
supply a district system for a museum, gallery and leisure
centre.
However, following our clients' half-year budget reviews in
September we have been approached regarding the phasing of work. On
a prudent basis we anticipate that there will be a re-phasing of
work to meet their in-year budget pressures. This is expected to
materially impact second half revenues and margins. No contracts
have been cancelled but the timing of revenues on some is expected
to move into FY25.
Separately as set out in the 31 August trading update, the
unexpected policy decision by the UK Government on net nutrient
neutrality rules has resulted in certain Water customers deferring
investment decisions pending regulatory clarity.
As a result of these challenges and the anticipated delays, we
expect our revenues and profit for FY24 to be substantially below
market expectations. These clients have planned multi-year
programmes, and while no requests to look at phasing have been
made, we believe, given their fixed in-year budgets, the knock-on
impact means it is prudent to expect lower revenues and profits in
FY25 than currently forecast.
The Company returned to a net cash position at the end of H1
FY24. As at 30 September, over 83% of the accrued income had been
collected as cash with the remaining balance due in the coming
weeks. Overall, we expect to end FY24 in profit and with a net cash
positive position.
*excluding IFRS 16 liabilities
Commenting on the results, Eneraqua Technologies CEO, Mitesh
Dhanak, said: "During the period the Group performed in line with
our expectations notwithstanding the inflationary pressure on our
energy client budgets. Post-period end the Group has faced dual
headwinds. The continued and increased budgetary pressures on local
government are leading to discussions on slowing down project
delivery and deferring works into FY25. This compounds the impact
of the recent unexpected Government policy change in relation to
net nutrient neutrality. As a result, the Board now expects some
projects to be delivered more slowly with revenues moving into next
year and reduced operational leverage affecting margins. As a
result we expect to see a material reduction in revenues and
outturn in profitability during FY24. This is extremely
disappointing given the underlying imperative to transition to Net
Zero.
"The Group continues to be cash generative and retain a net cash
position as it manages through these near-term headwinds. The Board
remains confident that the longer-term opportunity for the business
driven by the social and economic imperatives driving the carbon
transition remains in place."
An overview of the interim results is available to watch here:
https://bit.ly/ETP_H12023overview
Analyst Presentation
A presentation for analysts will be held today at 9:00am via
webinar. Analysts wishing to attend should contact
eneraqua@almapr.co.uk.
Investor Presentation
A presentation to retail investors will be hosted at 11am this
morning. Investors are invited to sign up for the presentation via
the PI World platform using the following link:
https://bit.ly/ETP_FY24_H1_webinar. Questions can be submitted
during the presentation.
(1) Adjusted EBITDA - Adjusted for share based payment charges
(prior year also excludes IPO costs).
(2) Order Book defined as Contracted + Secured. Contracted =
project contract 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
Iain Richardson, CFO
Liberum - Nominated Adviser and Broker +44(0)203 100 2000
Edward Mansfield
Benjamin Cryer
Anake Singh
Singer Capital Markets (Joint Broker) +44 (0)20 7496 3000
Sandy Fraser
Justin McKeegan
Asha Chotai
Alma (Financial PR and IR) +44(0)20 3405 0205
Justine James eneraqua@almapr.co.uk
Sam Modlin
Will Ellis Hancock
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, 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 191 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
CEO Statement
The first half of the financial year has been solid and in-line
with our expectations. We have continued to grow revenues and
returned to a net cash position.
The underlying longer term drivers of our end markets clearly
remain strong with significant opportunities in both Energy and
Water in the UK and in our other regions of operation. Cost
effectiveness and energy efficiency remains at the forefront of our
clients' priorities alongside meeting net zero goals. Similarly,
our water efficiency technology offers a proven solution to the
challenges of drought that are being seen in the UK and Europe.
Whilst we delivered a solid performance in water and post period
end secured new student housing and care home customer wins in
Spain , the unexpected UK Government announcement on net nutrient
neutrality at the end of August has impacted our water business, as
announced on 31 August, due to the regulatory uncertainty for
clients and this is discussed in detail below.
On Energy, we previously saw signs of a return to normality for
FY25 with recent contract awards including the Group's first NHS
Trust and the Royal Borough of Kensington & Chelsea being
evidence of renewed commitment from clients.
Notwithstanding this, from the end of September we have seen a
marked change in the behaviour of some customers. Local Authorities
and social housing landlord capital budgets continue to be under
pressure with the Regulator of Social Housing, now reporting that
approximately half of these organisations are planning to re-phase
works to manage their annual budgets. The Regulator also
highlighted that the expected low-point cash position for the
sector will be in mid-2024. The substantial increase in costs on
Government-mandated cladding and insulation projects and other
works has seen landlords over-commit their annual capital budgets
and as a result seek to slow down spend in the second half of their
financial year (October - March) to manage their budgets.
Following their half-year budget reviews at end-September, we
have recently received requests to review delivery plans and
phasing on a number of material contracts due for delivery in our
current financial year. While the final outcomes remain uncertain,
we have taken the prudent view that a number of these contracts
will be re-phased to move spend into FY25.
As a result of these anticipated delays, we envisage that
revenue and profit for the current year will be materially lower
than previously expected. With H1 revenue of GBP26.0m, the Group's
order book stands at GBP146.2m of which taking a prudent view,
approximately 25% is now anticipated to be delivered in the
remainder of H2 FY24. Outturn margins are also expected to fall as
the slowing of project delivery reduces the operational leverage
that we have traditionally benefitted from as teams are required to
stay on the project for longer periods. We continue to see strong
cash conversion and expect to report a net cash position at the
FY24 year end.
Importantly, no contracts have been cancelled and work
continues, but we anticipate that there will be a need to slow down
delivery against initial project plans, to enable a higher
proportion of expenditure to fall into our clients' following
financial year (April 2024 - March 2025).
The clients concerned are all long-term relationships with
planned works across a number of years. While they have not
discussed any changes to their future plans with us, given the
analysis from the Regulator of Social Housing, we believe that it
is prudent to assume there will also be slippage in their spending
plans for FY25 and we are planning accordingly to ensure that both
operating profit and net cash within the business are
protected.
Financial performance
Our half year trading demonstrated the solid performance of the
Group amidst an ongoing challenging economic environment. Revenue
for the half increased by 7% to GBP26.0m (H123: GBP24.2m),
demonstrating the Group's ability to convert our new business
pipeline into contract wins and realised revenue.
In the period, average contract size was GBP2.45m (H123:
GBP3.5m), reflecting growth in our water business, which has
smaller individual contracts. Gross margin at 34.1% is in line with
management expectations, reflecting the project mix in the
period.
Adjusted EBITDA was GBP0.79m (H1 FY22: GBP3.98m), whilst PBT
moved to an adjusted loss before tax of (GBP0.4m) (H123: profit
GBP3.0m) reflecting the expected H2 bias for the year.
As we have noted previously, due to the nature of our customers
and their procurement calendars, our contract delivery and revenues
are traditionally weighted to the second half of our financial
year.
As at 30 September, the Group's order book across Energy and
Water stood at GBP146.2m
The Company remains well capitalised to fund growth in executing
its order book through existing resources and operating cash
generation. The Group saw a cash inflow in the first half of the
year as it saw the unwind of its working capital investment at
FY23. As at 30 September 2023, over 83% of accrued income at the
FY23 year-end had been converted to cash. N et cash (excluding IFRS
16 liabilities) at the H1 period end was GBP0.5m.
Operational and strategic progress
Despite the challenges in the current economic environment,
Eneraqua remains on course to deliver growth, albeit at a reduced
pace to that anticipated in late August. We have seen improved cash
generation as working capital begins to unwind and we expect this
to continue for the remainder of the year. Recent contract awards
evidence the significant opportunity for us to build further
growth, while noting that many clients will continue to navigate
significant budgetary constraints.
We have seen orders from new and existing clients which reflect
the quality of service and value for money that our team
delivers.
We have also completed our global production facility in Toledo,
Spain, where product assembly is now under way with manufacturing
of key components to commence in Q4. As previously outlined, this
production facility will be responsible for the assembly and supply
of the Control Flow product range. Having a central facility allows
us better quality control, and also reduces production costs by 12%
per unit.
Energy
In Energy, our turnkey retrofit district and communal heating
systems, including ground and air source heat pump solutions, are
an important tool for clients in meeting their sustainability and
net zero goals. Ongoing wins across our geographies and product
lines give confidence of continued environmental and political
tailwinds supporting the Group's growth.
The acquisition of Mathewson Holdings in 2022 opened up new
opportunities in the health and commercial sectors, which has
resulted in the Group securing its first NHS Trust award with a
GBP11.3m contract with the Kingston NHS Trust. Delivery will
commence in late Q4 with the majority of revenue recognised in
FY25.
The Mathewson team were instrumental in the winning of the
contract through a competitive tender process. At the time of the
acquisition, we flagged the opportunity to expand into the
healthcare sector as a new opportunity thanks to their expertise in
the area. This contract is a clear demonstration of our successful
acquisition strategy in practice. We continue to pursue further
contracts in healthcare and look forward to further growth in this
sector.
In addition, post period end, we secured a GBP12.7m contract
with the Royal Borough of Kensington & Chelsea for the
replacement of an end of life gas-fired district heating system
with a low-carbon heat-pump based system, underscoring the
continued demand for our solutions in public, multi-occupancy
buildings, where there is a need to retrofit and upgrade
end-of-life heating systems that burn fossil fuels with a green
alternative.
We also secured a GBP7.2m contract with a world-class museum,
art gallery, and leisure centre complex for the replacement of an
old gas-fired system again with a new low-carbon heat pump
solution. These awards reflect the ongoing investment in low-carbon
solutions, and the continued demand from both private and public
bodies to transition towards heating systems that are cleaner,
cost-effective and less damaging to the environment.
Water
Water harnesses the patented Control Flow HL2024 technologies
which reduce water wastage and improve the efficiency of heating
and hot water systems. Clients include water companies, developers,
hotels, schools and leisure centres, with the products installed in
both domestic and commercial applications.
By reducing water wastage, we can cut water consumption by up to
26% in homes and deliver energy bill savings through improved
performance of heating and hot water systems. The benefits of the
technology are becoming better understood by clients and we
experienced growing demand in H1 FY24.
As reported, on 29 August 2023, the UK Government ("Government")
announced its intention to change the legislation that governs
development in nitrate-sensitive areas. While the initial proposals
were blocked in Parliament, the Government has made clear its plan
to press ahead with the proposed changes through a specific
Parliamentary Bill later this year. This is expected to remove
existing responsibilities and instead set up a centralised
management scheme.
As communicated in the trading update, the continuing policy
uncertainty has led clients to pause projects until there is
greater clarity on their responsibilities and the details of the
proposals are finalised. We believe this will be complete during
FY25.
Notwithstanding this, the benefits of our water efficiency
technologies are becoming better understood in terms of both
reducing water wastage and cutting household utility bills. We
expect this to create greater opportunities in the future.
Away from the UK, we have seen success and continued interest in
our water technologies in both India and Spain.
In Spain we have completed installing Control Flow HL2024 in
four hospitals and a number of student accommodation and care home
sites and we have a healthy pipeline of new projects with
interested parties in a variety of sectors.
In India, following our first agritech contract to provide clean
energy, water efficient irrigation systems for the State of
Uttarakhand, two further states have now adopted the solution.
Follow-on discussions with Uttarakhand have been delayed due to the
substantial flooding that has affected that state. Separately, the
Indian Government is trialling our technologies in its domestic
water programmes.
Acquisition Strategy
The acquisition of Mathewson Holdings completed in August 2022
brought complementary technical capability and a market presence in
the health and commercial sectors. As already mentioned, this
facilitated the award of our first major NHS Trust contract award
of GBP11.3m. This substantiates our approach in making acquisitions
that enhance our capabilities and enable access to new markets.
This was followed by our acquisition of the Installatiebedrijf
Vriend B.V ("Vriend") business in Holland. The integration of this
highly skilled and well-established team gives us a springboard for
our Energy and Water solutions in the Netherlands. The growth
opportunity in North Western Europe is large, with strong market
drivers thanks to clearly defined targets and commitments to
achieve Net Zero from governments in the region. Following the
acquisition, we now have the requisite local accreditations which
will enable us to access new tender opportunities and accelerate
our growth strategy in an area where we see exciting potential.
People
The current labour market in the UK and Europe remains tight. We
are increasingly utilising offshore solutions using our engineering
team in India in order to manage workflows and costs.
As noted earlier, there is a risk of potential slippage in our
energy projects due to client budgetary pressures. If these occur,
then we will delay our planned recruitment and review existing
teams to ensure they are right-sized. We maintain a constant review
to ensure that staffing levels reflect our needs.
Outlook
The demand for our energy and water solutions remains strong.
Whilst the recent award of several major contracts indicates that
some client capital budgets are starting to return to normal, the
increased inflation which started to impact in 2022/23 is
continuing to have a negative impact and create budgetary pressures
for others.
As noted above, this is expected to see some clients seek to
delay project delivery resulting in revenue slippage into FY25,
with continuing pressure in that year anticipated given the
cautionary tone of the report from the Regulator of Social Housing.
This is clearly disappointing as it follows the unexpected
Government announcement on nutrient neutrality that affected our
water business.
Despite the impact of these two issues, the Group expects to
remain profitable for FY24 and report a net cash positive position
at year end.
In both energy and water we are well placed to capitalise on
growth, although for both FY24 and FY25 we anticipate this will be
at a slower pace than previously expected. The Board remains
confident that the longer-term opportunity for the business driven
by the social and economic imperatives driving the carbon
transition is unaffected. Our proven expertise in these areas
offers important assurance to clients on the quality and
performance of installations, thereby providing the confidence to
make the move to low-carbon and water efficient solutions. This
remains the inevitable direction of travel given the climate and
water challenges that are now becoming apparent.
CFO Statement
I am pleased to report on Eneraqua's unaudited interim results
for the six months ended 31 July 2023 which marked a return to a
net cash position (excluding IFRS16 liabilities).
KPIs
The Group's financial Key Performance Indicators, which are
aligned with its growth strategy, are revenue growth, adjusted
EBITDA, adjusted EBITDA margin, adjusted PBT, R&D spend, cash
conversion and ROCE.
31 Jul 2023 31 Jul
2022
Revenue GBP26.0m GBP24.2m
============ =========
Revenue growth 7% 92%
============ =========
EBITDA GBP0.74m GBP3.92m
============ =========
Adjusted EBITDA GBP0.79m GBP3.98m
============ =========
Adjusted EBITDA margin 3.0% 16.2%
============ =========
Adjusted PBT (GBP0.4m) GBP3.0m
============ =========
R&D spend GBP0.5m GBP1.07m
============ =========
Cash conversion* 640% (56%)
============ =========
ROCE (0.4%) 13.4%
============ =========
*Cash from operating activities/EBITDA
Revenue
Group revenues increased by 7% to GBP26.0m, (H1 2023: GBP24.2m).
International revenues grew from GBP0.16m in H1 2023 to GBP0.57m in
H1 2024.
As a result of the anticipated delays in both energy and water,
we envisage that revenue and profit for the current year will be
materially lower than previously expected.
The Group's order book stands at GBP146.2m of which, taking a
prudent view, approximately 25% is now anticipated to be delivered
in the remainder of H2 FY24.
Profits
The growth in revenue was offset by investment in headcount and
infrastructure. Adjusted EBITDA was GBP0.8m, (H1 2023: GBP3.9m),
with the Group achieving Adjusted EBITDA margins of 3%.
The Group reported a small statutory operating loss of GBP0.1m
(H1 2023: GBP3.1m operating profit) and a statutory loss before tax
of GBP0.4m (H1 2023: GBP2.9m profit before tax).
Cash flow & net cash
The Group saw a cash inflow in the first half of the year
through the unwind of its working capital investment during FY23.
As at 30 September over 83% of accrued income at the FY23 year-end
had converted to cash.
Capital expenditure was limited in H1, being GBP0.4m of plant
and equipment associated with the establishment of the
manufacturing facility in Toledo, Spain. Intangible asset additions
reflect the continued development of the HL2024 family of products.
In addition, there was a further outflow of GBP0.3m for the
acquisition of Vriend.
The Group ended the period with net cash (excluding IFRS 16
liabilities) of GBP0.5m compared with GBP0.2m of net debt at 31
July 2022 and GBP3.0m of net debt at end-FY23. The Group expects to
end FY24 in a net cash position.
Acquisitions
On 3 April 2023 the Group acquired Vriend a business
incorporated in the Netherlands, for total consideration of
EUR0.522m. Vriend is a multidisciplinary installer of sustainable
energy solutions with a focus on residential and commercial
projects. The acquisition represents the Group's first step on
their European acquisition strategy, providing the necessary
accreditations and foundations to expand the Group offering into
Northern Europe.
Adjusting Items
The only adjusting item in the period was share based payment
charges of GBP0.1m (H1 2023: GBP0.1m).
Headcount
The Group's full time equivalent (FTE) employees at 31 July 2023
were 191 (31 July 22: 144). This growth reflects the addition of
Vriend to the Group as well as continued recruitment in key areas
to support the Group's growth strategy and ensure the management of
key projects during the year.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 July
Six months Six months Twelve
to 31 Jul to 31 Jul months to
Note 2023 2022 31 Jan 2023
GBP'000 GBP'000 GBP'000
------------------------------------------------------ ------- ----------- ----------- -------------
Continuing operations
Revenue 3 26,047 24,246 55,074
Cost of sales (17,174) (14,327) (31,995)
------------------------------------------------------ ------- ----------- ----------- -------------
Gross profit 8,873 9,919 23,079
Administrative expenses (8,973) (6,868) (12,774)
Other operating income - - -
------------------------------------------------------ ------- ----------- ----------- -------------
Included within administrative
expenses are:
* Share based payment charge (58) (58) (117)
* Depreciation of property, plant and equipment (297) (666) (655)
* Depreciation of right-of-use assets (204) (14) (196)
* Amortisation of intangible assets (333) (191) (573)
----------- ----------- -------------
Adjusted administrative expenses (8,081) (5,939) (11,233)
----------- ----------- -------------
Adjusted EBITDA(1) 792 3,980 11,846
------------------------------------------------------ ------- ----------- ----------- -------------
Operating profit (100) 3,051 10,305
Interest payable and similar
expenses (341) (100) (370)
------------------------------------------------------ ------- ----------- ----------- -------------
Profit before taxation (441) 2,951 9,935
Income tax 540 (757) (1,420)
------------------------------------------------------ ------- ----------- ----------- -------------
Profit for the period from
continuing operations 99 2,194 8,515
Total profit for the period
attributable to equity holders
of the parent
Total comprehensive income
for the period attributable
to equity holders of the parent 99 2,194 8,515
====================================================== ======= =========== =========== =============
The accompanying notes form part of the condensed interim
consolidated financial statements
(1) Adjusted EBITDA is considered to be a Key Performance
Indicator and consistent with how the Group measures trading and
cash generative performance. Note this is an Alternative
Performance Measure and is a non-IFRS measure.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 Jul 31 Jul 2022
2023 GBP'000 31 Jan 2023
Note GBP'000 GBP'000
--------------------------------- -----
Non-current assets
Intangible assets 9,255 8,505 8,703
Property, plant and equipment 3,251 2,868 3,441
Right-of-use assets 1,319 207 1,213
Deferred tax asset - - -
--------------------------------- -----
Total non-current assets 13,825 11,580 13,357
--------------------------------- -----
Current assets
Inventory 2,924 1,236 2,557
Trade and other receivables 6 26,825 13,148 29,226
Cash and cash equivalents 5,963 6,521 3,224
--------------------------------- -----
Total current assets 35,712 20,905 35,007
--------------------------------- ----- --------- ------------ ------------
TOTAL ASSETS 49,537 32,485 48,364
================================= ===== ========= ============ ============
Equity attributable to
owners of the parent
Called up share capital 332 344 332
Share premium account 10,113 10,113 10,113
Merger reserve (5,490) (5,490) (5,490)
Other reserves 7 (624) 269
Retained earnings 20,055 13,963 19,791
--------------------------------- ----- --------- ------------ ------------
Total equity 25,017 18,306 25,015
--------------------------------- ----- --------- ------------ ------------
Current liabilities
Borrowings 7 1,457 2,310 2,793
Trade and other payables 16,866 7,248 15,154
Lease liabilities 428 118 543
--------------------------------- ----- --------- ------------ ------------
Total current liabilities 18,751 9,676 18,490
--------------------------------- ----- --------- ------------ ------------
Non-current liabilities
Borrowings 7 4,023 4,404 3,408
Lease liabilities 1,442 32 1,183
Deferred tax liability 305 67 268
Total non-current liabilities 5,769 4,503 4,859
Total liabilities 24,520 14,179 23,349
--------------------------------- ----- --------- ------------ ------------
TOTAL EQUITY AND LIABILITIES 49,537 32,485 48,364
================================= ===== ========= ============ ============
The accompanying notes form part of the condensed interim
consolidated financial statements
CONSOLIDATED STATEMENT OF CASHFLOWS
For the six months ended 31 July
GROUP Six months Six months Twelve
to 31 Jul to 31 Jul months to
2023 2022 31 Jan 2023
GBP'000 GBP'000 GBP'000
----------- ----------- -------------
Cash flow from operating activities
Profit for the financial period 99 2,194 8,515
Adjustments for:
Amortisation of intangible assets 204 191 573
Depreciation of property, plant
and equipment 297 666 655
Depreciation on right-of-use assets 333 14 196
Interest payable 367 100 313
Lease liability finance charge 13 19 57
Taxation charge / (credit) (540) 756 1,420
Corporation tax received / (paid) (61) - 25
Foreign exchange (426) - (392)
Share based payment charge 58 58 117
Changes in working capital:
Increase in inventory (3,150) (50) (1,371)
Decrease / (increase) in trade
and other receivables 8,430 (759) (16,837)
(Decrease) / increase in trade
and other payables (723) (5,386) 3,685
Net (outflow) / increase from
operating activities 4,901 (2,197) (3,044)
------------------------------------------ ----------- ----------- -------------
Cash flow from investing activities
Purchase of intangible assets (393) (285) (269)
Purchase of property, plant and
equipment (425) (113) (882)
Sale of property, plant and equipment - - 3
Acquisition of businesses - net
of cash acquired (312) (1,319) (1,620)
Net cash outflow from investing
activities (1,130) (1,717) (2,768)
------------------------------------------ ----------- ----------- -------------
Cash flows from financing activities
Proceeds from borrowings - 7,340 7,249
Repayment of borrowings (759) (786) (1,369)
Reduction of share capital - - (12)
Interest paid (177) (100) (313)
Repayment of lease liabilities (96) (89) (261)
Dividends paid - - (328)
Net cash (outflow) / inflow from
financing activities (1,032) 6,365 4,966
------------------------------------------ ----------- ----------- -------------
Net increase / (decrease) in
cash and cash equivalents 2,739 2,451 (846)
Cash and cash equivalents at beginning
of period 3,224 4,070 4,070
Cash and cash equivalents at
the end of the period 5,963 6,521 3,224
------------------------------------------ ----------- ----------- -------------
The accompanying notes form part of the condensed interim
consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July
Share Share Merger Other Retained Total
Capital Premium Reserve Reserves Earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 February 2022 344 10,113 (5,490) (294) 11,769 16,442
Profit for the period - - - - 2,194 2,194
Total comprehensive
profit for the period - - - - 2,194 2,194
------------------------- --------- --------- --------- ---------- ---------- --------
Other(1) - - - (330) - (330)
------------------------- --------- --------- --------- ---------- ---------- --------
Total transaction
with owners - - - (330) - (330)
------------------------- --------- --------- --------- ---------- ---------- --------
Balance at 31 July
2022 344 10,113 (5,490) (624) 13,963 18,306
========================= ========= ========= ========= ========== ========== ========
At 1 August 2022 344 10,113 (5,490) (624) 13,963 18,306
Profit for the period - - - - 6,321 6,321
Total comprehensive
profit for the period - - - - 6,321 6,321
------------------------- ----- ------- -------- ------ ------- -------
Reduction in share
capital (12) - - - - (12)
Dividends paid - - - - (328) (328)
Other(1) - - - 728 - 728
------------------------- ----- ------- -------- ------ ------- -------
Total transaction
with owners (12) - - 728 (328) 388
------------------------- ----- ------- -------- ------ ------- -------
Balance at 31 January
2023 332 10,113 (5,490) 104 19,956 25,015
========================= ===== ======= ======== ====== ======= =======
At 1 February 2023 332 10,113 (5,490) 104 19,956 25,015
Profit for the period - - - - 99 99
Other comprehensive
income - - - - - -
------------------------- ---- ------- -------- ----- ------- -------
Total comprehensive
profit for the period - - - - 99 99
------------------------- ---- ------- -------- ----- ------- -------
Other(1) - - - (97) - (97)
------------------------- ---- ------- -------- ----- ------- -------
Total transaction
with owners - - - (97) - (97)
------------------------- ---- ------- -------- ----- ------- -------
Balance at 31 July
2023 332 10,113 (5,490) 7 20,055 25,017
========================= ==== ======= ======== ===== ======= =======
(1) Other includes share based payments, foreign exchange and
other items
The accompanying notes form part of the condensed interim
consolidated financial statements.
Notes to the financial information
1. BASIS OF PREPARATION
The figures for the six months ended 31 July 2023 and 31 July
2022 are unaudited and do not constitute statutory accounts.
As permitted, the Company has chosen not to adopt IAS 34
"Interim Financial Statements" in preparing this Interim Financial
Information. The accounting policies adopted are consistent with
those applied by the Group in the preparation of the annual
consolidated financial statements for the year ended 31 January
2023.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. Several
amendments and interpretations apply for the first time in 2023,
but these do not have a material impact on the interim condensed
consolidated financial statements of the Group. The financial
information for the year ended 31 January 2023 set out in this
interim report does not comprise the Group's statutory accounts as
defined in section 434 of the Companies Act 2006.
The statutory accounts for the year ended 31 January 2023, which
were prepared under international accounting standards in
conformity with the requirements of the Companies Act 2006, have
been delivered to the Registrar of Companies. The auditors reported
on those accounts; their report was unqualified and did not contain
a statement under either Section 498(2) or Section 498(3) of the
Companies Act 2006 and did not include references to any matters to
which the auditor drew attention by way of emphasis.
1.1 Critical accounting judgements and key sources of estimation uncertainty
The preparation of condensed Interim Financial Information
requires the Directors to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. There are no changes to
critical accounting judgements and key sources of estimation
uncertainty from those disclosed in the annual accounts for the
year ended 31 January 2023.
2. 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
segment based on the reports reviewed by the Board.
The Board considers that during the period ended 31 July 2023
the Group operated in the three business segments according to the
geographical location of its operations and those being:
- United Kingdom
- Europe; and
- India
United
Six months to 31 July 2023 Kingdom Europe India 2023
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- --------- -------- ---------
Revenue 25,476 371 200 26,047
Cost of sales (16,802) (283) (89) (17,174)
--------- --------- -------- ---------
Gross Profit 8,674 89 111 8,873
Administrative expenses (7,722) (1,092) (159) (8,973)
------------------------------------------------------------ --------- --------- -------- ---------
Included within administrative
expenses are:
* Share based payment charge (58) - - (58)
* Depreciation of property, plant and equipment (143) (151) (3) (297)
* Depreciation of right-of-use assets (204) - - (204)
* Amortisation of intangible assets (268) (65) - (333)
--------- --------- -------- ---------
Adjusted administrative expenses (7,049) (876) (156) (8,081)
--------- --------- -------- ---------
Adjusted EBITDA(1) 1,625 (787) (45) 792
------------------------------------------------------------ --------- --------- -------- ---------
Operating profit/(loss) 952 (1,003) (49) (100)
Interest payable and similar
expenses (325) (18) 3 (341)
Profit/(Loss) before tax 626 (1,021) (46) (441)
Taxation 464 82 (6) 540
--------- --------- -------- ---------
Profit/(Loss) after tax 1,090 (940) (51) 99
--------- --------- -------- ---------
Net Assets as at 31 July
2023
Assets: 37,373 11,647 517 49,537
Liabilities (12,254) (11,702) (564) (24,520)
--------- --------- -------- ---------
Net assets / (liabilities) 25,119 (55) (47) 25,017
--------- --------- -------- ---------
United
Six months to 31 July 2022 Kingdom Europe India 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- -------- -------- ---------
Revenue 24,087 66 93 24,246
Cost of sales (14,231) (80) (16) (14,327)
--------- -------- -------- ---------
Gross Profit 9,856 (14) 77 9,919
Administrative expenses (5,976) (801) (91) (6,868)
------------------------------------------------------------ --------- -------- -------- ---------
Included within administrative
expenses are:
* Share based payment charges (58) - - (58)
* Depreciation of property, plant and equipment (348) (306) (12) (666)
* Depreciation of right-of-use assets (14) - - (14)
* Amortisation of intangible assets (191) - - (191)
--------- -------- -------- ---------
Adjusted administrative expenses (611) (306) (12) (929)
--------- -------- -------- ---------
Adjusted EBITDA(1) 4,491 (509) (2) 3,980
------------------------------------------------------------ --------- -------- -------- ---------
Operating profit/(loss) 3,880 (815) (14) 3,051
Interest payable and similar
expenses (83) (17) - (100)
Profit/(Loss) before tax 3,797 (832) (14) 2,951
Taxation (756) - (1) (757)
--------- -------- -------- ---------
Profit/(Loss) after tax 3,041 (832) (15) 2,194
--------- -------- -------- ---------
Net Assets as at 31 July
2022
Assets: 27,679 3,748 242 31,669
Liabilities (11,998) (1,348) (17) (13,363)
--------- -------- -------- ---------
Net assets / (liabilities) 15,681 2,400 225 18,306
--------- -------- -------- ---------
Twelve months to 31 January United
2023 Kingdom Europe India 2023
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- -------- -------- ---------
Revenue 54,546 77 451 55,074
Cost of sales (32,525) 718 (188) (31,995)
--------- -------- -------- ---------
Gross profit 22,021 795 263 23,079
Administrative expenses (11,249) (1,232) (293) (12,774)
------------------------------------------------------------ --------- -------- -------- ---------
Included within administrative
expenses are:
* Share based payment charges (117) - - (117)
* Depreciation of property, plant and equipment (350) (288) (17) (655)
* Depreciation of right-of-use assets (196) - - (196)
* Amortisation of intangible assets (505) (68) - (573)
--------- -------- -------- ---------
Adjusted administrative
expenses (10,081) (876) (276) (11,233)
--------- -------- -------- ---------
Adjusted EBITDA(1) 11,940 (81) (13) 11,846
------------------------------------------------------------ --------- -------- -------- ---------
Operating profit/(loss) 10,772 (437) (30) 10,305
Interest payable and similar
expenses (98) (271) (1) (370)
--------- -------- -------- ---------
Profit/(Loss) before tax 10,674 (708) (31) 9,935
Taxation (1,378) (40) (2) (1,420)
--------- -------- -------- ---------
Profit/(Loss) after tax 9,296 (748) (33) 8,515
--------- -------- -------- ---------
Net Assets
Assets: 36,995 10,840 529 48,364
Liabilities (12,869) (9,955) (525) (23,349)
--------- -------- -------- ---------
Net assets 24,126 885 4 25,015
--------- -------- -------- ---------
3. REVENUE
Six months Six months Twelve months
to 31 Jul to 31 Jul to 31 Jan
2023 2022 2023
GBP'000 GBP'000 GBP'000
-------------------- ----------- ----------- --------------
United Kingdom 25,476 24,087 54,546
Europe 371 66 77
Rest of the World 200 93 451
26,047 24,246 55,074
----------- ----------- --------------
4. OPERATING PROFIT
Operating profit from continued operations is stated after
charging / (crediting):
Twelve
months
Six months Six months to 31 Jan
to 31 Jul to 31 Jul 2023
2023 2022 GBP'000
GBP'000 GBP'000
------------------------------ ----------- ------------- ------------
Depreciation of property,
plant and equipment 297 666 655
Depreciation of right-of-use
assets 333 14 196
Amortisation of fixed assets 204 191 573
Share based payments 58 58 117
Exchange differences - 75 -
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
period.
Six months Six months Twelve months
to 31 Jul to 31 Jul to 31 Jan
2023 2022 2023
------------------------------------ ----------- ----------- --------------
Profit for the period from
continuing operations - GBP'000 99 2,194 8,515
Weighted number of ordinary
shares in issue 33,388,788 34,438,730 33,388,788
Weighted number of fully
diluted ordinary shares in
issue 332,673 332,673 332,673
------------------------------------- ----------- ----------- --------------
Basic earnings per share
from continuing operations
- pence 0.30 6.37 25.50
Diluted earnings per share
from continuing operations
- pence 0.30 6.31 25.25
------------------------------------- ----------- ----------- --------------
6. TRADE AND OTHER RECEIVABLES
31 Jul 2023 31 Jul 2022 31 Jan 2023
GBP'000 GBP'000 GBP'000
--------------------------- ------------ -------------- --------------
Trade receivables 4,895 4,916 3,492
Contract assets 3,119 - 459
Other debtors 2,671 1,894 2,352
Prepayments and accrued
income 16,140 6,338 22,778
Tax recoverable - - 145
26,825 13,148 29,226
------------ -------------- --------------
7. BORROWINGS
31 Jul 2023 31 Jul 2022 31 Jan 2023
GBP'000 GBP'000 GBP'000
--------------- ------------ ------------ ------------
Current 1,457 2,310 2,793
Non-current 4,023 4,404 3,408
5,480 6,714 6,201
------------ ------------ ------------
Analysis of maturity of loans is given below:
31 Jul 2023 31 Jul 2022 31 Jan 2023
GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- --------------
Amounts falling due within
one year
Other loans 1,457 2,310 1,469
Amounts falling due 1-2
years
Other loans 1,821 1,612 1,821
Amounts falling due 2-5
years
Other loans 2,202 2,792 2,911
5,480 6,714 6,201
------------ -------------- --------------
Other loans relate to a GBP6,000,000 facility provided by HSBC
to Cenergist Limited and a EUR1,500,000 facility provided to
Cenergist Spain SL by Instituto De Finanzas De Castilla-La Mancha
S.A.U. ("CLM") and are secured by fixed and floating charges over
the assets of the Company and by cross guarantees from the
Company's subsidiary undertakings.
Interest on the HSBC facility is at a rate of 3.450% over the
Bank of England Base Rate with the repayment period being 48 months
from date of individual tranche drawdown.
Interest on the CLM facility is at a rate of 3.50% with the
repayment period being 84 months from date of individual tranche
drawdown.
8. RECONCILIATION OF MOVEMENT IN NET DEBT
At 1 February Non-cash At 31 July
2022 changes Cashflow 2022
--------------------------- -------------- --------- --------- -----------
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 4,070 - 2,451 6,521
Borrowings - current - - (2,310) (2,310)
Borrowings - non-current - - (4,404) (4,404)
Lease liability - current
& non current (191) (48) 89 (150)
Net Cash / (Debt) 3,879 (48) (4,174) (343)
--------------------------- -------------- --------- --------- -----------
Adjusted Net Cash /
(Debt)(2) 4,070 - (4,263) (193)
--------------------------- -------------- --------- --------- -----------
At 1 August Non-cash At 31 January
2022 changes Cashflow 2023
--------------------------- ------------ --------- --------- --------------
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 6,521 - (3,297) 3,224
Borrowings - current (2,310) - 841 (1,469)
Borrowings - non-current (4,404) - (328) (4,732)
Lease liability - current
& non current (150) (1,226) (350) (1,726)
Net Cash / (Debt) (343) (1,226) (3,134) (4,703)
--------------------------- ------------ --------- --------- --------------
Adjusted Net Cash /
(Debt)(2) (193) - (2,784) (2,977)
--------------------------- ------------ --------- --------- --------------
At 1 February Non-cash At 31 July
2023 changes Cashflow 2023
----------------------------- -------------- --------- --------- -----------
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 3,224 - 2,739 5,963
Borrowings - current (2,793) - 1,336 (1,457)
Borrowings - non-current (3,408) - (615) (4,023)
Lease liabilities - current
& non-current (1,726) 31 (175) (1,870)
Net Cash / (Debt) (4,703) 31 3,285 (1,387)
----------------------------- -------------- --------- --------- -----------
Adjusted Net Cash /
(Debt)(2) (2,977) - 3,460 483
----------------------------- -------------- --------- --------- -----------
(2) Adjusted Net Cash / (Debt) i s considered to be a Key
Performance Indicator and consistent with how the Group measures
net cash / debt. It is calculated as cash at bank less borrowings.
Note this is an Alternative Performance Measure and is a non-IFRS
measure.
9. BUSINESS COMBINATION
On 3 April 2023 Cenergist Spain SL acquired all of the share
capital of Installatiebedrijf Vriend B.V. ("Vriend"). Vriend
provides low carbon solutions to customers in the Netherlands.
Background and Rationale
Vriend is a renowned multidisciplinary installer of sustainable
energy solutions with a focus on residential and commercial
projects. The acquisition represents the Group's first step on
their European acquisition strategy, providing the necessary
accreditations and foundations to expand the Group offering into
Northern Europe.
Consideration
The total consideration for the acquisition was EUR0.522
million. The consideration was structured as follows:
Initial consideration, payable in cash on completion of EUR0.485
million; and
Working capital adjustment of EUR0.037 million, paid within
three months of acquisition.
The initial estimates of the fair value of the assets acquired
and liabilities assumed of Vriend at the date of acquisition give
rise to goodwill of EUR0.376m, relating to accumulated "know how"
and expertise of the business and its staff. None of the goodwill
is expected to be deducted for income tax purposes.
Note that this assessment is not yet finalised.
10. EVENTS SUBSEQUENT TO PERIOD END
The Group has not identified any subsequent event to be
reported.
[3]
https://www.gov.uk/government/publications/quarterly-survey-for-q1-april-to-june-2023-to-2024/quarterly-survey-for-q1-april-to-june-2023-to-2024-summary-accessible-version
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END
IR FLFEAIELILIV
(END) Dow Jones Newswires
October 11, 2023 02:00 ET (06:00 GMT)
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