TIDMEAAS
RNS Number : 6892H
eEnergy Group PLC
25 November 2022
25 November 2022
eEnergy Group plc
("eEnergy" or "the Group")
Preliminary Results
eEnergy (AIM: EAAS), the Net Zero energy services provider, is
pleased to announce its preliminary results for the year ended 30
June 2022 ("FY22").
Financial highlights
-- Revenue up 63% to GBP22.1 million (2021: GBP13.6 million)
o Energy Management revenues of GBP11.6 million (2021: GBP2.2 million)
o Energy Services revenues of GBP10.5 million (2021: GBP11.4 million)
-- Adjusted EBITDA (1) up 264% to GBP3.0 million (2021: GBP0.8 million)
-- Profit before tax and exceptional items (2) of GBP1.6 million (2021:
profit of GBP0.1 million)
-- Contracted future revenues increased 384% to GBP25.3 million (2021:
GBP5.2 million)
-- Energy Management revenues 20% higher than pre-acquisition revenues
of Utility Team and Beond combined
-- A year of significant investment in launching the integrated eEnergy
proposition
-- Today, separately announced a GBP2.5 million capital raise through
a new sub-ordinated debt facility from Hawk Investment Holdings,
an existing shareholder of eEnergy, FFIH, a new strategic investor,
and all Directors of the company in order to strengthen the Group's
balance sheet to address a tightened liquidity position and to support
growth of the business and continued investment in eEnergy's market
leading platform
Operational achievements
-- Margins maintained or improved across Energy Management and Energy
Services divisions
-- The launch of a single, clear and integrated proposition, under the
eEnergy brand
-- Established robust cross-sell proposition and process
-- Acquisition of UtilityTeam completed in September 2021 and integrated
into a single Energy Management business during the year
-- Increased ownership stake in measurement platform MY ZeERO from 51%
to 85.5%
-- Delivered commercial launch of MY ZeERO with 898 smart meters ordered
for a total contract value of GBP1.1 million with 559 installed as
at 30 June 2022
-- Launched new services eCharge and eSolar, both of which have delivered
strong organic growth
-- Strengthening of the leadership team of both Energy Management and
Energy Services
-- Extension of the project funding facility with SUSI Partners
FY2023 Trading and Outlook
-- The Board believes the business has seen an inflection point in revenue
and earnings as a result of the energy crisis which has driven strengthening
customer appetite through enhanced financial returns from tackling
energy waste and migrating to Net Zero
-- This has contributed to a strong start to the year with Q1 GBP7.6
million revenue, up 90% on prior year
-- Q1 Energy Services sales of GBP4.1 million TCV, up 120% on same period
last year, record month in October with sales of GBP3 million in
the month. This equates to average TCV sales per quarter since January
of GBP4.6 million
-- TCV of GBP15.6 million signed since 1 January 2022 up 77% on same
period last year, including GBP5.3m TCV with existing customers
-- Contracted future revenues ('Forward Order Book') in Energy Management
at 30 September 2022 of GBP25.4 million, up 39% since 31 December
2021 and 18% since 30 June 2022
-- Contracted future revenues in Energy Services of GBP3.1 million at
30 September 2022, implying c.69% coverage of Q2 revenue budget.
"Forward Order Book" increased in Q2 to imply 100% coverage for Q2
revenue target
-- Total value of proposal pipeline (excluding Solar) for installation
this financial year up 16% year-on-year (as at 30 September 2022),
with 42% of the pipeline from repeat customers and 51% in Education.
-- 8.9 MW of solar projects under Heads of Terms as at end September
2022, forecast to convert to c. GBP1.5 million margin contribution
during H2
-- Awarded a framework agreement with a multi-academy trust for LED
lighting projects over 48 academies for an estimated GBP2.5 million
in revenues, subject to survey and contracts, expected in the coming
months (to be funded using trade creditor facilities)
-- Average contract duration in Energy Management of 28 months at 30
June 2022, up 27% from prior year
-- Strong contracted forward order book and year-to-date trading gives
visibility on delivering H1 budgeted revenue
-- However, the Company has experienced a tightened liquidity position
subsequent to the year-end. As at 31 October 2022, prior to drawdown
on the new subordinated debt facility, the Company had a cash balance
of GBP114k
-- In addition to the new GBP2.5 million subordinated debt facility,
the Board has taken a number of working capital and trading initiatives
in order to mitigate this and improve cash generation going forward
-- The Group continues to expect material year-on-year Revenue and EBITDA
growth for FY23, benefiting from strong organic growth
Commenting on the results, Harvey Sinclair, CEO, said : "This
financial year has been pivotal for eEnergy as we have invested in
launching our unified proposition under a single integrated brand.
We have continued to grow organically and through acquisition, and
the volatility seen across the energy sector has only made our
offering more attractive. These huge tailwinds continue to present
the Company with significant opportunities and our forward order
book has never been stronger.
"We have continued to launch innovative products and services
allowing our customers to accelerate their Net Zero strategies with
no upfront capital investment. Following record revenues in Q4, we
entered the new financial year with a strong new business pipeline
and a contracted forward order book of GBP25 million. Post year-end
we have raised additional capital through a new subordinated debt
facility in order to strengthen the Group's tightened liquidity
position. The Board is encouraged by the macroeconomic outlook and
is confident in the long term prospects of the business as the UK
continues on its journey to be Net Zero by 2050."
Note: (1) Adjusted EBITDA is EBITDA excluding Exceptional Items.
Exceptional Items are those items which, in the opinion of the
Directors, should be excluded in order to provide a consistent and
comparable view of the underlying performance of the Group's
ongoing business, including the costs incurred in delivering the
'Buy & Build' strategy associated with acquisitions and
strategic investments, costs of restructuring and transforming
acquired businesses and share-based payments.
Note: (2) Profit before tax and Exceptional Items includes
within Exceptional Items brand impairment charges shown below
EBITDA.
Contacts:
eEnergy Group plc Tel: +44 20 7078 9564
Harvey Sinclair, Chief Executive Officer info@eenergyplc.com ;
Crispin Goldsmith, Chief Financial www.eenergyplc.com
Officer
Singer Capital Markets (Nominated Tel: +44 20 7496 3000
Adviser and Joint Broker)
Justin McKeegan, Asha Chotai, James
Maxwell (Corporate Finance)
Tom Salvesen (Corporate Broking)
Canaccord Genuity Limited (Joint Broker) Tel: +44 20 7523 8000
Max Hartley, Tom Diehl (Corporate Broking)
Kit Stephenson (Sales)
Tavistock (Financial PR & IR) Tel: +44 207 920 3150
Jos Simson, Heather Armstrong, Katie eEnergy@tavistock.co.uk
Hopkins
About eEnergy Group plc
eEnergy (AIM: EAAS) is a Net Zero energy services provider,
empowering organisations to achieve Net Zero by tackling energy
waste and transitioning to clean energy, without the need for
upfront investment. It is making Net Zero possible and profitable
for all organisations in four ways:
-- Transition to the lowest cost clean energy through our digital procurement
platform and Energy Management services.
-- Tackle energy waste with granular data and insight on energy use
and dynamic Energy Management.
-- Reduce energy use with the right energy efficiency solutions without
upfront cost.
-- Reach Net Zero with onsite renewable generation and electric vehicle
(EV) charging.
eEnergy is a Top 5 B2B energy company and has been awarded The
Green Economy Mark by London Stock Exchange.
Chairman's statement
Introduction
I am pleased to report on what has been a pivotal year for
eEnergy, as we established an integrated proposition under the
eEnergy brand, enabling us to fulfil our vision to make Net Zero
both possible and profitable for organisations.
With the foundations of our business model set last year, we
have focused on integrating UtilityTeam and the other business
units into a single, clear customer proposition; positioning
eEnergy as a unique, end to end energy services business.
Our vision is clear, to enable every business to access the
lowest cost clean energy, identify and tackle energy waste, reduce
energy consumption and transition to an EV charging model through
zero capital solutions.
While COVID-19 presented challenges for the business, including
prolonged lockdowns in Ireland, eEnergy has weathered the storm
from the pandemic and emerged stronger and well positioned to
execute its growth strategy.
Energy Markets
Across Europe, wholesale energy prices have hit record highs,
principally caused by Russia's invasion of Ukraine and the
resulting effects to gas supply. Many countries across the
continent have moved away from Russian gas sources both as a
response to the war and in a move to diversify sources of supply.
These macroeconomic changes have triggered an inflection point for
all organisations across the world as they now attempt to mitigate
energy costs and accelerate a move to, not just Net Zero but,
energy independence away from the grid.
These massive tailwinds are now well established, and they
provide a significant opportunity for eEnergy to accelerate its
growth and to capture a share of this huge market opportunity which
we predict will see explosive growth over the coming decade.
Strategy
Following a transformational year, eEnergy has continued to
evolve its strategy and business model with the launch of its Solar
and EV charging propositions and has now established a true end to
end solution for organisations looking to transition to Net
Zero.
The Company has invested considerable resource into its market
leading platform in order to truly differentiate both its products
but equally its operating model, which has enabled efficiencies and
perfectly positions eEnergy for scalable growth.
eEnergy is establishing itself as a platform business within the
Energy Management sector with many unique and innovative digital
products that enable its customers to transition to Net Zero faster
without the need for capital investment. Coupled with our
Energy-as-a-Service model, it has never been easier for an
organisation to transition to Net Zero.
We see great parallels with the way the Software-as-a-Service
model revolutionised the IT and telecoms sector for businesses of
all sizes. This revolution was not achieved overnight but today it
is the new normal.
Our Energy-as-a-Service model is a significant enabler for
customers adopting energy reduction solutions which we see as a
major factor in driving future growth to the business, and as we
continue to evolve our funding models for projects, we believe
there is an exciting opportunity to start building forward
recurring revenue streams, in particular within the metering and EV
charging spaces.
While the adoption of this "As-a-Service" model in the UK's
energy transition sector lags behind our international
counterparts, in the United States, who have seen explosive growth
in the last few years, we are now starting to see increased levels
of education and awareness, in both the public and private sectors
which together with the energy crisis, we believe will now
accelerate adoption on a large scale.
Following the integration of its various services into a
combined proposition under a single eEnergy brand, the business has
embarked on a strategy of cross selling its energy reduction
services to its more than 2,000 retained Energy Management
customers. Although this takes time, we have been very encouraged
by the levels of engagement and we are now securing much larger
contracts to both existing and new clients, with Energy Services
average project value up 44% and Energy Management average contract
duration up 27%.
In May, eEnergy increased its ownership in the Group's MY ZeERO
intelligent smart metering and analytics platform from 51% to
85.5%. We made our initial investment in MY ZeERO after we
identified the opportunity to integrate proprietary energy
analytics hardware and software into our Energy services division.
The rollout of the smart meters has been hugely successful and
further underpins eEnergy's differentiated and valuable proposition
in the market.
Post year end, we have announced an additional GBP2.5 million
investment in the business through a new subordinated debt facility
in order to give the business additional cash resources to continue
to navigate the working capital cycle of our growing business.
Following this new investment in the company, the Board believes we
are well positioned to benefit from the robust structural and
regulatory drivers in the market. The Board are supporting this
investment through a c. GBP0.5m participation in the debt
facility.
People
The eEnergy team has seen significant growth in the last two
years following the acquisitions of RSL, Beond, UtilityTeam and
Measure My Energy growing from 33 to 128 people in less than 24
months with all teams now fully integrated into the wider eEnergy
business. We are very pleased to have retained all the key talent
across the divisions, as well as hiring top tier talent across the
industry.
Furthermore, we have strengthened our senior leadership team
within the year, with the addition of Delvin Lane, ex CEO of
UtilityTeam, who is now MD of the Energy Management business, Simon
Smith as MD of Energy Services. Louisa Gregory joined in September
this year and stepped into the role of Chief People Officer and is
a pivotal hire to the C suite as we develop our people
strategy.
On the finance side, Crispin Goldsmith has been appointed as CFO
of the Group and to the Board, previously holding the role of Chief
Strategy & Commercial Officer. Crispin brings valuable
experience and knowledge to eEnergy which has already benefited the
continued growth of the business.
Outlook
eEnergy is very well positioned to benefit from exposure to
significant regulatory and structural growth drivers in addition to
tailwinds created by the energy crisis.
Energy security, consumption and management have become
absolutely critical areas of focus for all organisations over the
last 12 months, with the current environment providing increased
levels of opportunity and awareness in the market for eEnergy's
products and services to both new and existing customers.
The final quarter of the financial year was a record period for
the business with revenues of GBP8.3 million and Adjusted EBITDA of
GBP2.0 million. This momentum has continued into the new financial
year providing a strong pipeline and the Board remains encouraged
by the Group's progress to date and prospects for the future as
eEnergy's proposition becomes ever more relevant.
I'd like to take this opportunity to thank the team for their
hard work, our customers for their loyalty and our shareholders and
debt provicers for their continued support.
David Nicholl
Non-Executive Chairman
25 November 2022
Chief Executive Officer's report
Introduction
Our mission to make Net Zero both possible and profitable for
all organisations, has come of age this year. We are seeing
sustained high energy prices which are expected to be prolonged as
a result of the energy crisis across the UK and Europe, caused by a
multitude of factors, none larger than the reduction of gas supply
from Russia.
Alongside these high and increasing energy prices, the drive to
tackle climate change has never been more prevalent; together these
two market forces have provided a genuine inflection point for
eEnergy and the Group is experiencing a huge increase in demand for
our integrated Net Zero offering, with record growth in our new
business pipeline as we enter the new financial year.
Following a busy FY21 where we successfully executed on our
stated M&A strategy and cemented the foundations of our evolved
business model, the focus for FY22 was to:
1. Fully integrate our acquisitions through a single operating model;
Invest in both our digital platform and our technology solutions;
2. and
3. Integrate our end to end proposition under the single eEnergy brand.
Significant investment was made in the year in order to deliver
these objectives. The integration of the various businesses has
been a huge success and the single, clear and integrated
proposition, under the eEnergy brand has been well received by
customers, who are looking for an end to end solution to tackle
energy costs and achieve Net Zero. This combined with the market
drivers of high energy costs and an obligation to Net Zero resulted
in a record Q4, which followed record contract signings achieved in
Q3.
We successfully launched two new services:
A renewables proposition in eSolar, providing funded roof top solar
1. solutions to our customers; and
An EV charging division with eCharge, both of which have surpassed
2. expectations, since their launch in March 2022.
Additionally, we strengthened the management team welcoming
Delvin Lane and Simon Smith as Managing Directors for each of the
Energy Management and Energy Service businesses respectively.
Having secured additional debt funding subsequent to the
year-end, eEnergy is ideally positioned to take advantage of these
powerful market tailwinds as businesses and organisations seek to
tackle high energy costs and the urgent need to cut carbon, in
order to achieve stated Net Zero objectives. We believe we can
deliver strong adoption in a challenging economic backdrop through
our capital free energy conservation measures.
Results
For the year ended 30 June 2022 we posted results in line with
revised market expectations as we continued to invest in our
innovative suite of products and services. We have started to
capitalise upon the increased cross-selling opportunities which
exist across our existing in-contract client base, executing our
strategy of delivering a holistic Net Zero market leading
solution.
The year resulted in revenues of GBP22.1 million (2021: GBP13.6
million), split between Energy Management and Energy Services
divisions 53% and 47% respectively. I am particularly pleased to
report that this led to a 264% increase in Adjusted EBITDA of
GBP3.0 million (2021: GBP0.8 million).
The performance of Energy Services during H1, impacted by the
tail-end of Covid-related restrictions, was disappointing and
weighed on the full-year performance. However, strong and
consistent contract sales have been delivered since the start of
H2, which drove record revenues for Q4 and a strong pipeline and
continuing momentum into FY23.
Net Debt increased during the year as a result of increased
levels of investment in software and one-off integration costs,
together with an increased working capital requirement as we
transitioned to new payment cycles with key partners. Net Debt
(including lease liabilities) at the year end was GBP4.5 million
(2021: net cash of GBP0.8 million) and our cash position (excluding
restricted cash balances) was GBP1.4 million (2021: GBP3.3
million).
In February, we were pleased to announce the new revolving
credit facility with Silicon Valley Bank, providing a revolving
credit facility of GBP5.0 million over three years, with potential
for additional capital facilities as eEnergy delivers on its growth
plan in the future.
In April, we announced that we had entered into a new EUR10.0
million committed project funding facility to extend both the scope
and scale of our financing arrangements with SUSI Partners AG
("SUSI"), extending the current relationship in Ireland to include
the rest of the UK.
These partnerships, with a renowned growth investor and premier
fund manager, validate the strength of eEnergy's proposition.
After eEnergy's first investment in MY ZeERO in April 2021, we
were pleased to announce in May 2022 that we increased our
ownership from 51% to 85.5%. The integration of this proprietary
energy analytics hardware and software into our Energy Services
division and rollout of the smart meters gives eEnergy a
differentiated and valuable proposition in the market.
Offering
Our purpose is to make Net Zero both possible and profitable for
businesses and organisations, without the need for capital
investment.
We do this by enabling our customers to access the lowest cost,
clean energy available, tackling energy wastage, reducing
consumption and transitioning to lower cost, onsite energy
generation and EV charging solutions.
We are a technology enabled, innovative platform business which
differentiates us in the market and enables scalable long term
growth.
We own and operate a proprietary marketplace procurement
platform which provides "whole of market" pricing through an
innovative reverse auction service.
We also own My ZeERO, which provides us with proprietary,
intelligent smart metering technology and a cloud based analytics
platform which allows circuit level energy monitoring and data
insights which is central to tackling energy wastage and delivering
validation of energy savings.
In parallel, our Energy Services division offers capital free
energy reduction solutions, onsite renewable generation and EV
charging solutions. We call this "energy as-a-service" which
unlocks energy savings from which a service charge is payable,
releasing net cash flow from day one to our clients.
In summary, we provide customers with an end to end solution to
achieving Net Zero, reducing energy costs without the need for
capital investment, in a capital constrained economic
environment.
Strategy
After a transformative FY22, we now have a single clear
proposition under the eEnergy brand, and a fully integrated
operating model poised and ready for growth.
We have acquired a loyal and contracted customer base of over
2,000 clients which have a strong demand for energy and cost
reduction and accessing lower cost energy through on site
generation, which we expect to now leverage fully.
Our EV charging solution is well poised for rapid scale in what
we expect to be a huge growth market opportunity for both new and
existing customers.
Post year-end we announced a GBP2.5 million investment in the
business through a new subordinated debt facility with the goal to
give the business additional capacity and working capital headroom
to benefit from the significant opportunities available as a result
of the powerful market tailwinds and macroeconomic environment and
continue to invest in growth.
Following this new debt funding, the Board expects to fund
current forecast organic growth through operating cash generation.
There may also be the potential to expand debt facilities from
existing providers if appropriate.
Outlook
We are very pleased to see new business opportunities across
both our Energy Management and Energy Services divisions grow
during Q4 and we enter FY23 benefitting from a robust forward
contracted order book, standing at GBP25.3 million at year end, and
a strong sales pipeline. This positive start to FY23 underpins
current market expectations for the year.
Looking ahead, the Board remains confident that eEnergy is well
placed to utilise the opportunities available resulting from the
macroeconomic trends and that we will continue to deliver on our
strategic objectives.
Harvey Sinclair
Chief Executive Officer
25 November 2022
Chief Financial Officer's report
Group key performance indicators
Full year revenue of GBP22.1 million, 63% growth on FY21 revenue
-- of GBP13.6 million
-- Adjusted EBITDA (1) of GBP3.0 million (FY21 GBP0.8 million)
Profit before tax and exceptional items (2) of GBP1.6million (FY21
-- GBP0.1 million)
Cash balance (excluding restricted cash balances) at 30 June 2022
-- of GBP1.4 million (30 June 2021 - GBP3.3 million)
Net Debt (including GBP0.8 million of IFRS 16 lease liabilities)
at 30 June 2022 was GBP4.4 million (30 June 2021 - Net cash of GBP0.8
-- million, including GBP0.7 million of lease liabilities)
Note: (1) Adjusted EBITDA is EBITDA excluding Exceptional Items.
Exceptional Items are those items which, in the opinion of the
Directors, should be excluded in order to provide a consistent and
comparable view of the underlying performance of the Group's
ongoing business, including the costs incurred in delivering the
'Buy & Build' strategy associated with acquisitions and
strategic investments, costs of restructuring and transforming
acquired businesses and share-based payments.
Note: (2) Profit before tax and Exceptional Items includes
within Exceptional Items brand impairment charges shown below
EBITDA.
Summary performance
FY22 was a year of significant progress for the Group,
delivering revenues of GBP22.1 million (up 63% from GBP13.6 million
in FY21) and Adjusted EBITDA of GBP3.0 million (up 264% from GBP0.8
million in FY21) in the face of unprecedented volatility in the
energy markets.
Since coming to market in January 2020, eEnergy has completed
four acquisitions including UtilityTeam, the Group's largest
acquisition to date, which was completed in H1 FY22. These
acquisitions have been complemented by organically developed new
product opportunities to assemble a compelling and integrated
customer proposition - helping organisations achieve Net Zero
without the need for capital investment. eEnergy is now uniquely
placed to support its customer base in their transition to Net
Zero. And, with a backdrop of record energy prices, saving the
customer significant cost while doing so.
Following the acquisition of UtilityTeam, FY22 saw rigorous
focus on integrating the Group's people, products and operations.
The benefits of this strategy are reflected in recent financial
performance, with record Q4 revenues of GBP8.3 million and Adjusted
EBITDA of GBP2.0 million, supported by the conversion of
multi-product opportunities with new customers, the adoption of
multiple new services by existing accounts and the benefits of
scale efficiencies.
FY22 also saw substantial progress on balance sheet management,
with an additional committed project funding facility with SUSI
Partners AG and a successful refinancing of the Group's corporate
debt facilities with Silicon Valley Bank both completed during H2
FY22. Both facilities have allowed eEnergy to benefit from
increased access to funding at lower cost than previously.
The new corporate debt facility has facilitated improved balance
sheet gearing, enabling deferred consideration from the acquisition
of UtilityTeam and further investments in MY ZeERO to be funded
through debt rather than equity. Net Debt excluding lease
liabilities of GBP3.6 million at 30 June equated to 1.2x Adjusted
EBITDA.
The Group ended the year well placed to deliver continued strong
organic growth in FY23 with a Forward Order Book of GBP25.3 million
(up from GBP18.3 million at 31 December 2021 and GBP5.2 million at
30 June 2021) and a strong pipeline of new business opportunities
across both Energy Management and Energy Services expected to close
early in FY23.
Net Debt increased by GBP5.2 million during the period as a
result of investments made in our proprietary technology platforms
and MY ZeERO eMeters, one-off costs of acquiring and integrating
UtilityTeam, and the one-off impact of lengthened cash collection
cycles in both Energy Management and Energy Services. Whilst this
has led to reduced cash inflows in the short term, this will
largely be offset going forward by increased cash flows from an
enhanced contracted Forward Order Book.
Post year-end we announced an additional GBP2.5 million in debt
funding into the business through a new subordinated debt facility
in order to give the business the working capital headroom to
continue to invest in growth, and benefit from the robust market
tailwinds. We have also instigated a number of working capital
initiatives to mitigate the Company's increased working capital
requirement going forward, including progressing an off-balance
sheet funding solution for MY ZeERO and diversifying supply
chains.
Divisional performance
Energy Services
FY22, whilst disappointing from a P&L perspective, was
nevertheless a pivotal year for Energy Services. H1 was impacted by
an interrupted origination pipeline as a result of the aftereffects
of Covid-related lockdowns. However momentum built strongly through
H2 as surging energy prices and a widespread acknowledgement,
following the Russian invasion of Ukraine, that these higher energy
prices represented a 'new normal'. These factors substantially
enhanced the economic case for the Energy Service solutions offered
by eEnergy.
Aided by these favourable macroeconomic tailwinds, and
complemented by the launch of eSolar and eCharge products during
the period, the business secured sales with Total Contract Value
("TCV") of GBP9.7 million in H2, 64% up on the same period last
year (H2 FY21 GBP5.9 million). This drove a 10% increase in TCV
secured for the full year to GBP14.0 million (up from GBP12.7
million in FY21).
Performance in the UK was particularly strong with TCV secured
in H2 of GBP8.5 million, up 100% on the same period last year, and
full year TCV secured up 35% at GBP12.1 million (representing 87%
of the total for the division).
Revenue performance was more modest, reflecting the lag between
signing contracts and recognising the revenue associated with them.
Full year revenues were marginally down on the previous year at
GBP10.5 million (FY21 GBP11.4 million) with Ireland, where
lockdowns were harsher and lifted later than in the UK, accounting
for 90% of the shortfall. However the strong sales performance was
evident during H2 with revenues of GBP5.8 million up 14% on last
year (H2 FY21 GBP5.1 million) and the business delivering record
revenues in Q4.
The business ended the year with a contracted Forward Order Book
of GBP3.8 million (June 2021: GBP0.1 million) giving strong
coverage for Q1 FY23 revenues.
Gross Margin after commissions for the year of 34.2% was
consistent with FY21.
Operating costs were allowed to increase by GBP0.1 million, in
part reflecting investment in a new divisional leadership team
which has been instrumental in driving the improved sales momentum
during H2 2022.
Energy Management
Likewise, FY22 was a year of significant change in Energy
Management. The acquisition of UtilityTeam, completed in September
2021, established the Group as a Top 5 B2B energy company in the
UK.
UtilityTeam contributed strategic relationships with an
attractive customer base and a strong pool of talent which
complemented eEnergy's existing capabilities and resources in
Beond. The combined businesses have been operating as a single,
integrated customer offering from February 2022.
Subsequent to the year-end, a new financial reporting platform
has been launched for the combined entity.
Through the integration both employee and customer retention has
remained strong. During the year 85% of customers were retained on
renewal equating to a churn rate of only 6% per annum.
Financial performance for the combined business exceeded the
targets set at the time of the acquisition. Energy Management
revenues of GBP11.6 million for the full year were 432% up on FY21,
reflecting the annualisation effect of the Beond acquisition
(completed December 2020), the acquisition of UtilityTeam
(completed September 2021), as well as strong organic growth in the
business.
This organic growth is reflected in 18% growth in the contracted
order book from GBP18.3 million at 31 December 2021 (after the
acquisition of UtilityTeam) to GBP21.6 million at 30 June 2022.
Gross Margin increased by 770bps during the period to 80.7%
reflecting improved management of the partnerships sales
channel.
Operating costs were held flat as a percentage of revenues,
reflecting investment of efficiency savings into growth and
customer service delivery.
MY ZeERO, reported as part of the Energy Management division,
successfully completed development of the next generation
proprietary eMeter during the year with commercial launch during Q3
due to strong customer demand. By 30 June 2022, 898 meters with a
TCV of GBP1.1 million were under contract with 559 of these
installed.
Accelerated through acquisitions
FY22 saw both the acquisition of UtilityTeam, our largest
acquisition completed to date, and an increase in ownership to take
control of eEnergy Insights (the holding company for MY ZeERO)
through exercise of our warrants in October 2021 and subsequent
acquisition of minority investor stakes in May 2022 to take our
ownership to 85.5% at the year-end.
The acquisition of UtilityTeam transformed eEnergy into a Top 5
B2B energy company and has given the opportunity to unlock GBP0.5
million operating efficiencies through leveraging the Energy
Management platform built since the acquisition of Beond in
December 2020. UtilityTeam further brought embedded, strategic
relationships with an attractive customer base and a strong pool of
talent into the eEnergy Group.
Integration completed
Subsequent to completing the acquisition of UtilityTeam, a
significant investment was made in integrating the business into a
single compelling platform with the key goals of:
-- Optimising customer-facing activities (sales and account management)
-- Sharing best practice capabilities
-- Unlocking platform synergies between the two legacy entities
Key milestones delivered during the period included:
Customer-facing teams merged from February with a single integrated
-- sales platform
All clients migrated to eEnergy's proprietary reverse auction platform
-- in March, with all auctions undertaken in the platform subsequently
-- Proprietary client portal launched to all auction customers in March
Annualised efficiency savings of GBP0.5 million realised, re-invested
-- in growth and customer service delivery
To mark completion of the integration, the business adopted the
'eEnergy' brand from 1 July 2022 with the legacy brands of Beond
and UtilityTeam both being retired from that point.
Through the integration, both customer and employee retention
has remained strong and financial performance for the combined
business has exceeded the targets set at the time of the
acquisition.
Improved profitability
Growth in revenues has delivered significant scale benefits to
the business. Adjusted EBITDA of GBP3.0 million represents a margin
of 13.6% on revenue in FY22, up from 6.1% for FY21.
Profit before exceptional items, including impairment of
acquired brand as part of the Energy Management integration, of
GBP1.6 million was up 2,190% (FY21 GBP0.1 million).
These improvements were driven through scale efficiencies
delivered in both the operating businesses and at Group level and
an increased share of revenues from the higher margin Energy
Management division (given annualisation of Beond performance and
the mid-year acquisition of Beond).
Cash flow and working capital
Net Bank Debt (excluding lease liabilities) of GBP3.6 million at
30 June 2022 was GBP5.2 million higher than at 30 June 2021
following investment and inventory build in MY ZeERO, the
development of our proprietary technology platforms and the one-off
costs of acquiring and integrating UtilityTeam. Gross cash was
GBP1.4 million as at 30 June 2022, a decrease from GBP3.3 million
at 30 June 2021.
After exceptional costs, and adjusting for certain non-cash
items, the business delivered a "cash loss", reflecting reported
earnings, rent, finance costs and effects of non-cash items, of
GBP0.5 million for the year.
Further organic growth investments totalled GBP1.4 million,
including GBP0.6 million in platform development and GBP0.8 million
in eMeter stock-build.
Moreover, both Energy Management and Energy Services divisions
have experienced lengthened cash collection cycles resulting in
lower cash generated in the period, but a higher contracted cash
forward order book at period end to be collected in the future.
In Energy Management, availability of 'upfront' payments from
energy suppliers has been more restricted. This resulted in lower
cash receipts from completed contract signings in the year, with a
correspondingly richer cash collection profile over the life of the
contract. The net impact of this has been to push a net GBP3.4
million of cash collections from FY22 into future periods. This was
partially mitigated by GBP1.2 million of net cash acquired with
Utility Team.
In Energy Services, the move to a new committed financing
facility announced in April 2022 came with a need to 'batch fund'
once a month (rather than on an ad hoc basis once each deal
completes), adding an estimated c. 2.5 weeks to the cash collection
cycle. Additionally, success in winning larger, more valuable
projects has increased average installation times. A particularly
strong revenue month in June, with cash therefore collected after
the year-end, had a net GBP1.6 million impact on cash collections
in the period. In addition, c. GBP1.2 million of projects
(including MY ZeERO) were held on the balance at the year-end,
generating long-term recurring cash receipts beyond the period end.
The overall impact was GBP3.0 million in working capital
outflow.
This was mitigated by a GBP2.0 million net cash benefit from
other working capital items in the period.
Cash at bank at 30 June 2022 of GBP1.4 million (excluding GBP0.4
million of restricted cash balances) was GBP1.9 million down on the
year (30 June 2021 GBP3.3 million) as a result of these
dynamics.
Funding
In February the Group completed a re-financing of the Group's
corporate debt facilities, consolidating previous facilities with
Beach Point Capital, Lloyds and Coutts into a single Revolving
Credit Facility with Silicon Valley Bank. The initial committed
facility is for GBP5.0 million and there is the potential to extend
this, subject to credit approval, to support growth investments and
bolt-on acquisitions in the future.
On completion of the re-financing the new facility delivered a
270bps reduction in interest costs compared to the blended cost of
the previous facilities.
In April we entered into a new EUR10.0 million committed project
funding facility with SUSI Partners AG. This facility extended both
the scope and the scale of the Group's existing financing
arrangements with SUSI, who were already the Group's funding
partner in Ireland. Importantly, the facility allows funding of
eEnergy's range of energy efficiency and onsite generation
technologies, enabling eEnergy to continue to create innovative,
market leading, capital free solutions for its customers.
The Board believes it is important to maintain a robust level of
cash headroom in the business to allow the business to continue to
deliver on its growth objectives. As such, the Company has taken a
number of working capital initiatives, in addition to trading
initiatives detailed above, in order to mitigate the tightened
working capital position experienced following the period end. The
Company has made good progress in securing off-balance sheet
funding for MY ZeERO eMeters from an existing funding partner, and
the Directors expect this, once implemented, to release additional
cash for the Company from existing completed and contracted
projects. The Company is also planning a measured rollout of
eMeters with a strategy of this being self-funded through third
party financing, rather than through the Group's balance sheet,
going forward. Further, the Company continues successfully to
diversify its supply chains across the business as part of the
Company's inflation mitigation strategy, with additional benefits
expected for working capital.
In order to strengthen the balance sheet further given the
extended cash collections cycles, MY ZeERO investment, payment of
liabilities and general working capital, subsequent to the year-end
we announced a GBP2.5 million new subordinated debt facility in
order to give the business the cash headroom to continue to invest
in growth and benefit from the robust market tailwinds. As at 31
October 2022, prior to drawdown on the new subordinated debt
facility, the Company had a cash balance of GBP114k.
Conclusion
FY22 has been a pivotal year for both the Group and the
individual operating divisions. Successful completion of the
integration of the two acquired Energy Management businesses,
strong and accelerating customer engagement across multiple Group
products and highly favourable market tailwinds mean the eEnergy
Group ended the year with a strong platform to deliver continued
rapid growth, both for the current year and into the future.
Crispin Goldsmith
Chief Financial Officer
25 November 2022
Consolidated statement of comprehensive income
For the year to 30 June 2022
Year to Period
30 June to 30 June
Note 2022 2021
GBP'000 GBP'000
Continuing operations
Revenue from contracts with customers 5 22,096 13,596
Cost of sales 6 (9,131) (8,059)
----------------------------------------------- ------- ---------- -------------
Gross profit 12,965 5,537
Operating expenses 7 (12,233) (4,955)
Included within operating expenses are:
Exceptional items 7 2,289 248
Adjusted operating expenses (9,944) (4,707)
---------- -------------
Adjusted earnings before interest,
taxation, depreciation and amortisation 3,021 830
----------------------------------------------- ------- ---------- -------------
Earnings before interest, taxation,
depreciation and amortisation 732 582
Depreciation, amortisation and impairment (2,636) (333)
Finance costs - net 10 (323) (426)
Loss before tax (2,227) (177)
----------------------------------------------- ------- ---------- -------------
Income tax 11 736 205
----------------------------------------------- ------- ---------- -------------
(Loss) / profit for the year from continuing
operations (1,491) 28
=============================================== ======= ========== =============
Attributable to:
Members of the parent entity (1,431) 28
Non-controlling interests (60) -
----------------------------------------------- ------- ---------- -------------
(1,491) 28
=============================================== ======= ========== =============
Other comprehensive income - items
that may be reclassified subsequently
to profit and loss
Change in the fair value of other current
assets - 34
Translation of foreign operations (125) 102
----------------------------------------------- ------- ---------- -------------
Total other comprehensive (loss) /
profit (125) 136
----------------------------------------------- ------- ---------- -------------
Total comprehensive (loss) / profit
for the year (1,616) 164
=============================================== ======= ========== =============
Total comprehensive (loss) / profit
for the year attributable to:
Members of the parent entity (1,556) 164
Non-controlling interests (60) -
----------------------------------------------- ------- ---------- -------------
(1,616) 164
=============================================== ======= ========== =============
Basic and diluted earnings / (loss)
per share from continuing
operations (pence) 12 (0.72p) 0.01p
----------------------------------------------- ------- ---------- -------------
Consolidated statement of financial position
As at 30 June 2022
As at
As at 30 June
30 June 2021
2022 Restated
Note GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 13 458 80
Intangible assets 14 28,733 10,503
Right of use assets 21 777 610
Deferred tax asset 24 1,071 415
Investment in associate 15 - 155
Total non-current assets 31,039 11,763
------------------------------------------ ------- --------- -----------
Inventories 17 809 371
Trade and other receivables 18 16,022 5,513
Financial assets at fair value through
profit or loss 26 21 140
Cash and cash equivalents 19 1,802 3,332
------------------------------------------ ------- --------- -----------
Total current assets 18,654 9,356
------------------------------------------ ------- --------- -----------
TOTAL ASSETS 49,693 21,119
------------------------------------------ ------- --------- -----------
NON-CURRENT LIABILITIES
Lease liability 21 399 434
Borrowings 22 5,011 1,245
Other liabilities 23 2,252 468
Deferred tax liability 24 1,318 415
Provision 25 860 -
Total non-current liabilities 9,840 2,562
CURRENT LIABILITIES
Trade and other payables 20 16,802 7,819
Lease liability 21 492 264
Borrowings 22 11 601
Total current liabilities 17,305 8,684
------------------------------------------ ------- --------- -----------
TOTAL LIABILITIES 27,145 11,246
------------------------------------------ ------- --------- -----------
NET ASSETS 22,548 9,873
========================================== ======= ========= ===========
Equity attributable to owners of the
parent
Issued share capital 27 16,373 16,071
Share premium 27 47,360 33,014
Other reserves 28 261 601
Reverse acquisition reserve 28 (35,246) (35,246)
Foreign currency translation reserve (138) (13)
Accumulated losses (5,985) (4,554)
------------------------------------------ ------- --------- -----------
Equity attributable to equity holders
of the parent 22,625 9,873
------------------------------------------ ------- --------- -----------
Non-controlling interest (77) -
------------------------------------------ ------- --------- -----------
Total equity 22,548 9,873
========================================== ======= ========= ===========
Company statement of financial position
As at 30 June 2022
As at As at
30 June 30 June
2022 2021
Note GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 13 28 -
Intangible assets 14 34 18
Right of use assets 20 279 -
Investment in associate 21 - 155
Investment in subsidiary 16 6,574 17,947
-------------------------------------- ------- --------- ----------
Total non-current assets 6,915 18,120
-------------------------------------- ------- --------- ----------
Loan to subsidiaries 24,380 579
Trade and other receivables 18 863 153
Cash and cash equivalents 19 91 1,187
-------------------------------------- ------- --------- ----------
Total current assets 25,334 1,919
-------------------------------------- ------- --------- ----------
TOTAL ASSETS 32,249 20,039
-------------------------------------- ------- --------- ----------
NON-CURRENT LIABILITIES
Deferred tax liability 24 - -
Borrowings 22 - -
Total non-current liabilities - -
CURRENT LIABILITIES
Trade and other payables 20 2,114 1,003
Lease liability 21 265 -
Loans from subsidiaries - 1,452
Total current liabilities 2,379 2,455
-------------------------------------- ------- --------- ----------
TOTAL LIABILITIES 2,379 2,455
-------------------------------------- ------- --------- ----------
NET ASSETS 29,870 17,584
====================================== ======= ========= ==========
Equity attributable to owners of the
parent
Issued share capital 27 16,373 16,071
Share premium 27 47,360 33,014
Other reserves 28 1,087 567
Accumulated losses (34,950) (32,068)
-------------------------------------- ------- --------- ----------
Total equity 29,870 17,584
====================================== ======= ========= ==========
Statements of cashflows
For the year ended 30 June 2022
Group Company
--------------------- ------------------------
Year Year Year Year
to 30 to 30 to 30 to 30
June June June June 2021
2022 2021 2022 GBP'000
Note GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Operating profit (loss) - continuing
operations (1,491) 28 (2,882) (1,507)
Adjustments for:
Depreciation, amortisation and
impairment 2,636 332 159 -
Finance cost (net) 264 376 (24) (3)
Shares and warrants issue to
settle expenses - 486 - 485
Share based payments 520 301 520 301
Share of loss in associate - 34 - 34
Foreign exchange movement - 33 - -
Gain on derecognition of contingent
consideration (1,032) (1,444) (1,032) (1,444)
Operating cashflow before working
capital movements 897 146 (3,259) (2,134)
Increase in trade and other
receivables (9,857) (2,406) (706) (127)
(Decrease) / increase in trade
and other payables 165 2,761 (15) 504
(Increase) in inventories (95) (23) - -
Increase / (decrease) in deferred
income 2,650 (264) - -
Net cash inflow (outflow) from
operating activities (6,240) 214 (3,980) (1,757)
--------------------------------------- ----- --------- ---------- ---------- ------------
Cash flow from investing activities
Amounts received from (paid
to) group undertakings - - (8,448) 1,299
Acquisition of subsidiaries (11,081) (2,395) - (2,395)
Cash acquired on acquisition
of subsidiaries 4,007 1,218 - -
Cash from exercise of options - 521 - -
in acquired business
Expenditure on intangible assets (401) (217) (16) (18)
Purchase of property, plant
and equipment (294) (134) (34) -
--------------------------------------- ----- ---------
Net cash inflow (outflow) from
investing activities (7,769) (1,007) (8,498) (1,114)
--------------------------------------- ----- --------- ---------- ---------- ------------
Cash flows from financing activities
Interest (paid) received (188) (319) - -
Repayment of lease liabilities (347) (163) - -
Proceeds from the issue of share
capital, net of issue costs 11,382 3,149 11,382 3,149
Proceeds from loans and borrowings 4,891 294 - -
Repayment of borrowings (3,287) (314) - -
--------------------------------------- ----- --------- ---------- ---------- ------------
Net cash inflow from financing
activities 12,451 2,647 11,382 3,149
--------------------------------------- ----- --------- ---------- ---------- ------------
Net (decrease) / increase in
cash & cash equivalents (1,558) 1,854 (1,096) 278
Effect of exchange rates on 28 - - -
cash
Cash & cash equivalents at the
start of the period 3,332 1,478 1,187 909
Cash & cash equivalents at
the end of the year 18 1,802 3,332 91 1,187
======================================= ===== ========= ========== ========== ============
The non cash consideration issued to acquire subsidiaries during
the year was GBP3.0 million (2021: GBP9.0 million) and is disclosed
for each acquisition in note 30.
Refer note 33 for net debt reconciliation.
Consolidated statement of changes in equity
For the year ended 30 June 2022
Reverse Foreign
Share Share Acq-uisition Other Currency Accum-ulated Non-controlling Total
Capital Premium Reserve Reserves Reserve Losses interest Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30
June
2020 15,725 22,375 (35,246) 82 (115) (4,582) - (1,761)
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Other
comprehensive
loss - - - - 102 - - 102
Change in fair
value
of other current
assets - - - 34 - - - 34
Profit for the
year - - - - - 28 - 28
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Total
comprehensive
profit for the
year
attributable to
equity
holders of the
parent - - - 34 102 28 - 164
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Issue of shares
for
cash 96 3,104 - - - - - 3,200
Issue of shares
for
acquisition of
subsidiary 235 7,299 - - - - - 7,534
Issue of shares
in
settlement of
fees 9 293 - - - - - 302
Share based
payment - - - 485 - - - 485
Exercise of
warrants 6 159 - - - - - 165
Cost of share
issue - (216) - - - - - (216)
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Total
transactions
with owners 346 10,639 - 485 - - - 11,470
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Balance at 30
June
2021 16,071 33,014 (35,246) 601 (13) (4,554) - 9,873
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Other
comprehensive
loss - - - - (125) - - (125)
Loss for the year - - - - - (1,431) (60) (1,491)
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Total
comprehensive
loss for the
year
attributable to
equity
holders of the
parent - - - - (125) (1,431) (60) (1,616)
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Issue of shares
for
cash 240 11,760 - - - - - 12,000
Issue of shares
for
acquisition of
subsidiary 55 2,903 - - - - - 2,958
Issue of shares
in
exchange for
loan
notes 7 301 - - - - - 308
Acquisition of
non-controlling
interest - - - - - - (17) (17)
Acquisition of
put
option relating
to
non-controlling
interests - - - (3,921) - - - (3,921)
Utilisation on
acquisition
of
non-controlling
interests - - - 3,061 - - - 3,061
Share based
payment - - - 520 - - - 520
Cost of share
issue - (618) - - - - - (618)
================== ======== ======== ============= ========= ========= ============= ================ ========
Total
transactions
with owners 302 14,346 - (340) - - (17) 14,291
------------------ -------- -------- ------------- --------- --------- ------------- ---------------- --------
Balance at 30
June
2022 16,373 47,360 (35,246) 261 (138) (5,985) (77) 22,548
================== ======== ======== ============= ========= ========= ============= ================ ========
Company statement of changes in equity
For the year ended 30 June 2022
Share Share Other Accum-ulated Total
Capital Premium Reserves Losses Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30 June
2020 15,725 22,375 82 (30,561) 7,621
----------------------------- --------- --------- ---------- ------------- --------
Loss for the year - - - (1,507) (1,507)
----------------------------- --------- --------- ---------- ------------- --------
Total comprehensive
loss for the year
attributable to equity
holders of the parent - - - (1,507) (1,507)
----------------------------- --------- --------- ---------- ------------- --------
Issue of shares for
cash 96 3,104 - - 3,200
Issue of shares for
acquisition of subsidiary 235 7,299 - - 7,534
Issue of shares in
settlement of fees 9 293 - - 302
Share based payment - - 485 - 485
Exercise of warrants 6 159 - - 165
Cost of share issue - (216) - - (216)
----------------------------- --------- --------- ---------- ------------- --------
Total transaction
with owners 346 10,639 485 - 11,470
----------------------------- --------- --------- ---------- ------------- --------
Balance at 30 June
2021 16,071 33,014 567 (32,068) 17,584
----------------------------- --------- --------- ---------- ------------- --------
Loss for the year - - - (2,882) (2,882)
----------------------------- --------- --------- ---------- ------------- --------
Total comprehensive
loss for the year
attributable to equity
holders of the parent - - - (2,882) (2,882)
----------------------------- --------- --------- ---------- ------------- --------
Issue of shares for
cash 240 11,760 - - 12,000
Issue of shares for
acquisition of subsidiary 55 2,903 - - 2,958
Issue of shares in
exchange for loan
notes 7 301 - - 308
Share based payment - - 520 - 520
Cost of share issue - (618) - - (618)
----------------------------- --------- --------- ---------- ------------- --------
Total transaction
with owners 302 14,346 520 - 15,168
----------------------------- --------- --------- ---------- ------------- --------
Balance at 30 June
2021 16,373 47,360 1,087 (34,950) 29,870
============================= ========= ========= ========== ============= ========
Notes to the financial information
For the year ended 30 June 2022
1 GENERAL INFORMATION
eEnergy Group plc ("the Company") is a public limited company
with its shares traded on the AIM Market of the London Stock
Exchange. eEnergy Group plc is a holding company of a group of
companies (the "Group"). eEnergy is a digital energy services
company, empowering organisations to achieve Net Zero by tackling
energy waste and transitioning to clean energy, without the need
for upfront investment. It is making Net Zero possible and
profitable for all organisations in four ways:
-- Transition to the lowest cost clean energy through our
digital procurement platform and Energy Management services.
-- Tackle energy waste with granular data and insight on energy
use and dynamic Energy Management.
-- Reduce energy use with the right energy efficiency solutions without upfront cost.
-- Reach Net Zero with onsite renewable generation and electric
vehicle (EV) charging.
The Company is incorporated and domiciled in England and Wales
with its registered office at 20 St Thomas Street, London, England,
SE1 9RS. The Company's registered number is 05357433.
2 ACCOUNTING POLICIES
IAS 8 requires that management shall use its judgement in
developing and applying accounting policies that result in
information which is relevant to the economic decision-making needs
of users, that are reliable, free from bias, prudent, complete and
represent faithfully the financial position, financial performance
and cash flows of the entity.
2.1 Basis of preparation
The financial statements have been prepared in accordance with
UK adopted international accounting standards ("UK IFRS") and with
the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical
cost convention as modified by financial assets and liabilities at
fair value through profit or loss and other comprehensive income,
and the recognition of net assets acquired under the reverse
acquisition at fair value.
The preparation of financial statements in conformity with UK
IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts in the financial statements. The areas involving a higher
degree of judgement or complexity, or areas where assumptions or
estimates are significant to the financial statements, are
disclosed in note 2.23.
The financial statements present the results for the Group and
Company for the year ended 30 June 2022. The comparative period is
for the year ended 30 June 2021.
The principal accounting policies are set out below and have,
unless otherwise stated, been applied consistently in the financial
statements. The consolidated financial statements are prepared in
Pounds Sterling, which is the Group's functional and presentation
currency, and presented to the nearest GBP'000.
2.2 New standards, amendments and interpretations
The Group and Company have adopted all of the new and amended
standards and interpretations issued by the International
Accounting Standards Board that are relevant to its operations and
effective for accounting periods commencing on or after 1 July
2021.
No standards or Interpretations that came into effect for the
first time for the financial year beginning 1 July 2021 have had an
impact on the Group or Company.
2.3 New standards and interpretations not yet adopted
At the date of approval of these financial statements, the
following standards and interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases have not yet been adopted by the UK):
Standard Impact on initial application Effective date
-------------------- -------------------------------------------------------- ---------------
Annual Improvements 2018-2020 Cycle 1 January 2023
IFRS 17 Insurance Contracts 1 January 2023
IAS 1 Classification of liabilities as Current or Non-current 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 12 Deferred tax arising from a single transaction 1 January 2023
-------------------- -------------------------------------------------------- ---------------
The effect of these new and amended Standards and
Interpretations which are in issue but not yet mandatorily
effective is not expected to be material.
2.4 Going concern
The financial information has been prepared on a going concern
basis, which assumes that the Group and Company will continue in
operational existence for the foreseeable future. In assessing
whether the going concern assumption is appropriate, the Directors
have taken into account all relevant information about the current
and future position of the Group and Company, including the current
level of resources and the ability to trade within the terms and
covenants of its loan facility over the going concern period, being
at least 12 months from the date of approval of the financial
statements. The Directors have also taken into account the expected
ability of the Group to raise additional equity or debt capital if
required.
The directors note that the macroeconomic and geo-political
environment have become less stable during the period. Increasing
energy prices reinforce the importance of reducing consumption, and
the directors therefore believe the business is well placed to
continue to deliver strong growth despite this backdrop. However
the directors note the environment does create heightened risk and
uncertainties, including from inflationary pressures.
The Group has prepared budgets and cash flow forecasts covering
the going concern period which have been stress tested for the
negative impact of possible scenarios. The Group has identified
additional working capital funding requirements and has secured a
new GBP2.5 million subordinated loan facility to improve working
capital headroom. GBP2.0m of this is unconditional with the balance
subject to shareholders approving additional capacity to issue
warrants attaching to the subordinated loan facility.
Taking these matters into consideration, the Directors consider
that the continued adoption of the going concern basis is
appropriate having prepared cash flow forecasts for the relevant
period. The financial statements do not reflect any adjustments
that would be required if they were to be prepared other than on a
going concern basis.
2.5 Basis of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The group recognises any non-controlling interest
in the acquire on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised either in profit
or loss or as a change to other comprehensive income. Contingent
consideration that is classified as equity is not re-measured, and
its subsequent settlement is accounted for within equity.
Acquisition-related costs are expensed as incurred.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated.
2.6 Associates
An associate is an undertaking in which the Group holds an
equity investment and where the Group exercises significant
influence over the operational and financial management of the
undertaking, but not control. Associates are included in the
financial statements and accounted for using the equity method.
Under the equity method, the investment is initially recognised at
cost, and the carrying amount is increased or decreased to
recognise the investor's share of the profit or loss of the
investee after the date of acquisition. The Group's investment in
associates includes goodwill identified on acquisition.
2.7 Foreign currency translation
(i) Functional and presentation currency
Items included in the individual financial statements of each of
the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
GBP Sterling, which is the Company's presentation and functional
currency. The individual financial statements of each of the
Company's wholly owned subsidiaries are prepared in the currency of
the primary economic environment in which it operates (its
functional currency). IAS 21 The Effects of Changes in Foreign
Exchange Rates requires that assets and liabilities be translated
using the exchange rate at period end, and income, expenses and
cash flow items are translated using the rate that approximates the
exchange rates at the dates of the transactions (i.e. the average
rate for the period).
(ii) Transactions and balances
Transactions denominated in a foreign currency are translated
into the functional currency at the exchange rate at the date of
the transaction. Assets and liabilities in foreign currencies are
translated to the functional currency at rates of exchange ruling
at the balance sheet date. Gains or losses arising from settlement
of transactions and from translation at period-end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement for the
period.
(iii) Group companies
The results and financial position of all the Group entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance
sheet;
- income and expenses for each income statement are translated
at the average exchange rate; and
- all resulting exchange differences are recognised as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to shareholders' equity. When a foreign operation is partially
disposed or sold, exchange differences that were recorded in equity
are recognised in the income statement as part of the gain or loss
on sale.
2.8 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers.
The chief operating decision maker, who are responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the executive Board of
Directors.
2.9 Impairment of non-financial assets
Non-financial assets and intangible assets not subject to
amortisation are tested annually for impairment at each reporting
date and whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable.
An impairment review is based on discounted future cash flows.
If the expected discounted future cash flow from the use of the
assets and their eventual disposal is less than the carrying amount
of the assets, an impairment loss is recognised in profit or loss
and not subsequently reversed.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are largely independent cash
flows (cash generating units or 'CGUs').
2.10 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and
demand deposits with banks and other financial institutions and
bank overdrafts.
2.11 Financial instruments
IFRS 9 requires an entity to address the classification,
measurement and recognition of financial assets and
liabilities.
a) Classification
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured at amortised cost; and
-- those to be measured subsequently at fair value through profit or loss.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows.
The Group classifies financial assets as at amortised cost only
if both of the following criteria are met:
-- the asset is held within a business model whose objective is
to collect contractual cash flows; and
-- the contractual terms give rise to cash flows that are solely
payment of principal and interest.
b) Recognition
Purchases and sales of financial assets are recognised on trade
date (that is, the date on which the Group commits to purchase or
sell the asset). Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially
all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial
asset.
Transaction costs of financial assets carried at FVPL are
expensed in profit or loss.
The Group classifies energy credits as FVPL assets. Information
about the method used in determining fair value is provided in note
25.
Debt instruments
Debt instruments are recorded at amortised cost: Assets that are
held for collection of contractual cash flows, where those cash
flows represent solely payments of principal and interest, are
measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest
rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses.
d) Impairment
The Group assesses, on a forward looking basis, the expected
credit losses associated with any debt instruments carried at
amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. For
trade receivables, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Impairment
losses are presented as a separate line item in the statement of
profit or loss.
2.12 Revenue recognition
Under IFRS 15, Revenue from Contracts with Customers, five key
points to recognise revenue have been assessed:
Step 1: Identity the contract(s) with a customer;
Step 2: Identity the performance obligations in the
contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance
obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity, and specific criteria have been met for
each of the Group's activities, as described below.
The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the
specifics of each arrangement. Where the Group makes sales relating
to a future financial period, these are deferred and recognised
under 'accrued expenses and deferred income' on the Statement of
Financial Position.
The Group derives revenue from the transfer of goods and
services overtime and at a point in time in the major product and
service lines detailed below.
Energy Services
Revenues from external customers come from the provision of
Energy Services (Energy Efficiency solutions, PV generation and EV
charging capability) which will typically include the provision of
technology at the outset of the contract and then an additional
ongoing service over the term of the contract. The Group may assign
the majority or all of its right and obligations under a client
agreement to a Finance Partner but that assignment does not change
the recognition of revenue under the contract..
a) As a Service
The Group will undertake to install technology which either
delivers energy savings, generates energy or provides a service
proposition to customers over the term of a contract, typically
between 5 -10 years. The Group will design the solution to deliver
the desired outcomes over the contract term, source and then
install that technology. Once the installation has been accepted
the customer will make payments monthly or quarterly over the
contract term. The installation of the technology by the Company is
typically considered to be the principal performance
obligation.
Included within the agreement is an undertaking to ensure that
the agreed outcomes are delivered and this may require the repair
or replacement of faulty products. Where this performance
obligation is not a material element of the client agreement
revenue is not separately recognised and an accrual for the
expected future costs is recognised as part of the cost of sale pro
rata to the aggregate revenue that is recognised. Where this
performance obligation is material the revenue is recognised
rateably over the term of the contract as the performance
obligation is satisfied.
b) Supply and installation of equipment
The Group will supply and install equipment for customers.
Payment of the transaction price is typically due in instalments
between the customer order and the installation being accepted or
upon installation acceptance. Revenue is recognised as
installations are completed.
c) Energy credits
From time to time the Group will receive consideration for both
LaaS and supply & install contracts in Ireland in the form of
energy credits. Energy credits are financial assets that are valued
at fair value through profit or loss and their initial estimated
value is included as part of the transaction price recognised as
revenue. Energy credits are validated by the SEAI (the Irish
regulator) and once validated are transferred to an undertaking
that needs those energy credits, typically a power generation
company. Any changes in the fair value of the energy credits
between initial recognition and their realisation for cash are
recorded as other gains or losses.
Energy Management
Revenue is comprised of fees received from customers or
commissions received from energy suppliers, net of value-added tax,
for the review, analysis and negotiation of gas and electricity
contracts on behalf of clients in the UK.
To the extent that invoices are raised in a different pattern
from the revenue recognition policy described below, entries are
made to record deferred or accrued revenue to account for the
revenue when the performance obligations have been satisfied.
All of the Group's Energy Management clients receive Procurement
Services and many also receive Risk management, consulting and
advisory services (together "Management Services"). These services
will often be combined into a single contract but the Group
separately identifies the relevant procurement obligations and
recognises revenue when the relevant performance obligations have
been satisfied. Revenue is recognised for each of these as
follows:
a) Procurement services
Procurement revenue arises when the Group provides services that
lead to the client entering into a contract with an energy
supplier. The Group typically receives a commission from the energy
supplier based upon the amount of energy consumed by the client
over the life of the contract. As the services provided by the
company are completed up to the point that the contract is signed
between the client and the energy supplier the performance
obligation is considered to be satisfied at that point and the
revenue is recognised then. Contract signature may be considerably
in advance of the date at which the supply contract will commence.
The total amount of revenue recognised is based upon applying the
historical energy consumption of the client to estimate the
expected energy consumption over the term of the contract with the
energy supplier. This revenue is then limited by an allowance for
actual consumption to be lower than originally estimated and an
allowance for the contract term not being completed. The balance of
revenue not recognised at the point the energy supply contract is
signed is recognised over the life of the contract in line with the
client's actual consumption.
b) Energy Management services
As well as Procurement services the Group provides clients with
a range of risk management, consulting and advisory services which
include Bill Validation, Cost recovery, compliance services,
ongoing market intelligence, ongoing account management and the
development of hedging strategies. These services are typically
provided evenly over the term of the contract and are therefore
recognised rateably over the contract life.
Client segmentation
The Group's Energy Management clients are segmented into four
categories based upon the balance of services they contract to
receive from the Group. These categories are:
Small & Medium enterprise clients who typically only take procurement
SME: services.
Clients who typically take fixed procurement contracts with
Fixed: a limited range of management services.
Clients who take a wider range of management services, including
Fixed Plus: Bill Validation and / or Budget Management reporting.
Clients who typically procure using a flex model with regular
retrading of the procurement contract and more advanced risk
Flex: management services.
Clients who take one or more of the services above that have
Managed: integrated EEaaS services (i.e. LaaS, MY ZeERO etc).
The overall proportion of revenue attributed by management to
Procurement Services and recognised at the point the energy supply
contract is signed ranges from 70% of the total expected contract
value for SME to 17% for Flex and the average recognised across the
portfolio for FY22 was 23%.
Cost of sales
Cost of sales represents internal or external commissions paid
in respect of sales made. The Cost of sale is matched to the
revenue recognised so for Procurement Services is recognised at the
time the contract is signed and for Management Services rateably
over the contract term. To the extent the pattern of payment for
these commissions is different from the costs being recognised
accruals or prepayments are recorded in the balance sheet.
Other
a) Management services
The Group provides management services to customers and certain
other parties under fixed fee arrangements. Efforts to satisfy the
performance obligation are expended evenly throughout the
performance period and so the performance obligation is considered
to be satisfied evenly over time and accordingly the revenue is
recognised evenly over time.
2.13 Share based payments
The cost of equity-settled transactions with employees is
measured by reference to the fair value of the equity instruments
granted at the date at which they are granted and is recognised as
an expense over the vesting period, which ends on the date on which
the relevant employees become fully entitled to the award. In
valuing equity-settled transactions, no account is taken of any
vesting conditions, other than conditions linked to the price of
the shares of a group company (market conditions) and non-vesting
conditions. No expense is recognised for awards that do not
ultimately vest, except for awards where vesting is conditional
upon a market or non-vesting condition, which are treated as
vesting irrespective of whether or not the market or non-vesting
condition is satisfied, provided that all other vesting conditions
are satisfied. At each balance sheet date before vesting, the
cumulative expense is calculated, representing the extent to which
the vesting period has expired and management's best estimate of
the achievement or otherwise of non-market conditions and of the
number of equity instruments that will ultimately vest or in the
case of an instrument subject to a market condition, be treated as
vesting as described above. The movement in cumulative expense
since the previous balance sheet date is recognised in the income
statement, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified, or a
new award is designated as replacing a cancelled or settled award,
the cost based on the original award terms continues to be
recognised over the original vesting period. In addition, an
expense is recognised over the remainder of the new vesting period
for the incremental fair value of any modification, based on the
difference between the fair value of the original award and the
fair value of the modified award, both as measured on the date of
the modification. No reduction is recognised if this difference is
negative. Where an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and any cost not
yet recognised in the profit and loss account for the award is
expensed immediately. Any compensation paid up to the fair value of
the award at the cancellation or settlement date is deducted from
equity, with any excess over fair value expensed in the profit and
loss account.
2.14 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any accumulated impairment losses.
When the Group acquires any plant and equipment it is stated in
the financial statements at its cost of acquisition.
Depreciation is charged to write off the cost less estimated
residual value of Property, plant and equipment on a straight line
basis over their estimated useful lives which are:
- Plant and equipment 4 years
- Computer equipment 4 years
Estimated useful lives and residual values are reviewed each
year and amended as required.
2.15 Intangible assets
Intangible assets acquired as part of a business combination or
asset acquisition, other than goodwill, are initially measured at
their fair value at the date of acquisition. Intangible assets
acquired separately are initially recognised at cost.
Amortisation is charged to write off the cost less estimated
residual value of plant and equipment on a straight line basis over
their estimated useful lives which are:
Brand and trade
- names 10 years
- Customer relationships 11 years
- Software 5 years
Estimated useful lives and residual values are reviewed each
year and amended as required.
Indefinite life intangible assets comprising goodwill are not
amortised and are subsequently measured at cost less any
impairment. The gains and losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as
the difference between net disposal proceeds and the carrying
amount of the intangible asset.
Other intangible assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying
amount might not be recoverable. An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an
asset's fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets
or group of assets (cash-generating units).
Goodwill impairment reviews are undertaken annually, or more
frequently if events or changes in circumstances indicate a
potential impairment. The method and useful lives of finite life
intangible assets are reviewed annually. Changes in the expected
pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method. The cost of finished goods and work in progress comprises
design costs, raw materials, direct labour and other direct costs.
It excludes borrowing costs. Net realisable value is the estimated
selling price in the ordinary course of business, less applicable
variable selling expenses.
2.17 Leases
The Group leases properties and motor vehicles. Leases are
recognised as a right-of-use asset and a corresponding lease
liability at the date at which the leased asset is available for
use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
- Variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
- Amounts expected to be payable by the Group under residual value guarantees;
- The exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease
period. Right-of-use assets are measured at cost which comprises
the following:
- The amount of the initial measurement of the lease liability;
- Any lease payments made at or before the commencement date
less any lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Right-of-use assets are depreciated over the shorter of the
asset's useful life and the lease term on a straight line basis. If
the Group is reasonably certain to exercise a purchase option, the
right-of-use asset is depreciated over the underlying asset's
useful life.
Payments associated with short-term leases (term less than 12
months) and all leases of low-value assets (generally less than
GBP5k) are recognised on a straight-line basis as an expense in
profit or loss.
2.18 Equity
Share capital is determined using the nominal value of shares
that have been issued.
The Share premium account includes any premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from the Share
premium account, net of any related income tax benefits.
The Reverse Acquisition reserve includes the accumulated losses
incurred prior to the reverse acquisition, the share capital of
eLight Group Holdings Limited at acquisition, the reverse
acquisition share based payment expense as well as the costs
incurred in completing the reverse acquisition.
Put options in relation to acquisitions where it is determined
that the non-controlling interest has present access to the returns
associated with the underlying ownership interest the Group has
elected to use the present-access method. This results in the fair
value of the option being recognised as a liability, with a
corresponding entry in other equity reserves.
Accumulated losses includes all current and prior period results
as disclosed in the income statement other than those transferred
to the Reverse Acquisition reserve.
2.19 Taxation
Taxation comprises current and deferred tax.
Current tax is based on taxable profit or loss for the period.
Taxable profit or loss differs from profit or loss as reported in
the income statement because it excludes items of income and
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
asset or liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial information and
the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset
realised. Deferred tax is charged or credited to profit or loss,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
2.20 Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of
transaction costs. Borrowings are subsequently carried at amortised
cost. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income
statement over the period of the borrowings using the effective
interest method. Fees paid on the establishment of loan facilities
are capitalised as a prepayment for liquidity services and
amortised over the period of the loan to which it relates.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the end of the reporting
period.
2.21 Exceptional items and non-GAAP performance measures
Exceptional items are those items which, in the opinion of the
Directors, should be excluded in order to provide a consistent and
comparable view of the underlying performance of the Group's
ongoing business. Generally, exceptional items include those items
that do not occur often and are material.
Exceptional items include i) the costs incurred in delivering
the "Buy & Build" strategy associated with acquisitions and
strategic investments; (ii) incremental costs of restructuring and
transforming the Group to integrate acquired businesses and (iii)
share based payments.
We believe the non-GAAP performance measures presented, along
with comparable GAAP measurements, are useful to provide
information with which to measure the Group's performance, and its
ability to invest in new opportunities. Management uses these
measures with the most directly comparable GAAP financial measures
in evaluating operating performance and value creation. The primary
measure is Earnings before Interest, Tax, Depreciation and
Amortisation ("EBITDA") and Adjusted EBITDA, which is the measure
of profitability before Exceptional items. These measures are also
consistent with how underlying business performance is measured
internally. We also report our Profit before Exceptional items
which is our net income, after tax and before exceptional items as
this is a measure of our underlying financial performance.
The Group separately reports exceptional items within their
relevant income statement line as it believes this helps provide a
better indication of the underlying performance of the Group.
Judgement is required in determining whether an item should be
classified as an exceptional item or included within underlying
results. Reversals of previous exceptional items are assessed based
on the same criteria.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with GAAP.
2.22 Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the entity's accounting policies,
management makes estimates and assumptions that have an effect on
the amounts recognised in the financial statements. Although these
estimates are based on management's best knowledge of current
events and actions, actual results may ultimately differ from those
estimates. The following are the critical judgement the directors
have made in the process of applying the Group's accounting
policies.
Impairment assessment
In accordance with its accounting policies, each CGU is
evaluated annually to determine whether there are any indications
of impairment and a formal estimate of the recoverable amount is
performed. The recoverable amount is based on value in use which
require the Group to make estimates regarding key assumptions
regarding forecast revenues, costs and pre-tax discount rate.
Further details are disclosed within note 14. Uncertainty about
these assumptions could result in outcomes that require a material
adjustment to the carrying amount of goodwill in future
periods.
Energy credits
Energy credits are valued based on management's assessment of
market price fair value underlying the energy credit. Such
assessment is derived from valuation techniques that include inputs
for the energy credit asset that are not based on observable market
data. Further details are disclosed within note 25. Uncertainty
about the market price fair value used in valuing the energy credit
assets could result in outcomes that require a material adjustment
to the value of these energy credits assets in future periods.
Intangible assets
On acquisition, specific intangible assets are identified and
recognised separately from goodwill and then amortised over their
estimated useful lives. An external expert is engaged to assist
with the identification of material intangible assets and their
estimated useful lives. These include items such as brand names and
customer lists, to which value is first attributed at the time of
acquisition. The capitalisation of these assets and the related
amortisation charges are based on judgements about the value and
economic life of such items.
The economic lives for customer relationships, trade names and
computer software are estimated at between five and eleven years.
The value of intangible assets, excluding goodwill, at 30 June 2022
is GBP4,917,000 (2021: GBP1,890,000).
Contingent consideration
An element of consideration relating to certain business
acquisitions made is contingent on the future EBITDA targets being
achieved by the acquired businesses. On acquisition, estimates are
made of the expected future EBITDA based on forecasts prepared by
management. These estimates are reassessed at each reporting date
and adjustments are made where necessary. Amounts of deferred and
contingent consideration payable after one year are discounted. The
carrying value of contingent consideration at 30 June 2022 is
GBP868,000 (2021: GBPnil).
Any gain or loss on revaluation of contingent consideration does
not adjust the carrying value of goodwill and is treated as an
exceptional item in the income statement.
Procurement services revenue
When assessing the recognition of Procurement Services revenue
within the Energy Management division the Group estimates the
degree to which expected energy consumption is constrained by
reductions in energy consumption over the term of the contract when
compared to the historical energy consumption of the client and by
the risk of supply contracts being terminated by clients before the
end of the contract term. These constraints reduce the extent to
which Procurement Service revenue is recognised on signing whether
the client contract is purely for Procurement Services or a
combination of Procurement and Energy Management Services.
3. PRIOR YEAR ADJUSTMENT
In the prior year the Group acquired Beond Group Limited on
which the Group estimated the fair value of assets and liabilities
acquired. During the current year, and within the measurement
period of one year as permitted by IFRS 3, the Group finalised the
provisional fair values acquired and as a result has increase the
accrued revenue at the acquisition date by GBP1,190,000, with a
corresponding reduction in Goodwill. This has been recorded in the
prior year balance sheet and has no impact on the statement of
comprehensive income, cashflows or reserves.
4. SEGMENT REPORTING
The following information is given about the Group's reportable
segments:
The Chief Operating Decision Maker is the Board of Directors.
The Board reviews the Group's internal reporting in order to assess
performance of the Group and has determined that in the year ended
30 June 2022 the Group had three operating segments, being Energy
Services, Energy Management and Group.
The Board considers that the Group operates in two business
segments, Energy Management and Energy Services, which
predominantly comprised of LED lighting solutions. With the
strengthening of the management team following the acquisition of
UtilityTeam in September 2021 and the appointment of Managing
Directors to lead each of the operating segments the Board now
primarily reviews Energy Services as a single segment whereas in
the prior year the Board reviewed the operations in the UK and
Ireland separately. Accordingly, the comparative figures have been
restated to be consistent with the current management of the
Group.
Energy Energy Group
2022 Mgmt Services Central 2022
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ---------- --------- ---------
Revenue - UK 11,634 8,518 - 20,152
Revenue - Ireland - 1,944 - 1,944
--------- ---------- --------- ---------
Revenue - Total 11,634 10,462 - 22,096
--------- ---------- --------- ---------
Cost of sales (2,251) (6,880) - (9,131)
--------- ---------- --------- ---------
Gross Profit 9,383 3,582 - 12,965
Operating expenses (5,709) (2,607) (1,628) (9,944)
--------- ---------- --------- ---------
Adjusted EBITDA 3,674 975 (1,628) 3,021
Depreciation and amortisation (789) (124) (159) (1,072)
Finance and similar charges (82) (244) 3 (323)
Profit (loss) before exceptional
items and tax 2,803 607 (1,784) 1,626
Impairment of brands (1,564) - - (1,564)
Exceptional items (797) (346) (1,146) (2,289)
--------- ---------- --------- ---------
Loss before tax 442 261 (2,930) (2,227)
Income tax 736 - - 736
--------- ---------- --------- ---------
Profit (loss) after exceptional
items and tax 1,178 261 (2,930) (1,491)
========= ========== ========= =========
Net Assets
Assets: 33,930 12,930 2,833 49,693
Liabilities (10,483) (8,702) (7,960) (27,145)
Net assets (liabilities) 23,447 4,228 (5,127) 22,548
========= ========== ========= =========
Energy Energy Group
2021 Mgmt Services Central 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- ---------- --------- ---------
Revenue - UK 2,187 8,511 - 10,698
Revenue - Ireland 2,898 2,898
-------- ---------- --------- ---------
Revenue - Total 2,187 11,409 13,596
-------- ---------- --------- ---------
Cost of sales (590) (7,469) - (8,059)
-------- ---------- --------- ---------
Gross Profit 1,597 3,940 - 5,537
Operating expenses (862) (2,550) (1,295) (4,707)
-------- ---------- --------- ---------
Adjusted EBITDA 735 1,390 (1,295) 830
Depreciation and amortisation (233) (100) - (333)
Finance and similar charges (14) (416) 4 (426)
Profit (loss) before exceptional
items and tax 488 874 (1,291) 71
Exceptional items - - (248) (248)
-------- ---------- --------- ---------
Loss before tax 488 874 (1,539) (177)
Income tax 170 - 35 205
-------- ---------- --------- ---------
Profit (loss) after exceptional
items and tax 658 874 (1,504) 28
======== ========== ========= =========
Net Assets
Assets: 9,197 8,681 3,141 21,019
Liabilities (2,322) (7,820) (1,004) (11,146)
Net assets (liabilities) 6,875 861 2,137 9,873
======== ========== ========= =========
5. REVENUE FROM CONTRACTS WITH CUSTOMERS
2022 2021
GBP'000 GBP'000
----------------- --------- ---------
Sales revenue 22,181 13,478
Energy credits (85) 118
------------------ --------- ---------
22,096 13,596
----------------- --------- ---------
In the current year, there were no customers accounting for
greater than 10% of the Group's revenue.
In the prior year, more than 10% of the Group's revenue was
accounted for by 1 UK customer (GBP1.6 million).
6. COST OF SALES
2022 2021
GBP'000 GBP'000
------------------------------ --------- ---------
Cost of sales - labour 1,745 2,320
Cost of sales - commissions 1,148 564
Cost of sales - technology 4,377 2,479
Cost of sales - other 1,861 2,696
------------------------------- --------- ---------
9,131 8,059
------------------------------ --------- ---------
7. OPERATING EXPENSES
The breakdown of operating expenses by nature is as follows:
2022 2021
GBP'000 GBP'000
Wages and salaries 7,039 3,625
Rent, utilities and office costs 1,165 253
Professional fees 503 464
Travel and motor vehicle expenses 442 175
Foreign exchange (2) (2)
Share of loss on investment in associate - 34
Realised gain on sale of other assets - (304)
Adjustment of assets recorded at fair value
through profit or loss (41) -
Exceptional items (see below) 2,289 248
Other expenditure 838 462
---------------------------------------------- --------- ---------
12,233 4,955
--------------------------------------------- --------- ---------
The Directors consider the following expenses (credits) within
operating expenses to be exceptional:
2022 2021
Note GBP'000 GBP'000
-------------------------------------------------- ---- --------- ---------
Changes to the initial recognition of contingent
consideration 30 (1,032) (1,444)
Integration costs 891 -
Other strategic investments 347 -
Restructuring costs 290 113
Acquisition related costs 1,273 1,094
Share based payment expense 34 520 485
-------------------------------------------------- ----
2,289 248
-------------------------------------------------- ---- --------- ---------
8. AUDITORS REMUNERATION
2022 2021
GBP'000 GBP'000
Fees payable to the Company's auditor for
the audit of parent company and consolidated
financial statements 80 41
Tax compliance services - 7
80 48
----------------------------------------------- --------- ---------
9. STAFF COSTS AND DIRECTORS' EMOLUMENTS
The aggregate staff costs for the year were as follows:
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------- ---------
Directors' remuneration 932 648 932 648
Other staff wages and salaries 4,556 2,569 - 81
Social security costs 1,031 408 169 89
Share based payment expense 520 485 - -
7,039 4,110 1,101 818
--------------------------------- --------- --------- --------- ---------
On average, excluding non-executive directors, the Group and
Company employed 23 technical staff members (2021: 25), 43 sales
staff members (2021: 26) and 62 administration and management staff
members (2021: 21).
10. FINANCE COSTS - NET
2022 2021
GBP'000 GBP'000
Interest expense - borrowings (266) (361)
Finance charge on leased assets (57) (65)
Finance costs - net (323) (426)
---------------------------------- --------- ---------
11. TAXATION
2022 2021
GBP'000 GBP'000
The charge / (credit) for year is made
up as follows:
Current tax charge / (credit)
Current year 159 (36)
Deferred tax credit (note 24)
Origination and reversal of temporary
differences (895) (169)
Total tax credit for the year (736) (205)
---------------------------------------------- --------- ---------
Reconciliation of effective tax rate
Loss before income tax (2,227) (177)
--------- ---------
Income tax applying the UK corporation
tax rate of 19% (2021: 19%) (423) (34)
Effect of tax rate in foreign jurisdiction 85 28
Non - deductible expenses 11 95
Impact of tax rate change (102) 44
Movement in unrecognised deferred tax
asset (322) (303)
Other tax differences 15 (35)
---------------------------------------------- --------- ---------
Income tax credit for the year (736) (205)
---------------------------------------------- --------- ---------
The movements in Deferred Tax are described in Note 24.
Factors affecting the future tax charge
The standard rates of corporation tax in the UK and Ireland are
19% and 12.5% respectively.
A reduction in the UK corporation tax rate from 19% to 17%
effective 1 April 2020 was substantively enacted on 6 September
2016. The March 2020 Budget announced that a rate of 19% would
continue to apply with effect from 1 April 2020. An increase in the
UK corporate tax rate from 19% to 25% (effective from 1 April 2023)
was substantively enacted on 14 May 2021. This will increase the
Company's future current tax charge accordingly.
12. EARNINGS PER SHARE
The calculation of the Basic and diluted earnings per share are
calculated by dividing the profit or loss for the year by the
weighted average number of ordinary shares in issue during the
year.
2022 2021
--------------------------------------------- ------------ ------------
(Loss) profit for the year from continuing
operations - GBP'000 (1,431) 28
Weighted number of ordinary shares in
issue 208,451,471 199,038,204
---------------------------------------------- ------------ ------------
Basic earnings per share from continuing
operations - pence (0.69) 0.01
---------------------------------------------- ------------ ------------
Weighted number of dilutive instruments
in issue - 11,504,993
Weighted number of ordinary shares and
dilutive instruments in issue 208,451,471 210,543,197
---------------------------------------------- ------------ ------------
Diluted earnings per share from continuing
operations - pence (0.69) 0.01
---------------------------------------------- ------------ ------------
Share options and warrants could potentially dilute basic
earnings per share in the future but were not included in the
calculation of diluted earnings per share in the current year as
they are anti-dilutive. See note 34 for further details.
13. PROPERTY, PLANT AND EQUIPMENT
GROUP Property, Computer
plant & equipment equipment
GBP'000 GBP'000 Total GBP'000
-------------------------------- ------------------- ----------- --------------
Cost
Opening balance 107 70 177
Additions on acquisition 153 10 163
Additions in the year - 125 125
Transfer to intangibles - (176) (176)
------------------- ----------- --------------
At 30 June 2021 260 29 289
Additions on acquisition (note
30) 306 - 306
Additions in the year 240 47 287
At 30 June 2022 806 76 882
------------------- ----------- --------------
Depreciation
Opening balance (39) (8) (47)
Additions on acquisition (104) (10) (114)
Charge for the year (48) (22) (70)
Transfer to intangibles - 22 22
------------------- ----------- --------------
At 30 June 2021 (191) (18) (209)
Additions on acquisition (note
30) (108) - (108)
Charge for the year (95) (12) (107)
At 30 June 2022 (394) (30) (424)
------------------- ----------- --------------
Net book value 30 June 2021 69 11 80
--------------------------------- ------------------- ----------- --------------
Net book value 30 June 2022 412 46 458
================================= =================== =========== ==============
COMPANY Property,
plant & equipment
GBP'000 Total GBP'000
----------------------------- ------------------- --------------
Cost
Opening balance 72 72
Additions in the year 34 34
------------------- --------------
At 30 June 2022 106 106
------------------- --------------
Depreciation
Opening balance (72) (72)
Charge for the year (6) (6)
------------------- --------------
At 30 June 2022 (78) (78)
------------------- --------------
Net book value 30 June 2021 - -
----------------------------- ------------------- --------------
Net book value 30 June 2022 28 28
=============================== =================== ==============
14. INTANGIBLE ASSETS
The intangible assets primarily relate to the Goodwill and
separately identifiable intangible assets arising on the Group's
acquisitions. See note 30 for further details of the acquisitions
made in the current year. The Group tests the intangible asset for
indications of impairment at each reporting period, in line with
accounting policies.
Customer
Goodwill Software Relation-ships Brand Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- ---------------- --------- ---------
Cost
Opening balance 211 - - - 211
Additions on acquisition
(restated) (note
3) 8,402 411 824 555 10,192
Additions in the
year - 77 - - 77
Transfer from PP&E - 154 - - 154
--------- --------- ---------------- --------- ---------
At 30 June 2021 (restated) 8,613 642 824 555 10,634
Additions on acquisition
(note 30) 15,203 215 3,487 1,039 19,944
Additions in the
year - 401 - - 401
At 30 June 2022 23,816 1,258 4,311 1,594 30,979
Amortisation
Opening balance - - - - -
Additions on acquisition - - - - -
Charge for the year - (60) (41) (30) (131)
At 30 June 2021 - (60) (41) (30) (131)
Additions on acquisition - - - - -
Impairment - - - (1,564) (1,564)
Charge for the year - (159) (392) - (551)
--------- --------- ---------------- --------- ---------
At 30 June 2022 - (219) (433) (1,594) (2,246)
--------- --------- ---------------- --------- ---------
Net book value 30
June 2021(restated) 8,613 582 783 525 10,503
------------------------------ --------- --------- ---------------- --------- ---------
Net book value 30
June 2022 23,816 1,039 3,878 - 28,733
============================== ========= ========= ================ ========= =========
The Group completed a strategic review of its brands and trading
names and on 1 July 2022 aligned all of the trading businesses
under the master "eEnergy" brand. Accordingly, the carrying value
of the Beond and the UtilityTeam brand names were fully impaired as
at the year end.
The recoverable amount of each cash generating unit was
determined based on value-in-use calculations which require the use
of assumptions. The calculations use cash flow projections based on
financial budgets approved by management which are built "bottom
up" for the next three years. Within those cash flow projections
revenues increase at a compound annual growth rate of 20% (2021:
20%). The annual discount rate applied to the cash flows is 13%
(2021: 13%) which is the same rate used by our valuation adviser to
value the separably identifiable intangible assets in the year.
The directors have considered and assessed reasonably possible
changes in key assumptions and have not identified any instances
that could cause the carrying amount to exceed recoverable
amount.
15. INVESTMENT IN ASSOCIATE
During the prior year, the Group entered into various agreements
to acquire, in April 2021, an initial 33.3% interest which was
increased to 37.5% interest in eEnergy Insights Ltd ("EIL") in June
2021. EIL was a newly formed specialist smart metering measurement
equipment and analytics business which acquired certain trade
assets out of the administration process of Measure My Energy
Limited ("MME") and certain associated intellectual property assets
in April 2021.
As part of the agreement entered into in June 2021 the Group
received nil cost warrants to raise its interest to 51% of the
equity, subject to certain operational targets being achieved. In
addition, agreement was reached on a mechanism to acquire the
remaining 49% of the equity under a pre agreed valuation method
after three years.
The Group exercised it warrants in October 2021 taking its
ownership interest to 51%. It subsequently acquired the
shareholdings of certain minority investors in May 2022, taking its
ownership interest to 85.5%.
In the prior year, the Group held EIL as an equity accounted
investment in associate. Following the acquisition in October 2021
the Group was considered to have assumed control and EIL has been
subsequently accounted for as a consolidated subsidiary, with the
acquisition treated as a step acquisition.
2022 2021
GBP'000 GBP'000
-------------------------------------------- ---------- ---------
Interest in associate at beginning of the
year 155 -
Investment in associate during the year - 189
Derecognition following step acquisition (155) -
Share of loss on investment in associate - (34)
Interest in associate at end of the year - 155
--------------------------------------------- --------- ---------
In the prior year EIL's loss from April 2021 until June 2021 was
GBP91,000 of which the Group recognised its share of loss of
GBP34,000. No share of the result of EIL was recognised in the
current year until the date of the step acquisition on the basis
the company is in a net liabilities position.
16. INVESTMENT IN SUBSIDIARIES
2022 2021
COMPANY ONLY GBP'000 GBP'000
Opening balance 17,947 6,574
Additions during the year:
* consideration paid RSL - 2,238
* consideration paid Beond (note 30) - 9,135
Transfer to intermediate holding company (11,373) -
Closing balance 6,574 17,947
------------------------------------------- --------- ---------
The full list of subsidiary undertakings of the Company are
listed in note 39.
17. INVENTORY
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ---------
The balance at year end comprised:
Work in progress 403 153 - -
Finished goods 406 218 - -
-------------------------------------- --------- --------- --------- ---------
809 371 - -
------------------------------------- --------- --------- --------- ---------
18. TRADE AND OTHER RECEIVABLES
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- ---------
Trade receivables 3,827 2,090 - -
Prepayments 726 543 574 111
Accrued revenue 9,892 2,056 - -
Other receivables 1,577 824 289 42
-------------------- --------- --------- --------- ---------
16,022 5,513 863 153
------------------- --------- --------- --------- ---------
All trade receivables are short term and are due from
counterparties with acceptable credit ratings so there is no
expectation of a credit loss. Accordingly, the Directors consider
that the carrying value amount of trade and other receivables
approximates to their fair value. The value of inventory expensed
as part of Cost of Sales in the year and prior year is disclosed in
Note 6. Inventories are stated at the lower of cost and net
realisable value.
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and short term
deposits. The carrying value of these approximates to their fair
value. Cash and cash equivalents included in the cash flow
statement comprise the following balance sheet amounts.
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ---------
Cash at bank and in hand (excluding
restricted cash) 1,380 3,332 91 1,187
Restricted cash 422 - - -
Cash and cash equivalents 1,802 3,332 91 1,187
-------------------------------------- --------- --------- --------- ---------
Restricted cash relates to financing arrangements and customer
collections.
20. TRADE AND OTHER PAYABLES
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------- ---------
Current liabilities
Trade payables 4,196 4,064 609 564
Accrued expenses 2,610 1,143 313 116
Deferred income 2,809 159 - -
Social security and other taxes 2,790 1,959 324 323
Contingent consideration 868 - 868 -
Other payables 3,529 494 - -
---------------------------------- --------- --------- --------- ---------
16,802 7,819 2,114 1,003
--------------------------------- --------- --------- --------- ---------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and continuing costs. The Directors
consider that the carrying value amount of trade and other payables
approximates to their fair value. Refer Note 31.
Deferred income represents revenues collected but not yet earned
as at the year end.
Other payables primarily relates to provisions for under
consumption or cancelled contracts.
21. LEASES
The Group had the following lease assets and liabilities at 30
June:
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- ---------
Right of use assets
Properties 774 579 279 -
Motor vehicles 3 31 - -
---------------------- --------- --------- --------- ---------
777 610 279 -
--------------------- --------- --------- --------- ---------
Lease liabilities
Current 542 264 265 -
Non-current 350 434 - -
---------------------- --------- --------- --------- ---------
892 698 265 -
--------------------- --------- --------- --------- ---------
Group Company
------------------------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------
Maturity on the lease liabilities
are as follows:
Current 492 264 265 -
Due between 1-5 years 176 194 - -
Due beyond 5 years 224 240 - -
------------------------------------- --------- --------- --------- ---------
892 698 265 -
------------------------------------ --------- --------- --------- ---------
Right of use assets
Group Company
---------------------------- -------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- --------- ---------
Properties
Opening balance 579 477 - -
Additions 487 215 431 -
Additions on acquisition 135 - - -
Depreciation (427) (102) (152) -
Impact of foreign exchange - (11) - -
---------------------------- --------- --------- --------- ---------
Closing balance 774 579 279 -
----------------------------- --------- --------- --------- ---------
Motor vehicles
Opening balance 31 61 - -
Additions - - - -
Depreciation (28) (27) - -
Impact of foreign exchange - (3) - -
---------------------------- --------- --------- --------- ---------
Closing balance 3 31 - -
----------------------------- --------- --------- --------- ---------
22. BORROWINGS
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------- --------- --------- --------- ---------
Current
Borrowings 11 601 - -
-------------- --------- --------- --------- ---------
11 601 - -
------------- --------- --------- --------- ---------
Non-current
Borrowings 5,011 1,245 - -
5,011 1,245 - -
------------- --------- --------- --------- ---------
In February 2022 the Group refinanced substantially all of its
existing bank indebtedness and consolidated its borrowings into a
single GBP5 million, four year, revolving credit facility provided
to eEnergy Holdings Limited, an intermediate holding company in the
Group. The new facility is secured by way of debentures granted to
the lender by all of the Group's trading subsidiaries. The facility
includes covenants relating to debt service cover and gearing.
Maturity on the borrowings are as follows:
2022 2021
Maturity on the borrowings are as follows: GBP'000 GBP'000
Current 11 589
Due between 1-2 years 11 913
Due between 2-5 years 5,000 300
Due beyond 5 years - 44
--------------------------------------------- --------- ---------
5,022 1,846
-------------------------------------------- --------- ---------
23. OTHER LIABILITIES
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- --------- ---------
Income and other taxes - 468 - -
Other non-current liabilities 2,252 - -
2,252 468 - -
-------------------------------- --------- --------- --------- ---------
Other non-current liabilities relates to amounts owed to
external funding providers in relation to customer receivables not
yet received by the Group and paid on in respect of multi-year
contracts.
24. DEFERRED TAX
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the
following
Assets Liabilities Total
-------------------- -------------------- --------------------
2022 2021 2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- --------- --------- ---------
Intangible assets - - 1,060 415 1,060 415
Tangible assets - - 258 - 258 -
Losses (925) (415) - (925) (415)
Other (146) - - - (146) -
----------------------------- --------- --------- --------- --------- --------- ---------
Total (assets) liabilities (1,071) (415) 1,318 415 247 -
----------------------------- --------- --------- --------- --------- --------- ---------
Movement in temporary difference during the year
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the current
and prior reporting period:
2022 2021
GBP'000 GBP'000
Balance at 1 July - -
Acquired on acquisition - liability 1,142 169
Credit for the year (895) (169)
Balance at 30 June 247 -
-------------------------------------- --------- ---------
Unrecognised deferred tax assets
At 30 June 2022, the Group had tax losses in the UK and Ireland
totalling GBP11.7 million and GBP3.2 million respectively (2021:
GBP8.5 million and GBP2.3 million) for which deferred tax assets
have been recognised to the extent that it is expected to be future
taxable profits against which the Group can use the benefit
therefrom.
25. PROVISIONS
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------- --------- --------- --------- ---------
Put option 860 - - -
860 - - -
----------- --------- --------- --------- ---------
During the year, the Group entered into a put option agreement
in respect of the step acquisition of EIL to acquire further shares
in the company, see note 15. The fair value of this option at
acquisition was GBP3,921,000, of which GBP3,061,000 was utilised
following exercise of options to acquire shares and discount rate
unwind.
26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group classifies the following financial assets at fair
value through profit or loss:
Group Company
-------------------- --------------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- --------- --------- ---------
Energy credits 21 140 - -
21 140 - -
---------------- --------- --------- --------- ---------
The energy credits are measured under level 2 of the fair value
hierarchy as described in note 31.
27. SHARE CAPITAL AND SHARE PREMIUM
Ordinary Share Share
Shares (1) Capital Premium Total
GROUP AND COMPANY # GBP'000 GBP'000 GBP'000
----------------------------------------- ------------ --------- --------- ---------
As at 30 June 2020 (ordinary shares
of GBP0.003 each) 130,926,167 392 22,375 22,767
----------------------------------------- ------------ --------- --------- ---------
Issue of shares for acquisition
of RSL 13,333,333 40 744 784
Issue of shares at placing price
of GBP0.10 32,000,000 96 3,104 3,200
Issue of initial shares for acquisition
of Beond 63,771,130 191 6,441 6,632
Issue of shares for acquisition
of minority interest in Beond 1,177,326 4 114 118
Issue of shares in lieu of settlement
of fees 2,841,801 8 293 301
Issue of shares upon exercise of
warrants 2,208,333 7 159 166
Cost of share issue (216) (216)
---------
As at 30 June 2021 (ordinary shares
of GBP0.003 each) 246,258,090 738 33,014 33,752
---------
Issue of shares at placing price
of GBP0.15 80,000,000 240 11,760 12,000
Issue of shares for the acquisition
of Utility Team 18,031,249 55 2,903 2,958
Issue of shares in exchange for
loan notes from eEnergy Insights
Ltd 2,490,620 7 301 308
Cost of share issue - (618) (618)
As at 30 June 2022 (ordinary shares
of GBP0.003 each) 346,779,959 1,040 47,360 48,400
---------
Deferred share capital 15,333
---------
Total share capital 16,373
---------
The deferred shares have no voting, dividend, or capital
distribution (except on winding up) rights. They are redeemable at
the option of the Company alone.
There has been no movement in the number of deferred shares
during the current and prior years.
Details of share options and warrants issued during the year and
outstanding at 30 June 2022 are set out in note 34.
The share premium represents the difference between the nominal
value of the shares issued and the actual amount subscribed less;
the cost of issue of the shares, the value of the bonus share
issue, or any bonus warrant issue.
28. OTHER RESERVES
2022 2021
GROUP GBP'000 GBP'000
-------------------------------------------- --------- ---------
Share based payment reserve 1,087 567
Revaluation reserve - other current assets 34 34
Other equity reserve (860) -
261 601
-------------------------------------------- --------- ---------
2022 2021
COMPANY GBP'000 GBP'000
----------------------------- --------- ---------
Share based payment reserve 1,087 567
1,087 567
----------------------------- --------- ---------
Share based payment Cumulative charge recognised under IFRS 2 in respect
reserve of share -- based payment awards.
Reverse acquisition Substantially represents the preacquisition value
reserve of the equity of the parent company and the investment
in eLight, net of expenses that was made when eLight
reversed into the company then known as Alexander
Mining plc in January 2020 to create eEnergy Group
plc.
Revaluation reserve The increase in the assessed carrying value of other
current assets.
Other equity reserve This relates to the fair value of the put option liability
in relation to the EIL acquisition in October 2021,
which under the present access method is recognised
against an other equity reserve.
29. NON-CONTROLLING INTERESTS
Non-controlling interests relates to the Group's investment in
eEnergy Insights Limited ("EIL"). In the prior year, the Group
acquired 37.5% of the shares in EIL and this was accounted for as
an equity accounted associate. The Group acquired additional shares
in the year which took the Group's investment to 85.5% of the
company and is now a consolidated subsidiary.
The non-controlling interest at FY22 was negative equity of
GBP77,000 (2021: GBPnil), being negative equity of GBP16,000 on
acquisitions in October 2021 and May 2022 with a further loss
recognised for the post-acquisition period of GBP60,000.
30. BUSINESS COMBINATIONS
UtilityTeam TopCo Limited
On 17 September 2021 the Company completed the acquisition of
all of the share capital of UtilityTeam TopCo Limited ("UTT"). At
the same time the Company completed the Placing of 80 million
shares which were issued at 15 pence per share, raising GBP12.0
million for the Company. The Placing proceeds have been primarily
used to settle the initial cash consideration for the acquisition
of UTT.
UTT is a UK-based, top 20 energy consulting and procurement
business, whose services aim to reduce costs and support clients'
transition to Net Zero.
The initial consideration of GBP14.0 million was satisfied as
follows:
-- cash consideration of GBP9.5 million, payable on completion
with further cash consideration of GBP2.0 million, payable on or
before 31 December 2021; and
-- the issue of 18.0 million Ordinary Shares, which had a fair
value of GBP3.0 million based on the closing share price on the day
prior to completion.
-- In April 2022, a reduction in consideration of GBP500,000 was
agreed with the vendors to reflect the difference between the level
of net working capital and debt in UTT when compared to that
estimated in the Sale & Purchase Agreement. This amount was
repaid by the vendors in cash during FY22 and is reflected in the
table below. The final working capital adjustment was finalised
subsequent to the year end and a further GBP280,000 reduction in
will be recorded in FY23.
It was initially agreed that further earn-out consideration of
up to a maximum of GBP5.1 million may be payable, based on a
multiple of 7.0x UTT's EBITDA, for the year ending 31 December
2021. eEnergy agreed to pay GBP7 for every GBP1 of EBITDA generated
in excess of GBP2.3 million, up to a maximum EBITDA of GBP3.0
million ("Earn-Out Consideration").
The Earn-Out Consideration would be satisfied as follows:
-- the first GBP1.5 million of Earn-Out Consideration will be paid in cash; and
-- any balance, up to GBP3.6 million, will be satisfied by the
issue of new Ordinary Shares at a price that is the higher of 24p
and the 30 day volume weighted average price prior to 31 December
2021.
The Earn Out Consideration was agreed in July 2022 and it was
further agreed that it would be satisfied by the issue of 4,000,000
Ordinary Shares to the vendors. Subsequently, the deferred
consideration of GBP1,900,000 referred below was reduced by
GBP1,032,000 to a value of GBP868,000 - refer to Note 20.
The fair value of the assets acquired and liabilities assumed of
UTT at the date of acquisition based upon the UTT consolidated
balance sheet at 17 September 2021 are as follows:
GBP'000
------------------------------------------------- --------
Property, plant and equipment 191
Right of use assets 135
Cash at bank 3,994
Inventory 27
Trade and other receivables 1,279
Trade and other payables (4,269)
Lease liabilities (141)
Other liabilities (2,190)
Loans and other borrowings (1,450)
Intangible assets 4,526
Deferred tax liability (1,132)
--------
Total identifiable net assets acquired 970
Goodwill 14,970
Consideration
Initial consideration (shares issued recorded
at the market value) 2,958
Cash 11,081
Contingent consideration 1,900
Total consideration 15,940
-------------------------------------------------- --------
Goodwill relates to the accumulated "know how" and expertise of
the business and its staff. None of the goodwill is expected to be
deducted for income tax purposes. A purchase price allocation was
performed during the year which recognised specific identifiable
intangible assets which are deductible for income tax purposes.
These separately identified intangible assets were:
- Brand names - GBP1,039,000; and
- Customer relationships - GBP3,487,000
eEnergy Insights Limited
In April 2021, the Group acquired 33.3% of eEnergy Insights
Limited ("EIL") which was increased to 37.5% in June 2021. The
Group exercised warrants in October 2021 taking ownership to 51%
with a further acquisition to 85.5% in May 2022. See note 15 for
further information.
The fair value of the assets acquired and liabilities assumed of
EIL at the date of acquisition are as follows:
GBP'000
---------------------------------------- --------
Property, plant and equipment 11
Computer software 215
Cash at bank 13
Trade and other receivables 60
Inventory 317
Borrowings (822)
Trade and other payables (44)
--------
Total gross identifiable net assets (250)
Non-controlling interests 16
--------
Total identifiable net assets acquired (234)
Goodwill 234
Consideration
Cash (GBP28) -
Total consideration -
----------------------------------------- --------
31. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The Company manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders. The overall strategy of the Company and
the Group is to minimise costs and liquidity risk.
The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued
share capital, foreign exchange reserves and retained earnings as
disclosed in the Consolidated Statement of Changes of Equity.
The Group is exposed to a number of risks through its normal
operations, the most significant of which are interest, credit,
foreign exchange and liquidity risks. The management of these risks
is vested to the Board of Directors.
The sensitivity has been prepared assuming the liability
outstanding was outstanding for the whole period. In all cases
presented, a negative number in profit and loss represents an
increase in finance expense / decrease in interest income.
Fair Value Measurements Recognised in the Statement of Financial
Position
The following provides an analysis of the Group's financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 & 2 based on the degree to
which the fair value is observable.
-- Level 1 fair value measurements are those derived from inputs
other than quoted prices that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
-- Level 2 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
-- Level 3 assets are assets whose fair value cannot be
determined by using observable inputs or measures, such as market
prices or models. Level 3 assets are typically very illiquid, and
fair values can only be calculated using estimates or risk-adjusted
value ranges.
Equity Price Risk
The Group is exposed to equity price risks arising from equity
investments. Equity investments are held for strategic
purposes.
Interest Rate Risk
The Group is exposed to interest rate risk whereby the risk can
be a reduction of interest received on cash surpluses held and an
increase in interest on borrowings the Group may have. The maximum
exposure to interest rate risk at the reporting date by class of
financial asset was:
2022 2021
GBP'000 GBP'000
--------------- --------- ---------
Bank balances 1,802 3,332
---------------- --------- ---------
Given the extremely low interest rate environment on bank
balances, any probable movement in interest rates would have an
immaterial effect.
The maximum exposure to interest rate risk at the reporting date
by class of financial liability was:
2022 2021
GBP'000 GBP'000
Borrowings 5,022 1,846
------------- --------- ---------
The borrowings attract interest rates between 2.5% and 4.9%
(2021: between 3.4% and 13.5%). Assuming the amount at period end
was held for a year, a 10% movement in this rate would have a
GBP502,000: (2021: GBP18,000) effect on the amount owing.
Credit Risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables from customers. Indicators that there is no reasonable
expectation of recovery include, amongst others, failure to make
contractual payments for a period of greater than 120 days past
due.
The carrying amount of financial assets represents the maximum
credit exposure.
The principal financial assets of the Company and Group are bank
balances, trade receivables and energy credits. The Group deposits
surplus liquid funds with counterparty banks that have high credit
ratings and the Directors consider the credit risk to be
minimal.
The Group's maximum exposure to credit by class of individual
financial instrument is shown in the table below:
2022 2021
Carrying 2022 Carrying 2021
Value Maximum Exposure Value Maximum Exposure
Group GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------------ ---------- ------------------
Cash and cash equivalents 1,802 1,802 3,332 3,332
Trade receivables 4,022 4,022 2,090 2,090
Energy credits 21 21 140 140
5,845 5,845 5,562 5,562
--------------------------- ---------- ------------------ ---------- ------------------
2022 2021
Carrying 2022 Carrying 2021
Value Maximum Exposure Value Maximum Exposure
Company GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------------ ---------- ------------------
Cash and cash equivalents 91 91 1,187 1,187
Trade receivables - - - -
--------------------------- ---------- ------------------ ---------- ------------------
91 91 1,187 1,187
--------------------------- ---------- ------------------ ---------- ------------------
No aged analysis of financial assets is presented as no
financial assets are past due at the reporting date.
Trade receivables
The Group has applied IFRS 9 Financial Instruments and the
related consequential amendments to other IFRSs. IFRS 9 introduces
requirements for the classification and measurement of financial
assets and financial liabilities as well as the impairment of
financial assets.
In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model as opposed to an incurred
credit loss model under IAS 39. The expected credit loss model
requires the Group to account for expected credit losses and
changes in those expected credit losses at each reporting date to
reflect changes in credit risk since initial recognition of the
financial assets. In other words, it is no longer necessary for a
loss event to have occurred before credit losses are
recognised.
The group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. During the period, there were
no credit losses experienced and no loss allowance being
recorded.
Currency Risk
The Group operates in a global market with income and costs
arising in a number of currencies and is exposed to foreign
currency risk arising from commercial transactions, translation of
assets and liabilities and net investment in foreign subsidiaries.
Exposure to commercial transactions arise from sales or purchases
by operating companies in currencies other than the Company's
functional currency. Currency exposures are reviewed regularly.
The Group has a limited level of exposure to foreign exchange
risk through its foreign currency denominated cash balances, trade
receivables and payables:
2022 2021
GBP'000 GBP'000
--------------------------- --------- ---------
EURO
Cash and cash equivalents 317 58
Trade receivables 3,091 674
Trade payables (255) (252)
3,153 480
--------------------------- --------- ---------
The table below summarises the impact of a 10% increase /
decrease in the relevant foreign exchange rates versus the EUREUR
rate for the Group's pre-tax earnings for the period and on
equity:
2022 2021
GBP'000 GBP'000
--------------------------- --------- ---------
Impact of 10% rate change
Euro 350 57
350 57
--------------------------- --------- ---------
Liquidity Risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
The Group seeks to manage liquidity risk by regularly reviewing
cash flow budgets and forecasts to ensure that sufficient liquidity
is available to meet foreseeable needs and to invest cash assets
safely and profitably. The Group deems there is sufficient
liquidity for the foreseeable future.
The Group had cash and cash equivalents at period end as
below:
2022 2021
GBP'000 GBP'000
--------------------------- --------- ---------
Cash and cash equivalents 1,802 3,332
---------------------------- --------- ---------
32. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial
assets at Financial Financial
fair value assets at liabilities
through profit amortised at amortised
2022 - GROUP or loss cost cost Total
Financial assets (liabilities) GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------------- ----------- -------------- ---------
Fair value assets through
profit or loss 21 - - 21
Trade and other receivables - 5,599 - 5,599
Cash and cash equivalents - 1,802 - 1,802
Trade and other payables - - (16,264) (16,264)
Lease liabilities (current
and non-current) - - (892) (892)
Borrowings (current and
non-current) - - (5,022) (5,022)
21 7,401 (22,178) (14,756)
---------------- ----------- -------------- ---------
Financial Financial
assets at liabilities
amortised at amortised
2022 - COMPANY cost cost Total
Financial assets / liabilities GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- --------
Trade and other receivables 863 - 863
Cash and cash equivalents 91 - 91
Trade and other payables - (921) (921)
954 (921) 33
----------- -------------- --------
Financial
assets at Financial Financial
fair value assets at liabilities
through profit amortised at amortised
2021 - GROUP or loss cost cost Total
Financial assets (liabilities) GBP'000 GBP'000 GBP'000 GBP'000
Fair value assets through
profit or loss 140 - - 140
Trade and other receivables - 2,867 - 2,867
Cash and cash equivalents - 3,332 - 3,332
Trade and other payables - - (5,859) (5,859)
Lease liabilities (current
and non-current) - - (698) (698)
Borrowings (current and
non-current) - - (1,846) (1,846)
140 6,199 (8,403) (2,064)
---------------- ----------- -------------- --------
Financial Financial
assets at liabilities
amortised at amortised
2021 - COMPANY cost cost Total
Financial assets (liabilities) GBP'000 GBP'000 GBP'000
-------------------------------- ----------- -------------- --------
Trade and other receivables 153 - 153
Cash and cash equivalents 1,187 - 1,187
Trade and other payables - (680) (680)
1,340 (680) 660
----------- -------------- --------
33. RECONCILIATION OF MOVEMENT IN NET DEBT
Interest
At 1 July added to Other At 30
2021 New borrowing debt Debt repaid cashflows On acquisition June 2022
------------------- ---------- -------------- ---------- ------------ ----------- --------------- -----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 3,332 4,890 - (3,634) (7,215) 4,007 1,380
Borrowings (1,846) (4,890) (123) 3,287 - (1,450) (5,022)
------------------- ---------- -------------- ---------- ------------ ----------- --------------- -----------
Net Cash (debt)
excluding lease
liabilities 1,486 - (123) (347) (7,215) 2,557 (3,642)
Lease liabilities (698) (484) (57) 347 - - (892)
Net Cash (debt) 788 (484) (180) - (7,215) 2,557 (4,534)
------------------- ---------- -------------- ---------- ------------ ----------- --------------- -----------
Interest
At 1 July added to Other At 30
2020 New borrowing debt Debt repaid cashflows On Acquisition June 2021
------------------- ---------- -------------- ---------- ------------ ----------- --------------- -----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank 1,478 286 - (558) 915 1,211 3,332
Borrowings (1,424) (286) (97) 470 - (509) (1,846)
------------------- ---------- -------------- ---------- ------------ ----------- --------------- -----------
Net Cash (debt)
excluding lease
liabilities 54 - (97) (88) 915 702 1,486
Lease liabilities (582) (160) (44) 88 - - (698)
Net Cash (debt) (528) (160) (141) - 915 702 788
------------------- ---------- -------------- ---------- ------------ ----------- --------------- -----------
34. SHARE BASED PAYMENTS AND SHARE OPTIONS
(i) Executive Share Option Plan
The Group operates an Executive Share Option Plan, under which
directors, senior executives and consultants have been granted
options to subscribe for ordinary shares. All options are share
settled.
The fair value of services received in return for share options
granted is measured by reference to the fair value of the share
options granted. This estimate is based on the Black-Scholes model
which is considered most appropriate considering the effects of
vesting conditions, expected exercise period and the payment of
dividends by the Company.
(ii) Management Incentive Plan ("MIP")
On 7 July 2020 the Company made a series of awards under the
eEnergy Group Management Incentive Plan.
The MIP is linked to the growth in the value of the Company. The
forms of incentive award to be implemented as part of the MIP
comprise:
(a) "Growth Share Awards": awards granted in the form of an
immediate beneficial interest to be held by participants in a
discrete and bespoke class of ordinary shares ("Growth Shares") in
eEnergy Holdings Limited, a wholly owned subsidiary of the Company.
After a minimum period of three years, the Growth Shares may be
exchanged for new ordinary shares of 0.3 pence each in the Company
("Ordinary Shares"), subject to meeting performance conditions.
(b) "Share Options": awards granted in the form of a share
option with an exercise price equal to the market value of an
Ordinary Share at the date of Grant. These are structured to
qualify for the tax advantaged Enterprise Management Incentive
("EMI Share Options").
Under the MIP, the aggregate value of EMI Share Options and the
Growth Shares is capped at 12.5% of the Company's market
capitalisation on conversion of the Growth Shares.
Malus, clawback and leaver provisions apply to the MIP as
outlined in the Admission Document.
Growth Shares
As at 30 June 2022 the following Directors ("Participants") had
subscribed for Growth Shares in eEnergy Holdings Limited for their
tax market value as set out in the table below. This value was
determined by the Company's independent advisers, Deloitte LLP.
Payment of the subscription monies by the Participants is a firm
commitment, with payment normally deferred until the MIP
matures.
Aggregate Subscription
Director N umber of Growth shares Price
Harvey Sinclair 5,50 0 GBP298,650
Andrew Lawley 1,00 0 GBP54,300
David Nicholl 1, 00 0 GBP54,300
Total 7 ,500 GBP4 07,250
The Participants earn a percentage share of the "Value Created",
being the difference between the Group's market capitalisation
(one-month average) at the start and end of the measurement period
(which is at least three years) adding any returns to shareholders
such as dividends and deducting the value of new shares issued for
cash or otherwise. The percentage share of the Value Created is
subject to a minimum Total Shareholder Return ("TSR") hurdle of 5%
and up to 15% TSR is equal to the annual TSR realised by
shareholders over the measurement period, and thereafter increased
on a straight line basis so that at 25% TSR the share of the Value
Created is 20%, which is the maximum percentage of the Value
Created allocated to the MIP.
Growth Shares can be exchanged for Ordinary Shares after three
or four years at the Company's or Participant's option, based on
the Value Created at that time. The value of any EMI Share Options
held by a Participant are deducted from the value of their Growth
Shares before conversion to Ordinary Shares. The Remuneration
Committee must be satisfied that the gains on the Growth Shares are
justified by the underlying financial performance of the Group.
Participants will be required to hold 50% of any Ordinary Shares
acquired on conversion of the Growth Shares until the end of the
fourth year (30 June 2024).
On a change of control, the TSR growth rate up to that date is
measured and if the 5% minimum is achieved, Participants will share
in the value created.
The fair value of the Growth Shares over the vesting period
being three years grant date was deemed to be GBP833,000, with
GBP214,000 (2021: GBP419,000) fair value expensed during the
year.
EMI options
The Company granted the following EMI Share Options over
Ordinary shares at an exercise price of 6.12 pence, based on the
closing price on Monday 6 July 2020:
Director Number of Options
Harvey Sinclair 4,084,960
Ric Williams 4,084,960
----------------- ------------------
Total 8,169,920
----------------- ------------------
The EMI options are exercisable when the MIP matures, being
after a minimum period of three years. The Remuneration Committee
must be satisfied that the returns are justified by the underlying
financial performance of the Group.
Ric Williams resigned as a director during the year and the
Remuneration Committee agreed that his EMI Share Options will
either vest or lapse at the end of his notice period. As a result,
the vesting period for his award has been deemed to reduce from
three years to two years and three months and the value that has
been expensed has been accelerated accordingly.
The fair value of the EMI Options over the vesting period being
three years grant date was deemed to be GBP200,000, with GBP91,000
(2021: GBP66,000) fair value expensed during the year.
(iii) EMI Share Option Awards and non advantaged Share Option Awards
On 7 December 2021 the Company granted share options over
13,800,000 Ordinary Shares at an exercise price of 0.3 pence per
share. The majority of the awards were structured so that the
following vesting criteria applied:
-- 1/3rd with an exercise condition of the share price being above 24p at vesting;
-- 1/3rd with an exercise condition of the share price being
above 20p at vesting; and
-- 1/3rd with no exercise price condition
2.5 million of the Options were awarded to Crispin Goldsmith,
who is now a director of the Company. 2/3rd of his award has an
exercise price condition at 15p at the vesting date and the
remainder has no exercise price condition.
(iv) Other share options or warrants
On 9 January 2020 the Company issued 1,575,929 warrants to a
number of advisors as part of the reverse acquisition transaction
completed on that date which are exercisable for the 4 years
following the anniversary of the date of issue at 7.5p per share.
These advisor warrants had an estimated value of GBP45,544 which is
based on the Black-Scholes model which is considered most
appropriate considering the effects of vesting conditions, expected
exercise period and the payment of dividends by the Company.
The estimated fair values of warrants which fall under IFRS 2,
and the inputs used in the Black Scholes Option model to calculate
those fair values are as follows:
Number Exercise Expected Expected Risk free Expected
Date of grant of warrants Share Price Price volatility life rate dividends
--------------- ------------- ------------ --------- ------------ --------- ---------- -----------
9 Jan 2020 1,575,929 GBP0.075 GBP0.075 45.00% 5 0.00% 0.00%
Total contingently issuable shares
2022 2021
---------------------------------- ----------- ----------
Executive Share Option Plan 471,000 471,000
Other share options and warrants 25,570,849 1,452,596
----------------------------------- ----------- ----------
26,041,849 1,923,596
---------------------------------- ----------- ----------
The number and weighted average exercise price of share options
and warrants are as follows:
2022 2021
----------------------------------------- ------------------------ ------------------------
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
----------------------------------------- ---------- ------------ ---------- ------------
Outstanding at the beginning
of the year 17.887p 1,923,596 27.955p 4,308,262
Granted during the year (acquisitions) 16.2p 2,000,000 - -
Granted during the year 2.5p 22,118,253 - -
Lapsed during the year (Warrants) - - (45p) (133,333)
Lapsed during the year (Options) - - (1,476p) (43,000)
Exercised during the year - - (7.5p) (2,208,333)
------------------------------------------ ---------- ------------ ---------- ------------
Outstanding at the end of
the year 4.969p 26,041,849 17.887p 1,923,596
Exercisable at the end of
the year 20.961p 2,046,929 17.887p 1,923,596
------------------------------------------ ---------- ------------ ---------- ------------
Share options and warrants outstanding at 30 June 2022, had a
weighted average exercise price of 20.961 pence (2021: 17.887
pence) and a weighted average contractual life of 3.01 years (2021:
3.04 years). To date no share options have been exercised. There
are no market based vesting conditions attaching to any share
options outstanding at 30 June 2022.
35. CAPITAL COMMITMENTS
There were no capital commitments at 30 June 2022 or 30 June
2021.
36. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 June 2022 or 30 June
2021.
37. RELATED PARTY TRANSACTIONS
The remuneration of the Directors and their interest in the
share capital is disclosed in the Remuneration Committee report in
the Annual Report
Balances and transactions between companies within the Group
that are consolidated and eliminated are not disclosed in these
financial statements.
[Certain of the Directors have committed to invest a total of
GBP0.5m in the new subordinated loan facility, subject only to
shareholders approving additional capacity to issue the warrants
attaching to the subordinated loan facility.]
38. EVENTS SUBSEQUENT TO PERIOD
Post year end the Group commenced a process to raise capital to
support the ongoing working capital requirements of the Group.
Following this process the Group secured a new GBP[2.5] million
subordinated loan facility to improve working capital headroom.
GBP[1.9]m of this is unconditional with the balance subject to
shareholders approving additional capacity to issue warrants
attaching to the subordinated loan facility.
39. CONTROL
In the opinion of the Directors as at the period end and the
date of these financial statements there is no single ultimate
controlling party.
40. LIST OF SUBSIDIARY UNDERTAKINGS
As at 30 June 2022, the Group owned interests in the following
subsidiary undertakings, which are included in the consolidated
financial statements:
Holding Holding Country of
Name 2022 2021 Business Activity Incorporation Registered Address
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
Direct subsidiary
undertaking
---------------------------- ----------------------------------------------------------------------------------------
20 St Thomas Street,
England & London,
eEnergy Holdings Limited 100% 100% Holding Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
Indirect subsidiary
undertakings
---------------------------- ----------------------------------------------------------------------------------------
1-3 The Green, Malahide,
eLight Group Holdings Co.
Limited 100% 100% Holding Company Ireland Dublin K36 N153
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
eEnergy Services N.I. 100% - Trading Company Northern Ireland 19 Arthur Street, Belfast,
Limited BT1
4GA
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
1-3 the Green, Malahide,
Co.
e-Light Ireland Limited 100% 100% Trading Company Ireland Dublin K36 N153
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
1-3 the Green, Malahide,
eLight EAAS Projects Co.
Limited 100% 100% Trading Company Ireland Dublin K36 N153
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
eEnergy Services UK England & London,
Limited 100% 100% Trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
eEnergy EAAS Projects UK England & London,
Limited 100% 100% Trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
eEnergy Services RSL England & London,
Limited 100% 100% Trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
Smartech Energy Projects England & London,
Limited 100% 100% Trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
eEnergy Consultancy England & London,
Limited 100% 100% Trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
England & London,
Energy Centric Limited 100% 100% Dormant Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
Zero Carbon Projects England & London,
Limited 100% 100% Non-trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
Suite 4, 142 Spit Rd,
Zero Carbon Projects Pty Mosman,
Limited 100% 100% Non-trading Company Australia NSW, 2088
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
20 St Thomas Street,
England & London,
eEnergy Insights Limited 85.5% 37.5% Trading Company Wales SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
eEnergy Management Limited 100% - Trading Company England & 20 St Thomas Street,
Wales London,
SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
eEnergy Management Topco 100% - Holding Company England & 20 St Thomas Street,
Limited Wales London,
SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
eEnergy Management 100% - Holding Company England & 20 St Thomas Street,
Holdings Wales London,
Limited SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
eEnergy Management USA 100% - Non-trading Company United States 20 St Thomas Street,
Limited London,
SE1 9RS
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
UtilityTeam US Inc 100% - Non-trading Company United States 919 North Market Street,
Suit
950 Wilmington, DE 19801
---------------------------- -------- -------- -------------------- ----------------- ---------------------------
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November 25, 2022 12:40 ET (17:40 GMT)
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