TIDMETP
RNS Number : 4081C
Eneraqua Technologies PLC
11 October 2022
11 October 2022
Eneraqua Technologies plc
("Eneraqua", the "Company" or the "Group")
Interim Results
92% uplift in H1 revenue and full revenue cover for FYJan23
Investment in people and infrastructure underpins growth
strategy
Eneraqua Technologies plc, a specialist provider of energy and
water efficiency solutions, is pleased to announce its interim
results for the six months ended 31 July 2022.
H1 FYJan23 Financial Highlights
- Revenue increased 92% to GBP24.2m (H1 FYJan22: GBP12.6m),
reflecting growth in contract wins and project completions.
- Gross profit increased 64% to GBP9.9m (H1 FYJan22: GBP6.1m),
reflecting growth in revenue with increased contract sizes and, as
expected, reduction in gross margin reflecting larger contract wins
and maturing market compared to H1 FYJan22.
- Adjusted EBITDA(1) GBP3.98m (H1 FYJan22: GBP3.23m) reflecting
the continued investment in the team and our delivery
capabilities.
- Adjusted profit before tax GBP3.07m (H1 FYJan22:
GBP2.98m).
- Gross cash of GBP6.5m and net debt of GBP0.2m (H1 FYJan22:
Gross cash of GBP4.5m and net cash of GBP0.03m) following
significant planned investment to manage increase in project
delivery.
- Adjusted diluted EPS: 6.48p.
Operational and Strategic Highlights
- Delivered on plan to move into agritech with first contract
secured to provide ClimateSmart Irrigation solution to the State of
Uttarakhand in India.
- Awarded multiple contracts with new and existing social
housing and private sector clients to provide heat pump solutions.
These will help them meet their sustainability and net zero goals
and reduce residents' energy bills.
- Awarded two English local authority contracts to deliver net
water neutrality pilot programmes, for residential new build, using
Control Flow products.
- Completed the acquisition of Mathewson Holdings Ltd
(Mathewson) on 29 July 2022, for an initial consideration of
GBP1.3m.
Post period end and Outlook
- The Group continues to trade well and expects to benefit from
the traditional H2 weighting of client procurement calendars.
- Strong pipeline of opportunities for the current year and
beyond with an order book(2) providing full revenue cover for the
Group's FYJan23 revenue target.
- Having reviewed the performance to date, the Board has
evaluated prospects for FYJan24 and increased its revenue target by
14% to GBP80 .1m, materially ahead of prior management
expectations.
- This increased FYJan24 revenue target is already 72% covered
by the order book(2) (82% based on prior FYJan24 revenue
target).
- Pre-launch costs of GBP0.5m to be incurred in the current
period to facilitate the move into a new B2C revenue stream via the
launch of our Control Flow HL2024 technology direct to consumers in
FYJan24.
Commenting on the results, Eneraqua Technologies CEO, Mitesh
Dhanak, said: "I am pleased to report on a solid first half, which
has positioned the Group to deliver on its targets for FYJan23 with
confidence. Our performance underpins the Company's growth plans in
the domestic and commercial energy markets as well as the water
sector. We are pleased to have increased revenue visibility through
our order book(2) , with the current financial year remaining fully
covered. We have increased the revenue target for FYJan24 to
GBP80.1m, materially ahead of prior management expectations, and
have 72% of this already covered.
"Looking forward, we expect to launch our water efficiency
product direct to consumers later this year. This has been proven
to reduce domestic water and energy consumption and utility bills.
We remain confident in our products and in our valued team and have
a clear strategy focused on expanding our current offering and
nurturing our strong client relationships. This strategy coupled
with our strong order book and trading in the first months of the
second half, leave the Group feeling confident for the future, as
demonstrated by the 14% revenue upgrade for FYJan24, and focused on
the next stage of its development."
An overview of the interim results is available to watch here:
https://bit.ly/ETP_H123o
Analyst Presentation
A presentation for analysts will be held today at 9:00am via
webinar. Analysts wishing to attend should contact
eneraqua@almapr.co.uk.
(1) Adjusted EBITDA - Adjusted for share based payment charges
(prior year also excludes IPO costs).
(2) Order Book defined as Contracted + Secured. Contracted =
project contract issued and signed, with work started or ready to
start. Secured = sum of a) tender process successful, awaiting
project contract, and b) Directors' assumed win rate on Framework
opportunities.
For more information, please contact:
Eneraqua Technologies plc Via Alma PR
Mitesh Dhanak, CEO www.eneraquatechnologies.com
Iain Richardson, CFO
finnCap Limited - Nominated adviser and
Joint Broker
Ed Frisby / Charlie Beeson - Corporate
Finance
Andrew Burdis / Sunila de Silva - ECM +44(0)20 7220 0500
Singer Capital Markets - Joint Broker
Sandy Fraser / Justin McKeegan / Rachel
Hayes +44(0)20 7496 3000
Alma PR - Financial PR and IR +44(0)20 3405 0205
Justine James / Sam Modlin / Will Ellis eneraqua@almapr.co.uk
Hancock
Notes to editors
Eneraqua Technologies (AIM:ETP) is a specialist in energy and
water efficiency. The Group designs and delivers improved energy
and water systems which utilise its wholly owned intellectual
property, Control Flow HL2024. Energy was the first market the
Company entered and this is the larger sector, with the Company
focused on clients with end of life gas, oil or electric heating
and hot water systems. The Group provides turnkey retrofit district
or communal heating systems based either on high-efficiency gas or
ground/air source heat pump solutions that support Net Zero and
decarbonisation goals.
Water is a growing service offering focused on water efficiency
upgrades for utilities and commercial clients including hotels and
care homes. It has also expanded into agritech systems.
The activities in both areas are underpinned by the Company's
wholly-owned intellectual property, the Control Flow HL2024 family
of products which reduce water wastage and improve the performance
of heating and hot water systems.
The Company's main country of operation is the United Kingdom.
The Company's head office is in London with additional offices in
Leeds, Washington (Sunderland), India, Spain and the Netherlands.
The Company has 144 employees, with the majority employed within
the UK. Eneraqua Technologies has received the London Stock
Exchange's Green Economy Mark.
To find out more, please visit: www.eneraquatechnologies.com
Operational Review
In the first half of the financial year, Eneraqua made strong
progress in delivering on its growth strategy with energy
efficiency clearly at the forefront of our clients' priorities both
in terms of carbon emissions and cost. Our success is due to the
great work of our team in delivering our client goals, enabling us
to continue to focus on delivering on the Group's strategic
objectives.
Having successfully raised funds at IPO last November, the
business has further strengthened its position in its target
sectors. The current macroeconomic environment, while difficult for
all, creates opportunities for the Group as the technologies we
provide are becoming increasingly important solutions in the
mission to reduce global carbon emissions and cut utility bills.
With a clear strategic plan for growth, we are well positioned to
help our customers navigate the issues of today by improving the
efficiency of their heating and water systems.
In Energy, our turnkey retrofit district and communal heating
systems, including ground and air source heat pump solutions, are
an important tool for clients in meeting their sustainability and
net zero goals. For their residents, it cuts their energy bills
substantially. Our public and private sector clients rely on and
welcome our impartial advice and ability to deliver the best
solution for their buildings.
Water harnesses the patented Control Flow HL2024 technologies
that reduce water wastage and improve the efficiency of heating and
hot water systems. Clients include water companies, developers,
hotels, schools and leisure centres, with the products installed in
both domestic and commercial settings. By reducing water wastage,
we can cut water consumption by up to 26% in homes and deliver
energy bill savings through improved performance of heating and hot
water systems.
Financial performance
Our half year trading was robust and demonstrated the solid
performance of the Group amidst a challenging economic environment.
Revenue for the half increased by 92% to GBP24.2m, demonstrating
the Group's ability to convert our new business pipeline into
contract wins and realised revenue. This has seen the average
contract size increase from GBP2.25m in H1 FYJan22 to GBP3.5m in H1
FYJan23. As expected at IPO, alongside this growth in contract size
there has also been a reduction in gross margin compared to the
previous period. We expect gross margin to stabilise at or around
34% during FYJan24.
Through the contract wins secured in the second half of FY22,
adjusted EBITDA(1) increased to GBP3.98m (H1 FYJan22: GBP3.23m),
whilst PBT increased to GBP2.95m (H1 FYJan22: GBP2.75m).
As we have noted previously, due to the nature of our customers
and their procurement calendars, our contract delivery and revenues
are weighted to the second half of our financial year.
As planned, we have invested in our teams and infrastructure to
deliver contracts this year and allow for future growth next year.
This is reflected in the increase in administrative expenses in the
period.
The phasing of contract delivery and the full impact of the
larger contracts is expected to deliver a strong second half of
this financial year. We expect a larger working capital requirement
at the year end due to the timing of contract payment terms and
need for early ordering of key components. The latter is required
on a growing number of contracts to ensure project delivery remains
in line with agreed timetables. The Company remains well
capitalised to fund growth in executing its order book through
existing resources and operating cash generation.
The strength of the Group's orderbook, which already provides
full revenue cover for its FYJan23 revenue target and 72% cover for
the increased FYJan24 target (82% based on prior FYJan24 revenue
target) , underpins the Board's positive outlook for the year.
Operational and strategic progress
Despite the challenges in the current economic environment,
Eneraqua remains on course to deliver substantial growth, with
strong performances from both the Energy and Water sectors in the
financial year to date. In Energy, the period saw major contract
wins with growing demand for our air and ground source based
systems. This was further highlighted by the announcement of our
post-period contract wins and extensions with new and existing
social housing and private sector clients, to provide heat pump
based solutions over a three-year period. The decision of clients
to extend existing contracts to cover additional buildings is a
great reflection of the quality of service and value for money that
our team delivers. Our strong company culture of delivering high
quality outcomes helps form and support strong relationships with
clients.
Water has continued to grow, with a focus on helping clients
improve their water efficiency. Alongside our core programmes to
improve domestic and commercial buildings, we also completed our
planned expansion into the agritech sector with a first contract
win in India, delivering our ClimateSmart Irrigation programme for
the State of Uttarakhand. Following the success of this project, we
are now in discussion with other states in India.
Water also saw the award of contracts with two English local
authorities to deliver net water neutrality programmes. Within the
UK there are 74 local authorities where there are concerns about
water stress and nitrate levels in the local area. This has led to
applications to build over 120,000 new homes becoming stuck in the
planning process. By using Control Flow HL2024 in existing homes in
the area, the pilot schemes showed it was possible to save enough
water to meet the needs of the new homes and thereby avoid placing
any additional demand on local water resources. Following the
success of the pilot programmes we are now in discussion with other
local authorities and developers that face this same issue.
The water neutrality pilot also demonstrated the substantial
energy and water bill savings for domestic households through
Control Flow HL2024. On average each household would save an
equivalent of cGBP360 per annum. Following this success, the Board
has decided to invest in a direct B2C offering. With pre-launch
costs of approximately GBP0.5m in the second half, this will create
a new and exciting revenue stream for the business.
Our Research and Development teams in Europe and India remain
focused on developing new, innovative solutions that help reduce
carbon emissions and water consumption in both buildings and
agriculture. We are on track to launch our new MeterSave product
later this year which allows for easier installation of the Control
Flow technology alongside the water meter. Our R&D teams have
submitted new patent applications and are now focused on the design
and development of follow-on products for new sectors.
Following the two acquisitions last year, we were delighted to
complete at the end of H1 FYJan23 the acquisition of Mathewson, an
established provider of underfloor heating solutions for the health
and commercial sectors. This acquisition extends our reach into the
healthcare sector and deepens our offering in the commercial sector
by broadening the services we offer clients. The integration of
Mathewson is underway and we expect a positive benefit from FY24
onwards.
The integration of Welltherm has continued during the period and
this has helped ensure that we continue to deliver key ground
source heat pump projects on time and in line with client
expectations as well as mitigating increasing costs in the
sub-contract drilling market. We have invested in additional
capacity in Welltherm in order to meet demand.
Expanding our growth opportunities
Our growth strategy continues to be underpinned by expanding our
offerings within both the Energy and Water sectors, whether that be
organically or inorganically. As previously discussed, Energy
continues to grow with a strong pipeline and healthy order
book.
Water is also seeing substantial growth, following recent
contract wins and the two ongoing net water neutrality pilot
programmes. Both these pilots and the agritech contract in India,
highlight the effect that investing in increasing the efficiency of
existing water systems can have on the local environment. With
water stress continuing to be a risk, compounded by the high
temperatures seen in many geographies in recent months, Water and
the solutions it provides will continue to help reduce water
wastage around the globe.
Market dynamics
Energy continues to see increasing demand for low-carbon
solutions from both existing and new clients. With greater
familiarity in the technology, most clients are now seeking to
replace old district heating systems with ground-source heat pump
systems. As well as reducing carbon emissions, these also offer
lower energy bills for tenants making them particularly attractive
in the current climate.
For commercial buildings, the drive for low carbon heating
remains strong. Due to the nature of these buildings, the typical
package is based on large air-source heat pumps to provide the bulk
of demand with gas boilers providing top-up heating and hot
water.
In Energy, our technology-agnostic approach allows us to
identify and advise clients on the best solution for their
building. This can be pure heat pump solutions as well as hybrid
gas-heat pump systems depending on the individual circumstance.
Coupled with our ability to provide turnkey technical and financial
design and delivery, this creates an important point of
differentiation to our competitors. For Water, our patented
technology offers a performance edge for clients.
Regulatory and financial stability is an important consideration
for us and our clients. A stable environment supports the long-term
investment required to address climate change and water stress
issues.
People and culture
As expected, in order to deliver our order book for this year
and beyond, we are investing in the growth of our team. During H1,
the Group grew from 113 to 144 full time equivalent team members.
We are now more than double in size compared to the 71 members at
the end of H1 FYJan22.
We take great care in recruitment and whilst it has been a
challenging job market, we are proud to offer an opportunity to
join an exciting business operating in an accelerating market
environment. This has paid dividends for the business and was
reinforced in our latest annual staff survey where over 95% of
staff responded. Key highlights included:
- 96% agreed or strongly agreed that they find the work they do meaningful;
- 96% were confident in the Company's direction; and
- 92% agreed or strongly agreed that the Company has a good culture.
Our Company purpose and core values were drawn up by a
cross-company group and these have been adopted and are owned by
our team. This has created a strong company culture based on
delivering quality outcomes that has under-pinned our success to
date.
Purpose: To inspire and deliver innovative solutions to support
our clients' needs
and create a sustainable planet.
Outlook
The Company continues to make great strides forward. We have
seen momentum in our order book pipeline and new client wins in
Energy and Water; we have seen existing customers sign new
contracts and extend their working relationships with us; and we
have seen the roll out of exciting new products and a further
business acquisition.
Despite the challenges being faced globally, our business has
moved to mitigate these through the identification of multiple
suppliers and diligent recruitment, leaving it well positioned to
navigate these unprecedented times of economic disruption. Our
customers remain focused on reducing their climate impact and we
continue to support them, as they too adapt to the current
financial environment.
In terms of our inorganic growth strategy, we are very pleased
with the success of our recent acquisitions and how they are
integrating within the Group. We continue to look for opportunities
which meet our strict investment criteria and will accelerate the
growth of our business technologically, geographically or through
the enhancement of our delivery and service.
We remain confident in our products and our team and have a
clear strategy focused on expanding our current offering and
nurturing our strong, existing client relationships. This strategy
coupled with our significant order book and robust trading in the
first months of the second half, leave the Directors feeling
confident for the future and, noting the performance to date, the
Board has reviewed prospects for FYJan24 and increased its revenue
target by 14% to GBP80.1m, materially ahead of prior management
expectations.
Financial Review
Strategy
The Group's strategy is based on developing and delivering
profitable solutions and products which help our clients reduce
their carbon consumption and improve their water efficiency.
In addition, we have continued with our inorganic growth
strategy outlined at the time of IPO, focussing on the acquisition
of strategic, bolt-on opportunities in the UK, such as the
acquisition of Mathewson Limited, and the exploration and
identification of targets in North West Europe, which would give
the Group the relevant accreditations and credentials to operate in
these areas.
KPIs
The Group's financial Key Performance Indicators, which are
aligned with its growth strategy include Revenue growth, gross
profit, Adjusted EBITDA, adjusted EBITDA margin and R&D
spend.
31 Jul 2022 31 Jul 2021
Revenue GBP24.2m GBP12.6m
Revenue growth 92% 53%
Gross profit GBP9.9m GBP6.1m
EBITDA GBP3.92m GBP3.00m
Adjusted EBITDA GBP3.98m GBP3.23m
Adjusted EBITDA margin 16.4% 25.6%
R&D spend GBP1.07m GBP0.7m
Revenue
Group revenues increased by 92% to GBP24.2m, (H1 FYJan22:
GBP12.6m). International revenues grew from GBP0.09m in H1 FYJan22
to GBP0.159m in H1 FYJan23. Group revenues include GBP0.7m from
Welltherm Drilling Limited, following its acquisition last
year.
Profits
As the Group has secured and delivered larger value contracts,
gross margins, as expected, have reduced reflecting the nature of
larger client contracts. The Group has experienced inflationary
price pressure from its subcontractor cost base, which it has been
able to be passed on to the client in most cases.
The strong growth in revenue supported the investment in
headcount and infrastructure required for those projects starting
in the current financial year. Adjusted EBITDA increased 23% to
GBP4.0m (H1 FYJan22: GBP3.2m), with the Group achieving Adjusted
EBITDA margins of 16%, as expected, after allowing for significant
investment in team and infrastructure to deliver the larger
contracts commencing in H2 FYJan23. This investment supports both
our current operations and future growth.
Statutory operating profit increased to GBP3.1m (H1 FYJan22:
GBP2.9m) and statutory profit before tax was GBP2.9m (H1 FYJan22:
GBP2.8m).
Acquisitions
On 29 July 2022, the Group acquired Mathewson Holdings Ltd and
its trading subsidiary, Mathewson Ltd, an established provider of
underfloor heating solutions for the health and commercial sectors,
for an initial consideration of GBP1.3m with further consideration
of GBP0.35m payable over two years.
Headcount
The Group's full time equivalent (FTE) employees at 31 July 2022
were 144 (31 July 21: 71). This growth reflects the acceleration in
recruitment in order to support the Group's growth strategy.
Headcount also includes 12 Welltherm Drilling Limited employees,
following the acquisition of this business in September 2021.
Cash flow & cash position
The Group saw a cash outflow in the first half of the year as it
managed its project delivery timetable, requiring the forward
purchasing of key items on a number of projects.
Gross cash at 31 July 2022 was GBP6.5m (H1 FYJan22 GBP4.5m) with
net debt GBP0.2m (H1 FYJan22 net cash GBP0.03m).
The Group experienced a working capital outflow in the period
due to the timing of a number of trade creditor payments at the
start of the financial year. As a result of the global supply chain
issues, the Group has continued to forward order key material
components for its larger contracts, which are passed on to and
paid for by clients once the materials have been delivered,
impacting on working capital.
Capital expenditure was limited in H1, being GBP0.1m of deposits
for new drill rigs, due for delivery by the end of the calendar
year. In addition, there was a further outflow of GBP1.3m for the
acquisition of Mathewson.
During the period the Group secured new banking facilities with
HSBC UK Plc for an aggregate of GBP6.0m. The new facility will
support the Group in its growth strategy, both in terms of working
capital requirements and acquisition opportunities.
The Group ended the period with net debt (excluding IFRS 16
right of use lease liabilities) of GBP0.2m compared with GBP0.03m
of net cash at 31 July 2021, following the drawdown of the Group's
new debt facility.
Outlook
The Group is in a strong position with a healthy balance sheet,
well funded to be able to execute on its strong order book and
growth strategy. The Group is well placed to deliver another set of
strong results, as we continue to benefit from continued organic
growth.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 July
Six months Six months Twelve
to 31 Jul to 31 Jul months to
Note 2022 2021 31 Jan 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------------ ------- ----------- ----------- -------------
Continuing operations
Revenue 3 24,246 12,633 36,176
Cost of sales (14,327) (6,578) (21,572)
------------------------------------------------------ ------- ----------- ----------- -------------
Gross profit 9,919 6,057 14,604
Administrative expenses (6,868) (3,206) (10,171)
Other operating income - - -
------------------------------------------------------ ------- ----------- ----------- -------------
Included within administrative
expenses are:
* Exceptional items 4 - (225) (1,178)
* Share based payments (58) - -
* Depreciation of property, plant and equipment (666) (30) (618)
* Depreciation of right-of-use assets (14) (44) (113)
* Amortisation of intangible assets (191) (82) (381)
----------- ----------- -------------
Adjusted administrative expenses (5,939) (2,825) (7,881)
----------- ----------- -------------
Adjusted EBITDA(1) 3,980 3,232 6,723
------------------------------------------------------ ------- ----------- ----------- -------------
Operating profit 3,051 2,851 4,433
Interest payable and similar
expenses (100) (100) (366)
------------------------------------------------------ ------- ----------- ----------- -------------
Profit before taxation 2,951 2,751 4,067
Income tax (757) 159 (8)
------------------------------------------------------ ------- ----------- ----------- -------------
Profit for the period from
continuing operations 2,194 2,910 4,059
Total profit for the period
attributable to equity holders
of the parent
Other comprehensive income - (66) -
------------------------------------------------------ ------- ----------- ----------- -------------
Total comprehensive income
for the period attributable
to equity holders of the parent 2,194 2,844 4,059
====================================================== ======= =========== =========== =============
Other comprehensive income relates to the translation of foreign
operations.
The accompanying notes form part of the condensed interim
consolidated financial statements
(1) Adjusted EBITDA is considered to be a Key Performance
Indicator and consistent with how the Group measures trading and
cash generative performance. Note this is an Alternative
Performance Measure and is a non-IFRS measure.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 Jul 31 Jul 2021
2022 GBP'000 31 Jan 2022
Note GBP'000 GBP'000
--------------------------------- -----
Non-current assets
Intangible assets 8,505 6,736 7,218
Property, plant and equipment 2,868 3,061 3,095
Right-of-use assets 207 330 243
Deferred tax asset - 44 -
--------------------------------- -----
Total non-current assets 11,580 10,172 10,556
--------------------------------- -----
Current assets
Inventory 1,236 921 1,186
Trade and other receivables 13,148 3,856 12,389
Cash and cash equivalents 6,521 4,459 4,070
--------------------------------- -----
Total current assets 20.905 9,236 17,645
--------------------------------- ----- --------- ------------ ------------
TOTAL ASSETS 32,485 19,408 28,201
================================= ===== ========= ============ ============
Equity attributable to
owners of the parent
Called up share capital 344 3 344
Share premium account 10,113 457 10,113
Merger reserve (5,490) - (5,490)
Other reserves (624) (10) (294)
Retained earnings 13,963 4,671 11,769
--------------------------------- ----- --------- ------------ ------------
Total equity 18,306 5,120 16,442
--------------------------------- ----- --------- ------------ ------------
Current liabilities
Borrowings 7 2,310 812 -
Trade and other payables 7,248 9,507 11,426
Lease liabilities 118 119 82
--------------------------------- ----- --------- ------------ ------------
Total current liabilities 9,676 10,438 11,508
--------------------------------- ----- --------- ------------ ------------
Non-current liabilities
Borrowings 7 4,404 3,612 -
Lease liabilities 32 238 109
Deferred tax liability 67 - 142
Total non-current liabilities 4,503 3,850 251
Total liabilities 14,179 14,288 11,759
--------------------------------- ----- --------- ------------ ------------
TOTAL EQUITY AND LIABILITIES 32,485 19,408 28,201
================================= ===== ========= ============ ============
The accompanying notes form part of the condensed interim
consolidated financial statements
CONSOLIDATED STATEMENT OF CASHFLOWS
For the six months ended 31 July
GROUP Six months Six months Twelve
to 31 Jul to 31 Jul months to
2022 2021 31 Jan 2022
GBP'000 GBP'000 GBP'000
----------- ----------- -------------
Cash flow from operating activities
Profit for the financial period 2,194 2,910 4,059
Adjustments for:
Amortisation of intangible assets 191 82 381
Depreciation of property, plant
and equipment 666 30 618
Depreciation on right-of-use assets 14 44 113
Interest payable 100 1 330
Lease liability finance charge 19 13 36
Taxation charge / (credit) 756 (159) 8
Corporation tax received / (paid) - 380 380
Foreign exchange - 33 (38)
Share based payment charge 58 - 333
Changes in working capital:
Increase in inventory (50) (30) (295)
Increase in trade and other receivables (759) (949) (9,540)
(Decrease) / increase in trade
and other payables (5,386) 570 7,278
Net (outflow) / increase from
operating activities (2,197) 2,927 3,663
------------------------------------------- ----------- ----------- -------------
Cash flow from investing activities
Purchase of intangible assets (285) (354) (549)
Purchase of property, plant and
equipment (113) (350) (2,722)
Acquisition of businesses - net
of cash acquired (1,319) (1,665) (5,111)
Interest received - - -
Net cash outflow from investing
activities (1,717) (2,369) (8,382)
------------------------------------------- ----------- ----------- -------------
Cash flows from financing activities
Proceeds from borrowings 7,340 - 9,998
Repayment of borrowings (786) (383) (4,972)
Interest paid (100) - (330)
Repayment of lease liabilities (89) - (191)
------------------------------------------- ----------- ----------- -------------
Net cash inflow from financing
activities 6,365 (383) 4,505
------------------------------------------- ----------- ----------- -------------
Net increase / (decrease) in
cash and cash equivalents 2,451 175 (214)
Cash and cash equivalents at beginning
of period 4,070 4,284 4,284
Cash and cash equivalents at
the end of the period 6,521 4,459 4,070
------------------------------------------- ----------- ----------- -------------
The accompanying notes form part of the condensed interim
consolidated financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 July
Share Share Merger Other Retained Total
Capital Premium Reserve Reserves Earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 February 2021 3 456 - 56 1,761 2,276
Profit for the period - - - - 2,910 2,910
Other comprehensive
income - - - (66) - (66)
------------------------- --------- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - (66) 2,910 2,844
Balance at 31 Jul
2021 3 456 - (10) 4,671 5,120
------------------------- --------- --------- --------- ---------- ---------- --------
At 1 Aug 2021 3 456 - (10) 4,671 5,120
Profit for the period - - - - 1,149 1,149
Other comprehensive
income - - - 66 - 66
------------------------- --------- --------- --------- ---------- ---------- --------
Total comprehensive
income for the period - - - 66 1,149 1,215
Merger reserve (3) (456) (5,490) - 5,949 -
Issue of shares 344 11,996 - - - 12,340
Share issue costs - (1,883) - - - (1,883)
Other, including
share based payments
and foreign exchange
reserves - - - (350) (350)
Total transaction
with owners 341 9,657 (5,490) (350) 5,949 10,107
Balance at 31 Jan
2022 344 10,113 (5,490) (294) 11,769 16,442
------------------------- --------- --------- --------- ---------- ---------- --------
At 1 February 2022 344 10,113 (5,490) (294) 11,769 16,442
Profit for the period - - - - 2,194 2,194
Other comprehensive
income - - - - - -
------------------------- --------- --------- --------- ---------- ---------- --------
Total comprehensive
profit for the period - - - - 2,194 2,194
------------------------- --------- --------- --------- ---------- ---------- --------
Other, including
share based payments
and foreign currency
reserves - - - (330) - (330)
------------------------- --------- --------- --------- ---------- ---------- --------
Total transaction
with owners - - - (330) 2,194 1,864
------------------------- --------- --------- --------- ---------- ---------- --------
Balance at 31 July
2022 344 10,113 (5,490) (624) 13,963 18,306
========================= ========= ========= ========= ========== ========== ========
The accompanying notes form part of the condensed interim
consolidated financial statements
Notes to the financial information
1. BASIS OF PREPARATION
The figures for the six months ended 31 July 2022 and 31 July
2021 are unaudited and do not constitute statutory accounts.
As permitted, the Company has chosen not to adopt IAS 34
"Interim Financial Statements" in preparing this Interim Financial
Information. The accounting policies adopted are consistent with
those applied by the Group in the preparation of the annual
consolidated financial statements for the year ended 31 January
2022.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. Several
amendments and interpretations apply for the first time in 2022,
but these do not have a material impact on the interim condensed
consolidated financial statements of the Group. The financial
information for the year ended 31 January 2022 set out in this
interim report does not comprise the Group's statutory accounts as
defined in section 434 of the Companies Act 2006.
The statutory accounts for the year ended 31 January 2022, which
were prepared under international accounting standards in
conformity with the requirements of the Companies Act 2006, have
been delivered to the Registrar of Companies. The auditors reported
on those accounts; their report was unqualified and did not contain
a statement under either Section 498(2) or Section 498(3) of the
Companies Act 2006 and did not include references to any matters to
which the auditor drew attention by way of emphasis.
1.1 Critical accounting judgements and key sources of estimation uncertainty
The preparation of condensed Interim Financial Information
requires the Directors to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. There are no changes to
critical accounting judgements and key sources of estimation
uncertainty from those disclosed in the annual accounts for the
year ended 31 January 2022.
2. SEGMENT REPORTING
The following information is given about the Group's reportable
segments:
The Chief Operating Decision Maker is the executive Board of
Directors. The Board reviews the Group's internal reporting in
order to assess performance of the Group. Management has determined
the operating segment based on the reports reviewed by the
Board.
The Board considers that during the period ended 31 July 2022
the Group operated in the three business segments according to the
geographical location of its operations and those being:
- United Kingdom
- Europe; and
- India
United
Six months to 31 July 2022 Kingdom Europe India 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- -------- -------- ---------
Revenue 24,087 66 93 24,246
Cost of sales (14,231) (80) (16) (14,327)
--------- -------- -------- ---------
Gross Profit 9,856 (14) 77 9,919
Administrative expenses (5,976) (801) (91) (6,868)
------------------------------------------------------------ --------- -------- -------- ---------
Included within administrative
expenses are:
* Exceptional costs - - - -
* Share based payments (58) - - (58)
* Depreciation of property, plant and equipment (348) (306) (12) (666)
* Depreciation of right-of-use assets (14) - - (14)
* Amortisation of intangible assets (191) - - (191)
--------- -------- -------- ---------
Adjusted administrative expenses (5,365) (495) (79) (5,939)
--------- -------- -------- ---------
Adjusted EBITDA(1) 4,491 (509) (2) 3,980
------------------------------------------------------------ --------- -------- -------- ---------
Operating profit/(loss) 3,880 (815) (14) 3,051
Interest receivable and similar
income - - - -
Interest payable and similar
expenses (83) (17) - (100)
Profit/(Loss) before tax 3,797 (832) (14) 2,951
Taxation (756) - (1) (757)
--------- -------- -------- ---------
Profit/(Loss) after tax 3,041 (832) (15) 2,194
--------- -------- -------- ---------
Net Assets as at 31 July
2022
Assets: 27,679 3,748 242 31,669
Liabilities (11,998) (1,348) (17) (13,363)
--------- -------- -------- ---------
Net assets / (liabilities) 15,681 2,400 225 18,306
--------- -------- -------- ---------
United
Six months to 31 July 2021 Kingdom Europe India 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- -------- -------- ---------
Revenue 12,624 - 9 12,633
Cost of sales (6,523) (50) (3) (6,576)
--------- -------- -------- ---------
Gross Profit 6,102 (50) 6 6,058
Administrative expenses (2,989) (211) (7) (3,206)
Other operating income - - - -
--------- -------- -------- ---------
Operating profit 3,113 (261) (1) 2,851
Interest receivable and
similar income - - - -
Interest payable and similar
expenses (94) (6) - (100)
Profit before tax 3,019 (267) (1) 2,751
Taxation 159 - - 159
--------- -------- -------- ---------
Profit after tax 3,178 (267) (1) 2,910
--------- -------- -------- ---------
Net Assets as at 31 July
2021
Assets: 9,512 9,848 48 19,408
Liabilities (10,240) (4,031) (17) (14,288)
--------- -------- -------- ---------
Net assets / (liabilities) (728) 5,817 31 5,120
--------- -------- -------- ---------
Twelve months to 31 January United
2022 Kingdom Europe India 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- -------- -------- ---------
Revenue 35,918 216 42 36,176
Cost of sales (21,350) (187) (35) (21,572)
--------- -------- -------- ---------
Gross profit 14,568 29 7 14,604
Administrative expenses (8,974) (1,079) (118) (10,171)
------------------------------------------------------------ --------- -------- -------- ---------
Included within administrative
expenses are:
* Exceptional costs (1,178) - - (1,178)
* Depreciation of property, plant and equipment (132) (485) (1) (618)
* Depreciation of right-of-use assets (113) - - (113)
* Amortisation of intangible assets (339) (42) - (381)
--------- -------- -------- ---------
Adjusted administrative
expenses (7,212) (552) (117) (7,881)
--------- -------- -------- ---------
Adjusted EBITDA(1) 7,356 (523) (110) 6,723
------------------------------------------------------------ --------- -------- -------- ---------
Operating profit/(loss) 5,594 (1,050) (111) 4,433
Interest receivable and
similar income - - - -
Interest payable and similar
expenses (366) - - (366)
--------- -------- -------- ---------
Profit/(Loss) before tax 5,228 (1,050) (111) 4,067
Taxation (7) (1) - (8)
--------- -------- -------- ---------
Profit/(Loss) after tax 5,221 (1,051) (111) 4,059
--------- -------- -------- ---------
Net Assets
Assets: 24,847 3,245 109 28,201
Liabilities (9,208) (2,538) (13) (11,759)
--------- -------- -------- ---------
Net assets 15,639 707 96 16,442
--------- -------- -------- ---------
3. REVENUE
Twelve months
Six months Six months to 31 Jan
to 31 Jul to 31 Jul 2022
2022 2021 GBP'000
GBP'000 GBP'000
-------------------- ----------- ------------- --------------
United Kingdom 24,087 12,624 35,918
Europe 66 - 216
Rest of the World 93 9 42
24,246 12,633 36,176
----------- ------------- --------------
4. EXCEPTIONAL COSTS
Exceptional costs of GBPnil (six months to 31 July 2021:
GBP224,900; twelve months to 31 January 2022: GBP1,178,000) relate
to non-incremental costs associated with the initial public
offering of the Group.
5. OPERATING PROFIT
Operating profit from continued operations is stated after
charging / (crediting):
Twelve
Six months Six months months
to 31 Jul to 31 Jul to 31 Jan
2022 2021 2022
GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ------------- ------------
Depreciation of property,
plant and equipment 666 30 618
Depreciation of right-of-use
assets 14 44 113
Amortisation of fixed assets 191 82 381
Inventories recognised as
an expense - - 1
Research and development costs 67 - -
Share based payments 58 - 17
Exchange differences 75 33 (20)
Research and development costs in H1 FYJan2023 relate to the
development of new applications for HL2024 products. These were
incurred in the United Kingdom and were written off to the
statement of comprehensive income.
6. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
calculated by dividing the profit for the period by the weighted
average number of ordinary shares in issue during the period.
Six months Six months Twelve months
to 31 Jul to 31 Jul to 31 Jan
2022 2021 2022
------------------------------------ ----------- ----------- --------------
Profit for the period from
continuing operations - GBP'000 2,194 2,910 4,059
Weighted number of ordinary
shares in issue 33,558,207 253,774 22,204,677
Weighted number of fully
diluted ordinary shares in
issue 33,890,880 - 147,183
------------------------------------- ----------- ----------- --------------
Basic earnings per share
from continuing operations
- pence 6.54 1,146.69 18.28
Diluted earnings per share
from continuing operations
- pence 6.48 1,146.69 18.16
------------------------------------- ----------- ----------- --------------
Prior to the IPO, the number of shares is based on Cenergist
Limited. From the date of the IPO, the number of shares is based on
the Company.
7. BORROWINGS
31 Jul 2022 31 Jul 2021 31 Jan 2022
GBP'000 GBP'000 GBP'000
--------------- ------------ ------------ ------------
Current 2,310 812 -
Non-current 4,404 3,612 -
6,714 4,424 -
------------ ------------ ------------
Analysis of maturity of loans is given below:
31 Jul 2022 31 Jul 2021 31 Jan 2022
GBP'000 GBP'000 GBP'000
----------------------------- ------------ -------------- --------------
Amounts falling due within
one year
Other loans 2,310 812 -
Amounts falling due 1-2
years
Other loans 1,612 899 -
Amounts falling due 2-5
years
Other loans 2,792 2,713 -
6,714 4,424 -
------------ -------------- --------------
Other loans relate to a GBP6,000,000 facility provided by HSBC
to Cenergist Limited and a EUR1,500,000 facility provided to
Cenergist Spain SL by CLM, and are secured by fixed and floating
charges over the assets of the Company and by cross guarantees from
the Company's subsidiary undertakings.
Interest on the HSBC facility is at a rate of 3.450% over the
Bank of England Base Rate with the repayment period being 48 months
from date of individual tranche drawdown.
Interest on the CLM facility is at a rate of 3.50% with the
repayment period being 84 months from date of individual tranche
drawdown.
8. BUSINESS COMBINATION
On 29 July 2022 Cenergist Limited acquired all of the share
capital of Mathewson Holdings Limited ("Mathewson"). Mathewson
provides a complete service in underfloor heating solutions from
original specification, planning and drawings through to final
surface finish.
Background and Rationale
Mathewson and its subsidiary, Mathewson Limited are an
established provider of underfloor heating solutions in the health
and commercial sectors.
The acquisition extends the Group's low carbon offering into the
healthcare sector and strengthens its offering in other commercial
sectors where Mathewson provides underfloor heating solutions.
For the 10 months ended 30 June 2022, Mathewson recorded
revenues of GBP813,000 with a net profit before tax of
GBP205,000.
Consideration
The total consideration for the acquisition, assuming all
earn-out payments are made, will be GBP1.7 million. The
consideration, is structured as follows:
Initial consideration, payable in cash on completion of GBP1.3
million; and
Contingent consideration of GBP0.4m, payable over the course of
24 months, in 3-monthly instalments. The first instalment is
payable on 30 September 2022.
The initial estimates of the fair value of the assets acquired
and liabilities assumed of Mathewson Limited at the date of
acquisition are as follows:
GBP'000
-------------------------------------------------------- --------
Cash at bank 313
Inventory 60
Other receivables 676
Trade and other payables (132)
--------
Total identifiable net assets / (liabilities) acquired 917
Goodwill 817
--------
1,734
Consideration
Initial consideration 1,320
Deferred consideration 414
--------
Total consideration 1,734
--------
Note that the above assessment is not yet finalised.
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.
9. EVENTS SUBSEQUENT TO PERIOD
The Group has not identified any subsequent event to be
reported.
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END
IR FLFSAIALILIF
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