TIDMUTW
RNS Number : 8385O
Utilitywise plc
24 August 2017
24 August 2017
Utilitywise plc
("Utilitywise" or the "Group")
Trading Update
Utilitywise, the leading independent utility cost management
consultancy, today provides an update on trading for the year ended
31 July 2017. The Group will announce its full year results on 17
October 2017. The Board confirms that the Group has performed in
line with the expectations it announced on 31 July 2017.
As previously announced, the Group adopted IFRS 15 (Revenue from
Contracts with Customers) on 1 August 2017. Accordingly, the year
ended 31 July 2017 will be the final year that the Group reports
under the existing revenue accounting standard, IAS 18 (Revenue)
and all references to revenue and profit herein are based upon IAS
18 accounting policies(1) .
The Board expects to report Group revenue for the year of c. 3%
higher than the prior year and adjusted (2) profit before tax of c.
40% lower than the prior year. The fall in adjusted (2) profit
before tax is primarily because of an adjustment recognised in
respect of projected under-consumption of contracts, as announced
on 29 June 2017, and the deferral of certain significant renewals
contracts, announced on 31 July 2017.
Enterprise Division
The Enterprise Division, delivered a strong underlying operating
performance during the year, despite the issues outlined above. It
serves the SME market and represents the vast majority of the
Group's expected adjusted(2) profit before tax for the year ended
31 July 2017.
Additions to the gross order book totalled GBP99.2m, an increase
of 17.3% compared to GBP84.5m in the prior year. This was the
result of a number of planned productivity improvement initiatives,
which included, inter alia, enhanced operational management and a
reduction in sales force headcount from 625 to 550 during the
year.
The secured future revenue ("Order Book") increased by 17.4%
during the year on a like for like basis. The Order Book value as
at 1 August 2017, stated after the adoption of IFRS 15, was
GBP46.1m, of which c. GBP26.3m is expected to be recognised as
revenue during the financial year ended 31 July 2018, as a result
of the adoption of IFRS 15(3) . A reconciliation of the movement in
the Order Book during the year is set out later in this
announcement.
The European operation performed well, with an increase in
revenue and operating profit compared to the prior year.
Corporate Division
The Corporate Division, which services larger organisations and
represents less than 10% of the Group's expected adjusted(2) profit
before tax for the year ended 31 July 2017, saw a reduction in
revenue compared to the year ended 31 July 2016. The profit of the
division in the second half of the year was broadly in line with
the first half profit, as the business continues to build a
pipeline of future work.
The Corporate division continues to form a key part of the
Group's Strategy for Growth, as announced in March 2017, and The
Board remains confident in the medium-term prospects for this
Division.
Net debt
The Board expects to report that net debt at 31 July 2017 was c.
GBP19.0m, compared to GBP5.5m at 31 July 2016 (as restated). The
main reason for the increase during the year was the decision to
discontinue the acceptance of advance cash receipts from certain
energy suppliers, in respect of new business not yet written, as
announced in the Group's interim results in April 2017. The
year-end net debt was lower than management expectations, primarily
due to GBP1.0m of legacy supplier cash advances, previously
expected to have been repaid before the year-end, remaining
outstanding at 31 July 2017. It is now anticipated that it will be
repaid during the year ended 31 July 2018.
Brendan Flattery, CEO of Utilitywise, commented:
"Although the Company endured some headwinds in the period which
impacted our financial performance in the short term, there have
been a number of underlying improvements in the business which
auger well for the future. Productivity gains in our Enterprise
Division, which represents the majority of our profits, have led to
a significant increase in our order book. Looking forward, our
revenues and profits will now be more closely aligned to our cash
generation, and the secured future revenue balance of GBP46.1m at 1
August 2017 gives us increased visibility of future performance.
With our portfolio of energy services and strong customer service,
Utilitywise has a solid platform for future growth. I look forward
to providing further details in our year end results statement in
October."
Reconciliation of Order Book during the year
GBP'm
Prior to adoption of IFRS 15:
Opening order book 1 August
2016 (100% basis) 25.6
Restatement for leakage and
net objection rate (6.6)
------
Opening Order Book 1 August
2016 (restated) 19.0
Net order book growth in the
year 3.3
------
Closing Order Book 31 July
2017 (85% basis) 22.3
Adoption of IFRS 15:
Change contract initial recognition
from 85% to 80% (1.3)
Same supplier renewals deferred
to contract start date 25.1
Order Book 1 August 2017 46.1
------
The Order Book on 1 August 2017 is stated on an assumed future
revenue recognition of 80% of estimated total value of procurement
contracts, subsequent to the adoption of IFRS 15.
(1) With the exception of references to Order Book as at 1
August 2017, which are presented on the basis of IFRS 15 adoption,
given its impact upon the year ended 31 July 2018 and beyond.
(2) Adjusted profit before tax means stated before exceptional
items, non-cash accounting charges for share-based payments and
amortisation relating to acquired intangible assets.
(3) Under IFRS 15, revenue on both new business and same
supplier renewals is recognised at the point of contract
commencement
For further information
Utilitywise plc 0330 303 0233
Brendan Flattery (CEO)
Richard Laker (CFO)
finnCap (NOMAD and broker) 020 7220 0500
Matt Goode / Henrik Persson (Corporate
Finance)
Simon Johnson (Corporate Broking)
Liberum (Joint broker) 020 3100 2000
Robert Morton / Steve Pearce
Redleaf Communications 020 7382 4730
Robin Tozer / David Ison
Utilitywise is a leading independent utility cost management
consultancy, which has established trading relationships with a
number of major UK and European energy suppliers and provides
services to its customers designed to assist them in achieving
better value out of their energy contracts, reduced energy
consumption and lower carbon footprint. Utilitywise is a UK company
quoted on the AIM market of the London Stock Exchange. For more
information, please visit www.utilitywise.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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