eEnergy (EAAS ) described the last six months as a “transformational” period with the group achieving profitability for the period ended 31 December 2020

The Group, which operates as an "Energy Efficiency-as-a-Service" business across the UK and Ireland, said its business model was able to successfully navigate the impact of COVID-19 with new contract wins and accelerated light installations during the school holidays.

The Company highlighted that the number of LED lighting installations completed at schools and businesses in the UK & Ireland almost doubled in 1H21 to 111 (1H20: 57).

The increased recognition from larger schools and multi academy trusts has also driven the average contract value of each project up 50% when compared to the same period in the prior year.

The Group completed two acquisitions in line with its “buy and build” M&A strategy over the period. This included the acquisition of Renewable Solutions Lighting Ltd (“RSL”) as well as the acquisition of Beond Group Limited (“Beond”) in July and December 2020 respectively.

In particular, the completion of the group’s first acquisition, RSL enabled eEnergy to further expand its Light as a Service offering to the Academy and State Schools sector in the UK.

Financial Highlights

eEnergy reported revenue for the enlarged group soared over the period by 245% to £6.8m (1H20: £2m) with organic revenue up 140% to £4.5m (1H20: £2m) while the Group’s core business, eLight, saw its gross margin increase by 460 bps to 37.1% (1H20: 32.5%).

The Group’s business units reported positive operating EBITDA and eEnergy was able to generate a maiden profit before exceptional items £0.1m, in line with breakeven guidance.

Commenting on today’s half-year results, Harvey Sinclair, CEO of eEnergy states, "The last six months has been transformational for eEnergy which has seen the Group make real progress against its strategic objectives, despite the challenges of the pandemic. We are pleased to have delivered a small inaugural profit, in line with our breakeven guidance.”

‘This growth has been driven by increased demand for innovative energy efficiency solutions and a growing awareness of the importance for organisations to reduce their carbon footprint,’ it said, adding that its offering had proven popular in the education sector. 

In November 2020, the Group’s eLight division secured a £1 million contract, its largest-ever, to install LED Lighting at four secondary schools for a UK multi-academy trust.

Strengthening Balance Sheet with Additional Funding

In August 2020, eEnergy announced a major agreement with a new project funding partner, SUSI Partners AG ("SUSI"). Under the agreement, SUSI, via its Energy Efficiency Fund II, has provided a dedicated funding facility (the “Facility") to the Group of up to €15 million.

Given the opportunities perceived in the Irish and UK markets, the Group said it is working with SUSI to develop this agreement into a longer-term funding partnership, beyond the current committed Facility size and with the potential to fund LaaS projects in the UK.

The Company said this new funding structure provides the Group with ‘a significantly enhanced competitive advantage relative to the previous funding arrangements.’

eEnergy said the Facility provides its Irish business with greater flexibility to deploy capital, extend the contract length offered to customers and improves the Group’s economics.

As at 31 December 2020, cash at the bank was £2.8m (30 June 2020: £1.5m) and net cash (excluding IFRS 16lease liabilities) was reported at £0.6m (30 June 2020: £0.1m).

FY21 Outlook

The Board said it remains confident that Group revenue and gross profit remain in-line with its expectations for the full year to 30 June 2021. It told investors that it expects the Group to achieve a breakeven profit (before exceptional items) for the full year to 30 June 2021.

“Our market-leading, diversified offering continues to underpin the Board’s confidence that the Group will deliver strong growth over the next six months compared to the prior period, especially as the impact of the pandemic begins to ease, with the Board continuing to expect the Group to achieve a breakeven net income for the full year to 30 June 2021,” said Sinclair.

The Company added that it is currently evaluating several strategic opportunities in its pipeline “to build an integrated energy management and energy efficiency platform.”

eEnergy has delivered a strong first half outturn on both organic and total revenue growth metrics and continues to see “strong organic growth” as a result of increased demand in the market for energy efficiency solutions, particularly, for its EEaaS proposition. 

Future growth in the business appears underpinned by the both the increasing pace of projects completed during the six-month period and the increasing average value of each project. Furthermore, the successful acquisitions of RSL and Beond has provided the Group with further confidence in its accelerated growth strategy through M&A. 

Shares in eEnergy have seen an over three-fold increase in value since the beginning of June 2020 from a price of 5.25p.

Reasons to Follow EAAS

eEnergy intends to develop into a broader energy services company and acquire other businesses in the energy management sector. It is currently focused on providing ‘Light-as-a-Service’ to commercial customers and helps businesses and schools switch to LED lighting, typically for a fixed monthly service fee, avoiding any upfront payments.  

For businesses and schools, the energy savings are greater than the monthly service fee, allowing them to unlock free cash-flow from day one as well as to improve the quality of their lighting and reduce carbon emissions. 

Rapidly Expanding Market

The market in the EU for energy efficiency services was approximately €25 billion in 2017 and is expected to double by 2025.  

In November 2020, eEnergy launched the ‘Green Energy Initiative’, a scheme focused on helping more UK schools, which are eligible for part but not full Government funding, to reduce carbon emissions and save money by switching to cheaper, efficient LED lighting. 

The Initiative has been set up by eEnergy to work in conjunction with the Public Sector Decarbonisation Scheme ("PSDS"), a UK Governmental entity which provides grants for public sector bodies in order to fund energy efficiency and heat decarbonisation measures. 

eEnergy believes only 20% of schools have upgraded to date and expects to be able to increase its addressable market as the ‘Initiative’ will either make up any shortfall or fully fund the switch, using just its Funding Partners.  

Strong Supply Chain

In November 2020, eEnergy signed an exclusive OEM partnership with Venture Lighting Europe Limited ("VLE") to provide eLight-branded LED technology. 

Chosen after a tender process which included some of Europe's leading OEM manufacturers, with a 35-year heritage, VLE forms part of Advanced Lighting Technologies, a US-based group which has 600 employees and an annual revenue of over $130m. 

eEnergy believes an integrated supply chain for eLight will maximise operating efficiencies and is a significant market differentiator. In particular, it will hold dedicated stock lines for eLight, ‘significantly’ reducing the time that it takes to complete installation projects.

ESG merger and acquisitions strategy

eEnergy has an active ‘Climate Action Initiative’ with energy efficiency marked as the #1 solution for many commercial buildings to reduce their energy consumption. 

The Company has a declared M&A strategy in this space, which it expects to complement its core business and lead to an exciting ESG Investment Case for Investors. 

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