eEnergy (AIM: EAAS ) has secured its first contract win to provide solar power together with LED lighting in a single contract with the international manufacturer British Gaskets Limited. 

The UK and Ireland-focused Energy Efficiency-as-a-Service business said the single site contract, valued at around £0.4m, covers a solar power system, together with LED lighting. 

The contract is with British Gaskets Limited ("British Gaskets"), a UK based international manufacturer and supplier of gaskets, seals, plastic and rubber mouldings and materials. 

Over the 20 year lifetime of the system, the Board anticipates a total customer cost saving, at today's prices, of almost £1.4m and a reduction of CO2 emissions of around 576,000 tonnes. 

Harvey Sinclair, Group CEO, commented "This contract represents a major milestone for the Group as we begin to offer joined-up energy-as-a-service solutions to customers.  Our offer is being well received by the market and this blueprint for material energy and cost savings, coupled with significant decarbonisation is compelling for customers and the environment.  

He added, “This contract gives us the confidence that we're on track to deliver results for FY22 in-line with current market expectations." 

The Board continues to expect trading for FY22 to be in-line with market expectations. In a recent trading update for the year to 30 June 2021, eEnergy described the period as “transformational” demonstrating strong growth with revenue rising 200% from FY20. 

eEnergy reported full year revenue growth of 200% to £13.5m from £4.5m in FY20 and organic revenue growth of 75% in its core eLight business which generated £7.9m. eEnergy’s Energy Efficiency Division saw revenue grow by over 150% to £11.4m (FY20 - £4.5m). 

The Group reported adjusted EBITDA at £0.7m compared to a loss of £1.5m in FY20 with all core business units of eEnergy becoming profitable on an EBITDA basis for FY21. Profit before and after tax and before exceptional items rose to £0.1m from a loss of £1.9m. 

Cash balance as at 30 June 2021 was £3.2m, more than doubling from £1.5m in FY20.  

The Company’s primary focus during FY21 in both the UK and Ireland has been on the education sector, which has accounted for approximately 85% of revenue in FY21. 

While eEnergy’s pipeline of opportunities continues to grow, the Board highlighted to shareholders that it remains ‘highly confident that the fundamentals of the market and associated regulatory drivers provide a significant opportunity for growth in the medium term.’ 

Shares in eEnergy Group have increased by nearly 50% in value since the beginning of 2021. The stock was trading 8.57% higher immediately following the announcement at 19p 

Reasons to  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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