Eneraqua Technologies (ETP) , a provider of specialist energy and water efficiency solutions, updated markets on H1 2024 trading, which saw a return to a cash positive position, and its full-year outlook following recently announced government reforms to net nutrient rules.
H1 revenue is expected to be at least £26.0m, up from £24.3m, and the group returned to a net cash position of £0.5m. Eneraqua retains good revenue visibility, with the group's order book across Energy and Water standing at £146.3m, of which 48% is anticipated to be delivered through the remainder of FY24.
Some impact on client projects might come as a result of the UK Government unexpectedly announcing intentions to revise legislation governing development in nitrate-sensitive areas on August 29, 2023. However, the full details are pending, leaving the impact unclear. Eneraqua's water product line, including Control Flow HL2024 technologies, has helped developers offset nitrate emissions since 2017.
The proposed Levelling Up and Regeneration Bill could remove this obligation on developers, and its its place, there will be an enlarged mitigation programme through the Natural England Nutrient Mitigation Scheme. This scheme's current model involves generating credits for nutrient neutrality that developers purchase to counter emissions.
While Control Flow HL2024 technologies could benefit if the present approach of generating and supplying credits through the Nutrient Mitigation Scheme is maintained, the group expects clients to delay projects until there is greater clarity on scheme details, which is expected to have a negative impact on EBITDA by up to £2m.
In spite of this, Mitesh Dhanak, CEO of Eneraqua Technologies said “If the market-based credits approach is retained then it may create increased opportunities for our Control Flow HL2024 technologies as they are the lowest-cost nutrient mitigation solution available.”
“In the meantime, we have proactively considered the impact of this event in its entirety and are already focused on the mitigating actions we can take and will continue to monitor the situation as it evolves.”
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An impressive trading update from Eneraqua, coupled with some optimism surrounding increased opportunities for its technology if the market-based credits approach is retained by the government.
Eneraqua’s water offering is driven by targets to decrease buildings’ water consumption and therefore water costs. By installing Control Flow HL2024 to regulate flow, occupants can increase their water efficiency, decreasing both water and energy consumption. This is a primary focus for businesses with high levels of occupancy, such as hotels or care homes.
Eneraqua’s services are crucial in light of population growth and climate change, alongside inefficient water management and overexploitation, which put stress on water industries, in turn driving demand for increased water efficiency.
Better water efficiency also helps deliver carbon reduction goals through reductions in pump operations and hot water waste.
Eneraqua is expected to report full H1 2024 results on 11 October 2023, so make sure to to stay up to date.