Source - RNS
RNS Number : 7690M
Utilitywise plc
18 October 2016
 

18 October 2016 

Utilitywise plc

("Utilitywise" or the "Group")

Final Results 

Utilitywise plc (AIM: UTW), a leading independent utility cost management consultancy, is pleased to announce its audited full- year results for the year ended 31 July 2016.

 

Financial highlights

 

 

2016

(£000)

 

2015

 (£000)

 

% change

Revenue

84,428

 

69,106

+22%

Gross profit

32,791

 

30,296

+8%

EBITDA*

18,268

 

17,785

+3%

Profit before tax**

17,769

 

16,662

+7%

Diluted earnings per share# 

18.5p

 

17.9p

+3%

Total dividend for the year

6.5p

 

5.0p

+30%

Net debt

(£0.2m)

 

(£6.7m)

-97%

 

 

 

 

 

Operational highlights:

·     35% growth in Enterprise UK and Ireland order book additions to £84.5m, driven by productivity gains and multi-channel strategy

·     Improved supplier terms led to a substantial improvement in net debt

·     UK and Ireland customer numbers increased 23% to 32,000

·     International customer numbers increased 49% to 6,500

·     Partnership agreement signed with Dell to advance Energy Services offering

 

Post period end highlights:

·     Energy consultant headcount increased to 637 as at 30th September 2016

·     Future secured revenue as at 30 September 2016 - £28.3m

·     Appointment of Brendan Flattery as Group Chief Executive

 

Geoff Thompson, Executive Chairman of Utilitywise, commented:

"I am very pleased with the progress we are making at building a capability that has no direct comparator in the Industry. The strength of the procurement offering has provided a great foundation to make significant investment in our wider Energy Services capabilities allowing the Group access to significant growth opportunities going forward. This period of investment has positioned us very well for strong and sustainable growth with our broadened and differentiated offering. Strong operating cashflow generation contributed to a much improved cash position at the year end and the 30% increase in the dividend for the full-year is a sign of the confidence with which we enter the new year. I welcome Brendan Flattery to the CEO role and look forward to working with him." 

 

Brendan Flattery, Chief Executive of Utilitywise, commented:

"I have had a very enjoyable and positive first couple of weeks in the business, meeting over 1,000 colleagues, and engaging with many customers and partners in that short time. It is clear that we have a fantastic opportunity to build on the strong business that Geoff founded and built in the last ten years. I am looking forward to driving a new wave of innovation, bringing new products, services and technologies to life that enhance our strong procurement proposition, add value to customers, create direct relationships and differentiate the Utilitywise brand." 

 

 

*Excluding share based payment expenses of £0.6m (2015: £0.7m), exceptional items relating to acquisition costs of £nil (2015: £0.6m), legal, restructuring and re-organisation costs of £1.2m (2015: £0.2m), exceptional impairment of goodwill £1.3m (2015: £nil) and exceptional credit of £5.7m (2015: £0.2m) relating to the release of a contingent consideration (2015: relating to the release of a brought-forward provision).

 

** As above, and excluding amortisation relating to acquired intangibles of £1.9m (2015: £1.2m)

# As above, and including the tax impact of the above adjustments.

 

For further information: 

Utilitywise plc
 
 
0330 303 0233
Geoff Thompson (Executive Chairman)
 
 
Brendan Flattery (CEO)
 
 
 
Jon Kempster (CFO)
 
 
 
 
finnCap (NOMAD and broker)
 
 
020 7220 0500
Matt Goode/ Grant Bergman (Corporate Finance)
 
 
Simon Johnson (Corporate Broking)
 
 
 
 
 
 
 
Liberum (Joint broker)
 
 
 020 3100 2000
Robert Morton/ Steve Pearce
 
 
 
 
 
 
 
Redleaf Communications
 
 
020 7382 4730
Rebecca Sanders-Hewett/ David Ison/ Susie Hudson
 
 
 

 

About Utilitywise

Utilitywise is a leading independent utility cost management and services consultancy based in Newcastle. The Group 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.

 

 

Strategic Report

Outgoing Chairman's Statement

During my role as Chairman in the period I am pleased to report another year of growth. Revenue increased by 22% in the year to £84.4m, delivering adjusted EBITDA* for the period of £18.3m and adjusted profit before tax** of £17.8m, increases of 3% and 7% respectively.  This growth has principally been driven by our Enterprise Division.

The demand for our range of products and services remains strong and our confidence in the clear and growing opportunity available to the Group is reflected in the considerable investment we have made across the business in the year. The strength of our proposition is demonstrated by growth in the Enterprise (UK and Ireland) order book additions of 35%, to £84.5m, over the course of the financial year.

Alongside this strong growth, I am particularly pleased to report that we have reduced Group net debt to only £0.2m at the year-end compared to £6.7m last year. The Group has devoted significant time on improving our cash conversion by negotiating improved commercial terms with our energy suppliers.  The successful change in payment terms combined with a reduced reliance on renewals and extensions has improved the cash conversion and we expect this to continue.

We have continued our programme of strengthening our management team with the appointment of Brendan Flattery who started on the 1 October 2016 as the Group Chief Executive (CEO). Geoff Thompson, the founder and previous CEO of the business has stepped up to the role of Executive Chairman and I have taken up a non executive role. Earlier in the year Steve Attwell, Managing Director of our Enterprise Division left the Group and Chris Charlton was promoted internally having successfully managed the European business immediately prior.

The integration of t-mac Technologies has been successful and has enabled the Group to access additional opportunities as a result of the enhanced offering. The acquisition added market leading cloud based energy monitoring and controls capabilities to our service portfolio.The partnership with Dell to introduce Internet of Things (IoT) Building Automation solutions to customers is progressing well with trials underway and we see a significant opportunity to roll this out to both new and existing customers. The investment in the development of the Energy Services capability is evidenced by the results in our Corporate division which reduced against the prior year but the investment which continues into the new year will provide the Group with an exciting opportunity.

The Group now looks after over 32,000 customers in the UK and Ireland and over 6,000 in Europe. The Trusted Advisor framework we introduced last year continues to deliver the consistency and complete delivery of all applicable products and services as part of our Utility Management Plan proposition. As predicted this is illustrating that we can establish a relationship with potential customers outside of their normal procurement contract cycle. Our Net Promoter Score remains very strong at 58, demonstrating the level of positive engagement that our customers have with the Group.

Testament to the success of our multi-channel strategy and productivity initiatives, we have still managed to achieve strong growth in revenue and order book additions despite the small increase in our Energy Consultant headcount. As previously announced, the year was impacted by the Energy Consultant headcount falling behind the planned growth rate and as a result the year-end number of 625 represented only a 2.5% increase over the prior year of 610 and although we have been successful in recruiting new Energy Consultants during the period, the net increase was low due to the level of attrition. The attrition challenge is being proactively addressed by a number of initiatives following the appointment of our People Operations Director. These include improvements to the recruitment process, a new on-boarding, training and coaching programme to advance Energy Consultant success rates and the strengthening of team and management structure including a higher ratio of support staff to Energy Consultants.

I have thoroughly enjoyed my time as Chairman of the Group and look forward to supporting Geoff Thompson in his new role as Chairman and Brendan Flattery as the new Group CEO.

The Board is pleased to recommend a final dividend payment of 4.3p per share (2015: 3.3p), making a total of 6.5p for the year (2015: 5.0p), an increase of 30%, and continues to view the future with confidence.

* defined as EBITDA adjusted for share based payments and exceptional items

** defined as profit before tax adjusted for share based payments and exceptional items and amortisation relating to acquired intangibles
 

Our strategy

Utilitywise was established to assist the SME market in procuring their gas and electricity. It was a poorly served market with traditional consultants and brokers focusing on large customers. It became apparent that the SME market was very receptive to assistance and we have continued to expand our ability to service this market with increases in personnel and capabilities.

As we developed the business we started to build further capabilities that allowed our customers to monitor their usage and provided a reporting platform in order to aid better consumption management.

The strategy of the Group has been reinforced via acquisitions, which brought in more capabilities and expertise including the procurement of utilities for industrial and commercial customers, the ability to monitor water consumption via our OBox water sub-metering product, and an audit and compliance capability. These acquisitions typically targeted the larger customer but we have used these skills to enhance our offering to our core historic SME customer.

The acquisition of t-mac Technologies in April 2015 added market leading cloud-based energy monitoring and controls capabilities to our service portfolio and we have shown great progress integrating this business alongside our Corporate and our Enterprise customer base. The number of customers across the group benefitting from the "smartdash" data analytics software we acquired with t-mac is currently at 1,808 and a plan is in place to roll out the software to all customers, as we arrange installation of its AMR Smart Meter. This data-led service enables a wider and more comprehensive dialogue around energy management with customers and includes the deployment of our Edd:e monitoring hardware alongside the t-mac controls hardware as a key part of this. 

In the current year we have been named an OEM partner by Dell as part of a joint strategy to introduce Internet of Things (IoT) Building Automation solutions to customers. IoT connects internet-enabled devices with powerful software to provide users with a more granular level of control over energy-consuming assets. Devices include heating, ventilation and air conditioning (HVAC), security, refrigeration and lighting, which have traditionally operated as standalone entities. Connecting disparate devices together in a single, intelligent system can provide significant cost and performance advantages over traditional Building Energy Management Systems (BeMS) solutions. IoT technology enhances our existing t-mac BeMS capability. When we acquired t-mac, we recognised that the emerging IoT landscape would complement its cloud-based analytics and controls solution. Now, in addition to providing traditional BeMS users with enhanced solutions, IoT technologies will enable Utilitywise to offer affordable solutions to SMEs that are usually priced out of this market. Our strategy is to provide a comprehensive utility solution to all sizes of customer.

 

Business review

The Group has continued to grow significantly in the year under review with revenues growing 22%.

Financial highlights

 

2016

(£000)

2015

 (£000)

 

% change

Revenue

84,428

69,106

+22%

Gross profit

32,791

30,296

+8%

EBITDA*

18,268

17,785

+3%

Profit before tax**

17,769

16,662

+7%

Diluted earnings per share# 

18.5p

17.9p

+3%

Total dividend for the year

6.5p

5.0p

+30%

Net Debt

(£0.2m)

(£6.7m)

-97%

*Excluding share based payment expenses of £0.6m (2015: £0.7m), exceptional items relating to acquisition costs of £nil (2015: £0.6m), legal, restructuring and re-organisation costs of £1.2m (2015: £0.2m), exceptional impairment of goodwill £1.3m (2015: £nil) and exceptional credit of £5.7m (2015: £0.2m) relating to the release of a contingent consideration (2015: relating to the release of a brought-forward provision).

** As above, and excluding amortisation relating to acquired intangibles of £1.9m (2015: £1.2m)

# As above, and including the tax impact of the above adjustments.

 

 

Key performance indicators

Some of the key performance indicators used by the Directors are as follows:

KPI

2016

2015

% change

Energy consultants at 31 July

625

610

2.5%

Future secured revenue*

£25.6m

£26.2m

-2.3%

Enterprise UK & Ireland order book additions

£84.5m

£62.7m

  35%

Total Group customers

38,479

30,264

  27%

 

 

 

 

           

*Where future secured revenue is contracts which have been won but are not currently live and therefore have no contribution to these financial statements.

 

Performance

The Group has grown significantly in the year with revenue increasing 22% from £69.1m to £84.4m, driven principally by the Enterprise Division.

Enterprise

The Enterprise division, which serves the SME market, has shown good growth despite the headcount only growing 2.5% year on year. This is demonstrated by the increase achieved in Enterprise (UK and Ireland) order book additions of 35%. The Energy Consultant headcount was planned to be ahead of this position but the previously announced staff attrition through the year held back the growth expected. We have implemented a number of strategies to address this and to attract and retain the high quality staff required. These are showing early signs of delivering with the headcount as at 30 September improving to 637.

Notwithstanding the staff attrition headwinds, revenue generated by the Enterprise Division in 2016 was £68.8m compared to £54.5m in the previous year (an increase of 26% on 2015), with a 20% increase in EBITDA to £17.1m. Within the Enterprise Division, the European division generated revenues of £7.7m compared to £5.5m in the previous year and it has progressed well with continued progress in the two main markets we serve, Germany and France. 

Corporate

The Corporate division, servicing larger customers on a more consultative basis, has traded satisfactorily. The roll out of the "smartdash" data analytics software we acquired with t-mac is continuing. The partnership with Dell to introduce Internet of Things (IoT) Building Automation solutions to customers is progressing well with trials underway and we see a significant opportunity to roll this out to both new and existing customers. 

Revenue generated by the Corporate Division increased to £15.6m, up 7% from £14.6m in 2015 aided by the full-year revenue of t-mac, an increase of £1.7m over t-mac revenue from the prior year. Revenue for t-mac was £3.4m compared to the period included in 2015 from the point of acquisition in April 2015 of £1.7m. EBITDA declined by £2.3m reflecting the lower margin ESOS project work together with our investment in our capability to deliver the wider Energy Services offering. ESOS project work resulted in the acquisition of 214 new customers with 37% actively considering procurement.

Group

Gross margin was 38.8% for the year against 43.8% for 2015. The gross margin has fallen this year, in part due to the high attrition in the Consultant population in Enterprise. In the Corporate division, lower margin revenues in the ESOS project work, the investment required to establish the energy services team and costs associated with trialling t-mac and IoT have also contributed to the reduction in margin. The t-mac and IoT trials will continue in to the new year as we finesse the right product bundles for the differing customer sizes and ensure the product delivers the savings expected.

Overheads have increased but importantly at a rate below the growth rate in revenues. We have seen the overheads increase across the main support function to ensure that the business is set up to support the growth required.

Adjusted EBITDA, defined as EBITDA adjusted for share based payments and exceptional items for the period was £18.3m, an increase of £0.5m (3%) on the prior period to 31 July 2015.

The exceptional amounts relate to the release of the deferred consideration we expected to pay to the vendors of t-mac Technologies of £5.7m, net of discounting, offset by an impairment charge to the carrying value of the goodwill relating to t-mac of £1.3m. The business is performing satisfactorily and we are successfully integrating the t-mac smart dash software reporting solution across both Enterprise and Corporate customers. However, the revenue streams to be derived from the full integration into the wider Energy services offering are largely planned to fall outside the earn out period and the order book and business activity without these will not be sufficient currently to pay further sums to the vendors. The impairment charge reflects the timing changes to the revenue and profits arising from the business. There are various legal and restructuring charges incurred of £1.2m also included.

Net debt at the end of the year was £0.2m which was a significant improvement on the position as at the end of July 2015 of £6.7m. The net debt position reflects the improved payment terms we have managed and continue to negotiate with our customers the energy suppliers.

Dividend

The Board is proposing a final dividend of 4.3p (2015: 3.3p) per share making the total dividend for the year 6.5p (2015: 5.0p) per share subject to the approval of the shareholders at the Annual General Meeting.  The dividend per share will be paid on 19 December 2016 to shareholders on the register at close of business on 25 November 2016.  The associated ex-dividend date is 24 November 2016.

Outlook

We are confident in our outlook for the year ahead and having started the year in line with expectations, look forward to continued strong revenue growth and profit generation.

We have significantly strengthened the management team in the past few months to drive the continued development of our business, fully harness opportunities that exist in the market, and create differentiation for the Utilitywise brand. We have invested significantly in new products and services and will launch in Q2 our family of intelligent 'Internet of Things' technology solutions that connect businesses of all shapes and sizes to their energy, enabling them to manage usage and be more efficient. In addition, we have and continue to innovate with compelling and unique propositions such as the Advantage Plan, creating recurring revenue streams, and changing the nature of our billing relationship with customers. The deregulation of the commercial water market in England also provides us with a robust customer engagement and revenue opportunity that we will run alongside our existing energy procurement offering.

Furthermore, we have and continue to make improvements operationally, with a significant investment in People and creation of a dedicated People Services function, and the work done to improve the employer brand in order to attract and retain the high quality staff so far is showing early signs of working, with improvements in productivity, which we expect to continue to pay dividends throughout the year and into the future.

Lastly, we are very excited to have on board a new CEO, and will be conducting a strategic refresh in the coming months, which we believe will provide fresh impetus to the strong growth platform and model we already possess.  

Business model

Utilitywise continues to specialise in energy procurement and energy management services for businesses. The Company negotiates rates with energy suppliers on behalf of business customers, provides an account care service, and offers a range of products and services designed to assist customers in managing their energy consumption. Customers are based throughout the UK, the Republic of Ireland and certain European markets, across a variety of industry sectors and the public sector, and range in size from small single-site customers to large multi-site customers.

The Company has developed its routes to market as follows, for the delivery of these services.

·      The Company continues to employ energy consultants who contact prospective customers identified by the Company's bespoke IT search system to offer a potentially reduced energy tariff and various energy management products and services designed to assist in identifying ways to reduce that customer's overall energy consumption.

·      Secondly, the Company operates a 'partner channel' where organisations refer customers to Utilitywise and commissions generated from those customers are shared between Utilitywise and the referring organisation.

·     The Company also employs 'field based' energy consultants who target organisations that cannot be effectively reached via the core telemarketing channel.

·      The Company has a dedicated business development team that target larger I&C prospective customers. For these prospective customers the process is more consultative and bespoke and whilst it may lead
with an energy procurement discussion, it often includes a range of the broader service elements.

·      The Company has developed an online site intended to assist customers comparing tariffs. It is
specifically for customers with certain smaller consuming meters, enabling them to switch supplier with
minimal human intervention, thereby making the service viable for smaller customers.

The Group has continued to develop in all of these areas. The Group is organised in two divisions Enterprise and Corporate.

The Enterprise Division services SME and mid-market customers.

Following integration of four acquired businesses - namely Clouds Environmental Consultancy Limited, Aqua Veritas Consulting Limited, Energy Information Centre Limited (EIC) and t-mac Technologies Limited, the Corporate Division was created to service larger I&C customers.

The Directors continue to believe that the UK market fragmentation, the low penetration of third party intermediaries (TPIs) in the UK commercial market and the Company's current share of the total potential market mean that there is an opportunity to increase the Company's market share through organic growth and acquisitions.

In addition to the Company's aim of growing its market share of both SME and I&C customers, the Directors believe that there is an opportunity to capitalise on the Company's established relationships with energy suppliers who continue to show an interest in the Company's energy management products and services for sale into the supplier's customer base.

Consequently the Group's strategy remains focused on three key areas:

(1)  Organic growth

The scaling and investment in the UK procurement and services business model will continue and the number of energy consultants is planned to increase.

(2)  Acquisition

The Group continues to evaluate acquisitions that will add to the overall proposition.

(3)  European expansion

A clear market opportunity exists and utilising the experience and infrastructure of our acquired business Icon Communication Centres s.r.o we continue to evolve our business model across Europe.

Customer growth

Our core energy intermediary offering to commercial customers has continued to scale throughout this reporting period as evidenced by the volume of new customers we contracted in 2016. As at our IPO in June 2012 we had over 10,000 contracted customers and this grew to circa 32,000 customers by July 2016 in the UK & Ireland.

Given the sophistication of our leading software-based analysis tools, headcount remains the greatest driver of our core offering in order to convert the vast number of opportunities identified. As such, we will continue to add further to our staffing levels over the course of the current year.

Principal risks and uncertainties

The principal risks and uncertainties faced by the Group are outlined below:

Reliance on key suppliers

A significant proportion of the Group's revenues are derived from commissions paid by a small number of energy suppliers. Should these energy suppliers decide in future not to engage with the Group or with third party intermediaries (TPIs) generally and, instead, engage directly with customers, the Group would suffer a loss in revenues related to the commission payable by such energy suppliers. The Group maintains strong relationships with its suppliers and we will work together to resolve any minor issues before they become significant. The Group ensures that it is in constant dialogue and has trading with all of the major energy suppliers to help mitigate this risk. The Group further aims to mitigate this risk by providing a unique suite of products and services.

Exposure to underlying customers

The Group's customers pay the energy supplier directly for the energy consumed, with the Group receiving its commissions from the energy supplier. The Group is, however, at risk should the customer cease trading. Should this occur, the Group would suffer a loss in future revenues related to the commissions associated with the future energy consumption of that customer. It should be noted, however, that the energy supplier usually undertakes credit checks on customers prior to entering into a contract to supply energy. We do not recognise the full value of the revenue recognised for commissions from energy suppliers and provide for the variability in the commissions estimated at the time the contract goes live and the eventual commissions due when actual data is known. This provision and the associated estimate of the variability (sometimes referred to as the leakage rate) are updated regularly using maturing contracts in order to predict the future variability on all contracts yet to mature.

Customer service and delivery

We expect to deliver exceptional service to the end user of the energy we procure on their behalf. Although we do not in most cases have a contractual relationship with the end consumer, as our contractual customer is the energy supplier, we target the delivery of an exceptional service and overall experience with Utilitywise. The renewal rate is an obvious gauge of our success in retaining customers and this, together with the various additional products and services we can offer, help us differentiate our offering from the competition.

Competition

The Group has a number of competitors. These competitors may announce new services, or enhancements to existing services, that better meet the needs of customers or changing industry standards. Management continues to develop and offer a full range of energy services products to help mitigate competition risk.

Recruitment and Retention of the Right People

Recruiting and retaining the right people is critical for the success of the Group in meeting our objectives. Energy Consultant headcount has remained relatively static in the year as a result of increased attrition, which has offset recruitment in the period. To mitigate the attrition risk the Group has invested heavily in recruitment and on boarding processes, management structures and training and development.

Security and resilience of our networks and IT systems

We place significant reliance on the networks and IT systems within our business. The day-to-day running of our Enterprise Division, for instance is reliant on the in-house developed Quantum CRM system and any extended downtime would impact the Group's ability to transact with the end energy consumer.  It is therefore essential that we build security and resilience into the networks and systems to mitigate the risk from attacks and system failures. We are continually developing our systems and we continue to make significant investment in our IT infrastructure to improve the resilience of our key systems.

Liquidity

The Group has a revolving credit facility (RCF). The Group's cash flow forecast indicates that there is sufficient headroom in order to fund the Group's strategic objectives. We expect to be able to rely on the debt markets to refinance the RCF at its maturity in April 2019. The Group transacts with energy suppliers and we consider the risk attached to these to be low.

Legislation and Regulatory

Legislation may change in a manner that may require more strict or additional standards of compliance than those currently in effect thereby creating additional costs. In addition, the government may implement legislation requiring changes to current fee structures for TPIs. Should such legislation be passed there may be a material adverse effect on the Group's financial condition and operating results.

Currently, energy procurement is an unregulated market. Should regulation be introduced to cover the Group's activities, the increased regulatory burden could impact on the profits of the Group. We maintain a positive dialogue with all regulatory bodies and look to conduct ourselves in a manner that would be consistent with any likely regulatory change. However, it should be noted that the Board believes that the Group operates in line with best market practice, including the provisions of the OFGEM retail market review, and in its view any such regulation would initially impact on the smaller energy consultancy and brokering businesses. Should such legislation be passed that differs materially from our expectation, there may be a material adverse effect on the Group's financial condition and operating results.

 

 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the year ended 31 July 2016

 

 

 

 

 

 

31 July 2016

31 July 2015 

        

 

 

 

 

 

 

 

 

£

£

 

Revenue

 

84,428,434

69,106,061

 

 

 

 

 

 

Cost of sales

 

(51,637,848)

(38,809,898)

 

 

 

 

 

 

Gross profit

 

32,790,586

30,296,163

 

 

 

 

 

 

Total other operating income

 

6,233,402

735,180

 

 

 

 

 

 

Total administrative expenses

 

(20,900,175)

(16,673,937)

 

 

 

 

 

 

 Profit from operations

 

18,123,813

14,357,406 

 

 

 

 

 

 

Analysed as:

Earnings before exceptional costs, exceptional income, depreciation, amortisation and share-based payment costs

 

 

18,267,586

 

17,784,697

 

 

 

 

 

 

Exceptional income

 

 

 

 

Consideration release

 

5,740,318

-

 

Provision release

 

-

268,072

 

 

 

 

 

 

Exceptional costs

 

 

 

 

Goodwill impairment

 

(1,315,000)

-

 

Legal, relocation and restructure

 

(1,233,107)

(236,921)

 

Fees associated with acquisition

 

-

(601,284)

 

 

 

 

 

 

Depreciation

 

(757,041)

(864,989)

 

Amortisation of intangibles assets

 

(1,939,588)

(1,296,878)

 

Share option expense

 

(639,355)

(695,291)

 

 

 

18,123,813

14,357,406

 

 

 

 

 

 

Finance income

 

858,123

82,218

 

Finance expense

 

(569,453)

(316,895)

 

 

 

 

 

 

Profit before tax

 

18,412,483

14,122,729

 

 

 

 

 

 

Tax expense

 

(2,591,606)

(2,926,549)

 

 

 

 

 

 

Profit for the year attributable to equity holders of the parent company

 

 

15,820,877

11,196,180

 

 

 

 

 

 

Other comprehensive income/(expense)

Items that may be reclassified to profit or loss

 

 

 

 

Exchange difference on translation of foreign operation

 

11,578

35,964

 

 

Total comprehensive income attributable to equity holders of the parent company

 

15,832,455

 

 

11,232,144

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

31 July 2016

 

31 July 2015

 

Basic

 

20.5p

14.9p

 

Diluted

 

20.1p

14.6p

 

 

 

 

 

 

                     

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 July 2016

 

 

 

 

 

As at

As at

 

 

 

 

31 July 2016

31 July 2015

 

 

 

 

 

 

 

 

 

 

£

£

Non-current assets

 

 

 

 

 

Property, plant and equipment

 

 

 

5,590,575

5,899,463

Goodwill

 

 

 

23,808,291

25,123,291

Intangible assets

 

 

 

10,426,048

12,047,410

Accrued revenue

 

 

 

29,649,816

22,977,894

Total non-current assets

 

 

 

69,474,730

66,048,058

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

 

 

 

558,610

642,825

Trade and other receivables

 

 

 

19,656,568

15,939,299

Cash and cash equivalents

 

 

 

12,984,660

6,492,485

Total current assets

 

 

 

33,199,838

23,074,609

 

 

 

 

 

 

Total assets

 

 

 

102,674,568

89,122,667

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

 

21,644,424

17,131,012

Corporation tax liability

 

 

 

1,323,877

585,613

Current provisions

 

 

 

526,460

703,550

Total current liabilities

 

 

 

23,494,761

18,420,175

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Trade and other payables

 

 

 

4,435,565

9,340,004

Loans and other borrowings

 

 

 

13,175,000

13,175,000

Deferred tax liability

 

 

 

2,180,292

1,898,001

Non-current provision

 

 

 

-

168,224

Total non-current liabilities

 

 

 

19,790,857

24,581,229

 

 

 

 

 

 

Total liabilities

 

 

 

43,285,618

43,001,404

 

 

 

 

 

 

Net assets

 

 

 

59,388,950

46,121,263

             

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 (continued)

 

 

 

As at

 

As at

 

 

31 July 2016

 

 

31 July 2015

 

 

 

 

 

 

 

 

£

 

£

 

 

 

 

 

 

Equity attributable to equity holders of the parent company

 

 

 

 

Called-up share capital

 

78,081

 

76,593

Share premium

 

14,129,557

 

12,873,498

Merger reserve

 

9,531,644

 

9,531,644

Share option reserve

 

1,359,227

 

1,599,744

Foreign currency reserve

 

(29,766)

 

(41,344)

Retained earnings

 

34,320,207

 

22,081,128

Total equity

 

59,388,950

 

46,121,263

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

Share capital

Share premium

Share option reserve

 

Merger reserve

Retained earnings

Foreign currency reserve

Total

 

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

 

As at 1 August 2014

74,514

12,477,889

1,231,434

5,783,427

14,112,219

(77,308)

33,602,175

Profit for the period

-

-

-

-

11,196,180

-

11,196,180

Other comprehensive income

-

-

-

-

-

35,964

35,964

Total comprehensive income for the year

 

-

-

-

-

11,196,180

35,964

11,232,144

Dividends paid

-

-

-

-

(3,365,287)

-

(3,365,287)

Share option expense

-

-

695,291

-

-

-

695,291

Deferred tax on share options

-

-

(247,045)

-

-

-

(247,045)

Tax on equity items

-

-

-

-

58,080

-

58,080

Issue of shares

2,079

395,609

-

3,748,217

-

-

4,145,905

Reserves transfer relating to share based payments

-

-

(79,936)

-

79,936

-

-

Total contributions by and distributions to owners

2,079

395,609

368,310

3,748,217

(3,227,271)

-

1,286,944

 

 

 

 

 

 

 

 

As at 31 July 2015

76,593

12,873,498

1,599,744

9,531,644

22,081,128

(41,344)

46,121,263

Profit for the period

-  

-

-

15,820,877

-

15,820,877

Other comprehensive income

-

-

-

-

-

11,578

11,578

Total comprehensive income for the year

 

-

-

-

-

15,820,877

11,578

15,832,455

Dividends paid

-

-

-

-

(4,218,232)

-

(4,218,232)

Share option expense

-

-

639,355

-

-

-

639,355

Deferred tax on share options

-

-

(367,053)

-

-

-

(367,053)

Tax on equity items

-

-

-

-

123,615

-

123,615

Issue of shares

1,488

1,256,059

-

-

-

-

1,257,547

Reserves transfer relating to share based payments

 

-

 

-

 

(512,819)

 

-

 

512,819

 

-

 

-

Total contributions by and distributions to owners

1,488

1,256,059

(240,517)

-

(3,581,798)

-

(2,564,768)

 

 

 

 

 

 

 

 

As at 31 July 2016

78,081

14,129,557

1,359,227

9,531,644

34,320,207

(29,766)

59,388,950

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 July 2016

 

 

 

 

31 July 2016

 

31 July 2015

 

 

£

 

£

 

Operating activities

 

 

 

 

Profit before tax

18,412,483

 

14,122,729

 

Finance income

(858,123)

 

(82,218)

 

Finance expense

569,453

 

316,895

 

Depreciation of property, plant and equipment

757,041

 

864,989

 

Share option expense

639,355

 

695,291

 

Grant income

-

 

(30,790)

 

Loss on disposal of fixed assets

21,896

 

14,764

 

Amortisation of intangible fixed assets

1,939,588

 

1,296,878

 

Exceptional release of contingent consideration

(5,740,318)

 

-

 

Impairment of goodwill

1,315,000

 

-

 

 

17,056,375

 

17,198,538

 

Change in trade and other receivables

(9,615,435)

 

(14,189,914)

 

Change in inventories

84,215

 

(45,455)

 

Change in trade and other payables

 5,196,724

 

(5,149,824)

 

Change in provisions

(345,314)

 

(325,127)

 

 

(4,679,810)

 

(19,710,320)

 

Cash flows from operating activities

12,376,565

 

(2,511,782)

 

 

 

 

 

 

Income taxes paid

(1,814,488)

 

(2,208,042)

 

Net cash flows from operating activities

10,562,077

 

(4,719,824)

 

 

Investing activities

 

 

 

 

Purchase of property, plant and equipment

(467,316)

 

(1,864,615)

 

Purchase of intangibles

(318,226)

 

(31,886)

 

Finance income

      18,129

 

26,354

 

Acquisition of subsidiary, net of cash acquired

                   -

 

(6,397,858)

 

Net cash flows used in investing activities

(767,413)

 

(8,268,005)

 

 

Financing activities

 

 

 

 

Issue of shares

1,257,547

 

148,859

 

Loans repaid

(4,000,000)

 

(6,000,000)

 

Loans received

4,000,000

 

13,175,000

 

Finance expense

(451,867)

 

(276,017)

 

Dividends paid

(4,218,232)

 

(3,365,287)

 

Net cash flows from financing activities

(3,412,552)

 

3,682,555

 

 

Net (decrease)/increase in cash and cash equivalents

 

6,382,112

 

 

(9,305,274)

 

Translation gain/(loss) on cash and cash equivalents

110,063

 

(25,378)

 

Cash and cash equivalents at beginning of period

6,492,485

 

15,823,137

 

Cash and cash equivalents at end of period

12,984,660

 

6,492,485

 

               

 

Notes to financial statements

1. The financial information set out herein does not constitute the Group's statutory accounts for the year ended 31 July 2016 or the year ended 31 July 2015 within the meaning of section 435 of the Companies Act 2006, but is derived from those accounts. The information has been derived from the audited statutory accounts for each of those years upon which an unqualified audit opinion was expressed and which did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The audited accounts will be posted to all shareholders in due course and will be available upon request by contacting the Company Secretary at the Company's registered office.

2. Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).

Utilitywise plc is incorporated and domiciled in the United Kingdom.

3. Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer.

During the year the Group serviced both corporate and enterprise businesses. The Board considers that the services were offered from two distinct segments in the current year, and as such have taken the decision to report separately on these operating segments.

Operating segments are determined based on the internal reporting information and management structure within the Group. Information regarding the results of the reportable segment is included within this report.  Performance is based on segment operating profit or loss before share based payment charges, depreciation, amortisation and acquisition costs, as reported in the internal management reports that are reviewed by the chief operating decision maker (CODM). The segment operating profit or loss is used to measure performance. Revenues represent revenues to external customers.

The Enterprise Division derives its revenues from energy procurement by negotiating rates with energy suppliers for small and medium-sized business customers throughout the UK, the Republic of Ireland and certain European markets. The Corporate Division derives its revenues from energy procurement of larger industrial and commercial customers, often providing an account care service and offering a variety of utility management products and services designed to help customers manage their energy consumption.

 

 

31 July 2016

31 July 2015

 

 

 

£

£

 

Revenue

 

 

 

Enterprise

68,797,468

54,482,784

 

Corporate

17,104,342

15,922,052

 

Intersegment revenue

(1,473,376)

(1,298,775)

 

Total Group revenue

84,428,434

69,106,061

 

 

 

 

 

 

 

 

 

 

31 July 2016

31 July 2016

31 July 2016

 

Enterprise

Corporate

        Total

 

£

£

               £

Segment adjusted EBITDA

15,773,353

2,685,167

18,458,520

 

Intercompany revenue

-

(1,473,376)

(1,473,376)

 

Intercompany direct costs

1,473,376

-

1,473,376

 

Intercompany dividend income

(190,934)

-

(190,934)

 

Segment adjusted EBITDA post intercompany adjustments

17,055,795

1,211,791

18,267,586

 

Share option expense

(444,600)

(194,755)

(639,355)

 

Exceptional release of contingent consideration

5,740,318

-

5,740,318

 

Exceptional impairment of goodwill

(1,315,000)

-

(1,315,000)

 

Exceptional legal, relocation and restructure

(1,233,107)

-

(1,233,107)

 

Finance income

854,337

3,786

858,123

 

Finance expense

(568,806)

(647)

(569,453)

 

Depreciation

(558,784)

(198,257)

(757,041)

 

Amortisation

(19,460)

(11,034)

(30,494)

 

Taxation

(2,633,863)

(478,919)

(3,112,782)

 

Segment profit after tax

16,876,830

331,965

17,208,795

           

 

4.         Segmental reporting (continued)

 

 

31 July 2015

 

31 July 2015

 

31 July 2015

 

Enterprise

Corporate

           Total

 

£

£

                 £

Segment adjusted EBITDA

12,982,571

4,802,126

17,784,697

 

Intercompany revenue

-

(1,298,775)

(1,298,775)

 

Intercompany direct costs

1,298,775

-

1,298,775

 

Segment adjusted EBITDA post intercompany adjustments

14,281,346

3,503,351

17,784,697

 

Share option expense

(411,669)

(283,622)

(695,291)

 

Exceptional release of provision

254,340

13,732

268,072

 

Exceptional acquisition costs

(229,090)

-

(229,090)

 

Exceptional legal, relocation and restructure

(225,080)

(11,841)

(236,921)

 

Finance income

75,726

6,493

82,219

 

Finance expense

(310,455)

(6,441)

(316,896)

 

Depreciation

(333,334)

(531,654)

(864,988)

 

Amortisation

(9,116)

(13,623)

(22,739)

 

Taxation

(2,535,093)

(826,790)

(3,361,883)

 

Segment profit after tax

10,557,575

1,849,605

   12,407,180

 

 

31 July 2016

 

31 July 2015

 

Profit after tax

£

£

 

Enterprise

13,684,619

10,757,406

 

Corporate

331,965

1,847,713

 

Exceptional release of contingent consideration

5,740,318

-

 

Exceptional release of provision

-

268,072

 

Exceptional legal, relocation and restructuring

(1,233,107)

(236,921)

 

Exceptional investment costs

-

(229,090)

 

Exceptional impairment of goodwill

(1,315,000)

-

 

 

17,208,795

12,407,180

 

Group deferred tax adjustments

521,176

435,333

 

Exceptional investment cost

-

(372,194)

 

Amortisation

(1,909,094)

(1,274,139)

 

Total Group profit after tax

15,820,877

11,196,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.         Segmental reporting (continued)

 

 

 

 

31 July 2016

 

 

 

31 July 2015

 

 

Net assets

£

£

 

Enterprise

43,229,064

30,092,286

 

Corporate

15,750,908

18,657,405

 

Amortisation

(4,274,991)

(2,365,897)

 

Investment costs

(928,192)

(928,192)

 

Exceptional release of contingent consideration

5,740,318

-

 

Exceptional impairment of goodwill

(1,315,000)

-

 

Group tax adjustments

1,186,843

665,661

 

Group net assets

59,388,950

46,121,263

 

                     

 

5.         Exceptional items

 
31 July 2016
31 July 2015
Other operating income
£
£
Exceptional release
 
 
Provision release
-
                      (268,072)
Contingent consideration
(5,740,318)
-
 
 
 
Exceptional costs
 
 
Goodwill impairment
1,315,000
-
Legal, Restructuring and re-organisation
1,233,107
236,921
Acquisition costs and aborted acquisition costs
-
601,284
 
2,548,107
838,205
 
(3,192,211)
570,133

 

Exceptional items in the year ended 31 July 2016 relate to an impairment charge in connection to the acquisition cost of t-mac Technologies Limited. There is also a credit of £5.7m which has arisen from the release of deferred consideration where earn-out criteria are not anticipated to be met. Exceptional items are included in administrative expenses or other operating income in the statement of profit and loss.

In the year ended 2016, there is also a charge of £509k in relation to legal fees incurred as a result of a dispute with a competitor and restructuring and re-organisation costs such as settlement payments of £678k.

Exceptional items in the year ended 31 July 2015 relate to the costs incurred in the acquisition of t-mac Technologies Limited, costs of £39k in relation to unforeseen late invoices connected to the prior year acquisition of Icon Communication Centres s.r.o. and other aborted acquisition costs. Also included are restructuring and re-organisation costs such as settlement payments of £83k and costs of £52k incurred in the set-up of head office.

In the year ended 2015 there is also a credit of £268k offsetting these costs which has arisen from the release of restructure and dilapidation provisions not utilised. Exceptional items are included in administrative expenses in the statement of profit and loss.

6. Tax expense

 

 

 

 

31 July 2016

31 July 2015

 

£

£

Current tax expense

 

 

Current tax on profits for the period

2,884,430

3,751,370

Adjustments in respect of previous periods

(219,019)

(92,687)

 

2,665,411

3,658,683

 

 

 

Deferred tax expense

 

 

Origination and reversal of temporary differences

90,247

(559,737)

Adjustment in respect of previous periods

(36,385)

(173,349)

Effects of changes in tax rates

(127,667)

952

 

(73,805)

(732,134)

 

 

 

Total tax expense

2,591,606

2,926,549

         

 

Equity items

 

 

 

Current tax

(123,615)

(58,080)  

Deferred tax

367,053

247,045  

 

243,438

          188,965  

           

 

 

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profit for the year are as follows:

 

 

 

       31 July 2016

31 July 2015

 

                        £

£

Profit for the period

   18,412,483 

14,122,729

 

 

 

Expected tax charge based on corporation tax rate of 20% in 2016 (20.67% in 2015)

3,682,497              

2,918,568

Expenses not deductible for tax purposes

63,717              

141,281

Income not taxable for tax purposes

(954,421)              

-

Current tax rate difference

-              

-

Impact of change in tax rate in the period

(127,667)              

18,600

Adjustment to tax charge in respect of previous periods - current tax

(219,019)              

(92,687)

Adjustment to tax charge in respect of previous periods - deferred tax

(36,385)              

(173,349)

Deferred tax not recognised

(2,855)              

114,136

Impact of share options

185,739              

-

Total tax expense

2,591,606              

2,926,549

       

7. Earnings per share

Basic profit per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

Diluted profit per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume the conversion of all potentially dilutive ordinary shares.

 

 

 

 

 

 

 

31 July 2016              

31 July 2015

 

 

  £              

£

Profit

 

 

Profit used in calculating basic and diluted profit

15,832,455              

11,232,144

 

 

 

Number of shares

 

 

Weighted average number of shares for the purpose of basic earnings per share

77,389,304

75,270,221

 

 

 

Effects of:

 

 

Employee share options

1,209,737

1,150,512

Contingent shares to be issued

-

474,570

 

 

 

Weighted average number of shares for the purpose of diluted earnings per share

78,599,041

76,895,303

         

8. Share capital

 

2016

2015

Share capital issued and fully paid

Number

£

 

 

Number

 

 

£

 

 

 

 

 

Ordinary shares of £0.001 each

 

 

 

 

As at 1 August

76,592,334

76,592

74,514,151

74,514

Deferred consideration

-

-

30,701

31

Consideration

-

-

1,782,319

1,783

SAYE options exercised

539,856

540

10,670

11

CSOP options exercised

820,914

821

115,032

115

LTIP options exercised

127,859

128

139,461

139

As at 31 July

78,080,963

78,081

76,592,334

76,593

 

Ordinary shares carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.

On 6 October 2014 a further 12,500 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £13 and additions to share premium of £7,487.

On 10 December 2014 a further 158,905 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £159 and additions to share premium of £187,341.

On 16 January 2015 a further 48,479 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £48 and additions to share premium of £65,572.

On 21 April 2015 a further 1,782,319 shares were issued at 210.4p per share for consideration in the investment in t-mac Technologies Limited. The investment has been recognised at fair value in the consolidated financial statements which resulted in additions to the merger reserve of £3,748,218 and additions to share capital of £1,782.

On 7 May 2014 a further 61,402 shares were issued in settlement of deferred and contingent consideration due on the acquisition of Icon Communication Centres s.r.o., as announced on 29 April 2015. The deferred consideration of 30,701 shares is included in the brought-forward 2015 share capital balance. The contingent consideration of 30,701 has been recorded in the year ended July 2015 leading to additions to share capital of £31 and additions to share premium of £98,508.

On 7 May 2015 a further 35,294 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £35 and additions to share premium of £29,961.

On 5 November 2015 a further 103,186 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £103 and additions to share premium of £125,962.

On 1 December 2015 a further 529,001 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £529 and additions to share premium of £446,870.

On 5 January 2016 a further 293,143 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £293 and additions to share premium of £197,872.

On 19 January 2016 a further 173,354 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £173 and additions to share premium of £151,485.

On 27 January 2016 a further 25,294 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £25 and additions to share premium of £17,073.

On 10 February 2016 a further 36,744 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £37 and additions to share premium of £24,802.

On 16 March 2016 a further 22,222 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £22 and additions to share premium of £29,977.

On 20 April 2016 a further 98,669 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £99 and additions to share premium of £80,481.

On 26 April 2016 a further 35,294 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £35 and additions to share premium of £29,964.

On 13 May 2016 a further 35,294 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £35 and additions to share premium of £29,964.

On 25 May 2016 a further 105,810 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £106 and additions to share premium of £100,944.

On 9 June 2016 a further 11,715 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £12 and additions to share premium of £7,908.

On 30 June 2016 a further 5,325 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £5 and additions to share premium of £3,594.

On 7 July 2016 a further 13,578 shares were issued pursuant to the exercise of options over such shares, leading to additions to share capital of £14 and additions to share premium of £9,165.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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