9 March 2021

eEnergy Group plc

("eEnergy" or "the Group")

Results for the six months ended 31 December 2020

eEnergy (AIM: EAAS), the leading "Energy Efficiency-as-a-Service" business in the UK and Ireland, providing Light as a Service ("LaaS") under the eLight brand and renewable energy consulting and procurement under the Beond brand, today provides its unaudited results for the six months ended 31 December 2020.   

Financial Highlights for the six months ended 31 December 2020:

·    Revenue for the enlarged Group up 245% to £6.8 million (H1 2020: £2.0 million)

·    Organic revenue up 140% to £4.5 million (H1 2020: £2.0 million)

·    eLight gross margin increased by 460 bps to 37.1% (H1 2020: 32.5%)

·    Positive operating EBITDA in each business unit

·    Profit before exceptional items ⁽¹⁾ of £0.1 million (H1 2020 loss £1.0 million)

·    Cash at bank £2.8 million (30 June 2020: £1.5 million) and net cash (excluding IFRS 16 lease liabilities) of £0.6 million (30 June 2020: £0.1 million).

·    Completed placing to new and existing institutional investors for £3.2 million

Operational Highlights:

·    The Group's business model has been able to navigate the impact of COVID-19 with new contract wins and accelerated installations in the school holidays

·    Number of LED lighting installations completed at schools and businesses in the UK & Ireland almost doubled in H1 2021 to 111 (H1 2020: 57)

·    The Group completed two acquisitions in line with its "buy and build" M&A strategy

o  In July 2020, the Group expanded its LaaS offering to Academy and state schools through the acquisition of Renewable Solutions Lighting Ltd ("RSL").

o  In December 2020, eEnergy completed the acquisition of Beond Group Limited ("Beond"), a top 20 UK-based renewable energy consulting and smart procurement business.

·   Project funding partner, SUSI Partners AG agreed to provide a dedicated funding facility of up to €15 million for LaaS projects in the Republic of Ireland.

·    Agreed an exclusive OEM partnership with Venture Lighting Europe Limited to provide the Group with an eLight branded LED technology solution on exclusive terms.

·    Strengthened the Management with appointment of Rob Van Leeuwen as Group Chief Operating Officer in December 2020 and the Board with the appointments of Derek Myers as Chief Innovation Officer in December 2020, and Gary Worby as an Independent Non-executive Director in January 2021.

Harvey Sinclair, CEO of eEnergy, commented:

"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.  Our core business eLight has begun to scale, almost doubling the number of completed LED installations at schools and businesses compared to the first six months of 2019. Furthermore, the completion of our first acquisition, RSL, has further opened the Academy and State Schools sector in the UK to our Light as a Service offering."

"With growing pressure across all businesses and public sector organisations such as schools and hospitals, to save money and cut their carbon footprint, we expect further acceleration in interest for our Light as a Service offer to grow considerably in the coming years as evidenced by our growing pipeline of opportunities."

"In addition to sustained organic growth, our goal remains to build an integrated energy management and energy efficiency platform through our "buy and build" M&A strategy.  The integration of RSL has been delivered to plan and we took another significant step with the acquisition of Beond in December, which increases the breadth of our offering to customers from energy efficiency through to energy management.  We continue to adopt a disciplined approach to assessing future acquisition opportunities and are currently evaluating several interesting opportunities in our pipeline." 

"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 (before exceptional items) ⁽¹⁾ for the full year to 30 June 2021."

Note: (1) Profit before exceptional items is the profit before and after tax excluding transaction-related costs and share based payment expenses.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.  The person responsible for arranging for the release of this announcement on behalf of eEnergy is Ric Williams, Chief Financial Officer. 

Contacts:

About eEnergy Group plc

eEnergy Group plc is a leading "Energy Efficiency-as-a-Service" (EEaaS) business focused on providing its core "Light-as-a-Service" ("LaaS"), to educational and commercial & industrial customers through its eLight and RSL brands in the UK and Ireland. The Group helps businesses and schools switch to LED lighting, typically for a fixed monthly service fee, avoiding any upfront payments.

eEnergy was admitted to AIM in January 2020.  The Board's strategy is to develop eEnergy as a broader energy services company and acquire other businesses in the energy management sector. The market in the EU for energy efficiency services was approximately €25 billion in 2017 and is expected to double by 2025. 

In December 2020, eEnergy completed the acquisition of Beond Group Limited. Beond is a UK-based renewable energy consulting and procurement business, whose services aim to reduce costs for clients and tackle climate change.  Beond's services include provision of clean energy strategy, smart energy procurement, hedging strategies, bill validation, bureau services and market intelligence. However, its key offering is its proprietary platform used to run reverse energy auctions for clients.

eEnergy has been awarded The Green Economy Mark by the London Stock Exchange, which recognises a company's work on sustainability.                                   

https://eenergyplc.com/ 

Chief Executive's Statement

I am pleased to report that we have been able to deliver strong organic growth in the period and make significant strides with our strategy.  We have successfully integrated RSL into the Group and the acquisition of Beond in December 2020 marks an important step in delivering our strategy of developing an integrated energy management group enabling our customers to reduce the cost and environmental impact of their energy use through smart procurement, energy management and a range of energy efficiency solutions. 

Group Trading

eEnergy's core business, eLight, which provides "Light as a Service" (LaaS) to schools and businesses in the UK and Ireland, experienced strong organic growth in the period driving a significant improvement in Group's revenue. For the six-month period ended 31 December 2020, the Group generated revenue of £6.8 million, a 245% increase on the equivalent six-month period to December 2019. Organic revenue grew to £4.5 million, a 140% increase on the six months to December 2019. All Group business units reported positive operating EBITDA. 

The Group generated a maiden profit before exceptional items ⁽¹⁾ of £0.1 million, in line with our previously announced 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. The Group's LaaS proposition, where customers can fund carbon reduction through the energy savings delivered by installing LED lighting without investing capital upfront, has been especially popular in the education sector. During the period, the Group launched a new Green Energy Initiative to help more UK schools, which are eligible for part but not full Government funding, to reduce carbon emissions and save money by switching to cheaper, more efficient LED lighting.  Furthermore, in November, eLight secured a £1 million contract, its largest-ever, to install LED Lighting at four secondary schools for a UK multi-academy trust.

The Group has experienced strong growth within the Academy and state school sector in the UK.  This was helped in July by acquiring Renewable Solutions Lighting Ltd ("RSL") which specialises in this area. I'm pleased to report that RSL has been successfully integrated into the eLight operating platform, which has reduced unit costs for RSL and allowed it to offer more competitive pricing to its clients. 

Overall, the Group completed 111 LaaS projects, a 95% increase on the six-month period to December 2019. The increased interest from larger schools and multi academy trusts has driven the average contract value of each project up 50% when compared to the equivalent period in the prior year. 

Also, the Group is now benefitting from its exclusive OEM partnership with Venture Lighting Europe Limited ("Venture Lighting"), announced in October 2020.  Venture Lighting has provided the Group with a white label, eLight-branded, LED technology solution on exclusive terms. An integrated supply chain has also increased operating efficiencies. Venture Lighting holds dedicated stock lines in the UK for eLight, which has meant the Group has avoided supply chain disruption caused by Brexit or COVID-19.

Overall, more competitive technology pricing has helped improve eLight's gross margin for the period by more than 460 bps when compared to the equivalent period in the prior year. 

Beond Acquisition

In December, eEnergy completed the acquisition of Beond, a top 20 UK-based renewable energy consulting and smart procurement business, through a mix of consideration shares and a placing to new and existing institutional and other investors, raising gross proceeds of £3.2 million. The integration of the Beond business into the Group is progressing well, and the business has performed as expected to date. As per previous guidance, the acquisition is expected to be materially earnings-enhancing in the first full year of ownership as we introduce energy efficiency services to the Beond client base and build out the capability to offer a wider range of value-added services to Beond's customers.

New Funding Partner

In August 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.

The terms of the Facility provide for SUSI to purchase the future receivables arising from new LaaS projects in the Republic of Ireland across the education sector, other public bodies and a range of commercial sectors. The Facility will cover new projects installed for the next three years or until the Facility has been fully utilised, whichever is earlier.  Given the opportunities perceived in the Irish and UK markets, the Group 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.

This new funding structure provides the Group with a significantly enhanced competitive advantage relative to the previous funding arrangements. The Facility provides the Group's Irish business with greater flexibility to deploy capital, extend the contract length offered to customers and improves the Group's economics. eEnergy will have control over the implementation and management of contracts and retain an economic interest over the life of each contract, thereby improving returns.

Board and management changes

The Group has continued to strengthen its senior and operational management as it grows both organically and through acquisition.

In December, eEnergy announced the (non-Board) appointment of Rob Van Leeuwen as Group Chief Operating Officer.  Rob has 20 years of experience in the energy management sector, specialising in technology platforms and integration. A key focus of Rob will be to work closely with the Beond management team and oversee initiatives to accelerate growth, including enhancing the customer value proposition, growing revenues from existing customers and unlocking operational synergies and target stretch performance in lead generation and sales conversions.

Also in December, Derek Myers, the controlling shareholder of Beond prior to its acquisition by the Group, joined the Board as Chief Innovation Officer.  Derek held a range of senior management roles at Beond, from 2015 as CEO.  Previously, Derek was the Managing Director of iVentures Capital, an investment vehicle that raised funds to invest in and manage energy market businesses. Mr. Myers has previously worked as a strategy consultant at Accenture and futures trader at Macquarie Bank, trading, inter alia, energy products.

In January 2021, Gary Worby joined the Board as an Independent Non-Executive Director of the Board of the Company and member of the Remuneration Committee.  Gary brings considerable strategic experience to eEnergy, having worked in the energy and carbon sector for many years. In his role as an Independent Non-Executive Director, he will support the Board to help build eEnergy into a market-leading integrated energy management and energy savings platform, as well as strengthening the Group's corporate governance. Gary's career has included various executive leadership roles guiding businesses through organic growth and pan-European expansion, acquisitions, and trade sales. He was Managing Director of EnergyQuote JHA, one of the largest pan-European energy consultants with a world-class client base, which Accenture acquired in 2014.

COVID-19 Update and Outlook

The Group's business model has been able to navigate the impact of COVID-19 with new contract wins and accelerated installations during the school holidays. Whilst our pipeline of opportunities continues to grow, the most recent lockdown has inevitably added some additional challenges in delaying customers' decision-making in contracting for new business, which we anticipate will result in an extension to some project timeframes. However, the underlying fundamentals of our market remain very robust and the breadth of applications for our services and our ability to sell more to our growing customer base continues to grow.

The Board remains confident that, with the current and expected contracted forward order book, together with active cross-sell engagement for customers across the eLight and Beond businesses, Group revenue and gross profit remain in-line with its expectations for the full year to 30 June 2021.

The Board expects the Group to achieve a breakeven profit (before exceptional items)⁽1) for the full year to 30 June 2021.

Furthermore, we will continue to focus on our "Buy and Build" M&A strategy, including (i) the acquisition of established smart energy procurement platform and smart metering & software analytics businesses; (ii) scaling the existing EEaaS business through cross-sell opportunities and moving into Heating-as-a-Service ("HaaS"); and (iii) scaling the Group to benefit from operational efficiencies.

We are currently evaluating several strategic opportunities in our pipeline to build an integrated energy management and energy efficiency platform."

Harvey Sinclair

Chief Executive Officer

9 March 2021

Note: (1) Profit before exceptional items is the profit before and after tax excluding transaction-related costs and share based payment expenses.

Chief Financial Officer's Statement

This is our first interim report since we completed the reverse takeover that created eEnergy in January 2020.  We have had a strong start to FY21. We have completed two acquisitions that have enhanced our Energy Efficiency as a Service division and created the foundation for our Energy Management division.  The Board is confident for the year ahead and we can evaluate commercial opportunities in the current business environment.

Financial position and liquidity

We successfully completed our second placing of 2020 in December and raised gross proceeds of £3.2 million, primarily to part fund the acquisition of Beond.  At the end of December 2020, we had £2.8 million of cash at the bank.  In the month before its acquisition, Beond had drawn two CBILS loans of £0.5 million in aggregate, which are interest free for the first 12 months and for which repayments only start from the first anniversary.

With the December Placing and the issue of shares to the vendors of RSL and Beond we have substantially strengthened our balance sheet and increased our net assets to £8.0 million (30 June 2020 net liabilities of £1.8m).

We continue to model a number of potential scenarios that management believe are reasonably likely for the ongoing impact of COVID-19 on our financial performance and cash generation and the Board is confident that the Group has sufficient financial resources and headroom within its debt covenants for the foreseeable future should the worst of these scenarios be realised.

The Board continues to monitor and actively manage our cash position in the ordinary course.

Financial overview

Energy efficiency as a Service (eLight) - UK

In the face of challenging market conditions, we have delivered 570% revenue growth in the UK to £4.9 million in the six months ended 31 December 2020.  This includes RSL, which was acquired on 1 July 2020 and reflects both an increase in the number of projects completed (59 compared to 21 in the equivalent period of the prior year) as well as an increase in the average size of each project.  Organic revenue growth was 280% over the equivalent period of the prior year.

Energy efficiency as a Service (eLight) - Ireland

The impact of COVID-19 has continued to be more severe in Ireland than in the UK and we have received ongoing support from the Irish government for our staff.  Despite the market conditions, revenue grew 40% to £1.7million in the six months ended 31 December 2020, driven by our entry into the Northern Ireland school market and by the project funding in place with SUSI, which increases our share of the total contract value.

Energy Management

These Group results include the trading for Beond from Completion in 15 December 2020 up to the period end.  Beond performed strongly in its final quarter of 2020 and has contributed £162,000 of revenue and an operating EBITDA of £25,000 to the results for the six-month period ended 31 December 2020.

Working capital

The increase in trade and other receivables to £3.5 million (30 June 2020: £1.1 million) primarily reflects the volume of LaaS projects that were installed and recognised as revenue in December and the inclusion of the Beond balances at the end of December.  There is a broadly equivalent and offsetting increase in trade and other payables to £6.7 million (30 June 2020: £4.0 million).

Borrowings and lease liabilities

During the six-month period ended 31 December 2020 we drew down a further €275,000 under the eLight loan facility, received a £50,000 Bounce back loan for one of our operating companies and included £532,000 of bank loans that Beond had drawn. 

The Group's lease liabilities increased to £1.3 million (30 June 2020: £0.6 million) as a result of recording the lease for Beond's office under IFRS 16, together with the equal and opposite Right of Use asset.

Acquisitions

In July we completed the acquisition of RSL.  Since acquisition RSL has traded strongly and slightly ahead of our expectations.  We have integrated operational delivery of RSL's projects into the eLight operating platform and have seen the benefit in the project margins.  Contingent consideration of up to 16 million eEnergy shares is payable based upon RSL's EBITDA in the first year exceeding £296,000 and we have recorded the value of that consideration at acquisition at £1.4 million.

In December we completed the acquisition of Beond, which forms the foundation of our Energy Management business, to complement our Energy Efficiency platform.  As noted above Beond has made a positive contribution to these results.  The Beond acquisition was completed on 15 December 2020 although the compulsory purchase mechanism for a small number of minority shareholders was completed, post the period end, on 14 January 2021.

Ric Williams

Chief Financial Officer

9 March 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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