TIDMUTW
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 2015
(GBP000) (GBP000) % 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 (GBP0.2m) (GBP6.7m) -97%
Operational highlights:
-- 35% growth in Enterprise UK and Ireland order book additions
to GBP84.5m, 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 30(th) September 2016
-- Future secured revenue as at 30 September 2016 - GBP28.3m
-- 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 GBP0.6m (2015:
GBP0.7m), exceptional items relating to acquisition costs of GBPnil
(2015: GBP0.6m), legal, restructuring and re-organisation costs of
GBP1.2m (2015: GBP0.2m), exceptional impairment of goodwill GBP1.3m
(2015: GBPnil) and exceptional credit of GBP5.7m (2015: GBP0.2m)
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 GBP1.9m (2015: GBP1.2m)
(#) 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
GBP84.4m, delivering adjusted EBITDA* for the period of GBP18.3m
and adjusted profit before tax** of GBP17.8m, 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 GBP84.5m, 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 GBP0.2m at the
year-end compared to GBP6.7m 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 2015
(GBP000) (GBP000) % 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 (GBP0.2m) (GBP6.7m) -97%
*Excluding share based payment expenses of GBP0.6m (2015:
GBP0.7m), exceptional items relating to acquisition costs of GBPnil
(2015: GBP0.6m), legal, restructuring and re-organisation costs of
GBP1.2m (2015: GBP0.2m), exceptional impairment of goodwill GBP1.3m
(2015: GBPnil) and exceptional credit of GBP5.7m (2015: GBP0.2m)
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 GBP1.9m (2015: GBP1.2m)
# 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* GBP25.6m GBP26.2m -2.3%
Enterprise UK & Ireland order
book additions GBP84.5m GBP62.7m 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 GBP69.1m to GBP84.4m, 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 GBP68.8m compared to
GBP54.5m in the previous year (an increase of 26% on 2015), with a
20% increase in EBITDA to GBP17.1m. Within the Enterprise Division,
the European division generated revenues of GBP7.7m compared to
GBP5.5m 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
GBP15.6m, up 7% from GBP14.6m in 2015 aided by the full-year
revenue of t-mac, an increase of GBP1.7m over t-mac revenue from
the prior year. Revenue for t-mac was GBP3.4m compared to the
period included in 2015 from the point of acquisition in April 2015
of GBP1.7m. EBITDA declined by GBP2.3m 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 GBP18.3m, an
increase of GBP0.5m (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 GBP5.7m, net of discounting, offset by an
impairment charge to the carrying value of the goodwill relating to
t-mac of GBP1.3m. 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 GBP1.2m also included.
Net debt at the end of the year was GBP0.2m which was a
significant improvement on the position as at the end of July 2015
of GBP6.7m. 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
GBP GBP
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 31 July
2016 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 31 July
2016 2015
GBP GBP
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 31 July
2016 2015
GBP GBP
----------- -----------
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 Foreign
Share Share option Merger Retained currency
capital premium reserve reserve earnings reserve Total
GBP GBP GBP GBP GBP GBP GBP
--------- --------- --------- ---------- ---------- ---------- ------
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 31 July
2016 2015
GBP GBP
------------------------ --------------
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 (5,740,318) -
consideration
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 31 July 2015
2016
GBP GBP
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 31 July 31 July 2016
2016 2016
Enterprise Corporate Total
GBP GBP GBP
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 31 July 31 July 2015
2015 2015
Enterprise Corporate Total
GBP GBP GBP
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 31 July
2016 2015
Profit after tax GBP GBP
Enterprise 13,684,619 10,757,406
Corporate 331,965 1,847,713
Exceptional release of contingent 5,740,318 -
consideration
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 31 July
2016 2015
Net assets GBP GBP
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 5,740,318 -
consideration
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 31 July
2016 2015
Other operating income GBP GBP
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 GBP5.7m 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 GBP509k 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 GBP678k.
Exceptional items in the year ended 31 July 2015 relate to the
costs incurred in the acquisition of t-mac Technologies Limited,
costs of GBP39k 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 GBP83k and costs of GBP52k incurred in the set-up of head
office.
In the year ended 2015 there is also a credit of GBP268k
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 31 July 2015
2016
GBP GBP
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 31 July
2016 2015
GBP GBP
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 (954,421) -
for tax purposes
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
GBP GBP
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 GBP Number GBP
Ordinary shares of
GBP0.001 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 GBP13 and additions to share premium of
GBP7,487.
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 GBP159 and additions to share premium
of GBP187,341.
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 GBP48 and additions to share premium of
GBP65,572.
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 GBP3,748,218 and additions to
share capital of GBP1,782.
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 GBP31 and additions
to share premium of GBP98,508.
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 GBP35 and additions to share premium of
GBP29,961.
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 GBP103 and additions to share premium of
GBP125,962.
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 GBP529 and additions to share premium of
GBP446,870.
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 GBP293 and additions to share premium of
GBP197,872.
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 GBP173 and additions to share premium of
GBP151,485.
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 GBP25 and additions to share premium of
GBP17,073.
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 GBP37 and additions to share premium of
GBP24,802.
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 GBP22 and additions to share premium of
GBP29,977.
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 GBP99 and additions to share premium of
GBP80,481.
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 GBP35 and additions to share premium of
GBP29,964.
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 GBP35 and additions to share premium of
GBP29,964.
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 GBP106 and additions to share premium of
GBP100,944.
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 GBP12 and additions to share premium of
GBP7,908.
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 GBP5 and additions to share premium of
GBP3,594.
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 GBP14 and additions to share premium of
GBP9,165.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGGUPUUPQPPM
(END) Dow Jones Newswires
October 18, 2016 02:00 ET (06:00 GMT)
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