eEnergy (EAAS) has announced (1st March) a new £40m project funding facility, which will support the Group’s public sector customers with their energy transition projects over coming years. It is an innovative arrangement, which will see eEnergy retain an interest in the economics of each completed project, enhancing margins and driving growth in Energy Services revenue. A brief year-end trading update indicated that trading in the 6-months to Dec ‘23 was impacted
by balance sheet constraints (prior to the c.£30m disposal of the Energy Management division). This had already been signalled in January and we update our forecasts accordingly. The disposal of Energy Management leaves the Group in a strong net cash position and wholly focused on its high growth Energy Services business. Our confidence in growth prospects is strengthened by the new project funding facility. We therefore reiterate our Fair Value/ Share
estimate of 13p, before factoring in potential contingent consideration from the Energy Management disposal, which could be material (£8m to £10m on management estimates).
£40m project funding facility and trading update
eEnergy has entered into an agreement with NatWest to provide up to £40m of project funding to finance energy efficiency and onsite generation technologies for public sector customers across the full range of eEnergy products. This provides fresh capacity to support Energy Services growth, particularly the higher growth segments of Solar and EV Charging.
Recap of Energy Management (EM) disposal
eEnergy recently completed the disposal of its EM business to Flogas Britain Limited (a subsidiary of DCC plc) for an initial consideration of £29.3m (before repayment of £4.3m intercompany balances). Net proceeds will be reinvested in Energy Services after paying down external debt facilities of £8.1m. eEnergy estimates additional, contingent consideration in the range of £8m to £10m (capped at £20m) could become payable over the next two years, offering meaningful upside potential.
ED Fair Value 13p per share, before contingent consideration
EAAS currently trades on just 6.2x EV/EBITDA to Dec ’25. We continue to see Fair Value at 13p,
which would equate to c.12x FY’25 EV/EBITDA, falling to c.9x FY’26. Looking at the sum of the parts,
we would expect Energy Services to command a growth multiple, whilst central costs (reducing and
relating to plc, Board costs etc) should attract a lower multiple. Importantly, we note that the contingent
consideration could add a further £10m in cash (and valuation upside) for the period to 30th Sep ’25