In a trading update for the year ended 30 June 2021, eEnergy (EAAS) described the period as “transformational” as it demonstrated strong growth with revenue rising 200% from FY20.
The UK and Ireland-focused Energy Efficiency-as-a-Service ("EEaaS") business said that over the period, the business has entered the energy management market and delivered its maiden profit in line with market expectations, despite the challenges of a global pandemic.
eEnergy reported full year revenue growth of 200% to £13.5m from £4.5m in FY20 and organic revenue growth of 75% in its core eLight business which generated £7.9m. eEnergy’s Energy Efficiency Division saw revenue grow by over 150% to £11.4m (FY20 - £4.5m).
The Group reported adjusted EBITDA at £0.7m compared to a loss of £1.5m in FY20 with all core business units of eEnergy becoming profitable on an EBITDA basis for FY21. In addition, Profit before and after tax and before exceptional items rose to £0.1m from a loss of £1.9m.
Cash balance as at 30 June 2021 was £3.2m, more than doubling from £1.5m in FY20.
Operationally, the Company saw a 69% increase in the amount of completed eLight projects which rose from 125 in FY20 to 211. Average revenue per project also increased by 52%.
The Company’s primary focus during FY21 in both the UK and Ireland has been on the education sector, which has accounted for approximately 85% of revenue in FY21.
While its focus on education has stood the business in ‘good stead’ in the face of the challenges of COVID-19, the Group told investors that it started to see the benefits of renewed appetite from the commercial sector during its fourth quarter which resulted in eEnergy securing its largest retail contract to date with a leading UK health food chain.
eEnergy’s Energy Management business, Beond, which was acquired in December 2020, has achieved £2.2m in revenue to date which comes ahead of the Board's previous expectations.
The Company informed investors that it is currently in advanced discussions ‘with a number of major clients’ who are interested in deploying the Group's LaaS and MyZeERO solutions.
Looking ahead, the Group said it believes its performance in FY21 provides a strong platform for continued material revenue and profit growth across the core businesses of energy efficiency and energy management. At the same time, the Group said this will also allow it to invest in MyZeERO and its broader capabilities to deliver on its integrated offerings to clients.
While the Company’s pipeline of opportunities continues to grow, the Board highlighted to shareholders that it remains ‘highly confident that the fundamentals of the market and associated regulatory drivers provide a significant opportunity for growth in the medium term.’
Whilst early in the current financial year, the Board said it expects revenue and profit before and after tax and before exceptional items for FY22 to be materially ahead of FY21.
It expects FY22 revenue to be materially ahead of market expectations, but for profit before tax and exceptional items for FY22 to be around 10% below current market expectations.
Commenting on the update, Harvey Sinclair, Chief Executive Officer of eEnergy said, "Whilst the last year has been tough for all businesses, I am very pleased with the significant progress we have made during our first full year as a public company. I am proud that we have been able to post our maiden full year profit and deliver organic growth of 75%.”
He added, “We have grown our management team and executed on our strategy of acquiring and integrating value enhancing businesses which has moved eEnergy into the exciting wider energy services market. This provides an excellent platform for continued material growth in revenue and profit over the medium term."
Shares in eEnergy have nearly doubled in value since the beginning of 2021. The stock was trading 1.19% higher this morning at 20.44p following the publication of its trading update.
eEnergy intends to develop into a broader energy services company and acquire other businesses in the energy management sector. It is currently focused on providing ‘Light-as-a-Service’ to commercial customers and helps businesses and schools switch to LED lighting, typically for a fixed monthly service fee, avoiding any upfront payments.
For businesses and schools, the energy savings are greater than the monthly service fee, allowing them to unlock free cash-flow from day one as well as to improve the quality of their lighting and reduce carbon emissions.
Rapidly Expanding Market
The market in the EU for energy efficiency services was approximately €25 billion in 2017 and is expected to double by 2025.
In November 2020, eEnergy launched the ‘Green Energy Initiative’, a scheme focused on helping more UK schools, which are eligible for part but not full Government funding, to reduce carbon emissions and save money by switching to cheaper, efficient LED lighting.
The Initiative has been set up by eEnergy to work in conjunction with the Public Sector Decarbonisation Scheme ("PSDS"), a UK Governmental entity which provides grants for public sector bodies in order to fund energy efficiency and heat decarbonisation measures.
eEnergy believes only 20% of schools have upgraded to date and expects to be able to increase its addressable market as the ‘Initiative’ will either make up any shortfall or fully fund the switch, using just its Funding Partners.
Strong Supply Chain
In November 2020, eEnergy signed an exclusive OEM partnership with Venture Lighting Europe Limited ("VLE") to provide eLight-branded LED technology.
Chosen after a tender process which included some of Europe's leading OEM manufacturers, with a 35-year heritage, VLE forms part of Advanced Lighting Technologies, a US-based group which has 600 employees and an annual revenue of over $130m.
eEnergy believes an integrated supply chain for eLight will maximise operating efficiencies and is a significant market differentiator. In particular, it will hold dedicated stock lines for eLight, ‘significantly’ reducing the time that it takes to complete installation projects.
ESG merger and acquisitions strategy
eEnergy has an active ‘Climate Action Initiative’ with energy efficiency marked as the #1 solution for many commercial buildings to reduce their energy consumption.
The Company has a declared M&A strategy in this space, which it expects to complement its core business and lead to an exciting ESG Investment Case for Investors.
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