Utilitywise plc Trading Update (8385O)

TIDMUTW

RNS Number : 8385O

Utilitywise plc

24 August 2017

24 August 2017

Utilitywise plc

("Utilitywise" or the "Group")

Trading Update

Utilitywise, the leading independent utility cost management consultancy, today provides an update on trading for the year ended 31 July 2017. The Group will announce its full year results on 17 October 2017. The Board confirms that the Group has performed in line with the expectations it announced on 31 July 2017.

As previously announced, the Group adopted IFRS 15 (Revenue from Contracts with Customers) on 1 August 2017. Accordingly, the year ended 31 July 2017 will be the final year that the Group reports under the existing revenue accounting standard, IAS 18 (Revenue) and all references to revenue and profit herein are based upon IAS 18 accounting policies(1) .

The Board expects to report Group revenue for the year of c. 3% higher than the prior year and adjusted (2) profit before tax of c. 40% lower than the prior year. The fall in adjusted (2) profit before tax is primarily because of an adjustment recognised in respect of projected under-consumption of contracts, as announced on 29 June 2017, and the deferral of certain significant renewals contracts, announced on 31 July 2017.

Enterprise Division

The Enterprise Division, delivered a strong underlying operating performance during the year, despite the issues outlined above. It serves the SME market and represents the vast majority of the Group's expected adjusted(2) profit before tax for the year ended 31 July 2017.

Additions to the gross order book totalled GBP99.2m, an increase of 17.3% compared to GBP84.5m in the prior year. This was the result of a number of planned productivity improvement initiatives, which included, inter alia, enhanced operational management and a reduction in sales force headcount from 625 to 550 during the year.

The secured future revenue ("Order Book") increased by 17.4% during the year on a like for like basis. The Order Book value as at 1 August 2017, stated after the adoption of IFRS 15, was GBP46.1m, of which c. GBP26.3m is expected to be recognised as revenue during the financial year ended 31 July 2018, as a result of the adoption of IFRS 15(3) . A reconciliation of the movement in the Order Book during the year is set out later in this announcement.

The European operation performed well, with an increase in revenue and operating profit compared to the prior year.

Corporate Division

The Corporate Division, which services larger organisations and represents less than 10% of the Group's expected adjusted(2) profit before tax for the year ended 31 July 2017, saw a reduction in revenue compared to the year ended 31 July 2016. The profit of the division in the second half of the year was broadly in line with the first half profit, as the business continues to build a pipeline of future work.

The Corporate division continues to form a key part of the Group's Strategy for Growth, as announced in March 2017, and The Board remains confident in the medium-term prospects for this Division.

Net debt

The Board expects to report that net debt at 31 July 2017 was c. GBP19.0m, compared to GBP5.5m at 31 July 2016 (as restated). The main reason for the increase during the year was the decision to discontinue the acceptance of advance cash receipts from certain energy suppliers, in respect of new business not yet written, as announced in the Group's interim results in April 2017. The year-end net debt was lower than management expectations, primarily due to GBP1.0m of legacy supplier cash advances, previously expected to have been repaid before the year-end, remaining outstanding at 31 July 2017. It is now anticipated that it will be repaid during the year ended 31 July 2018.

Brendan Flattery, CEO of Utilitywise, commented:

"Although the Company endured some headwinds in the period which impacted our financial performance in the short term, there have been a number of underlying improvements in the business which auger well for the future. Productivity gains in our Enterprise Division, which represents the majority of our profits, have led to a significant increase in our order book. Looking forward, our revenues and profits will now be more closely aligned to our cash generation, and the secured future revenue balance of GBP46.1m at 1 August 2017 gives us increased visibility of future performance. With our portfolio of energy services and strong customer service, Utilitywise has a solid platform for future growth. I look forward to providing further details in our year end results statement in October."

Reconciliation of Order Book during the year

 
                                        GBP'm 
 Prior to adoption of IFRS 15: 
 Opening order book 1 August 
  2016 (100% basis)                     25.6 
 Restatement for leakage and 
  net objection rate                    (6.6) 
                                       ------ 
 Opening Order Book 1 August 
  2016 (restated)                       19.0 
 Net order book growth in the 
  year                                   3.3 
                                       ------ 
 Closing Order Book 31 July 
  2017 (85% basis)                      22.3 
 
 Adoption of IFRS 15: 
 Change contract initial recognition 
  from 85% to 80%                       (1.3) 
 Same supplier renewals deferred 
  to contract start date                25.1 
 Order Book 1 August 2017               46.1 
                                       ------ 
 

The Order Book on 1 August 2017 is stated on an assumed future revenue recognition of 80% of estimated total value of procurement contracts, subsequent to the adoption of IFRS 15.

(1) With the exception of references to Order Book as at 1 August 2017, which are presented on the basis of IFRS 15 adoption, given its impact upon the year ended 31 July 2018 and beyond.

(2) Adjusted profit before tax means stated before exceptional items, non-cash accounting charges for share-based payments and amortisation relating to acquired intangible assets.

(3) Under IFRS 15, revenue on both new business and same supplier renewals is recognised at the point of contract commencement

For further information

 
 Utilitywise plc                           0330 303 0233 
 Brendan Flattery (CEO) 
 Richard Laker (CFO) 
 
 finnCap (NOMAD and broker)                020 7220 0500 
 Matt Goode / Henrik Persson (Corporate 
  Finance) 
 Simon Johnson (Corporate Broking) 
 
  Liberum (Joint broker)                     020 3100 2000 
 Robert Morton / Steve Pearce 
 Redleaf Communications                    020 7382 4730 
 Robin Tozer / David Ison 
 

Utilitywise is a leading independent utility cost management consultancy, which 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. Utilitywise is a UK company quoted on the AIM market of the London Stock Exchange. For more information, please visit www.utilitywise.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

TSTEAEPDASKXEAF

(END) Dow Jones Newswires

August 24, 2017 02:00 ET (06:00 GMT)