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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Utilitywise | LSE:UTW | London | Ordinary Share | GB00B6WVD707 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.903 | 1.806 | 2.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMUTW
RNS Number : 4915D
Utilitywise plc
27 October 2015
27 October 2015
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 2015.
Financial Highlights
Hot Features
Premium
2015 2014
(as restated)
(GBP000s) (GBP000s) % change
Revenue 69,106 48,947 +41%
Gross profit 30,296 22,361 +35%
EBITDA* 17,785 14,467 +23%
Profit before
tax** 16,662 13,363 +25%
Diluted EPS(#) 17.9p 14.0p +28%
Total dividend
for the year 5.0p 4.0p +25%
*Excluding share based payment expenses of GBP0.6m (2014: GBP0.7m), exceptional items relating to acquisition costs of GBP0.6m (2014: GBP0.1m), restructuring and re-organisation costs of GBP0.2m (2014: GBP1.9m) and exceptional credit of GBP0.2m (2014: GBP2m) relating to the release of a brought-forward provision (2014 relating to release of contingent consideration).
** As above, but excluding amortisation relating to acquired intangibles of GBP1.2m (2014: GBP0.9m)
(#) As above, but including the tax impact of the above adjustments.
Highlights:
-- Strong revenue and profit growth -- Continued investment in our multi-channel routes to the customer -- Management strengthened with appointment of new COO, Brin Sheridan -- t-mac Technologies acquisition completed in April, integrated and performing well -- UK customers now exceeds 27,000
-- Review of accounting procedures to enable more accurate consumption variance tracking
Geoff Thompson, Chief Executive of Utilitywise, commented:
"The past year has been one of continued progress. We have maintained our growth aspirations and we are well advanced in the roll out of our multi-channel approach to the entire addressable market. We have complemented our capabilities in the year with the acquisition of t-mac Technologies and now can take a customer through the entire journey of procuring their energy, ensuring compliance, monitoring and reporting usage, and controlling and reducing their energy consumption.
Our management team has been further strengthened and I am delighted to welcome Brin Sheridan to the Group. Brin will assist us along with the rest of the Executive team to deliver this exciting opportunity we have to increase our market share.
We have slowed and refocused our recruitment in recent months to ensure that we have the highest quality of staff capable of delivering our Trusted Advisor strategy effectively and increasing our new customer conversion rates. Since period end the Group's UK customer base has increased further to 27,265 as at 30 September, with a corresponding increase in secured but not yet recognised revenue to GBP28.3 million as at 30 September compared to GBP26.2 million at period end.
Our outlook for the coming years remains extremely positive and we look forward to welcoming thousands of new customers to the services and products we can deploy to help them optimise their energy usage and to save money."
For further information:
Utilitywise plc 0330 303 0233 Geoff Thompson (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 Emma Kane/ Richard Gotla
About Utilitywise
Utilitywise is a leading independent utility cost management consultancy based in North Tyneside. The Group has established trading relationships with a number of major UK 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.
Businesses large and small rely on Utilitywise for their energy management needs. Clients range in size from single site SME's to multinationals with thousands of sites and cover the whole of the UK. In total, Utilitywise has over 27,000 customers.
Utilitywise is a UK company quoted on the AIM market of the London Stock Exchange. For more information, please visit www.utilitywise.com.
Strategic Report
Chairman's Statement
I am pleased to report another year of growth and excellent operational progress. Revenue increased by 41% in the year to GBP69.1m, delivering adjusted EBITDA of GBP17.8m and adjusted profit before tax of GBP16.7m, increases of 23% and 25% respectively. We remain extremely confident of the demand for our range of products and services and the considerable investment made across the business this year reflects this.
We have continued our programme of strengthening our management team with the appointment earlier this year of Steve Atwell as Managing Director of our Enterprise Division and, as separately announced today, Brin Sheridan as Chief Operating Officer. I look forward to welcoming Brin to the team.
We have also continued our ongoing commitment to refining and improving our internal systems and as part of this commitment have undertaken a comprehensive review of our accounting processes. This review focused in particular on the consumption variances that arise on energy contracts written. The Group has historically made a 15% provision for consumption variances and our review demonstrated that the current variance is running at that that level. However, when applying the same detailed analysis to prior years, the consumption variances were found to be higher than the 15% used in prior years. This, together with analysing the consumption variance on a contract by contract basis, enabled us to correctly calculate the provision at the relevant balance sheet dates. As a result, a prior year adjustment has been made to reflect this accounting error. Further details of this restatement are contained in the Business Review section.
Since IPO we have completed five acquisitions, including that of t-mac Technologies Limited in April, providing the Group with additional capabilities in the energy monitoring and controls space. We are pleased with the integration of t-mac to date and the additional opportunities we have started to see as a result of our joint offering. Whilst procurement remains the main contributor to Group revenue, the opportunities for customer interaction are increasing as a result of the broader services we now offer and our role as a trusted advisor to our customers is being endorsed at every opportunity.
The Group now looks after over 27,000 customers in the UK and over 4,000 in Europe. In the Enterprise Division we are increasing our ability to engage with potential customers and have developed our Trusted Advisor framework to ensure consistency and complete delivery of all applicable products and services as part of our Utility Management Plan. These will also enable us to establish a relationship with potential customers outside of their normal procurement contract cycle. Our Net Promoter Score remains very strong at 51, a demonstration of our endeavour to ensure all our customers have a positive engagement with the Group.
During the Period we completed the move to our new head office, which has allowed the Group to recruit new Energy Consultants and support staff. Having increased our Energy Consultant numbers since 31 July 2014 from 363 to 610 as at 31 July 2015, we have refocused our recruitment strategy to ensure we have the highest quality of staff capable of delivering our Trusted Advisor strategy effectively, in turn increasing our new customer conversion rates. As a result of this recruitment in the first quarter has been slower than anticipated and whilst the outlook for the current year remains good, overall headcount growth will be slightly slower than previously communicated.
Given the dynamic and ever changing environment in which we operate, I believe that the increasing diversity of our offering and the strategic decisions taken to broaden our products and services positions us well. Despite our continued success, our penetration remains relatively low in what is a large addressable market, which gives us great confidence for 2016 and beyond.
With the continued strong financial performance the Board is pleased to recommend a final dividend payment of 3.3p per share, making a total of 5.0p for the year, an increase of 25%, and continues to view the future with confidence.
Our Strategy
Utilitywise was established to assist the SME market to procure 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 conducive 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 I&C customers, the ability to monitor water consumption via our OBox 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.
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Our acquisition of t-mac Technologies has provided the Group with the ability to extend our capabilities further into the controls arena to help consumers of energy to not just monitor but to control and optimise their energy usage. The t-mac existing customer base is currently more akin to the larger multisite corporate customer but we intend to develop products and services which will appeal and provide this capability in to the wider SME customer base.
Our strategy is to provide a comprehensive utility solution to all sizes of customer. We can procure their energy, we can monitor, report and control their usage, identify efficiency savings and project manage the solutions in order to realise identified savings.
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 who 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 certain smaller meter sizes, enabling them to switch supplier with minimal human intervention, therefore making the service viable for the smaller customers.
The Group has continued to develop in all of these areas and has re-organised to ensure the Groups products and services are presented to target customers in the most efficient way. As a result the Group is now organised into two divisions; Enterprise and Corporate.
The Enterprise Division services SME and mid-market customers.
Following integration of all 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 has been created to service the 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, means 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 some of 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 now planned to increase to over 800 by the end of 2016.
(2) Acquisition
The Group continues to evaluate acquisitions which 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 and we are currently procuring energy on behalf of customers in four European countries: France, Germany, Holland and Belgium.
Business Review
The Group has developed in all areas of its operations and delivered a 41% increase in revenue, largely driven by increased headcount in line with our stated strategy.
Financial Highlights
2015 2014
(as restated)
(GBP000s) (GBP000s) % change
Revenue 69,106 48,947 +41%
Gross profit 30,296 22,361 +35%
EBITDA* 17,785 14,467 +23%
Profit before
tax** 16,662 13,363 +25%
Diluted earnings
per share(#) 17.9p 14.0p +28%
Total dividend
for the year 5.0p 4.0p +25%
*Excluding share based payment expenses of GBP0.6m (2014: GBP0.7m), exceptional items relating to acquisition costs of GBP0.2m (2014: GBP0.1m), restructuring and re-organisation costs of GBP0.2m (2014: GBP1.9m) and exceptional credit of GBP0.2m (2014: GBP2m) relating to the release of a brought-forward provision (2014 relating to release of contingent consideration).
** As above, but excluding amortisation relating to acquired intangibles of GBP1.2m (2014: GBP0.9m)
(#) As above, but including the tax impact of the above adjustments.
Prior year adjustment
The prior year adjustment relates to a correction of an accounting error in relation to the provision for the consumption variance (also referred to as leakage) arising on contracts where energy is procured for business customers. The Group provides services through negotiating rates with energy suppliers on behalf of business customers and revenues are generated by way of commissions from energy suppliers. This type of revenue is recognised when the contract between the customer and the energy supplier becomes live. The vast majority of the revenues in the Enterprise Division and a portion of the revenues in the Corporate Division and in Europe will transact and recognise revenue under this policy. The commissions are calculated based on expected energy usage by the business customer at agreed commission rates with the energy supplier. Where the actual energy usage by the business customer differs to that calculated at the date the contract goes live, an adjustment is made to revenue once the actual data is known; this is referred to as the consumption variance. The Group has historically estimated the fair value of revenue recognised at 85% of the expected full commission at the go-live date.
We have revisited the consumption variance calculation as part of our ongoing review of our accounting procedures. We have reviewed every contract that matured or ended prematurely in the year to 31 July 2015 and calculated the consumption variance applicable to that population. The consumption variance rate was subdivided to split out the contracts which have run to their full contract term and matured in the year; these contracts represented approximately 98% of the whole population. The remaining 2% was represented by the contracts which ended prematurely for a variety of reasons. The work on contracts maturing in the year to 31 July 2015 has demonstrated the consumption variance rate to be 14% for those contracts that ran to their full maturity and for those that ended prematurely and which display different characteristics the consumption variance rate was 1%.Therefore the overall consumption variance rate for this population of contracts was 15%, consistent with our revenue recognition policy.
This consumption variance rate represents our best estimate of the consumption variance applicable to the population of contracts still running at 31 July 2015. However, calculating the consumption variance in this way in prior years highlighted that contracts written some time ago with maturities in prior years were seeing consumption variance rates higher than 15%. Higher expected consumption variances would have required a greater provision to be made at the time revenue was recognised. Also the provision relating to each contract was held for 24 months and then released which did not reflect the lengthening of contract terms the Group was experiencing and when taken together with the consumption variance the aggregate provision was not sufficient at the previous Balance Sheet dates. Any additional consumption variance over our 15% assumption was therefore expensed in the financial period that the contract ended.
The impact of these changes in the accompanying set of accounts is to restate the provision and therefore the opening reserves at 1 August 2013 on a pre-tax basis by GBP3.9m. The restatement of the balance sheet at 31 July 2014 is GBP3.6m on a pre-tax basis.
For the year ended 31 July 2016 the consumption variance rate will be assumed to be 15%, consistent with the aggregate variance for contracts ending in the period ending 31 July 2015. This new methodology will be consistently applied going forward and updated regularly to gauge any variation and updated in the revenue recognised for the Group.
Key Performance Indicators
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Some of the key performance indicators used by the Directors are as follows:
KPI 2015 2014 % change Energy consultants at 31 July 610 363 +68% Future secured revenue* GBP26.2m GBP28.2m -7%
*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. We have moved our main North East operation into new premises in North Shields, which has allowed us to grow the headcount and to provide the basis for future growth. At period end, the secured pipeline was slightly below last year but had improved from the position at the time of our Interims (GBP23.5m) when we had just completed the move and were re-focusing the increased headcount on new customer acquisitions alongside a continuation of renewals and extensions. This is a very useful metric as it represents visible revenue streams secured by the Group but not yet recognised in the financial statements, and had increased further to GBP28.3 million as at 30 September 2015.
These results demonstrate the momentum we have established, as we continue to grow headcount to support organic growth and successfully integrate our recent acquisitions, but more fundamentally continue to show the strength of our proposition, the hard work of our people and most importantly the value we add to our customers.
Revenue generated in 2015 at GBP69.1m (2014: GBP48.9m as restated) represents an increase of 41% on the year ended 2014. Energy consultant headcount in the Enterprise Division continued to increase through the year to a total of 610 (an increase of 247 or 68%), a statistic that underpins the GBP55.9m (2014: GBP40.4m as restated) revenue generated by the Enterprise Division in 2015 (an increase of 38% on 2014). The Corporate Division, servicing larger customers on a more consultative basis, continues to perform well with revenues of GBP16.0m, an increase of 63% from GBP9.9m in the prior year.
Gross margin was 43.8% for the year against 45.7% for 2014 (as restated).
Net debt at the end of the year was GBP6.7m which compares to net cash at the end of July 2014 of GBP9.8m. During the year we acquired t-mac Technologies and GBP6.4m of cash was expended as part of that transaction. As part of the acquisition we refinanced and increased the revolving credit facility to GBP25m which will expire in June 2019. The other main impact on cash was the extension business which had revenue recognised in the year and together with renewals represented approximately40% of the Enterprise Division revenues. The increased proportion of extension and renewal business compared to 2014 resulted in an increase in accrued revenue as at 31 July 2015.
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 2015. As at our IPO in June 2012 we had over 10,000 contracted customers and this grew to approximately 26,000 customers as at 31 July 2015.
This has been principally driven by the increased Energy Consultant headcount to 610 at 31 July 2015, up from 363 at the previous year end. 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.
Acquisitions
The Group acquired the t-mac Technologies business in April 2015. The acquisition allows the Group to offer the complete range of energy products and services; we can deploy our edd:e circuit monitoring hardware and now, through t-mac, we can control the energy spend to optimise the usage. t-mac has been incorporated into our Corporate Division as the type of customer that t-mac has targeted to date fits very well with our consultative sales model. We expect to achieve revenue synergies from the deployment of t-mac across the existing Corporate customer base in the first instance and thereafter to target a suite of t-mac products to offer across the much larger Enterprise customer base we have.
The Group remains alert to further opportunities in this highly fragmented market which could bring additional products, services or expertise to our existing capability.
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.
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 or fail to pay the energy supplier. 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. The Group has grown rapidly over the last few years and this has been achieved through the headcount growth of our principal Enterprise operation in North Shields. We have also acquired five businesses and retaining the staff has been a key thrust of the integration process whilst providing a platform for these businesses to prosper, which in most cases has been through headcount growth. We are focused on providing a workplace that both attracts and retains people with the skills and behaviour that we need. During the year we have rolled out a Group wide appraisal system in order to help highlight skill gaps and enable us to identify more opportunities for personal growth development whilst providing a link to the performance management system to ensure we are rewarding our people that embody the competencies that will assist us to drive the business forward.
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 have made 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 June 2017. 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.
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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 their 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.
Dividend
The Board is proposing a final dividend of 3.3p per share subject to the approval of the shareholders at the Annual General Meeting. The dividend per share will be paid on 21 December 2015 to shareholders on the register at close of business on 27 November 2015. The associated ex-dividend date is 26 November 2015.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
31 July 31 July
2015 2014
GBP (as restated)
GBP
Revenue 69,106,061 48,947,159
Cost of sales (38,809,898) (26,585,832)
Gross profit 30,296,163 22,361,327
----------------------------------- ------------- ----------------
Other operating income 467,108 327,647
Exceptional contingent
consideration release - 2,000,000
----------------------------------- ------------- ----------------
Total other operating
income 467,108 2,327,647
----------------------------------- ------------- ----------------
Other administrative
expenses (15,835,732) (10,621,221)
Exceptional administrative
expenses (570,133) (2,021,790)
----------------------------------- ------------- ----------------
Total administrative
expenses (16,405,865) (12,643,011)
Profit from operations
before exceptional
items 14,927,539 12,067,753
Exceptional items (570,133) (21,790)
----------------------------------- ------------- ----------------
Profit from operations 14,357,406 12,045,963
Finance income 82,218 103,697
Finance expense (316,895) (476,393)
Profit before tax 14,122,729 11,673,267
Tax expense (2,926,549) (2,170,105)
Profit for the year
attributable to equity
holders of the parent
company 11,196,180 9,503,162
Other comprehensive
income/(expense)
Items that may be
reclassified to profit
or loss
Exchange difference
on translation of
foreign operation 35,964 (77,308)
----------------------------- ----
Total comprehensive
income attributable
to equity holders
of the parent company 11,232,144 9,425,854
----------------------------------- ------------- ----------------
Earnings per share
Basic 0.149 0.130
Diluted 0.146 0.124
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 July 31 July
2014 2013
31 July
2015 (as restated) (as restated)
GBP GBP GBP
Non-current assets
Property, plant
and equipment 5,899,463 4,837,532 4,795,670
Goodwill 25,123,291 14,851,149 14,281,748
Intangible assets 12,047,410 7,075,202 6,943,854
Accrued revenue 22,977,894 10,211,243 4,171,512
Total non-current
assets 66,048,058 36,975,126 30,192,784
----------- --------------- ---------------
Current assets
Inventories 642,825 97,983 80,825
Trade and other
receivables 15,939,299 13,958,035 7,731,065
Cash and cash
equivalents 6,492,485 15,823,137 9,014,680
Corporation tax
asset - 556,895
Total current
assets 23,074,609 30,436,050 16,826,570
----------- --------------- ---------------
Total assets 89,122,667 67,411,176 47,019,354
----------- --------------- ---------------
Current liabilities
Trade and other
payables 17,131,012 17,564,007 12,644,484
Loans and borrowings - - 1,252
Corporation tax
liability 585,613 - 429,088
Current provisions 703,550 750,639 -
----------- --------------- ---------------
Total current
liabilities 18,420,175 18,314,646 13,074,824
----------- --------------- ---------------
Non-current liabilities
Trade and other
payables 9,340,004 7,918,457 4,669,308
Loans and other
borrowings 13,175,000 6,000,000 5,000,000
Deferred tax
liability 1,898,001 1,132,642 1,958,117
Non-current provision 168,224 443,256 -
----------- --------------- ---------------
Total non-current
liabilities 24,581,229 15,494,355 11,627,425
----------- --------------- ---------------
Total liabilities 43,001,404 33,809,001 24,702,249
Net assets 46,121,263 33,602,175 22,317,105
----------- --------------- ---------------
As at As at As at
31 July 31 July
2014 2013
31 July
2015 (as restated) (as restated)
GBP GBP GBP
----------- --------------- ---------------
Equity attributable
to equity holders
of the parent company
Called-up share
capital 76,593 74,514 71,858
Share premium 12,873,498 12,477,889 10,864,765
Merger reserve 9,531,644 5,783,427 5,684,693
Share option reserve 1,599,744 1,231,434 228,916
Foreign currency
reserve (41,344) (77,308) -
Retained earnings 22,081,128 14,112,219 5,466,873
Total equity 46,121,263 33,602,175 22,317,105
----------- --------------- ---------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Retained Foreign
Share Merger earnings currency
Share Share option reserve (as reserve
capital premium reserve restated) Total
GBP GBP GBP GBP GBP GBP GBP
--------- ----------- ------------ ------------ ------------ ----------- -------------
As at 1
August
2013 (as
restated) 71,858 10,864,765 228,916 5,684,693 5,466,873 - 22,317,105
Profit
for the
period
(as restated) - - - - 9,503,162 - 9,503,162
Other comprehensive
income - - - - - (77,308) (77,308)
--------- ----------- ------------ ------------ ------------ ----------- -------------
Total comprehensive
income
for the
year (as
restated) - - - - 9,503,162 (77,308) 9,425,854
Dividends
paid - - - - (2,158,341) - (2,158,341)
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Share option
expense - - 737,117 - - - 737,117
Deferred
tax on
share options - - 617,249 - - - 617,249
Tax on
equity
items - - - - 948,677 - 948,677
Issue of
shares 2,656 1,613,124 - 98,734 - - 1,714,514
Reserves
transfer
relating
to share
based payments - - (351,848) - 351,848 - -
--------- ----------- ------------ ------------ ------------ ----------- -------------
Total contributions
by and
distributions
to owners 2,656 1,613,124 1,002,518 98,734 (857,816) - 1,859,216
--------- ----------- ------------ ------------ ------------ ----------- -------------
As at 31
July 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
------- ----------- ------------ ------------ ------------ ----------- -------------
CONSOLIDATED CASH FLOW STATEMENT
31 July 31 July
2015 2014
(as restated)
GBP GBP
-------------- ---------------
Operating activities
Profit before tax 14,122,729 11,673,267
Finance income (82,219) (103,697)
Finance expense 316,895 476,393
Depreciation of property,
plant and equipment 864,989 715,256
Share option expense 695,291 737,117
Grant income (30,790) (36,000)
Amortisation of intangible
fixed assets 1,296,878 946,391
-------------- ---------------
17,183,773 14,408,727
Change in trade and other
receivables (14,245,779) (11,961,397)
Change in inventories (45,455) (17,158)
Change in trade and other
payables (5,108,945) 8,296,666
Change in provisions (325,127) 888,591
-------------- ---------------
(19,725,306) (2,793,298)
Cash flows from operating
activities (2,541,533) 11,615,429
Income taxes paid (2,208,042) (1,910,373)
Net cash flows from operating
activities (4,749,575) 9,705,056
-------------- ---------------
Investing activities
Purchase of property, plant
and equipment (1,849,851) (630,583)
Purchase of intangibles (31,886) (42,313)
Finance income 82,219 12,603
Acquisition of subsidiary,
net of cash acquired (6,397,858) (792,188)
-------------- ---------------
Net cash flows used in investing
activities (8,197,376) (1,452,481)
-------------- ---------------
Financing activities
Issue of shares 148,859 200,000
Loans repaid (6,000,000) (1,252)
Loans received 13,175,000 1,000,000
Finance expense (316,895) (476,393)
Dividends paid (3,365,287) (2,158,341)
-------------- ---------------
Net cash flows from financing
activities 3,641,677 (1,435,986)
-------------- ---------------
Net (decrease)/increase in
cash and cash equivalents (9,305,274) 6,816,589
Translation loss on cash and
cash equivalents (25,378) (8,132)
Cash and cash equivalents
at beginning of period 15,823,137 9,014,680
-------------- ---------------
Cash and cash equivalents
at end of period 6,492,485 15,823,137
============== ===============
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 2015 or the year ended 31 July 2014 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 ("IFRSs"), as adopted by the European Union (EU).
Utilitywise Plc is incorporated and domiciled in the United Kingdom.
Prior year adjustment
The financial statements have been adjusted to reflect the correction of an error made in the financial statements for the year ended 31 July 2013 and 2014, which has led to the restatements of the 2013 and 2014 results. This arose following management's review of the revenue provision calculation. The conclusion of the review was that the rate used to calculate the estimated variability in value was too low and also the provision was held for 24 months and then released which did not reflect the lengthening of contract terms the Group was experiencing. Whilst earlier periods will have been affected, it was not possible to collect the required information that would have been available at the time the previous financial statements were authorised for issue; therefore, for periods prior to 2013, it is impracticable to correct prior period errors retrospectively and the first period of adjustment reflects the impact of any previous amendment.
The following financial statement extracts show the impact of the prior period adjustments to the Group's financial statements.
Consolidated statement of profit and loss and other comprehensive income
2014
Revenue pre-adjustment 48,641,855
Adjustment 305,304
Revenue post-adjustment 48,947,159
Tax expense pre-adjustment 2,101,925
Adjustment 68,180
Tax expense post-adjustment 2,170,105
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Consolidated statement of financial position
Non-current assets 2014 2013 Accrued revenue pre-adjustment 13,068,221 7,269,680 Adjustment (2,856,978) (3,098,168) Accrued revenue post-adjustment 10,211,243 4,171,512 Current assets Trade and other receivables pre-adjustment 14,717,485 8,554,629 Adjustment (759,450) (823,564) Trade and other receivables post-adjustment 13,958,035 7,731,065 Corporation tax asset pre-adjustment - - Adjustment 556,895 - Corporation tax asset post-adjustment 556,895 - Current liabilities Corporation tax liability pre-adjustment 303,200 1,357,362 Adjustment (303,200) (928,274) Corporation tax liability post-adjustment - 429,088 Consolidated statement of changes in equity Retained earnings BF pre-adjustment 8,460,236 4,814,894 Adjustment (2,993,363) - Retained earnings BF post-adjustment 5,466,873 4,814,894 Profit for the year pre-adjustment 9,266,038 4,758,206 Adjustment 237,124 (2,993,363) Profit for the year post-adjustment 9,503,162 1,764,843
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. The Group reports to the Board under both UK GAAP and IFRSs. Underlying accounting information is prepared under UK GAAP and the adjustments noted within this report taking results to IFRSs are made for the purpose of reporting to the Board and external reporting.
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 2014
2015
(as restated)
GBP GBP
Revenue
Enterprise (local GAAP) 55,852,477 40,370,136
Corporate (local GAAP) 15,953,655 9,859,510
Intersegment revenue (1,298,775) (1,252,367)
Accrued revenue (31,603) 390,627
Discounting of cash flows (1,369,693) (420,747)
------------ ---------------
Total Group revenue 69,106,061 48,947,159
============ ===============
Enterprise Corporate
GBP GBP
Segment profit 13,123,087 2,709,918
Finance income 19,861 6,493
Finance expense (269,575) (6,441)
Depreciation (333,334) (531,654)
Amortisation (10,931) (184,539)
Taxation (2,791,848) (833,110)
Profit after tax (local
GAAP) 9,737,260 1,160,667
============ ===============
31 July 31 July 2014
2015
(as restated)
Profit after tax GBP GBP
Enterprise (local GAAP) 9,737,260 4,803,910
Corporate (local GAAP) 1,160,667 1,304,782
Accrued revenue (31,603) 390,627
Grant release 30,790 36,000
Discounting of cash flows,
net of unwinding (1,358,857) (69,117)
Amortisation 1,327,608 999,891
Investment costs (372,194) (36,500)
Other accruals discounting 4,100 -
and adjustments
IFRS deferred tax adjustments 698,409 73,569
Exceptional release of
contingent consideration - 2,000,000
------------ ---------------
Total Group profit after
tax 11,196,180 9,503,162
============ ===============
31 July 2015 31 July 2014
(as restated)
Net assets GBP GBP
Enterprise (local GAAP) 27,919,465 27,052,066
Corporate (local GAAP) 14,070,477 2,469,364
Accrued revenue and tax
impact 287,218 312,502
Grant release and tax
impact - (24,638)
Discounting of cash flows
and tax impact (1,486,829) (394,342)
Share options 370,204 617,249
Amortisation 3,696,172 2,113,728
Investment costs (928,192) (555,998)
Exceptional release of
contingent consideration 2,000,000 2,000,000
Business combinations 192,748 12,244
-------------- ----------------
Group net assets 46,121,263 33,602,175
============== ================
4. Exceptional Items
31 July 31 July
2015 2014
Other operating income GBP GBP
Exceptional release
Contingent consideration - (2,000,000)
Administrative expense
Exceptional release
Provision releases (268,072) -
Exceptional costs
Restructuring and
reorganisation 236,921 782,795
Provisions - 1,193,895
Acquisition costs
and aborted acquisition
costs 601,284 45,100
570,133 2,021,790
---------- ------------
570,133 21,790
========== ============
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 reorganisation 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 arose from the release of restructure and dilapidation provisions not utilised. Exceptional items are included in administrative expenses in the statement of profit and loss.
Exceptional items in the year ended 31 July 2014 relate to the costs incurred in the acquisition of Icon Communication Centres s.r.o. and other aborted acquisition costs. Also included are restructuring and reorganisation costs such as settlement payments of GBP469k, costs of GBP167k incurred in the set up of a new head office which has been occupied in this financial year, as well as a dilapidations provision and an onerous lease provision for the previous premises of GBP422k and GBP772k respectively.
In the year ended 2014 there is also a credit of GBP2m offsetting these costs which has arose from the release of deferred consideration where earn out criteria were not met. Exceptional items in the year ended 2014 are included in administrative expenses and other operating income in the statement of profit and loss.
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5. Tax expense
31 July 2015 31 July 2014
(as restated)
GBP GBP
Current tax expense
Current tax on profits
for the period 3,751,370 2,638,086
Adjustments in respect
of previous periods (92,687) (67,920)
3,658,683 2,570,166
============= ===========================
Deferred tax expense
Origination and reversal
of temporary differences (559,737) (349,793)
Adjustment in respect
of previous periods (173,349) (50,268)
Effects of changes
in tax rates 952 -
------------- ---------------------------
(732,134) (400,061)
============= ===========================
Total tax expense 2,926,549 2,170,105
============= ===========================
Equity items
Origination and reversal
of temporary differences (58,080) (948,677)
Adjustment in respect
of previous periods 247,045 (617,249)
--------- ---------------------
188,965 (1,565,926)
========= =====================
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
2015 2014
(as restated)
GBP GBP
Profit for the period 14,122,729 11,673,267
Expected tax charge based
on corporation tax rate of
20.67% in 2015 (22.33% in
2014) 2,918,568 2,606,818
Expenses not deductible for
tax purposes 141,281 82,073
Income not taxable for tax
purposes - (446,630)
Current tax rate difference - (534)
Impact of change in tax rate
in the period 18,600 40,429
Adjustment to tax charge in
respect of previous periods
- current tax (92,687) (67,920)
Adjustment to tax charge in
respect of previous periods
- deferred tax (173,349) (50,268)
Deferred tax not recognised 114,136 6,137
Total tax expense 2,926,549 2,170,105
=========== ===============
6. 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 2015 31 July
2014
(as restated)
GBP GBP
Profit
Profit used in calculating
basic and diluted profit 11,232,144 9,425,854
Number of shares
Weighted average number
of shares for the purpose
of basic earnings per
share 75,270,221 72,464,331
Effects of:
Employee share options
and warrants 1,150,512 2,593,870
Contingent shares to
be issued 474,570 1,096,414
Weighted average number
of shares for the purpose
of diluted earnings
per share 76,895,303 76,154,615
7. Acquisition
Utilitywise plc acquired the entire share capital of T-mac Technologies Limited on 21 April 2015 for GBP16,169,169 in order to enhance the service offering provided by the Group and deepen Group client relationships.
Consideration consisted of both cash payments and the issue of shares, an element of which is contingent on the performance of T-mac Technologies Limited to 21 April 2017. Contingent consideration has been included as a best estimate of amounts payable.
Goodwill on consolidation has been calculated as follows:
GBP
Amount of consideration 16,169,169
Discounting on contingent consideration (300,561)
Net consideration 15,868,608
Fair value of net assets acquired:
Property, plant
and equipment 80,982
Inventory 499,387
Receivables 577,409
Cash 21,311
Payables (569,376)
Provisions (3,007)
Intangible
assets
Customer related 1,702,300
Technology
based 3,525,900
Marketing
related 856,100
Order backlog 152,900
Deferred tax
liability (1,247,440)
Net assets 5,596,466
---------------------
Goodwill 10,272,142
---------------------
Consideration:
Cash paid 6,250,000
Shares issued 3,750,000
Working capital
payment 169,169
Net contingent
consideration 5,699,439
Total consideration 15,868,608
-----------
The goodwill reflects expected synergies from combining the two businesses and is not tax deductible.
The total value of the contingent consideration is based on a multiple of expected EBITDA capped at GBP12,000,000. At the point of acquisition, management's estimate of the fair value of the contingent settlement was GBP6,000,000. This is split between cash and shares. All of the contingent consideration is discounted at a discount rate of 2.9% and included in trade and other payables as it meets the definition of a financial liability. The share consideration is deemed a financial liability as it represents the settlement of a specific cash amount rather than a specific number of shares.
Since the date of acquisition T-mac Technologies Limited has generated revenue of GBP1,674,125 and a profit before tax of GBP251,605, which are included in the consolidated statement of profit or loss and other comprehensive income.
Assuming T-mac Technologies Limited was acquired at the beginning of the annual reporting period, group revenue would be GBP73,464,818 and profit before tax would be GBP14,729,020.
8. Share Capital
2015 2014
Share capital issued
and fully paid Number GBP Number GBP
Ordinary shares of
GBP0.001 each
As at 1 August 74,514,151 74,514 71,858,078 71,858
Warrants exercised - - 333,332 333
Deferred consideration 30,701 31 253,290 253
Consideration 1,782,319 1,783 30,701 31
SAYE options exercised 10,670 11 - -
CSOP options exercised 115,032 115 - -
LTIP options exercised 139,461 139 2,038,750 2,039
----------- ------- ----------- -------
As at 31 July 76,592,334 76,593 74,514,151 74,514
=========== ======= =========== =======
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.
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