Utilitywise plc Half Yearly Report -2-

During the period, we successfully completed the move to new, larger premises in Newcastle which we invited institutional investors to visit in January. The increased capacity has enabled the Company to grow its headcount and measures are in place to ensure that the infrastructure of the Company is sufficiently scalable to cope with its recruitment strategy.

Investment in our products and services has continued during the period. Our Intellectual Property is an integral part of our business proposition and we remain committed to the ongoing development and innovation of our unique energy management solutions portfolio.

People

We are committed to attracting the right talent and to developing the skills of our people so that our customers benefit from our knowledge and experience and the quality of service we provide. Our training academy continues to ensure that all of our people have the appropriate knowledge and skills to service our clients with our full range of products and services.

Compliance and Quality Assurance Process

In order to maintain our status of trusted advisor to energy suppliers and customers alike, we remain committed to ensuring that our compliance and quality assurance processes are best in class. We have a number of procedures in place to ensure that our sales processes meet energy suppliers' compliance procedures, including training, coaching and documentation of our compliance procedures, as well as checks on all sales documentation, emails and checks on call recordings. A percentage of our sales documentation, including call recordings, is also quality checked by energy suppliers. We also adhere to our own stringent set of internally formulated quality assurance requirements.

Principal Risks and Uncertainties

The principle risks and uncertainties faced by the Group are as follows:

Exposure to energy 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 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 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 by 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 and there is limited individual customer concentration in revenue terms.

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 continue to develop and offer a full range of energy services products to help mitigate customer risk.

Legislation

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 its financial condition and operating results of the Group.

Regulatory

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. However, it should be noted that the Board believe 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.

Related Parties

During the period there have been no related party transactions which have had a material impact on the financial position or performance of the Group. There have been no significant changes to related party transactions disclosed in the annual report for the year ended 31 July 2014.

Outlook

Post period end, we are pleased to report further KPI progress with Group headcount increasing to 1,011, the Company's secured revenue pipeline at GBP26m and 23,109 Group customers as at 31 March 2015.

We are still at an early stage in terms of the growth potential in this sector and, with the reputation and resources we have built, firmly believe that Utilitywise is now ideally positioned to capitalise on it.

We see exciting opportunities ahead of us as the market evolves and related service opportunities emerge, for example in the water market when it fully de-regulates in 2017. In the meantime, we continue to build our Energy Services capability and recent Government initiatives such as the Energy Savings Opportunity Scheme (ESOS) have presented superb opportunities to engage with many large corporate customers to assist them not only in their regulatory compliance but also in their desire to reduce energy consumption.

Our relationship with the UK Energy Supply companies remains strong and as a result we have secured important new commercial terms with a number of suppliers during the period. We continue to work closely with them to provide innovative energy solutions for the benefit of our customers.

Our end customers and our desire to engage with them on all utility related matters is at the heart of what we do and we are focused on ensuring that we continue to cement our position as their trusted advisor in the second half of the year and beyond.

We are confident about the future prospects of the business and we have started the second half well, in particular in meeting our targets to increase Consultant headcount and to acquire new customers. Our second half performance will be predicated on the continuation of this momentum.

Acquisition of T-mac Technologies Limited (T-mac)

We continue to be focused on providing a comprehensive utility solution to all sizes of customer and are committed to developing further capabilities that respond to our customers' needs.

In line with this strategy, we have announced this morning the acquisition of T-mac. Further details are contained in a separate announcement released earlier today.

Financial Review

Income Statement

During the six month period ended 31 January 2015 revenue increased by 42% over the corresponding period last year to GBP29.9 million. A key driver of growth has been the addition of revenue generating Energy Consultants. At the end of January the headcount had increased to 449 up from 347 at the end of January 2014, 15% of which were recruited following the office move in November. The additional heads came in at the end of the six month period following the move to new offices to allow for further expansion and as such the average revenue generating headcount was approximately flat when comparing the two periods.

Despite this, revenue grew significantly which can be attributed in part to a commercially attractive opportunity to extend contracts with existing end consumers for longer terms. This has coincided with a period of low energy prices thus enabling the end consumer to lock in to these lower prices.

The secured pipeline (gross secured future revenue) was GBP23.5 million compared to GBP23.8 million at January 2014. The static headcount that contributed to the revenue and the fact that an extension will be recognised in revenue immediately means that the gross secured future revenue held at cGBP24m. As at 31 March 2015, the secured pipeline has increased to GBP26m as we refocused on new customer acquisition.

Overall Gross Margins are 45%, up on the prior period of 43%.

Adjusted EBITDA, defined as EBITDA adjusted for share based payments for the period was GBP7.7 million, an increase of GBP2.3 million (42%) on the period to 31 January 2014.

At the divisional results level we are pleased to see both divisions progress from the prior period. Of the EBITDA increase of GBP2.3m, GBP1.6m (68%) was attributable to the growth in the Enterprise division, with the remainder reflecting strong growth in the Corporate segment. The two segments have differing growth prospects with the Enterprise growth being fuelled by the addition of headcount as we acquire new customers in a market that remains extremely large compared to our current customer count. The Corporate Division operates in a much more mature market as far as procurement is concerned and some of the growth initially is driven by our desire to transfer some of the larger Enterprise customers in to the Corporate account managed customer function as their contracts come up for renewal. This together with some exciting opportunities to engage more fully with this customer base provides exciting growth prospects for the division as we continue to strengthen the non-procurement offering with our wide range of energy services.

Cash and Borrowings