REG - Eneraqua Technolgs. - Final Results
23/05/2024 07:00
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RNS Number : 5459P Eneraqua Technologies PLC 23 May 2024
23 May 2024
Eneraqua Technologies plc
("Eneraqua", the "Company" or the "Group")
Full Year Results
Macro-economic backdrop led to challenges in the year
but demand remains strong with the market beginning to stabilise
Eneraqua Technologies plc, a specialist provider of energy and water
efficiency solutions, is pleased to announce its audited full year results for
the year ended 31 January 2024.
Financial Highlights
FY to Jan FY to Jan
2024 2023
Revenue £53.8m £55.1m
EBITDA (£5.2m) £11.7m
Adjusted EBITDA(1) (£3.3m) £11.8m
Adjusted EBITDA margin (6.2%) 21.5%
Adjusted PBT (£6.0m) £10.1m
Adjusted diluted EPS (18.98p) 25.25p
Cash generated from operations £7.7m (£3.4m)
Gross Cash £6.4m £3.2m
Net Cash/(Debt) £1.2m £(3.0)m
ROCE (31.1%) 33.0%
Dividend per share 0 1.2p
Operational Highlights
· Group faced operational headwinds in both Energy and Water in FY24 with
project delays impacting financial performance.
o Energy - Some domestic projects delayed due to inflationary pressures on
client budgets, with domestic energy sector normalising. No clients lost with
projects deferred into FY25 and FY26.
o Water - In August 2023, UK Government announced its intention to change
legislation governing development in nitrate-sensitive areas, causing a hiatus
in work, since resolved. Policy now stabilised.
· Continued to make progress in the year despite challenges, with headwinds now
easing.
o Energy - Successes in non-domestic energy projects with first major NHS Trust
contract won: £11.3m contract with Kingston NHS Trust, and saw growth in
non-domestic sector more generally.
o Energy - Won new contracts for domestic Energy projects, including a £12.7m
contract with Royal Borough of Kensington & Chelsea.
o Water - Won first nutrient neutrality contract with Ashford Borough Council,
Kent. Will see patented Control Flow HL2024® products installed in 5,000
existing homes which unlocks a new 1,000 house development that had stalled
for over 18 months.
o Water - Continued to see demand increase internationally, with expansion
across a wide range of markets in Spain and India where a 3,000 home pilot is
underway to demonstrate benefits of Control Flow HL2024.
· International expansion continued with revenue growth of 138% to £1.3m.
· Revenue split: 77% public bodies and 23% private.
· Rightsizing of the business led to annualised cost savings of c. £1.0m.
· Completion of production facility in Toledo, Spain, with Group starting to see
benefits flow through in the form of reduced manufacturing costs and
improvements in quality assurance.
Post period end
· Following the acquisition of Vriend in the Netherlands and its successful
integration within the Group, it is on course to double turnover in first 12
months post-acquisition.
· Secured 4 appointments by the London Borough of Islington, the Royal Borough
of Kingston upon Thames, Cardiff Council and Ceredigion County Council under
4-year contracts to reduce the carbon emissions from their public buildings.
These four contracts involve work with a contract value of £14.8m in FY25
with further works in later years.
Current trading and outlook
· Local authority domestic Energy clients continue to see impacts of inflation
affecting budgets and as a result a return to normal levels is not anticipated
until FY26.
· Non-domestic Energy sector projects are an exciting new growth area for the
Group.
· Water continues to grow strongly as demand for solutions, across a wide range
of applications, increases.
Commenting on the results, Eneraqua Technologies CEO, Mitesh Dhanak,
said: "FY24 was one of the most difficult years for the Group, in which it
had to navigate challenging market conditions as inflationary pressure on
client budgets and policy decisions in the UK impacted the Group's project
delivery timelines. Notwithstanding these challenges, demand for the Group's
solutions remained strong, with no customers or projects being lost with
project timelines being extended into FY25 and FY26."
"Clients both in the UK and internationally recognise the need for and
benefits derived from our solutions. We have diversified our business over the
last year in terms of clients, non-domestic sector and international expansion
and we are confident we have the solutions, people, relationships and strategy
in place to service this demand and drive growth across both Energy and
Water."
An overview of the results is available to watch here:
https://bit.ly/ETP_FY24_Overview (https://bit.ly/ETP_FY24_Overview)
Investor Presentation
A presentation to retail investors will be hosted at 11am this morning.
Investors are invited to sign up for the presentation via the PI World
platform using the following link: https://bit.ly/ETP_FY24_results_webinar
(https://bit.ly/ETP_FY24_results_webinar)
Questions can be submitted during the presentation.
For further information please contact:
Eneraqua Technologies plc Via Alma
Mitesh Dhanak, Chief Executive Officer
Iain Richardson, Chief Financial Officer
Liberum (Nomad and Joint Broker) Tel: 0203 100 2000
Edward Mansfield
John More
Anake Singh
Singer Capital Markets (Joint Broker) Tel: 020 7496 3000
Sandy Fraser
Asha Chotai
Alma Strategic Communication (Financial PR)
Justine James Tel: 020 3405 0205
Andy Bryant eneraqua@almastrategic.com
Will Ellis Hancock
Emma Thompson
Notes to editors
Eneraqua Technologies (AIM:ETP) is a specialist in energy and water
efficiency. The Group operates in two markets, energy and water. Energy is the
larger, with the Company focused on clients with end of life gas, oil or
electric heating and hot water systems. The Group provides turnkey retrofit
district or communal heating systems based either on high-efficiency gas or
ground/air source heat pump solutions that support Net Zero and
decarbonisation goals.
Water is a growing service offering focused on water efficiency upgrades for
utilities and non-domestic clients including hotels, hospitals and care homes.
The Group's activities are underpinned by the Company's wholly-owned
intellectual property, the Control Flow HL2024® family of products which
reduce water wastage and improve the performance of heating and hot water
systems.
The Group's main country of operation is the United Kingdom. The Group's head
office is based in London with additional offices in Leeds, Washington
(Sunderland), India, Spain and the Netherlands. The Group has 206 employees,
with the majority employed within the UK.
To find out more, please visit: www.eneraquatechnologies.com
(http://www.eneraquatechnologies.com)
Chairman's statement
The year ended 31 January 2024, the Company's second year quoted on AIM, was a
most challenging one.
Turnover dipped only slightly relative to the previous year but a combination
of lower margins and increased overheads meant that the Company reported an
adjusted loss before tax of £6.0 million compared with an adjusted profit
before tax of £10.1 million in the previous year.
Despite the significant loss in the year our balance sheet remained sound with
net cash of £1.2m at the year end (2023: £3.0m net debt).
Energy
The main challenge was in our domestic Energy business in which to a large
extent our customers are public bodies or funded, directly or indirectly, by
public expenditure. As the year progressed our clients' expenditure plans were
progressively disrupted by rising costs.
The general level of inflation in the economy affected our clients' operations
but the greatest impact was on our clients' capital plans, where the cost of
key activities, such as cladding, increased by far more than the rate of
general inflation.
This inflation materially impacted capital programmes where budgets are fixed
at the outset of each financial year. In response to these inflationary
pressures clients were required to curtail their programmes to focus on
essential works, for example those directly required by legislation.
As a consequence, Eneraqua experienced project deferrals reducing revenue
which materially impacted profitability given the nature of the Group's cost
base and the associated operational leverage due to lower levels of
utilisation and associated efficiency.
An important point is that the projects we had expected to win, and in some
cases had already won, are still required and are being rescheduled within
clients' programmes in line with their budgets. There therefore remains a
strong pipeline of available work.
Water
In our Water business the challenges we faced were of a different nature.
Eneraqua's Control Flow HL2024® technology reduces water wastage and also
associated nitrate emissions from existing homes. These emissions are a
major issue in the U.K. and elsewhere which are blocking many new building
projects. Fitting our technology to existing homes enables new homes to be
built with no net increase in nitrate emissions.
The Company made good progress with pilot schemes which successfully
demonstrated the effectiveness of its technology and had expected to be able
to win more significant projects during the year to 31 January 2024. This
progress was halted when the Government announced in August 2023 a review of
its plans to achieve reductions in nitrate pollution, resulting in a hiatus in
project work.
The UK Government has since clarified its position and the Company believes
the latest Government guidance will likely have a positive effect on the
industry and will enable the Company to develop its Water business albeit
having caused a material delay in the Company's progress during the last
financial year.
International
Our international activities continued to perform well. In Spain our factory
which makes the Control Flow HL2024® products successfully started
production. All of the Control Flow HL2024® products for the European
market are now made in Spain and we are also making progress in selling our
products in Spain especially in the Hotel and Student Accommodation markets.
In the Netherlands we acquired Vriend providing the Company with the necessary
regulatory certificates to operate and an insight into the market to enable
the Company to sell in the Netherlands and more widely across the EU. We
have increased the strength of our Dutch sales capability and expect to make
further progress this year.
Our Indian operation is a key element of the future of the Group. In
addition to a sales and operating capability, we carry out high value research
and development work at our subsidiary in Kolkata. We have applied for a
number of patents in India based on our work there which will create new
applications for our Control Flow HL2024® technology. There is very
significant potential in India for the application of our technology both in
the supply of drinking water and in agriculture and we have already secured
contracts to deliver additional zero-carbon irrigation solutions and to
undertake trials of Control Flow HL2024® in 3,000 homes.
People
The very challenging market conditions during the year impacted all of those
who worked at Eneraqua. We had to reduce the size and scope of our
operations in the UK to reflect the reduced activity which resulted in a
number of redundancies, which we greatly regret, but could not sensibly be
avoided. Our workforce has shown both resilience and loyalty in continuing
to deliver high quality work for our customers throughout the year.
This year we appointed Bill Tame as our Senior Independent Non-Executive
Director. Bill has been an effective and diligent board member since his
appointment shortly prior to IPOand he brings a wealth of experience to the
Group.
Dividend
The board recognises the importance of dividend income to shareholders but
concluded that in light of the loss made in the year to 31 January 2024 it
would not be appropriate to propose a dividend for that year. The board will
keep the payment of dividends under review as we return to profit.
Outlook
After a bruising year to 31 January 2024 we have started the current year with
cautious optimism.
The need for the products and services which Eneraqua provides, as the world
moves towards net zero carbon emissions and grapples with growing shortages
and pollution of water, remains in place; the requirement for action grows
rather than diminishes as each year passes.
In the UK, while there remains pressure on public sector domestic capital
budgets, there is more stability in the non-domestic sector including
hospitals, offices and schools. Stability is the key requirement for our
clients to proceed with their expenditure plans, of which what Eneraqua
provides is part. The improving financial stability as well as certainty in
policy underpinning our Water business in the UK means that we expect the
projects which we had won or were well placed to win last year to start to be
realised. The continued growth in Water is in line with our expectation that
this will become the predominant part of the Group in the coming years.
Internationally, we signed a Memorandum of Understanding with the highly
respected The Energy and Resources Institute (TERI) which sets out a framework
for collaboration across a wide spectrum of water projects in India, where we
expect to see substantial growth in the coming years.
The potential size of the markets we serve remains far greater than the scale
of those markets today. We believe that through its unique technology and
the skills of its people Eneraqua can grasp a significant share of the markets
in which we operate.
Our plans for the current year are for significant growth in activity and a
return to profitability and we are determined to deliver on those plans.
Finally, I would like to thank Iain Richardson, who served as a director of
the Company and its Chief Financial Officer from before the Company's
flotation on AIM and who steps down as a director on 31 May 2024, for his
service to the Company. We all wish him well.
Guy Stenhouse
Chairman
22 May 2024
CEO statement
FY24 was one of the most difficult years for the Group, in which it had to
navigate challenging market conditions as inflationary pressure on client
budgets and policy decisions in the UK impacted the Group's project delivery
timelines. Notwithstanding these challenges, demand for the Group's solutions
remained strong, with no customers or projects being lost with project
timelines being extended into FY25 and FY26.
Following the delays to domestic energy projects and the subsequent impact on
the Group's performance, we responded by right-sizing the business, and we
remain confident in the structural drivers for our business, demand for our
services and the role Eneraqua will play in supporting the transition to
net-zero both in the UK and internationally. The delayed domestic projects
remain in the pipeline for FY25 and FY26.
As a result of the challenges faced by some of our clients in the domestic
sector, we have been focused on diversifying our client base, the sectors we
sell into and international expansion. Importantly, our non-domestic energy
projects have not been impacted in the same way as domestic energy projects,
and we see strong opportunity for growth in this area. Our appointment by
Kingston NHS Trust has been followed up this year with 4-year appointments by
the London Borough of Islington, the Royal Borough of Kingston upon Thames,
Cardiff Council and Ceredigion County Council to reduce the carbon emissions
from their public buildings. These four contracts involve work with a
contract value of £14.8m in FY25 with further works in later years.
Clients both in the UK and internationally recognise the need for and benefits
derived from our solutions. We have diversified our business over the last
year in terms of clients, non-domestic sector and international expansion and
we are confident we have the solutions, people, relationships and strategy in
place to service this demand and drive growth across both Energy and Water.
Financial performance
In the year, the Group delivered revenues of £53.8m (FY23: £55.1m) and an
adjusted LBT of (£6.0m) (FY23: PBT £10.1m).
With positive collection of receivables through the second half of the year,
coupled with tight cost control, the Group closed the year with a stronger
than anticipated cash position of £6.4m (FY23: £3.2m), representing a net
cash position of £1.2m (FY23: net debt of £3.0m). We have a healthy order
book of £101.7m of which 88% is expected to be delivered during FY25.
Over the year, and as previously disclosed, as part of our focus on
rightsizing the business we identified a number of cost reduction
opportunities which have resulted in c. £1m of annualised operating cost
being taken out of the business. We remain focused on effective cost control
while ensuring we are in the best position to grow as the market continues to
normalise.
Operational and strategic progress
Despite the challenges during the year, we have continued to deliver key
projects for our customers and we continued to see good progress in both
energy and water. Whilst domestic energy is not expected to return fully to
normal until FY26, the non-domestic sector offers significant growth
opportunities. This has seen a rise in work and pipeline opportunities for
non-domestic Energy projects and continued growth in Water.
A core reason for our listing over two years ago was to facilitate the buyout
of the full intellectual property behind the technology which underpins our
products. This technology led approach continues to differentiate our offering
and its effectiveness is evidenced by the way we have successfully broadened
our range of services and grown our customer base in the UK and overseas.
Our confidence in the Group's outlook reflects the stabilisation we are seeing
across our target markets coupled with the intrinsic need for and ever-growing
awareness around our products to meet net-zero and water-stress targets.
As well as optimising our operating costs through the year, we also continue
to look at ways of driving down the costs of our solutions. Since completion
of our production facility in Toledo, Spain we are starting to see the
benefits flow through with manufacturing of key components commencing in Q4 of
FY24. Through FY25 we expect to see a reduction in the manufactured costs of
our products, as well as improvements in quality assurance, delivering both a
financial payback and even higher client satisfaction scores.
Energy
In Energy, we continue to be committed to ensuring that our domestic-sector
customers feel supported as we work with them to find solutions to the
inflationary and other cost pressures on their budgets. Thanks to the hard
work and flexibility of our team we did not lose any contracts during this
challenging period, with projects instead being deferred into FY25 and FY26.
Not only did this strengthen our existing customer relationships but it raised
our profile as a trusted and capable partner.
While the domestic Energy sector has not yet returned to normal, during FY24
we continued to secure significant contracts including a £12.7m contract with
the Royal Borough of Kensington & Chelsea for the replacement of an
end-of-life gas fired district heating system with a low-carbon heat-pump
based system. Our turnkey retrofit district and communal heating systems,
including ground and air source heat pump solutions, are an important tool for
clients in meeting their sustainability and net zero goals. We have continued
to see a diversification of clients and growth in the non-domestic sector with
new wins including local authorities, the NHS, education and public buildings.
We see continued and growing awareness of and demand for cleaner heating
solutions to meet net-zero targets and reduce energy costs, both of which are
core aspects of our growth strategy.
At the time of the Mathewson acquisition, we outlined the opportunity it
opened in the NHS and I am delighted that we secured our first NHS contract,
worth £11.3m with the Kingston NHS Trust. This project is on course with the
client increasing the scope of works by an additional £1.1m reflecting the
quality of service provided to date.
We were also awarded a £7.2m contract with a world-class museum, art gallery
and leisure complex, again for the replacement of an old gas-fired system
again with a new low-carbon heat pump solution.
The non-domestic sector provides substantial opportunities for growth. This
year we have secured 4-year appointments with the London Borough of Islington,
the Royal Borough of Kingston upon Thames, Cardiff Council and Ceredigion
County Council to reduce the carbon emissions from their public buildings.
These four contracts involve work with a contract value of £14.8m FY25 with
further works in later years as the drive to meet Net Zero intensifies.
As mentioned, we continue to make progress internationally and see scope for
growth across our key target geographies. Since our acquisition of Vriend in
the Netherlands, we have been focused on integrating it within the business.
Vriend adds a particular speciality in designing and installing hybrid
gas/heat pump heating systems. We are on course to double revenues within a
year of the acquisition, which reinforces our confidence in further growth in
Europe.
Water
There is increasing global awareness of the risks from water scarcity in the
UK and elsewhere together with the need to mitigate the impacts of nitrate
pollution. While certain projects were impacted in FY24 by the UK
government's policy review on net nutrient neutrality, this has since
stabilised and opportunities are coming back on stream, underpinning our
confidence for Water moving forward. Our Water offering is based on our
patented Control Flow HL2024®technologies which reduce water wastage and
improve the efficiency of heating and hot water systems. Clients include
water companies, developers, hotels, schools and leisure centres, with the
products installed in both domestic and commercial applications.
We signed our first nutrient neutrality contract with Ashford Borough Council,
Kent, which will see Control Flow HL2024® products installed in some 5,000
existing homes which unlocks a new development of 1,000 homes that had been
stalled for over 18 months.
International expansion continues with successes both in Europe and in India.
In Spain we continue to see demand growing across a range of industries with
installation of Control Flow HL2024® in four hospitals and a number of
student accommodation and care home sites. We have a healthy pipeline of new
projects with interested parties in a variety of sectors.
In India, we are undertaking residential pilots for water efficiency as part
of that government's plans to improve urban water supply. We see the use of
our technology in a domestic setting as a positive step and we are encouraged
by the prospect of expanding these trials as the results come out.
The next steps in both residential and agritech in India are now not
anticipated until H2 FY2025 as a result of the current General Elections which
run until June.
Acquisition strategy
The Group is already seeing material benefits from the acquisition of both
Vriend in the Netherlands and Mathewson in the UK. We approach our M&A
activity with discipline and focus and the successes we are seeing since these
two businesses became part of the group come as a result of this approach.
We continue to focus on the integration of these two businesses into the Group
and to drive growth in each.
Technologies and R&D
Our technologies and focus on innovation to develop and protect our IP is a
key part of our strategy. R&D spend last year was £2.1m and we are
expecting similar levels of spend in FY25. Our focus for the R&D during
the year was towards enhancing our existing products as well as building the
roadmap for new ones and has resulted in applications for new patents in India
and Europe.
In the year we also signed a Memorandum of Understanding with The Energy and
Resources Institute ("TERI") in India. This agreement is focused on
introducing some of their technologies into Europe as well as working with
them in India and while at the early stages, we look forward to exploring this
avenue further.
Market
The underlying market drivers for our products remain stronger than ever as
the climate crisis intensifies and the need for green energy solutions becomes
more urgent. COP28 was the best attended climate conference in history,
reflecting the increasing momentum and global recognition of climate change.
The commitment to transitioning away from fossil fuels assumes doubling the
annual rate of energy efficiency improvements by 2030 as these are more
cost-effective solutions for many buildings.
At the same time water scarcity continues to be a growing global challenge.
Directives and investment plans are in place in the EU and the UK to increase
spending on water wastage and treatment, and governments and private companies
around the world are increasingly recognising the need to focus spending on
water infrastructure.
Our technologies offer proven solutions that can improve the efficiency of
energy systems as well as reduce water wastage. These place us in a strong
position to grow as we help our clients meet their goals.
ESG
ESG remains at the heart of our business and runs through the core of our
strategy. We are a carbon neutral company and our technologies have saved
the equivalent of 681 Olympic size swimming pools of water.
The environmental benefits derived from our technologies are clear and we are
committed to protecting the environment across our operations.
In FY24 the Group saved over 325,000 tCO2e through our Control Flow HL2024®
technology and renewable heating solutions designed to deliver our clients net
carbon zero strategies. This is an increase of 56% on the previous year and
represents a significant saving, more than offsetting the level of carbon
generated by the Group in its Scope 1 and 2 activities.
As an AIM quoted company, we align with the QCA Corporate Governance code,
which sets out our commitment to ethical values and behaviours, including our
responsibilities to our stakeholders, the environment, and society.
Strong governance is at the core of everything we do and is central to our ESG
and wider business practices. Our governance framework is designed to promote
ethical conduct, accountability, and transparency across our operations.
People
In a difficult year our people have been instrumental in in delivering for our
customers, and I would like to thank each and every one of our team for their
hard work and dedication. It is thanks to them that our clients were able to
mitigate their problems and tailor their work with us to suit their needs in
the face of challenging macro headwinds.
Unfortunately, the challenges in-year and project delays meant that we had to
let go of some of our teams in order to right-size the business. This was a
difficult but unavoidable decision given the delays in projects. I would
like to thank those individuals for their contributions and to wish them
success in the future.
With Iain Richardson stepping down as CFO, the search for his successor is
underway and James Lamb, Group Financial Controller, will take over the role
of interim CFO while we run the process to appoint a permanent successor.
Outlook
The first months of the current year have progressed as we planned and we are
expecting a significant volume of work with a return to profit in H2. Our cash
position is robust and we have returned to a revenue growth trajectory.
Our local authority domestic Energy clients continue to see the impacts of
inflation and other cost pressures affecting capital budgets. Some have been
able to navigate these issues, with others continuing to face challenges and
while we continue to secure new wins, we do not expect activity in this area
to return to normal levels until FY26.
In the non-domestic Energy sector we have secured several important new
clients and projects and we expect to see continuing growth through the
year. While margins are lower than for domestic projects, client capital
budgets in this sector have stabilised and are likely to grow in the coming
period.
Water continues to perform strongly as clients better understand and
appreciate the benefits of the Control Flow HL2024® technologies. This is
in both mitigating water stress as well as unlocking development held up by
water and nutrient neutrality concerns. We see Control Flow HL2024®
becoming one of the standard solutions for addressing these types of issues in
the future.
Internationally we see strong growth in the Netherlands as we expand our
energy offering and introduce our water solutions. In Spain and India we
continue to see growth through our Control Flow HL2024® products and the
diversification into residential as well as agricultural and non-domestic
projects.
Overall, following a challenging year, we are confident in the capability of
the business and encouraged by the traction we are now starting to see.
Mitesh Dhanak
CEO
22 May 2024
CFO Statement
2024 was a challenging year with the Group being affected by a number of
adverse macro-economic factors.
Strategy
Despite the challenges of 2024, the Group's strategy continues to be focused
on developing and delivering profitable solutions and products which help our
clients reduce their carbon consumption and improve their water efficiency.
KPIs
The Group's financial Key Performance Indicators, which are aligned with its
growth strategy, are revenue growth, adjusted EBITDA, adjusted EBITDA margin,
R&D spend, cash conversion and ROCE. These are consistent with how the
Group measures trading and cash generative performance and how these are
reported to the Board.
Cash conversion improved significantly from 2023 as the business benefited
from the unwind of the increased levels of accrued income at the end of H2
2023 and stringent working capital management as the business managed the
impact of inflation and cost pressures on the capital budgets of certain
clients.
2024 2023
Revenue £53.8m £55.1m
Revenue growth -2% 52%
EBITDA(1) (£5.2m) £11.7m
Adjusted EBITDA(2) (£3.3m) £11.8m
Adjusted EBITDA margin(3) (6.2%) 21.5%
Adjusted PBT(4) (£6.0m) £10.1m
R&D spend £2.1m £1.8m
Net Cash/(Debt)(5) £1.2m £(3.0m)
ROCE(6) (31.1%) 33.0%
1 Operating profit prior to depreciation of property, plant and equipment,
depreciation of right-of-use assets and amortisation of intangible assets.
2 Operating profit prior to exceptional costs, share based payment charges,
depreciation of property, plant and equipment, depreciation of right-of-use
assets and amortisation of intangible assets.
3 Adjusted EBITDA as a percentage of revenue
4 Profit before tax prior to exceptional costs and share based payment
charges.
5 Excluding IFRS16 Liabilities.
6 Operating profit as a percentage of total assets less current liabilities.
Revenue
Group revenues decreased by 2% to £53.8m, (FY23: £55.1m). UK revenues
decreased by 4% to £52.6m (2023: £54.5m). International revenues grew by
138% to £1.3m in 2024.
Profits
The unexpected delay on certain contracts and the impact of potential new
legislation, resulted in revenues declining, and these, together with decline
in gross margin and increase in headcount ahead of the expected start of
delayed contracts, adversely impacted profitability. The adjusted EBITDA
loss(2) was £3.3m, (2023: £11.8m profit), with Adjusted EBITDA margins(3)
of -6.2% (2023: 21.5%). Adjusted PBT was a loss of £6.0m (2023: £10.1m
profit).
Statutory operating loss was £7.2m (2023: £10.3m profit) and statutory
loss before tax was £7.9m (FY23: £9.9m profit).
Acquisitions
On 3 April 2023, the Group acquired Installatiebedrijf Vriend B.V. ("Vriend").
The total consideration for the acquisition, was €0.5m. The acquisition is
the first part of our geographic growth strategy and now gives the Group
delivery capabilities in the Netherlands. For the period following
acquisition, Vriend recorded revenues of £0.6m and an operating loss of
£0.2m.
Further information on acquisitions can be found in note 26.
Adjusting and Exceptional Items
The total pre-tax adjusting items, excluding depreciation and amortisation, in
the year were £1.9m. These were £0.3m of charges for share-based payments
(2023: £0.1m) and £1.6m of exceptional costs. Of these exceptional costs
£1.4m are in respect of salary and redundancy costs following the headcount
reduction exercise undertaken by the Group, which included the breakup and
cessation of the low-carbon solutions delivery team for private, domestic
customers. The remaining £0.1m is in respect of those rectification costs
incurred by the business, outside the normal course of operations, on one
contract, where certain key components failed to perform to specified
manufacturers standards.
Earnings per share
Basic earnings were (18.98p) (2023: 25.50p) and diluted earnings per share
were (18.98p) (2023: 25.25p).
Dividends
For the financial year ended 31 January 2024, the Board is not proposing a
dividend for the year (2023: 1.2p per share).
Headcount
The Group's full time equivalent (FTE) employees at 31 January 2024 were 221
(FY23: 168). Due to the disappointing result for the year, the Group commenced
a restructuring exercise during January and February 2024, which resulted in
the disbanding of the low carbons services team and a reduction in headcount
of 23.
Share capital & share options
Share options issued during the year under the Long-Term Incentive Plan were
748,595 with the total share options in issue at the year-end 1,081,268.
Cash flow & net cash
Cash conversion improved significantly from last year with a cash inflow from
operations of £7.7m (FY23: £3.4m outflow). This was as a result of the
unwind of the heavy 2023 Q4 project delivery during 2024 which has seen a
reduction in the level of trade and other receivables at the year end (FY24:
£21.5m, FY23: 28.6m), together with an increased focus on supplier management
and a reduction in the volume and value of key components which needed to be
bulk purchased ahead of the start of project, all of which positively impacted
working capital.
Total capital expenditure on property, plant and equipment amounted
to £0.5m (FY23: £0.9m). In addition there was a further outflow
of £0.4m for the acquisition of Vriend.
The Group ended the year with net cash (excluding IFRS 16 liabilities)
of £1.2m compared with £3.0m of net debt at 31 January 2023.
Iain Richardson
CFO
22 May 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 January 2024
2023
£'000
2024
£'000
Note
Continuing operations
Revenue 4 53,818 55,074
Cost of sales (41,591) (31,995)
Gross profit 12,227 23,079
Administrative expenses (17,865) (12,774)
Exceptional costs 5 (1,594) -
Operating (loss) / profit 6 (7,232) 10,305
Interest payable and other similar expenses 10 (667) (370)
(Loss) / Profit before taxation (7,899) 9,935
Income tax 11 1,560 (1,420)
(Loss) / profit for the year from continuing operations (6,339) 8,515
Total profit for the year attributable to equity holders of the parent (6,339) 8,515
Items that will or may be reclassified to profit or loss
Exchange losses arising on translation of foreign operations (680) (398)
Other comprehensive income (680) (398)
Total comprehensive (loss) / profit for the year attributable to equity (7,019) 8,117
holders of the parent
Basic (loss)/earnings per share from continuing operations - pence 12 (18.98) 25.50
Diluted (loss)/earnings per share from continuing operations - pence 12 (18.98) 25.25
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 January 2024
GROUP Note 2024 2023
£'000
£'000
Non-current assets
Intangible assets 13 9,122 8,703
Property, plant and equipment 14 2,991 3,441
Right-of-use assets 19 1,152 1,213
Deferred tax asset 20 720 -
Total non-current assets 13,985 13,357
Current assets
Inventory 16 3,349 2,557
Contract assets 17 1,493 459
Trade and other receivables 17 21,526 28,622
Current tax asset 701 145
Cash and cash equivalents 18 6,364 3,224
Total current assets 33,433 35,007
TOTAL ASSETS 47,418 48,364
Equity attributable to owners of the parent
Called up share capital 21 332 332
Share premium account 21 10,113 10,113
Merger reserve 22 (5,490) (5,490)
Other reserves 22 784 104
Retained earnings 13,226 19,956
Total equity 18,965 25,015
Current liabilities
Borrowings 24 1,913 1,469
Trade and other payables 25 21,756 13,632
Current tax liability - 1,522
Lease liabilities 19 487 543
Total current liabilities 24,156 17,166
Non-current liabilities
Borrowings 24 3,288 4,732
Lease liabilities 19 1,009 1,183
Deferred tax liability 20 - 268
Total non-current liabilities 4,297 6,183
Total liabilities 28,453 23,349
TOTAL EQUITY AND LIABILITIES 47,418 48,364
CONSOLIDATED STATEMENT OF CASHFLOWS
For the year ended 31 January 2024
GROUP Note 2024 2023
£'000
£'000
Cash flow from operating activities
(Loss) / profit for the financial year (6,339) 8,515
Adjustments for:
Amortisation of intangible assets 13 788 573
Depreciation of property, plant and equipment 14 824 655
Depreciation on right-of-use assets 19 412 196
Interest payable 535 313
Lease liability finance charge 19 132 57
Taxation (credit) / charge 11 (1,560) 1,420
Corporation tax (paid) / received (1,299) 25
Foreign exchange 318 113
Share based payment charge 23 279 117
Changes in working capital:
Increase in inventory (792) (1,371)
Decrease / (increase) in trade and other receivables 5,505 (16,837)
Increase in trade and other payables 8,124 3,685
Net cash inflow / (outflow) from operating activities 6,927 (2,539)
Cash flow from investing activities
Purchase of intangible assets (852) (713)
Purchase of property, plant and equipment (541) (882)
Sale of property, plant and equipment - 3
Acquisition of businesses - net of cash acquired (378) (1,681)
Net cash outflow from investing activities (1,771) (3,273)
Cash flows from financing activities
Proceeds from borrowings 427 7,249
Repayment of borrowings (1,001) (1,369)
Reduction of share capital - (12)
Interest paid (535) (313)
Repayment of lease liabilities (516) (261)
Dividends paid (391) (328)
Net cash (outflow) / inflow from financing activities (2,016) 4,966
Net increase / (decrease) in cash and cash equivalents 3,140 (846)
Cash and cash equivalents at beginning of period 3,224 4,070
Cash and cash equivalents at the end of the period 18 6,364 3,224
STATEMENT OF CHANGES IN EQUITY
As at 31 January 2024
GROUP Share Capital Share Premium Merger Reserve Foreign Exchange Reserve Retained Earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 February 2022 344 10,113 (5,490) (294) 11,769 16,442
Profit for the year - - - - 8,515 8,515
Total comprehensive income for the year attributable to equity holders of the - - - - 8,515 8,515
parent
Reduction in share capital (12) - - - - (12)
Dividends paid(1) - - - - (328) (328)
Exchange differences arising on translation of foreign operations - - - 398 - 398
Total transaction with owners (12) - - 398 (328) 58
Balance at 31 January 2023 332 10,113 (5,490) 104 19,956 25,015
At 1 February 2023 332 10,113 (5,490) 104 19,956 25,015
Loss for the year - - - - (6,339) (6,339)
Total comprehensive income for the year attributable to equity holders of the - - - - (6,339) (6,339)
parent
Reduction in share capital - - - - - -
Dividends paid - - - (391) (391)
Exchange differences arising on translation of foreign operations - - - 680 - 680
Total transaction with owners - - - 680 (391) 289
Balance at 31 January 2024 332 10,113 (5,490) 784 13,226 18,965
( )
(1)Prior to the payment of Eneraqua's dividend amounting to £328,000 in
September 2022 (1.0p per share), the directors reviewed the level of
distributable reserves available for that payment. When making their
assessment of the distributable reserves position the directors noted that
Cenergist Limited, the Company's wholly owned trading subsidiary, had declared
a dividend of £1,700,000 on 10 June 2022. The directors were satisfied that
there were distributable reserves in Eneraqua Technologies from which the
dividend could properly be made.
When making this dividend payment the Company had not filed its interim
accounts for the six-month period ended 31 July 2022. These accounts were
subsequently filed on 24 January 2024.
Details of Other Reserves can be found in note 22.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 January 2024
1 GENERAL INFORMATION
Eneraqua Technologies plc ("the Company") was incorporated and registered in
England and Wales on 19 August 2021 as a private limited company Eneraqua
Technologies Limited with its registered office at 2 Windmill Street,
Fitzrovia, London, W1T 2HX. On 8 November 2021 the company was re-registered
as a public limited. The Company's registered number is 13575021.
The Group's principal activities are the provision of turnkey solutions for
water efficiency and decarbonisation, the latter through district heating and
ground source heat pump systems for social housing, commercial clients, and
the residential sector. These activities are underpinned by our proprietary
water savings technology, Control Flow HL2024, which improves the efficiency
of heating and water systems for customers across the UK and Europe.
The consolidated financial information was approved for issue by the Board of
Directors on 15 May 2024.
2 ACCOUNTING POLICIES
IAS 8 requires that management shall use its judgement in developing and
applying accounting policies that result in information which is relevant to
the economic decision-making needs of users, that are reliable, free from
bias, prudent, complete and represent faithfully the financial position,
financial performance and cash flows of the entity.
2.1 Basis of preparation
The consolidated and company financial statements are for the year ended 31
January 2024. The consolidated financial statements have been prepared in
accordance with International accounts standards in conformity with the
requirements of the Companies Act 2006 (UK-adopted IAS). The company financial
statements were prepared in accordance with the Companies Act 2006 as
applicable to companies using Financial Reporting Standard 101 'Reduced
Disclosure Framework' ("FRS 101"). The Company applies the recognition,
measurement and disclosure requirements of IFRS, but makes amendments where
necessary in order to comply with Companies Act 2006.
The financial statements have been prepared under the historical cost
convention as modified by financial assets at fair value through profit or
loss, and the recognition of net assets acquired under the reverse acquisition
at fair value.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgment or complexity, or areas where
assumptions or estimates are significant to the financial statements, are
disclosed in note 2.25.
In preparing the company financial statements together with the Group
financial statements, the Company is taking advantage of the exemption in s408
of the Companies Act 2006 not to present its individual statement of profit
and loss and related notes that form part of these approved financial
statements.
The Company has applied the following exemptions in the preparation of its
financial statements:
· Disclosures in respect of new standards and interpretation that
have been issued but which are not yet effective have not been provided;
· Disclosures in respect of transactions with wholly-owned
subsidiaries have not been made;
· Certain disclosures required by IFRS 13 Fair Value Measurement
and the disclosures required by IFRS 7 Financial Instruments have not been
provided; and
· Disclosures in respect of share based payments as required by
IFRS 2 Share-based Payments have not been provided.
The principal accounting policies are set out below and have, unless otherwise
stated, been applied consistently in the financial statements. The
consolidated financial statements are prepared in Pounds Sterling, which is
the Group's functional and presentation currency, and presented to the nearest
£'000.
2.2 Basis of consolidation and acquisitions
The financial statements consolidate the financial information of the Group
and companies controlled by the Group (its subsidiaries) at each reporting
date. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity, has the rights to
variable returns from its involvement with the investee and has the ability to
use its power to affect its returns. The results of subsidiaries acquired or
sold are included in the financial information from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Acquisition costs expensed to the Statement of Comprehensive Income are
included within exceptional costs.
Where necessary, adjustments are made to the results of acquired subsidiaries
to bring their accounting policies into line with those used by the Group. All
intra-Group transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are adjusted,
where necessary, to ensure the use of consistent accounting policies.
The Company's shares were admitted to trading on AIM, a market operated by the
London Stock Exchange, on 22 November 2021. Prior to the reorganisation
Cenergist Limited ("Cenergist") was the ultimate holding company of the
subsidiaries, (collectively the "Cenergist Group"). The transaction was
accounted for as a capital reorganisation since it did not meet the definition
of a business combination under IFRS 3. In a capital reorganisation, the
consolidated financial statements of the Group reflect the predecessor
carrying amounts of the Cenergist Group with comparative information of the
Cenergist Group presented for all periods since no substantive economic
changes have occurred. The difference arising on acquisition has been
accounted for with the recognition of a merger reserve on the balance sheet
following the reorganisation of the share capital of the Group at the point of
completion of the transaction.
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. The Group recognises any non-controlling interest on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is recognised at
fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability is
recognised either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not
re-measured, and its subsequent settlement is accounted for within equity.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated.
2.3 New standards, amendments and interpretations
The following new and amended Standards and Interpretations have been issued
and are effective for the current financial period for the Group:
· Amendments to IAS 1: Presentation of Financial Statements:
Disclosure of Accounting Policies
The IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making
Materiality Judgements, providing guidance to help entities meet the
accounting policy disclosure requirements. The amendments aim to make
accounting policy disclosures more informative by replacing the requirement to
disclose 'significant accounting policies' with 'material accounting policy
information'.
The company has adopted the amendments to IAS 1 for the first time in the
current year.
· Amendments to IAS 8: Accounting Policies, Changes in Accounting
Estimates and Errors
The amendments replace the definition of a change in accounting estimates with
a definition of accounting estimates. Under the new definition, accounting
estimates are "monetary amounts in financial statements that are subject to
measurement uncertainty". The definition of a change in accounting estimates
was deleted.
The effect of these new and amended Standards and Interpretations has not had
any material impact on the disclosures or on the amounts reported in these
financial statements.
2.4 New standards and interpretations not yet adopted
Standards and amendments to standards that have been issued that are
applicable for the Group but are not effective for 2024 and have not been
early adopted are:
· Amendments to IAS 1: Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current
· Amendments to IAS 1: Presentation of Financial Statements:
Non-current Liabilities with Covenants
· Amendments to IFRS 16 Leases: Lease Liability in a Sale and
Leaseback
The effect of these new and amended Standards and Interpretations which are in
issue but not yet mandatorily effective is not expected to be material.
2.5 Going concern
The Group's business activities, together with factors likely to affect its
future development, performance and position are set out in the Strategic
Report of the Annual Report.
The Group had a cash inflow from operating activities of £6,927,000 in the
year (2023: £2,539,000 outflow), largely due to a reduction in trade
receivables and increased payables due to timing of project accruals.
The Group has prepared financial forecasts and projections for a period of 12
months from the date of approval of this financial information (the "going
concern assessment period"). These forecasts show that the Group will have
sufficient levels of financial resources available both to meet its
liabilities as they fall due for that period and comply with requirements on
its working capital facilities. In addition, the Group had headroom on its
banking facilities at the year end and throughout the forecast period.
The order book remains strong with revenues remaining second-half weighted
reflecting client procurement processes. While wider market inflationary and
cost pressures have affected the capital budgets of clients leading them to
focus on priority projects, it is important to note no contracts have been
cancelled, with delivery of other planned projects moving out.
Consequently, the Directors are confident that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of this financial information and
therefore have prepared the financial statements on a going concern basis.
2.6 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial information for each of the Group's entities
are measured using the currency of the primary economic environment in which
the entity operates ('the functional currency'). The consolidated financial
information is presented in £ Sterling, which is the Company's presentation
and functional currency. The individual financial statements of each of the
Company's wholly owned subsidiaries are prepared in the currency of the
primary economic environment in which it operates (its functional currency).
IAS 21 The Effects of Changes in Foreign Exchange Rates requires that assets
and liabilities be translated using the exchange rate at period end, and
income, expenses and cash flow items are translated using the rate that
approximates the exchange rates at the dates of the transactions (i.e. the
average rate for the period). The foreign exchange differences on translation
are recognised in other comprehensive income.
(ii) Transactions and balances
Transactions denominated in a foreign currency are translated into the
functional currency at the exchange rate at the date of the transaction.
Assets and liabilities in foreign currencies are translated to the functional
currency at rates of exchange ruling at the date of the Statement of Financial
Position. Gains or losses arising from settlement of transactions and from
translation at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of
Comprehensive Income for the period.
(iii) Group companies
The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
- assets and liabilities for each Statement of Financial Position
presented are translated at the closing rate at the date of the Statement of
Financial Position;
- income and expenses for each Statement of Comprehensive Income are
translated at the average exchange rate; and
- all resulting exchange differences are recognised as a separate
component of equity.
On consolidation, exchange differences arising from the translation of the net
investment in foreign operations are taken to shareholders' equity. When a
foreign operation is partially disposed or sold, exchange differences that
were recorded in equity are recognised in the Statement of Comprehensive
Income as part of the gain or loss on sale.
2.7 Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The segments for
this purpose are geographical segments. The chief operating decision maker,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
2.8 Impairment of non-financial assets
Non-financial assets and intangible assets not subject to amortisation are
tested annually for impairment at each reporting date and whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment review is based on discounted future cash flows, using a
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU. If the expected discounted
future cash flow from the use of the assets and their eventual disposal is
less than the carrying amount of the assets, an impairment loss is recognised
in profit or loss and not subsequently reversed.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are largely independent cash flows (cash generating
units or 'CGUs').
In the case of the Europe CGU, and it's acquisition of HGP, management
judgement based on factors such as market potential, and customer interest are
also used to form the basis for assessing the recoverable amount.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and demand
deposits with banks and other financial institutions and bank overdrafts.
2.10 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
a) Classification
The Group classifies its financial assets in the following measurement
categories:
· those to be measured at amortised cost.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
The Group classifies financial assets as at amortised cost only if both of the
following criteria are met:
· the asset is held within a business model whose objective is to collect
contractual cash flows; and
· the contractual terms give rise to cash flows that are solely payment
of principal and interest.
b) Recognition
Purchases and sales of financial assets are recognised on trade date (that
is, the date on which the Group commits to purchase or sell the asset).
Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit
or loss.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in
profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a separate line
item in the Statement of Comprehensive Income.
d) Impairment
The Group assesses, on a forward-looking basis, the expected credit losses
associated with any debt instruments carried at amortised cost.
The impairment methodology applied depends on whether there has been a
significant increase in credit risk.
In response to increased risk of credit losses due to the impact of the
current cost of living crisis, the Group has included the following
procedures:
- Performing credit checks on existing, new or prospective customers
- Maintaining regular dialogue with senior staff of existing customers
to discuss payments of invoices.
For trade receivables, the Group applies the simplified approach permitted by
IFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables. The Group's most significant clients are
public or regulated industry entities which generally have high credit ratings
or are of a high credit quality due to the nature of the client. These
customers are not considered to have been significantly impacted by Covid.
Expected credit losses are assessed on an individual customer basis, based on
the historical payment profiles of the customers, the current and historic
relationship with the customer, and the industry in which the customer
operates. There have been no impairments of trade receivables in the periods.
2.11 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
is determined using the first-in, first-out (FIFO) method. The cost of
finished goods and work in progress comprises design costs, raw materials,
direct labour and other direct costs. It excludes borrowing costs. Net
realisable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
When inventories are sold, the carrying amount of those inventories is
recognised as an expense in the period in which the related revenue is
recognised.
The amount of any write-down of inventories to net realisable value and all
losses of inventories are recognised as an expense in the period in which the
write-down or loss occurs.
2.12 Leases
Leases are recognised as a right-of-use asset and a corresponding lease
liability at the date at which the leased asset is available for use by the
Group.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
- Fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
- Variable lease payments that are based on an index or a rate,
initially measured using the index or rate as at the commencement date;
- Amounts expected to be payable by the Group under residual value
guarantees;
- The exercise price of a purchase option if the Group is reasonably
certain to exercise that option; and
- Payments of penalties for terminating the lease, if the lease term
reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Company, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security and conditions.
In all instances the leases were discounted using the incremental borrowing
rate.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period. Right-of-use assets
are measured at cost which comprises the following:
- The amount of the initial measurement of the lease liability;
- Any lease payments made at or before the commencement date less any
lease incentives received;
- Any initial direct costs; and
- Restoration costs.
Right-of-use assets are depreciated over the shorter of the asset's useful
life and the lease term on a straight line basis. If the Company is reasonably
certain to exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life.
Payments associated with short-term leases (term less than 12 months) and all
leases of low-value assets (generally less than £5k) are recognised on a
straight-line basis as an expense in profit or loss.
2.13 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The Share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the Share premium account, net of any
related income tax benefits.
Other reserves include share based payment and foreign currency reserves.
For the purposes of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at the
exchange rates prevailing at the balance sheet date and items of income and
expenditure are translated at the average exchange rate for the period.
Exchange differences arising are recognised in other comprehensive income and
accumulated in the Foreign Currency Reserve within equity.
Retained losses includes all current and prior period results as disclosed in
the Statement of Comprehensive Income other than those transferred to the
Reverse Acquisition reserve.
2.14 Revenue
Under IFRS 15, Revenue from Contracts with Customers, five key points to
recognise revenue have been assessed:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) a Group entity satisfies a performance
obligation.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the Group,
and specific criteria have been met for each of the Group's activities, as
described below.
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided
in the normal course of business, net of discounts, VAT and other sales
related taxes.
The Group bases its estimates on all available information including
historical results and experience taking into consideration the type of
customer, the type of transaction and the specifics of each arrangement. Where
the Group makes sales relating to a future financial period, these are
deferred and recognised under 'accrued expenses and deferred income' in the
Statement of Financial Position.
The Group derives revenue from the transfer of goods and services over time or
at a particular point in time in the major product and service lines detailed
below.
Energy and water efficiency contract services
The Group designs, supplies and installs energy and water efficiency systems
for clients. The Group delivers these services over the term of a contract
which vary in length, but are typically 6, 9 or 12 months. Revenue is
recognised for these services over time as the benefit is transferred to the
client, in line with the provisions of IFRS 15 para 35 (b) as the work
performed creates an asset that the customer controls as the asset is created.
The Group uses certified valuations to measure progress. The value of work
certified is then applied to the total expected contract revenue to determine
the revenue to be recognised up to a particular date.
Third party funded services
In some circumstances, external third parties provide funding in return for
the transfer of certain economic benefits arising from works undertaken on
behalf of the Group's clients. Where this occurs, the Group contracts with
the third parties for the sale of the related economic benefits and,
separately, passes agreed amounts to the Group's clients either in the form of
a discounted contract price or a direct contribution. The revenue to the Group
from these contracts is recognised once the third party is in a position to
take ownership of the economic benefits being transferred; associated costs
for amounts due to the Group's client are recognised at the same time.
Energy and water efficiency products
Energy and water efficiency products can be sold direct to a customer, outside
of contract services and in these circumstances the Group recognises revenue
at the time it delivers these products to the customer.
Contract assets and liabilities
Contract assets represent amounts for which the Group has a conditional right
to consideration in exchange for goods or services that the Group has
transferred to the customer. Contract liabilities represent the obligation to
transfer goods or services to a customer for which consideration has been
received, or consideration is due, from the customer.
Payment terms are set out in the contract and reflect the timing and
performance of service delivery. For substantially all contracts the payment
terms are broadly in line with satisfaction of performance obligations, and
therefore recognition of revenue, such that each contract has either a
contract asset or contract liability, however these are not overly material in
the context of the contract.
2.15 Exceptional costs
Exceptional costs are defined as expenses that arise from events or
transactions that are clearly distinct from the normal activities of the Group
and therefore are not expected to recur frequently or regularly.
Exceptional costs are those of significant size and of a non-recurring nature
that require disclosure in order that the underlying business performance can
be identified.
In determining whether an item should be presented as exceptional, the group
considers items that are significant, because of, either, their size or nature
and that are non-recurring. In order for an item to be presented as
exceptional, it should, typically, meet at least one of the following
criteria:
· It is a significant item, which may cross more than one
accounting period.
· It has been directly incurred as a result of either an
acquisition or divestment, or arises from a major business change or
restructuring programme.
· It is unusual in nature or outside the normal course of business.
The separate reporting of items, which are presented as exceptional within the
relevant category in the consolidated statement of comprehensive income, helps
provide an indication of the group's trading performance in the normal course
of business.
2.16 Taxation
The taxation expense for the year comprises current and deferred tax and is
recognised in the Statement of Comprehensive Income except to the extent that
it relates to items recognised in other comprehensive income, or directly in
equity, in which case the tax expense is also recognised in other
comprehensive income or directly in equity.
Current tax is the amount of income tax payable in respect of the taxable
profit for the current or past reporting periods. It is calculated on the
basis of tax rates and laws that have been enacted or substantively enacted by
the Statement of Financial Position date.
Deferred tax represents the future tax consequences of transactions and events
recognised in the financial statements of current and previous periods, and
arises from 'temporary differences'. Deferred tax is recognised in respect of
all temporary differences, except that unrelieved tax losses and other
deferred tax assets are recognised only to the extent that it is probable that
they will be recovered against the reversal of deferred tax liabilities or
other future taxable profits.
Deferred tax is measured using the tax rates and laws that have been enacted
or substantively enacted by the Statement of Financial Position date that are
expected to apply to the reversal of the temporary differences.
2.17 Property, plant and equipment
Tangible fixed assets are stated at cost, less accumulated depreciation and
accumulated impairment losses. Cost includes the original purchase price plus
any further costs directly attributable to bringing the asset to its working
condition for its intended use.
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost of fixed assets, less their estimated residual value, over
their estimated useful lives as follows:
Buildings -
2% straight line
Fixtures and fittings -
20% straight line
Office equipment -
33% straight line
Plant and machinery - 20%
straight line
Motor vehicles
- 33% straight line
Asset residual values and useful lives are reviewed at the end of each
reporting period, and adjusted if appropriate. The effect of any change is
accounted for prospectively.
2.18 Intangible assets
Intangible assets acquired as part of a business combination or asset
acquisition, other than goodwill, are initially measured at their fair value
at the date of acquisition. Intangible assets acquired separately are
initially recognised at cost.
Indefinite life intangible assets are not amortised and are subsequently
measured at cost less any impairment. The gains and losses recognised in
profit or loss arising from the derecognition of intangible assets are
measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset.
Intangible asset impairment reviews are undertaken annually, or more
frequently if events or changes in circumstances indicate a potential
impairment. The method and useful lives of finite life intangible assets are
reviewed annually. Changes in the expected pattern of consumption or useful
life are accounted for prospectively by changing the amortisation method or
period.
Intangible assets with an estimated useful life are stated at cost less
accumulated amortisation and accumulated impairment losses. Amortisation
charges are included within administration expenses in the Statement of
Comprehensive Income and are provided on all intangible assets with a definite
life so as to write off the cost of an asset over its estimated useful life as
follows:
Development assets (note 2.23) 20% straight line
Customer relationships 10% straight line
Licences 20% straight line
Patents 15 years straight line
Asset residual values and useful lives are reviewed at the end of each
reporting period and adjusted if appropriate. The effect of any change is
accounted for prospectively.
As the business has grown significantly and become more established, the
business has gained larger and longer contracts. With effect from 1 February
2022, the estimated useful life of patents was extended to 15 years straight
line to better reflect the higher value and more complex nature of the
benefits of such patents.
2.19 Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs.
Borrowings are subsequently carried at amortised cost. Any difference between
the proceeds (net of transaction costs) and the redemption value is recognised
in the Statement of Comprehensive Income over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan
facilities are capitalised as a prepayment for liquidity services and
amortised over the period of the loan to which it relates.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability or at least 12 months
after the end of the reporting period.
Borrowing costs are recognised in the income statement in the period in which
they are incurred.
2.20 Government grants
Grants relating to expenditure on tangible fixed assets are credited to profit
or loss at the same rate as the depreciation on the assets to which the grant
relates. The deferred element of grants is included in creditors as deferred
income.
Grants of a revenue nature are recognised in the Statement of Comprehensive
Income in the same period as the related expenditure.
2.21 Investments in subsidiaries
In the Company Statement of Financial Position, investments in subsidiaries
are measured at cost less accumulated impairment losses.
2.22 Distributions to equity holders
Dividends and other distributions to the Company's shareholders are recognised
as a liability in the financial statements in the period in which the
dividends and other distributions are approved by the shareholders. These
amounts are recognised in the Statement of Changes in Equity.
2.23 Research and development
Research and development expenditure in the United Kingdom is written off to
the Statement of Comprehensive Income in the period in which it is incurred.
Development costs that are directly attributable to the design and testing of
identifiable and unique products controlled by the Group are recognised as
intangible assets where the following criteria are met:
· It is technically feasible to complete the asset so that it will
be available for use;
· Management intends to complete the asset and use or sell it;
· There is an ability to use or sell the asset;
· It can be demonstrated how the asset will generate probable
future economic benefits;
· Adequate technical, financial and other resources to complete the
development and to use or sell the asset are available; and
· The expenditure attributable to the asset during its development
can be reliably measured.
Development expenditure incurred by the Group's subsidiaries in the United
Kingdom, Netherlands, Spain and India is capitalised and amortised in
accordance with intangible asset policy (note 2.18).
2.24 Employee benefits
Short-term benefits
Short-term benefits, including holiday pay and other similar non-monetary
benefits are recognised as an expense in the period in which the employee's
entitlement to the benefit accrues.
Defined contribution pension plan
The Company operates a defined contribution pension plan for its employees.
Contributions are recognised as an expense when they fall due. Amounts due but
not yet paid are included within creditors on the Statement of Financial
Position.
The assets of the plan are held separately from the Company in independently
administered funds.
Share-based payments
The Group provides share-based payment arrangements to certain employees.
Equity-settled arrangements are measured at fair value at the date of the
grant. To the extent material, the fair value (excluding the effect of
non-market based vesting conditions) is expensed on a straight-line basis over
the vesting period. The amount recognised as an expense is adjusted to reflect
the actual number of shares that are expected to vest.
Where equity-settled share-based payments are modified, and are of benefit to
the employee, the incremental fair value is recognised over the period from
the date of modification to the date of vesting. Settlements and cancellations
are treated as an acceleration of vesting and the unvested amount is
recognised immediately in the Statement of Comprehensive Income.
The company has no cash-settled arrangements.
2.25 Critical accounting judgements and key sources of
estimation uncertainty
In the application of the Group's accounting policies, which are described in
note 3, the Directors are required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Key sources of estimation uncertainty
Accounting estimates, by definition, will seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below:
Carrying value of intangible assets - determining whether goodwill,
development costs, customer relationships, patents or licences are impaired
requires estimation of the value in use of the cash generating units to which
the assets relate. The value in use calculation requires the entity to
estimate the value and timing of future cash flows expected to arise from each
cash generating unit and apply a suitable discount rate, in order to calculate
the present value of the present value of those future cash flows.
Calculations use cash flow projections based on financial budgets approved by
management which are built 'bottom up' for the next three years. The annual
discount rate applied to the cash flows is 12% (2023: 12%); this is based on
an average of rates used by similar listed businesses.
The carrying amount of the development costs, patents and licences is
£1,586,000, £549,000 and £283,000 respectively. See note 13 for further
detail.
Other estimates include the fair value of intangible assets acquired on
acquisitions, depreciation and asset impairments (for example provisions
against stock and debtors). Other than the carrying value of intangible
assets, none of the estimates made in the preparation of the financial
information are considered to carry significant estimation uncertainty, nor to
bear significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year.
2.26 Subsidiary Companies audit exemption
With the exception of Cenergist Limited, the Company's active subsidiaries
detailed in note 15 are exempt from the requirements of the Companies Act 2006
relating to the audit of their individual accounts by virtue of section 479A
of the Companies Act 2006.
3. SEGMENT REPORTING
The following information is given about the Group's reportable segments:
The Chief Operating Decision Maker is the Board of Directors. The Board
reviews the Group's internal reporting in order to assess performance of the
Group. Management has determined the operating segment based on the reports
reviewed by the Board.
The Board considers that during the year ended 31 January 2024 the Group
operated in the three business segments according to the geographical location
of its operations, those being:
- United Kingdom,
- Europe; and
- India.
2024 United Kingdom Europe India 2024
£'000 £'000 £'000 £'000
Revenue 52,561 675 581 53,818
Cost of sales (41,204) (322) (65) (41,591)
Gross profit 11,357 354 516 12,227
Administrative expenses (14,971) (2,409) (485) (17,865)
Exceptional costs (1,594) - - (1,594)
Operating profit/(loss) (5,208) (2,055) 31 (7,232)
Interest receivable and similar income - - - -
Interest payable and similar expenses (335) (333) 1 (667)
Profit/(Loss) before tax (5,543) (2,388) 32 (7,899)
Taxation 1,538 28 (6) 1,560
Profit/(Loss) after tax (4,005) (2,360) 26 (6,339)
Net Assets
Assets: 35,998 11,060 360 47,418
Liabilities (18,105) (10,054) (294) (28,453)
Net assets 17,893 1,006 66 18,965
4. REVENUE
2024 2023
£'000
£'000
United Kingdom 52,562 54,546
Europe 675 77
Rest of the World 581 451
53,818 55,074
Within the sales revenue, there were two customers in the United Kingdom that
accounted for greater than 10% of total revenue of the Group contributing
£32,573,000 (2023: 1 customer - £20,197,000).
5. EXCEPTIONAL COSTS
2024 2023
£'000
£'000
Restructuring costs 1,449 -
Rectification costs 145 -
1,594 -
Exceptional costs are those of significant size and of a non-recurring nature
that require disclosure in order that the underlying business performance can
be identified. The exceptional costs in these financial statements include
restructuring costs of £1,449,000 (2023: £nil), in respect of salary and
redundancy costs following the headcount reduction exercise undertaken by the
Group, which included the breakup and cessation of the low-carbon solutions
delivery team for private, domestic customers. The rectification costs of
£145,000 (2023: £nil) were incurred by the business, outside the normal
cause of operations, on one contract, where certain key components failed to
perform to specified manufacturers' standards.
6. OPERATING LOSS / PROFIT
Operating loss / profit from continued operations is stated after charging:
2024 2023
£'000
£'000
Depreciation of property, plant and equipment 14 824 655
Depreciation of right-of-use assets 19 412 196
Amortisation of intangible assets 13 788 573
Share based payments 23 279 117
7. AUDITORS' REMUNERATION
Fees payable to the Company's auditors in respect of the audit of the
financial statements and for other services provided to the Company are as
follows:
2024 2023
£'000
£'000
Fees payable to the company's auditor for the audit of the parent company and 42 37
the group's consolidated financial statements
Fees payable to the company's auditor for the audit of the subsidiary accounts 52 45
94 82
No other services were provided by the Company's auditors.
8. EMPLOYEES
Staff costs, including directors' remuneration is set out below:
Group 2024 2023
£'000
£'000
Wages and salaries 9,300 7,009
Social security costs 1,122 851
Share based payments (note 23) 279 117
Cost of defined contribution scheme 307 209
11,008 8,186
The average monthly number of employees, including the Directors, during the
year was as follows:
Group Group Group
2024 2023
No. No.
Administrative 186 143
9. DIRECTORS' REMUNERATION
2024 2023
£'000
£'000
Directors' emoluments 687 827
Company contributions to defined contribution scheme 17 17
Employers' national insurance on Directors' remuneration 87 105
Amounts paid to directors in respect of third party services - -
791 949
Directors are considered to be the key management personnel.
During the year retirement benefits were accruing to 3 Directors (2023: 3) in
respect of defined contribution pension schemes.
The highest paid Director received remuneration of £294,000 (2023: £342,000)
The value of the Group's contributions paid to a defined contribution pension
scheme in respect of the highest paid Director amounted to £1,761 (2023:
£1,761).
Directors are considered to be the key management personnel of the Company.
A detailed breakdown of the Director's total emoluments is included within the
Remuneration Committee report.
10. INTEREST PAYABLE AND SIMILAR EXPENSES
2024 2023
£'000
£'000
Interest payable (535) (313)
Lease liability finance charge (132) (57)
(667) (370)
11. TAXATION
2024 2023
£'000
£'000
The credit / (charge) for year is made up as follows:
Corporation tax
Corporation taxation on the results for the year 919 (1,317)
Adjustments in respect of previous periods - -
919 (1,317)
Deferred tax
Origination and reversal of temporary differences 641 (183)
Changes to tax rates - -
Adjustments in respect of previous periods - 80
641 (103)
Taxation credit/(charge) on profits on ordinary activities 1,560 (1,420)
Factors affecting tax credit/(charge) for the year
The tax assessed for the year is lower than (2023: lower than) the standard
rate of corporation tax in the UK of 24% (2023: 19%). The differences are
explained below:
2024 2023
£'000
£'000
(Loss) / profit on ordinary activities before tax (7,899) 9,935
Tax on ordinary activities at the standard rate of corporation tax in the UK 1,896 (1,888)
of 24% (2023: 19%)
Effects of:
Expenses not deductible for tax purposes (194) 164
Additional R&D tax relief 310 371
Adjustments to tax charges in respect to prior periods(1) (47) 77
Losses carried forward not recognised (186) (79)
Difference in tax rate between current and deferred tax (219) -
Tax rate changes - (65)
Taxation credit/(charge) on profits on ordinary activities 1,560 (1,420)
There are total tax losses of £2,668,000 available for carry forward against
future tax liabilities in the UK and overseas (2023: £1,053,000).
(1)Primarily relates to the effect of a prior year R&D tax claim.
12. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is calculated by
dividing the profit or loss for the year by the weighted average number of
ordinary / diluted ordinary shares in issue during the period, except when
there is a loss, in which case the basic measure is used.
2024 2023
(Loss) / profit for the year from continuing operations - £'000 (6,339) 8,515
Weighted number of ordinary shares in issue 33,388,788 33,388,788
Weighted number of fully diluted ordinary shares in issue 33,985,502 33,721,461
Basic (loss) / earnings per share from continuing operations - pence (18.98) 25.50
Diluted (loss) / earnings per share from continuing operations - pence (18.98) 25.25
Further information on ordinary shares can be found in note 21.
13. INTANGIBLE ASSETS
Goodwill Development Costs Customer Relationships £'000 Patents Licences Total £'000
£'000
£'000
£'000
£'000
Cost
At 31 January 2022 4,369 1,647 671 334 747 7,768
Additions 1,184 444 161 269 - 2,058
Disposals - - - - - -
At 31 January 2023 5,553 2,091 832 603 747 9,826
Additions 306 523 102 174 155 1,260
Disposals - - - (53) - (53)
At 31 January 2024 5,859 2,614 934 724 902 11,033
Amortisation
At 31 January 2022 - 190 - 41 319 550
Charge for the year - 356 - 67 150 573
At 31 January 2023 - 546 - 108 469 1,123
Charge for the year - 482 89 67 150 788
At 31 January 2024 - 1,028 89 175 619 1,911
Net book value
31 January 2023 5,553 1,545 832 495 278 8,703
31 January 2024 5,859 1,586 845 549 283 9,122
Amortisation of patents commence once they are granted.
Goodwill additions relates to goodwill generated through one acquisition in
the current year (refer Note 26)
- Acquisition of Installatiebedrijf Vriend B.V. ("Vriend"). (April
2023) = £0.3m.
During the year, the group incurred research and development costs of
£2,119,709 (2023: £1,756,000) of which £523,000 were capitalised (£2023:
£444,000).
Impairment testing
Goodwill arising on business combinations is assessed separately under IFRS 3
in the period of acquisition.
The Group allocates goodwill to groups of CGU's based on their operating
segment as set out in note 3. The operating segments therefore represent the
lowest level at which goodwill is monitored by the Board.
Goodwill has been assessed as follows:
2024 2023
£'000
£'000
United Kingdom 1,521 1,521
Europe 4,338 4,032
5,859 5,553
Under IAS 36 the Group is required to test goodwill for impairment at least
annually or more frequently if indicators of impairment exist.
The recoverable amount of a CGU has been calculated with reference to its
value in use, using financial forecasts approved by the Board covering a 5
year period with the final period taken into perpetuity.
In each case the key assumption is the rate of growth of gross profit
(primarily driven by volume growth). In the case of the UK CGU and its two
acquisitions, Welltherm Drilling Limited and Mathewson Holdings Limited, the
company has assumed a 5% growth rate throughout the 5 year period. In the case
of the European CGU and its Dutch acquisition, HaGePe International B.V., in
which in certain markets the absolute sales volumes were very low, and
therefore percentage increases can be misleading, the company made an
assessment to arrive at specific growth targets in each of the years.
The Board considers these growth rates to be prudent. In all cases a nil
growth rate assumption has been made on the terminal value in the impairment
calculation.
Each of the CGUs has headroom under the annual impairment review. The
Directors believe that no reasonable change in any of the above key
assumptions would cause the carrying value of the unit to materially exceed
its recoverable amount.
14. PROPERTY, PLANT AND EQUIPMENT
Land & Buildings £'000 Plant & machinery Motor vehicles £'000 Fixtures & fittings £'000 Office equipment £'000 Total
£'000 £'000
Cost
At 31 January 2022 48 3,773 228 113 120 4,282
Additions 147 480 118 42 95 882
Disposals - - (6) - - (6)
Exchange impact 4 142 - 1 (4) 143
At 31 January 2023 199 4,395 340 156 211 5,301
Additions 12 105 177 63 184 541
Disposals (5) (59) (136) - - (200)
Exchange impact - - - - - -
At 31 January 2024 206 4,441 381 219 395 5,642
Depreciation
At 31 January 2022 6 1,010 71 34 66 1,187
Charge for the year 34 475 86 22 38 655
Disposals - - (4) - - (4)
Exchange impact 2 19 - 1 - 22
At 31 January 2023 42 1,504 153 57 104 1,860
Charge for the year 48 549 61 47 119 824
Disposals - (8) (25) - - (33)
Exchange impact - - - - - -
At 31 January 2024 90 2,045 189 104 223 2,651
Net book value
At 31 January 2023 157 2,891 187 99 107 3,441
At 31 January 2024 116 2,396 192 115 172 2,991
15. INVESTMENTS
Company only 2024 £'000 2023 £'000
Opening balance 254 254
Additions during the year - -
Closing balance 254 254
Company subsidiary undertakings
As at 31 January 2024, the Company owned interests in the following subsidiary
undertakings, which are included in the consolidated financial statements.
Name Holding 2024 Holding 2023 Business Activity Country of Incorporation Registered Address
Direct subsidiary undertaking
Cenergist Limited 100% 100% Trading Company England & Wales 8 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Indirect subsidiary undertakings
GS Drilltech Ltd 100% 100% Trading Company England & Wales Unit 13, Millshaw Park Avenue, Leeds,
LS11 0LR
Welltherm Drilling Ltd 100% 100% Trading Company England & Wales 8 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Mathewson Holdings Limited 100% 100% Holding Company England & Wales 8 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Mathewson Limited 100% 100% Trading Company England & Wales 8 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
LCS Renewables Limited 100% 100% Trading Company England & Wales 8 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Luxe Lights Ltd 100% 100% Dormant England & Wales 7 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Control Flow Technologies Limited 100% 100% Trading Company England & Wales 7 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Cenergist Scotland Limited 100% 100% Dormant Scotland Brodies Llp Capital Square, 58 Morrison Street, Edinburgh, United Kingdom, EH3
8BP
Energy Water Services Ltd 100% 100% Trading Company England & Wales 8 Bede House, Glover Industrial Estates, Washington, Tyne & Wear, NE37 2SH
Installatiebedrijf Vriend B.V. 100% - Trading Company Netherlands Constructieweg 21 A, 8305AA Emmeloord, Netherlands
Cenergist BV 100% 100% Trading Company Netherlands Huizermaatweg 15, Kantoor 6, 1273NA Huizen, Netherlands
Cenergist Spain SL 100% 100% Trading Company Spain Calle Juan De Mena, 10-Piso 1IZ, Madrid 28014, Spain
HGP International BV 100% 100% Holding Company Netherlands Huizermaatweg 27, 1273NA Huizen, Netherlands
HL2024 Shop BV 100% 100% Trading Company Netherlands Huizermaatweg 16, 1271NM Huizen, Netherlands
HGP Exploitatie BV 100% 100% Trading Company Netherlands Huizermaatweg 27, 1273NA Huizen, Netherlands
Cenergist Energy Private Ltd 100% 100% Trading Company India 30 New Road, Kolkata 700 027, India.
16. INVENTORY
Group 2024 2023
£'000
£'000
Finished goods and goods for resale 3,349 2,557
3,349 2,557
No impairment loss was recognised in cost of sales during the year (2023:
£nil). The stock provision at the year-end totalled £nil (2023: £nil), as
the Group increased inventory levels in order to satisfy expected orders in
financial year 2025.
17. TRADE AND OTHER RECEIVABLES AND CONTRACT ASSETS
Trade and other receivables
Group 2024 2023
£'000
£'000
Trade receivables 4,491 3,492
Other debtors 2,039 2,352
Prepayments and accrued income 14,997 22,778
21,526 28,622
Group 2024 2023
£'000
£'000
Due within one year 18,206 26,019
Due after more than one year 3,320 2,603
21,526 28,622
Included in prepayments and accrued income are retention balances of
£1,870,000 (2023: £1,153,000).
Trade and other receivables are stated at amortised cost. Details of any
expected credit losses on trade and other receivables are provided in note 27.
Contract assets
Contract assets represent revenue in excess of amounts billed and at 31
January 2024 amounted to £1,493,000 (2023: £459,000).
Significant changes in contract assets during the year are as follows:
£'000
At 31 January 2022 -
Increase due to work done not transferred from contract assets 459
At 31 January 2023 459
Transfers from contract assets recognised at the beginning of the year to (459)
trade receivables
Increase due to work done not transferred from contract assets 1,493
At at 31 January 2024 1,493
The Group typically satisfies performance obligations in line with
contractually agreed milestones and through acceptance by the customer of
agreed upon work performed which will create an obligation for payment.
18. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and short term deposits held
with banks with a A-1+ rating. The carrying value of these approximates to
their fair value. Cash and cash equivalents included in the cash flow
statement comprise the following statement of financial position amounts.
Group 2024 2023
£'000
£'000
Cash and cash equivalents 6,364 3,224
6,364 3,224
19. LEASES
The Group had the following lease assets and liabilities:
Group 2024 2023
£'000
£'000
Right-of-use assets
Properties 487 656
Motor vehicles 640 535
Office equipment 25 22
1,152 1,213
Lease liabilities
Current 487 543
Non-current 1,009 1,183
1,496 1,726
2024 2023
£'000
£'000
Maturity on the lease liabilities are as follows:
Current 580 544
Due between 1-2 years 435 798
Due between 2-5 years 586 420
Due beyond 5 years - -
1,601 1,762
Right-of-use assets
A reconciliation of the carrying amount of the right-of-use asset is as
follows:
2024 2023
£'000
£'000
Properties
Opening balance 656 205
Additions 49 692
Disposals - (97)
Depreciation (218) (144)
487 656
Motor vehicles
Opening balance 535 38
Additions 287 541
Depreciation (182) (44)
640 535
Office equipment
Opening balance 22 -
Additions 15 30
Depreciation (12) (8)
25 22
1,152 1,213
Lease liabilities
A reconciliation of the carrying amount of the lease liabilities is as
follows:
2024 2023
£'000
£'000
Opening balance 1,726 191
Additions 339 1,263
Adjustments (185) 482
Payment made (516) (261)
Finance charge 132 51
1,496 1,726
The Group also incurred the following expenses during the year of £9,000
(2023: £66,000) which related to property leases that were either short term
in nature (12 months of less) or of low value in nature (less than £2,000 per
annum), thus being excluded from treatment under IFRS 16: Leases.
20. DEFERRED TAX
Group 2024 2023
£'000
£'000
Deferred tax asset / (liability)
Other temporary differences net of tax losses (1) 720 (268)
Net recognised in Statement of Financial Position 720 (268)
( )
(1) Other temporary differences predominantly includes temporary differences
arising on property, plant and equipment.
2024 2023
£'000
£'000
Movement in net deferred tax liabilities in the year:
Income statement - other 641 (104)
Tax related to items credited outside statement of financial performance - (22)
641 (126)
( )
(1) Other temporary differences predominantly includes temporary differences
arising on property, plant and equipment.
2024 2023
£'000
£'000
Movement in net deferred tax asset in the year:
Income statement - other 151 -
151 -
21. SHARE CAPITAL
Number of Shares Share Capital Share Premium
£'000 £'000
Ordinary Shares
As at 1 February 2022
TOTAL ORDINARY AND DEFERRED SHARES 34,438,730 344 10,113
Deferred Shares
Cancellation of deferred shares (1,216,600) (12) -
TOTAL ORDINARY AND DEFERRED SHARES 33,222,130 332 10,113
As at 1 February 2023
TOTAL ORDINARY AND DEFERRED SHARES 33,222,130 332 10,113
TOTAL ORDINARY AND DEFERRED SHARES 33,222,130 332 10,113
22. RESERVES
Share premium account
The share premium account represents the premium arising on the issue of
shares, net of issue costs.
Merger reserve
Reserve created in accordance with the acquisition of the Cenergist Limited
Group on 5 October 2021.
Other reserves
Other reserves include share based payments, foreign exchange and other items.
Retained earnings
Retained earnings represents cumulative profits and losses net of dividends
and other adjustments.
23. SHARE BASED PAYMENTS
The Group has in place an LTIP whereby the options are expected to be settled
by physical delivery of shares.
Group and Company Date of grant Employees entitled Number of shares granted Principal vesting conditions Contractual life
Long Term Incentive Pan November 2021 Selected senior employees Nil Service during vesting period 3 years
EPS performance hurdle
Long Term Incentive Pan July 2023 Selected senior employees Nil Service during vesting period 3 years
EPS performance hurdle
Weighted average exercise price (pence) Number Weighted average exercise price (pence) Number
2024 2024 2023 2023
Outstanding at beginning of year - 332,673 - 332,673
Granted on Admission during the year - LTIP scheme - 748,595 - -
Outstanding at the end of the year - 1,081,268 - 332,673
Under the LTIP the participants are offered the opportunity to acquire shares
in Eneraqua Technologies Plc at nil cost subject to achieving the principal
vesting conditions.
The vesting period for the LTIP is 3 years. Executive Directors have a two
year post vest holding period for awards under this scheme.
The fair value of these LTIP share options being amortised over the vesting
period.
2024 2023
£'000
£'000
Charge for the year - LTIP Scheme 279 117
279 117
24. BORROWINGS
2024 2023
£'000
£'000
Current 1,913 1,469
Non-current 3,288 4,732
5,201 6,201
Analysis of maturity of loans is given below:
2024 2023
£'000
£'000
Amounts falling due within one year
Other loans 1,913 1,469
Amounts falling due 1-2 years
Other loans 2,348 1,821
Amounts falling due 2-5 years
Other loans 940 2,911
5,201 6,201
Other loans relate to a £6,000,000 facility provided by HSBC to Cenergist
Limited, a €1,500,000 facility provided to Cenergist Spain SL by Instituto
De Finanzas De Castilla-La Mancha S.A.U. ("CLM") and a €500,000 facility
provided to Cenergist Spain SL by BankInter SA ("Bank Inter") and are secured
by fixed and floating charges over the assets of the Company and by cross
guarantees from the Company's subsidiary undertakings.
Interest on the HSBC facility is at an all-in-rate of 3.450% over the Bank of
England Base Rate with the repayment period being 48 months from date of
individual tranche drawdown.
Interest on the CLM facility is at an all-in-rate of 3.50% with the repayment
period being 84 months from date of individual tranche drawdown.
Interest on the Bank Inter facility is at a rate of 8.77% with the repayment
period being 18 months from date of individual tranche drawdown.
25. TRADE AND OTHER PAYABLES
Group 2024 2023
£'000
£'000
Trade creditors 5,818 7,584
Other taxation and social security 2,239 728
Other creditors 114 104
Deferred consideration 66 366
Accruals and deferred income 13,519 4,850
21,756 13,632
26. BUSINESS COMBINATION
Acquisition of Installatiebedrijf Vriend B.V. ("Vriend")
On 3 April 2023 Cenergist Spain SL acquired all of the share capital of
Installatiebedrijf Vriend B.V. ("Vriend"). Vriend provides low carbon
solutions to customers in the Netherlands.
Background and Rationale
Vriend is a renowned multidisciplinary installer of sustainable energy
solutions with a focus on residential and commercial projects. The
acquisition represents the Group's first step on their European acquisition
strategy, providing the necessary accreditations and foundations to expand the
Group offering into Northern Europe.
Consideration
The total consideration for the acquisition was €0.522 million. The
consideration was structured as follows:
· Initial consideration, payable in cash on completion of €0.485
million; and
· Working capital adjustment of €0.037 million, paid within three
months of acquisition.
The initial estimates of the fair value of the assets acquired and liabilities
assumed of Vriend at the date of acquisition are as follows:
£'000
Tangible assets 50
Inventory 68
Cash at bank 70
Other receivables 56
Trade and other payables (117)
Total identifiable net assets acquired 127
Fair value adjustments (87)
Customer relationships 102
Goodwill 306
448
Consideration
Initial consideration 416
Working capital adjustment 32
Total consideration 448
Goodwill relates to the accumulated "know how" and expertise of the business
and its staff. The acquisition will significantly enhance the customer
service offering provided by the Group, and helping the Group expand into new
markets. None of the goodwill is expected to be deducted for income tax
purposes.
Fair value adjustments include provisions for significantly aged retentions,
accrued income, inventories and tangible fixed assets.
The net cash outflow of £378,000 in the year reported in the statement of
cashflow represents total consideration of £448,000 less cash at bank of
£70,000.
27. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The Company manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders. The overall strategy of the Company and the Group is to minimise
costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the parent, comprising issued share capital, foreign exchange
reserves and retained earnings as disclosed in the Consolidated Statement of
Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange, and
liquidity risks. The management of these risks is vested to the Board of
Directors.
Credit Risk
Credit risk arises on financial instruments such as trade receivables and
short-term bank deposits.
Policies and procedures exist to ensure that customers have an appropriate
credit history. The Group's most significant clients are public or regulated
industry entities which generally have high credit ratings or are of a high
credit quality due to the nature of the client.
Short-term bank deposits are made only with UK ring-fenced banks.
Counterparty exposure positions are monitored regularly so that credit
exposures to any one counterparty are within acceptable limits.
At the Statement of Financial Position date there were no significant
concentrations of credit risk.
Trade and other receivables and contract assets included in the Statement of
Financial Position are stated net of expected credit loss (ECL) provisions
which have been estimated on a customer-by-customer basis, based on the
relationship with the customer and its historical payment profile. There are
no provisions held against trade and other receivables or contract assets at
the Statement of Financial Position date.
2024 Gross Provision Net
£'000
£'000
£000
Current 3,484 - 3,484
31-60 days from invoice 86 - 86
61-90 days from invoice 188 - 188
90+ days 733 - 733
4,491 - 4,491
The Group's maximum exposure to credit by class of individual financial
instrument is shown in the table below:
Group 2024 2024 2023 2023
Carrying Value Maximum Exposure Carrying Value Maximum Exposure
£'000 £'000 £'000 £'000
Cash and cash equivalents 6,364 6,364 3,224 3,224
Trade receivables 4,491 4,491 3,492 3,492
10,855 10,855 6,716 6,716
Currency Risk
The Group operates in a global market with income and costs possibly arising
in a number of currencies and is exposed to foreign currency risk primarily in
respect of entities within the Group entering into commercial transactions
arising from sales or purchases in currencies other than the Companies'
functional currency. Currency exposures are reviewed regularly.
The Group is also exposed to adverse foreign currency movements on translation
of net assets and income statements of foreign subsidiaries. It is not the
Group's policy to hedge through the use of derivatives the translation effect
of exchange rate movements on the income statements or statements of financial
positions of overseas subsidiaries.
The Group has a limited level of exposure to foreign exchange risk through
their foreign currency denominated cash balances and a portion of the Group's
costs being incurred in Euro Dollars and Indian Rupee. Accordingly, movements
in the Sterling exchange rate against these currencies could have a
detrimental effect on the Group's results and financial condition. Such
changes are not considered likely to have a material effect on the Group's
financial position at 31 January 2024.
Currency risk is managed by maintaining some cash deposits in currencies other
than Sterling. The table below shows the currency profiles of cash and cash
equivalents:
2024 2023
£'000
£'000
Cash and cash equivalents
Sterling 6,007 3,040
Euro 437 239
Indian Rupee (80) (55)
6,364 3,224
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will have sufficient
liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
The Group seeks to manage liquidity risk by regularly reviewing cash flow
budgets and forecasts to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably. The Group
deems there is sufficient liquidity for the foreseeable future.
The Group had cash and cash equivalents at period end as below:
2024 2023
£'000
£'000
Cash and cash equivalents 6,364 3,224
6,364 3,224
The following are the contractual maturities of financial instruments,
including estimated interest payments and excluding the effect of netting
arrangements:
Contractual cash flows
2024 Carrying amount Total 1 month or less 1-3 months 3-12 months 1-2 years 2-5 years
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Financial Liabilities
Trade payables 5,818 5,818 5,227 564 26 - -
Secured bank loans 5,201 5,534 147 294 1,538 2,768 787
Lease liabilities 1,496 1,601 52 103 425 435 586
Deferred consideration 66 66 - 33 33 - -
12,581 13,019 5,426 994 2,022 3,203 1,373
Contractual cash flows
2023 Carrying amount Total 1 month or less 1-3 months 3-12 months 1-2 years 2-5 years
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Financial Liabilities
Trade payables 7,584 7,584 7,405 128 50 - -
Secured bank loans 6,201 6,684 142 284 1,280 2,276 2,702
Lease liabilities 1,726 1,762 50 95 399 798 420
Deferred consideration 366 366 - 75 225 66 -
15,877 16,396 7,597 582 1,954 3,140 3,122
As disclosed in Note 24 the Group has a secured bank loan that contains loan
covenants. A future breach of covenant may require the Group to repay the loan
earlier than indicated in the above table. Under the agreement, the covenant
is monitored on a regular basis to ensure compliance with the agreement.
The interest payments on variable interest rate loans in the table above
reflect interest rates at the reporting date and these amounts may change as
market interest rates change.
Interest Rate Risk
The Group is exposed to interest rate risk whereby the risk can be a reduction
of interest received on cash surpluses held and an increase in interest on
borrowings the Group may have. The maximum exposure to interest rate risk at
the reporting date by class of financial asset was:
Variable rate instruments 2024 2023
£'000
£'000
Bank balances 6,364 3,224
Financial liabilities (3,777) (4,778)
2,587 (1,554)
Fixed rate instruments 2024 2023
£'000
£'000
Financial liabilities (1,423) (1,423)
(1,423) (1,423)
Sensitivity analysis
An increase of 25 basis points in interest rates throughout the period would
have affected the statement of profit and loss by the amounts shown below.
This calculation assumes that the charge occurred at all points in the period
and had been applied to the average risk exposures throughout the period:
2024 2023
£'000
£'000
Profit or loss decreases or increases 37 12
28. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
2024 - Group Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets / liabilities £ £ £
Trade and other receivables and contract assets 23,019 - 23,019
Cash and cash equivalents 6,364 - 6,364
Trade and other payables - (21,756) (21,756)
Lease liabilities (current and non-current) - (1,496) (1,496)
Borrowings - (5,201) (5,201)
29,383 (28,453) 930
2023 - Group Financial assets at amortised cost Financial liabilities at amortised cost Total
Financial assets / liabilities £ £ £
Trade and other receivables and contract assets 29,226 - 29,226
Cash and cash equivalents 3,224 - 3,224
Trade and other payables - (9,938) (9,938)
Lease liabilities (current and non-current) - (1,726) (1,726)
Borrowings - (6,201) (6,201)
32,450 (17,865) 14,585
29. RECONCILIATION OF MOVEMENT IN NET DEBT
2024 At 1 February 2023 Non-cash changes Cashflow At 31 January
2024
£'000 £'000 £'000 £'000
Cash at bank 3,224 - 3,140 6,364
Borrowings - current (1,469) 427 (871) (1,913)
Borrowings - non-current (4,732) - 1,445 (3,287)
Lease liabilities - current & non-current (1,726) 745 (516) (1,497)
Net Debt (4,703) 1,172 3,198 (333)
2023 At 1 February 2022 Non-cash changes Cashflow At 31 January
2023
£'000 £'000 £'000 £'000
Cash at bank 4,070 - (846) 3,224
Borrowings - current - (321) (1,148) (1,469)
Borrowings - non-current - - (4,732) (4,732)
Lease liabilities - current & non-current (191) (1,274) (261) (1,726)
Net Debt 3,879 (1,595) (6,987) (4,703)
30. PENSION COMMITMENTS
The Group operates a defined contribution scheme. The assets of the scheme are
held separately from those of the Group in an independently administered fund.
The pension cost charge represents contributions payable by the Group to the
fund and amounted to £306,000 (2023: £209,000). £39,000 (2023: £21,000)
was payable to the fund at the Statement of Financial Position date and is
included with creditors.
31. CAPITAL COMMITMENTS
There were no capital commitments at 31 January 2024 or 31 January 2023.
32. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 January 2024 or 31 January 2023.
33. RELATED PARTY TRANSACTIONS
No Related Party transactions other than trading within the Group took place
in the year.
The Executive and Non-Executive Directors are the Key Management and as such
there are no other Related Parties disclosures.
34. PRIOR YEAR ADJUSTMENT
The impact of the prior year restatement in respect of total equity in the
Company only, is as follows:
1 Feb 2022 As Presented Restatement 1 Feb 2022 As restated
£'000
£'000
£000
Share premium account 11,375 (1,262) 10,113
Trade and other payables 16 1,262 1,278
This restatement aligns the share premium account in the Company account with
the consolidated accounts. This arose as a result of share issue costs being
settled in the subsidiary due to the timing of the opening of the Plc's bank
account and the linked intercompany adjustment not being processed. There was
no impact to the Statement of Comprehensive Income and as the amounts were
non-cash items the Cash Flow Statement was not impacted either.
35. CONTROL
In the opinion of the Directors as at the year end and the date of the
financial information there is no single ultimate controlling party.
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