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Frankie, good analysis, but don't forget the one off milestone payment from Viatris which was recorded in H1 2023. As this was carried over from 2022 it is likely that most/all of it was accounted for in Q1 2023. However, even if we assumed an even spread over the 6 months that's another $2m per quarter that STX need to replace. So that's another 13.3k prescriptions or c4.5k per month. As we are probably c10k prescriptions per month now that's a big ask.
Just checked the RNS when the $20m loan from SWK Financing was announced.
There is a minimum 12 month revenue figure that if breached will force STX to do a placing to cover the shortfall.
The 12 month revenue figures are Q4 2023 $14.5m, and then increasing each 3 months to $22.5m, $31.5m, 38.9m and then in Q4 2024 $45.7m.
STX has just announced $17.5m for 2023, so above the required $14.5m, however, this includes a $4.4m one off milestone payment from Viatris.
If we assume an extra $8m rev is required in Q1 (the difference between the 14.5m and 22.5m) at c$150 per prescription that's c53k for the quarter. In Q4 2023 we are now being told that prescriptions were only 28.6k, so this needs to almost double in Q1.
It is doable - say 12k in Jan, 17k in Feb (40% increase), 24k in March (another 40% increase) - but seems a big ask.
Remember the CEO will have got a bonus for arranging this! His salary in 2022 was a basic of £406k and he received a bonus relating to 2021 (when he only worked 6 months) but paid in 2022 of £223k (including an extra 25% because it was paid late!). In 2022 his bonus was £329k, to be paid in 2023. He has never bought a share in the open market!!
Yep, a good little company that is growing quite rapidly. Had some cashflow issues but has just sold one division for £30m (and total market cap is c£25m!!) so these are now resolved.
LUCE recently bought c9% of the company and as part of the net zero offering (solar, LED etc) i believe LUCE supply the LEDs that EAAS fit.
They have a lot of contracts with schools - over the holidays they refit the whole lighting system over to LED at no upfront cost. If the electricity saving is c50% the school 'pays' maybe 20% a year to cover the cost, so still makes say 30% annual saving in total.
We were told YE numbers would be published 2nd half of Feb. Well Feb ends tomorrow so i will be disappointed if they don't land at 7am tomorrow
Don't want to have a pop, but maybe you should start using spellcheck before you hit 'post'. Everyone makes the off typo or incorrect spelling, however, with you it's almost every word.
To add to the MyZero discussion EAAS do also get a fee per installation for the first 2 years - see below.
Also YE numbers (18 months as financial period has changed) are due 2nd half of Feb, so any day now. Need BOD to spell out direction going forward
"As part of the Transaction, further contingent cash consideration may also be payable on the following basis and subject to the EM Subsidiaries delivering an agreed minimum level of earnings during the period:
· an amount equal to the free cashflow generation from the EM Subsidiaries (excluding the impact of My ZeERO from completion to 30 September 2025; and
· a payment per successfully completed My ZeERO Installation during the same period as above.
The contingent consideration is estimated by the Company to be in the range of £8 million to £10 million, subject to the Energy Management Division achieving strong growth in line with its business plan, and is capped at £20 million.
Any contingent consideration will be payable in two instalments, covering the period from completion to 30 September 2024, and the 12-month period to 30 September 2025.
Belatedly watched it. As expected CEO tells us how great everything is and how dedicated and motivated the team is, whereas the SP tells a different story. He predictably limited the presentation to 30 minutes and took only a few 'filtered' questions as usual.
When things go wrong, and they clearly have, he seems to take zero responsibility.
It is easy to blame a 3rd party for over estimating sales, however, as these go back to Q1 2023 surely these figures would have been checked v actuals through the year. An issue should have been identified months ago.
The net revenue debacle is 100% down to Greg as he should have known that salespeople will take the easiest route to get prescriptions if you let them - the insurance reimbursement process should have been sorted this time last year. At least this seems to have been fixed now and the average rev per prescription is increasing.
The most worrying thing for me is the Q4 2023 increase in prescriptions. To only achieve 22% is poor as we were told all salespeople were fully trained and adding value by the end of Q3. Their own estimate for the period, was over 50% . To now say they have made changes is unacceptable. They've been selling for 18 months now.
Any company/person who bought in the last placing at 8p was clearly misled and has a potential claim against the company. Trust is important. I believe the CEO got bonuses link to this.
Clearly Q1 2024 numbers are critical now as a 20% quarterly increase is not sufficient going forward. I think an issue is that whilst the product is good most insurance companies stipulate that the cheap oral tablet must be taken first. This slows down the process and clearly for pregnant women the issue is time boxed.
I would expect as part of the cost saving the BOD either defer a % of wages or take shares in lieu of cash and i would also like the BOD to buy in the open market - after all you can now buy 1m shares for less than £30k.
However, it's pretty obvious this CEO will not do neither.
Yes, very encouraging.
Cash was £556k on 30/6/23 so H2 has been excellent with cash inflows of well over £1m. Clearly cash is very important for such a small company so this is really positive
I think the investor meets presentation may have been delayed so it can incorporate full year numbers (which is 18 months this year as the time period is being adjusted) , as else all the questions will be about that.
Did they say 2md half if Feb? If so any time now.
Although i have big holdings in my SIPP and ISA i have also traded this recently as some of the drops have been strange, almost due to boredom. After the sale was announced this spiked to 9.75p and in the next week dropped to low 6s. I loaded up in the 6.1 to 6.5 range and sold these at c7.9p. When the EGM was confirmed i also thought best to sell a few more as i suspected some would see this as a opportunity to get out. So sold a few at c8p. Just bought some back this morning at 7.19. With the £25m received that's c6.5p underpinning the SP. IMHO anything under 7.5p is a massive bargain. Hopefully if the BOD show they are using this money wisely (and not just paying themselves excessive bonuses) this should be 10p plus.
There seems to be very little stock around. I've struggled to top up both yesterday and today and when i have HL has only allowed low amounts. Hopefully the start of the SP rise - it is priced to fail, which seems overdone IMHO
SP has perked up a little today. Hopefully, this will continue over the next few weeks in anticipation of the March update
A director buy is always good, however, if they are buying a few thousand pounds worth, a similar amount to a PI, then it is almost pointless.
Yes, EBITDA is forecast at £33m for the full year 2023 yet only a week or so ago we were told in the TU that " EBITDA expected to be significantly ahead of current market expectations, with expansion of adjusted EBITDA margin for the year, driven by strict controls and operating leverage."
So essentially this is a profit upgrade. To be significantly ahead that's c10% IMHO so hopefully £36m plus.
For a fast growing, profitable company a valuation of 10 times EBITDA is a good rule of thumb - so about double the current SP.
Sorry - too big to copy in one go. 2nd part is posted last, so you need to read the the lower part 1st!!
IC Article as per ADVFN
eEnergy’s in-house solar PV system solution offers an equally compelling offering for clients by providing them with onsite solar generation at no upfront investment, significant energy savings, and cheaper energy consumption than buying directly from the national grid.
A good example is the group’s £3mn contract with West Midlands-based Tudor Grange Academies Trust. eEnergy is providing Tudor with a fully funded 10-year service agreement with no upfront costs for a turnkey energy solution. It will enable its 12 schools to generate 30 per cent of their energy needs and earn additional income exporting any unused energy to the national grid. eEnergy will recognise £1.9mn of revenue for the contract in 2024 and 2025.
eSolar projects are a significant growth area, so it’s reassuring to know that the ability of eEnergy to deliver on new contracts is underpinned by off-balance-sheet arrangements with funding partners to finance the capital cost of the projects. It also improves the group’s own working capital position.
Energy-efficiency-as-a-service profits booming.
The EEaaS offering is not only high-growth, but is profitable. Analysts at Canaccord Genuity estimate that the energy services division’s revenue increased 144 per cent from £9.6mn to £23.5mn from 2021 to 2023, and that annual cash profit more than trebled from £0.9mn to £2.6mn. The last figure is worth noting because it more than covers the group’s estimated central overheads of £1.9mn.
Moreover, with analysts predicting that the energy services division's revenue will increase by 25 per cent to £29.5mn in 2024 and by a further 10 per cent to £32.6mn in 2025, cash profit could surge to £4.5mn and £5.4mn, respectively. Central overheads are only expected to rise by £0.2mn in each year to support the rapid growth.
Sum-of-the-parts valuations.
The point is that if you value the energy services business on a similar rating to the energy management disposal, then it could also be worth £30mn (7.8p) as a standalone entity assuming the board hits analysts’ earnings expectations. That sum is more than eEnergy’s own market capitalisation of £27.5mn. Add to that £18mn (4.6p) of pro-forma net cash and a potential £8mn-£10mn (2-2.5p) earn-out on the energy management disposal, and it’s not difficult to see why Canaccord has a target price of 12p and analysts at research firm Equity Development have a 13p-a-share fair valuation. My sum-of-the-parts valuations are even higher. BUY.
Bargain Shares 2024: eEnergy's net zero strategy will soon be rewarded.
Energy-efficiency-as-a-service profits are booming for this energy services provider.
*Pro-forma cash of £18mn (4.7p)
*Energy Services unit potentially worth £30mn
*Potential £8mn-£10mn earn-out from recent disposal
eEnergy (EAAS) is a technology-enabled energy services provider that helps corporate and public organisations achieve their net zero goals by designing, funding and implementing energy efficient projects.
The group has grown quickly since listing on London’s junior market four years ago, buoyed by a combination of organic and acquisitive growth. This has not gone unnoticed. Following several unsolicited approaches, the directors recently announced the sale of its fast-growing energy management business to Flogas, a division of support services group DCC (DCC), for an initial cash consideration of £29.1mn (7.5p a share). Around £4mn of the proceeds will be used to pay off intra-company debt and a further £8.1mn will pay off eEnergy’s borrowing.
Joint house broker Canaccord Genuity estimates that the group held £1mn cash on 31 December 2023, so on completion of the disposal, which is subject to shareholder approval, pro-forma net cash of £18mn will back up two-thirds of eEnergy’s market capitalisation of £27.5mn. In addition, there is a valuable earn-out agreement that eEnergy’s directors believe could earn the group a further £8mn-£10mn of contingent cash consideration payable in two instalments later this year and in late 2025. The earn-out is capped at £20mn and is subject to the energy management division delivering an agreed minimum level of earnings.
The benefit for eEnergy’s shareholders is that the energy management disposal delivers a potential £39mn total return (including a £10mn earn-out) on the £23.4mn invested in that business since December 2020. The acquirer is paying a multiple of 6.5 to 8.5 times the energy management division’s forecast 2024 cash profit (of £4.6mn) to enterprise valuation.
Importantly, it means that eEnergy’s board now has the funding to accelerate growth in its other fast-growing business, energy services. This operation helps clients cut their energy consumption by switching to energy-efficient technologies by way of a capital-free funding model.
Turning energy efficiency into a service.
Specifically, eEnergy delivers energy reduction solutions by offering clients energy-efficiency-as-a-service (EEaaS) through the deployment of LED technology, other energy efficiency solutions, charging infrastructure and rooftop solar photovoltaics (PVs). Its largest customer segments are in education and healthcare. Customer asset upgrades, paid for through lower energy bills, are financed through third-party finance partners that have long-term relationships with eEnergy.
For instance, energy-efficient LED upgrades to schools remove the barrier of a high upfront capital commitment
This appears to be slowly dying. Now just a website focused company at a time when ad revenues are declining. Is Stock Informer still going strong. Gfin spent over £5m on this a few years ago.
Yes, very low PE and of course this is on last years profit. Card has already stated PBT will be at top end of estimates, which are £58m to £62m. At £60m the PE will be in the 5s. Madness!
Yes, nice to see this in the 8's although as per usual any rise has been sold into.
I suspect the £25m has hit our account. Although no doubt someone will point out £8m is being used to clear the debt so it's only £17m (or c4.5p per share) in the last 12 months the borrowing cost was over £1m so eliminating this will clearly add £1m to the bottom line . This debt has been holding back both the SP and the growth of the company, although ES still grew 87% in the last 12 months.
The broker note states ES growth in 2024 is estimated to be c25% - and i think this is against 2023 which was a 18 month trading period, due to the accounting date change to 31/12 (from 30/6).
Looking forward to the trading update hopefully in a week or so.
Despite getting £25m cash it appears this won't really get moving until the YE numbers are announced - 2nd half of Feb.
As part of the EM sale RNS it was mentioned that YE trading was at the lower end of expectations. This seems to have spooked a few. I'm unsure what these expectations were. This YE is 18 months as the accounting period is being changed/extended. The 12 month figures were quite good and the outlook for YE, so the final 6 months is below.
All seemed quite positive in Sept when this was released.
Outlook
Energy remains high on the agenda across the UK, and we continue to see strong appetite from new and existing customers for our suite of products and services.
Post period end, the Company secured a significant contract with a Total Contract Value ("TCV") of £3.0 million, resulting in £1.9 million revenues, from existing customer Tudor Grange Academies Trust, for a solar energy generation project across its collection of academies. This illustrates the Company's ability to execute against its cross selling strategy within its existing customer base.
Whilst market conditions tightened over the summer period, eEnergy's contracted revenue book remains significant, giving strong visibility on revenues for the final six months of the financial period. Contracted forward revenues (the "Forward Order Book") at 30 June 2023 were £27.5 million (31 December 2022: £26.4 million), of which £14.1 million are expected to convert into revenues in the six months to 31 December 2023.
The Group remains confident that eEnergy's proposition is more relevant than ever, further supported by a continued shift in regulatory and structural growth drivers. The Group remains cautiously optimistic of delivering results for the 18 month period ending 31 December 2023 in line with market expectations.