Member Info for shandypants2

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.

RNS out. All approved. £25m hitting the bank account ASAP

With the GM tomorrow it should be an interesting day.

Even with the SP rise over the last week the company valuation is currently bang on £30m. Obviously when the £30m sale is ratified, EAAS gets an immediate £25m of cash.

So is the rest of the business (£19m rev p.a , 87% growth) worth just £5m??

Even at 10p the market cap would be £38.7m, which seems quite conservative IMHO.

No Traa, these are small, simple acquisitions and they have said they are targeting smaller companies where the directors are close to retirement.

Essentially they will be cash deals and paid upfront - as has been the case with the last few acquisitions.

Maybe (re)listen to the last investor meets presentation.

Do you mean no mention of cash in the TU? It is rare to mention cash in a TU and quite frankly it is not required. Cash was £3.2m on 31/12/22 and £3.7m on 30/6/23, despite a number of new stores being opened in the period. In the 6 months since we have record revenues and increased margins. The number of new stores/bars has slowed so IMHO cash is in a good place.

Usually cash is only mentioned in a TU if there is a potential concern/to reassure and it would appear there is no concern ATM.

I think you are looking for a negative when there isn't one

Yes BOD options exercise prices are well above the current SP and the current broker valuation is c13p a share so there is much upside. Hopefully we should see 8p prior to the EGM and 9p plus afterwards as it appears until the sell is finalised the SP won't reflect true value and/or any increase is being sold into as people with c5p shares are taking some profit.

I will be disappointed if they miss their own guidance as it was only adjusted down late last year. However, as long as growth is impressive e.g. 50% quarterly increase, we are clearly moving in the right direction.

Q4 did contain both Thanks Giving and Christmas so that could have had some impact.

Had to start rising eventually as we approach the 7th Feb. Anything below 7.8p (£30m valuation) still seems a very low purchase price IMHO

It was yesterday, early afternoon. I got lucky - tried to buy a larger amount but insufficient stock so bought 100k and within seconds price had risen to 6.28. I have been buying (again) when the price dropped below 7 and when overall valuation dropped to c£23m yesterday thought i'd load up, as a trade. After all we will get £25m cash in less than 2 weeks.

Hopefully this should slowly start rising back to 8p minimum as the recent SP action has been massively overdone IMHO.

Really good numbers throughout - increasing revenues, margins and of course cash (despite the idiot claiming we were burning cash).

Mo, as we know, is doing the opposite of CF and is letting the numbers do the talking, so not sure how anyone can claim this is being hyped.

Maybe the recent SP rise is simply due to all the 2024 share tips accompanying some recent really good RNSs having a positive impact .

MO. The options are clearly there to 'protect' the CEO id/when the company is sold , which is CF's plan.

I can imagine the conversation Mo - why should i become CEO if you sell it within a couple of years?

CF - ok fair play. I do want it sold, but don't know when. To give you some protection here are a generous option package. You get them if the business/shares performed well and/OR if it gets sold.

Please note, 1% share options can be both generous to an individual and insignificant to the company as a whole

For info.

£25m valuation (the cash we will receive) is c6.5p a share

£30m valuation - the total value of the offer for the Management Div is c7.8p a share

£40m - valuing the Services Div at only £10m - 10.3p

£45m valuation - the total valuation based on the EBITDA multiple used for Mgmt div - 11.6p a share

Just bought another 100k at 6.1p. Surely a no brainer

Yes a solid, if slightly unspectacular, trading update.

It does appear that acquisition will be required to drive revenue growth and so the piecemeal payment agreement for Vigilante will mean that cash will limit the size and frequency of these. However, the one announced a few weeks ago looks a good fit at a sensible price.