EAS.L Regulatory News (EAS)

For immediate release 7 June 2016

Energy Assets Group plc

("Energy Assets", the "Company" or the "Group")

Preliminary Results for the year ended 31 March 2016

Energy Assets Group plc (LSE: EAS.L), the largest independent provider of industrial and commercial (I&C) gas metering services in the UK1 and a major provider of multi-utility network, metering and data services, is pleased to announce its preliminary results for the year ended 31 March 2016. 

Financial highlights

· Total revenue increased by 25% to £45.3m (2015: £36.2m);

· Recurring revenue, generated from the Group's meter and data asset portfolio, increased by 12% to £26.1m (2015: £23.3m) representing 58% of total revenue;

· Revenue from Siteworks activity increased by 49% to £19.2m (2015: £12.9m);

· EBITDA before exceptional items increased by 16% to £22.5m from £19.4m;

· Operating profit before exceptional items increased by 20% to £15.2m from £12.7m;

· Profit before tax and exceptional items increased by 20% to £10.7m (2015: £8.9m). Profit before tax was £10.5m (2015: £9.3m);

· Basic earnings per share increased by 11% to 30.36p (2015: 27.30p);

· Cash generated from operations increased by 8% to £21.1m (2015: £19.5m);

· In November 2015, the Group announced a £10m increase to its current facility with Lombard, the asset finance division of The Royal Bank of Scotland Group, taking total facilities from the Group's three main funding partners to £110m. Additionally, a two year extension of the Group's £35m Bank of Scotland facility was also agreed in November 2015;

· Available facilities at 31 March 2016 were £29.5m and cash at bank was £6.7m.

Operational highlights

· The Group's owned and managed meter and data asset portfolio has increased by 23% in the year to circa 450,000 assets (2015: circa 365,000) with all existing major contracts across gas and electricity contributing to this growth;

· The Company acquired Blyth Utilities Limited (Blyth), a Multi-Utility Infrastructure Provider, on 9 December 2015. Integration is progressing well;

· Since acquisition, Blyth has successfully secured a new £6m contract with East Lothian Developments Ltd (ELDL) to provide utility networks for a new development in East Lothian. This is testimony to the expertise and uniquely differentiated offering within our expanded business;

· The three new businesses acquired in the previous financial year, Bglobal Metering, Origin and SA Gas, are now fully integrated into the Group and are performing well under Energy Assets management. Performance in the 2015/16 financial year was as expected and the Board is pleased with the progress of each of these businesses;

· Energy Assets was appointed as a preferred supplier to Crown Gas and Power (Crown), the gas supply division of Crown Oil Ltd, in December 2015. The appointment, for the provision of advanced gas metering technology and data services solutions, was made due to Energy Assets reputation for delivering a high quality service offering. 

Corporate developments

On 18 April 2016, the Boards of Energy Assets and Euston BidCo Ltd (BidCo) announced that they had reached agreement on the terms of a recommended cash acquisition by BidCo, a newly established company indirectly wholly owned by the Alinda Funds, which are controlled and managed by Alinda, of the entire issued and to be issued share capital of Energy Assets. 

As previously advised by the Board of Energy Assets on 19 May 2016, the Court Meeting and the General Meeting were adjourned, in each case to a date, time and place to be determined by the directors. We would expect to be in a position to further update shareholders in relation to this in the next few days.

Further information on the proposed acquisition, which has been unanimously recommended by the Energy Assets Board, and its current status can be found on the Energy Assets website.

Chief Executive's comment

Commenting on today's announcement, Chief Executive Phil Bellamy-Lee said:

"The financial year to 31 March 2016 has been very successful for Energy Assets incorporating good organic growth across our asset portfolio and Siteworks business from strong trading activity and new contract wins.

We were delighted to welcome Blyth into the Energy Assets Group in December 2015. This acquisition represents another step in our continuing growth strategy and has allowed us to expand our services to become a fully accredited multi-utility infrastructure provider in the commercial area. The acquisition has also enabled us to extend our utility networks offering to businesses within the UK house building sector at a very exciting time following recent government announcements that investment in the housing sector is set to double to support home ownership.

The addition of Crown to our customer portfolio and the confidence they have shown in the capabilities and technology that the Energy Assets Group can offer is testament to the hard work and focus of our operational team. The relationship is progressing well as we continue to deliver a level of service which matches their expectations.

We continue to enjoy good relationships with all of our banking partners who have expressed a keen interest to continue working with the Group. We are confident that these relationships will provide sufficient funding to facilitate our future growth plans as we work towards being the supplier of choice for customers within the UK I&C utilities sector and the largest independent provider of I&C energy metering services in the UK.

The new financial year has started well, all segments continue to grow and we are on track to deliver another year of strong operating and financial performance."

Enquiries

For further information visit www.energyassets.co.uk or contact:

About Energy Assets:

Energy Assets provides metering and related services in the I&C segment of the UK utility market and is the largest independent provider of I&C gas metering services in the UK, by number of assets owned and managed. 

The Group offers utility suppliers, end-user energy consumers and commercial and residential developers a broad spectrum of expert metering related services from the design, project management and building of utility networks to management of new and replacement meters and the collection and provision of energy consumption data.

Energy Assets (EAS) is listed on the Main Market of the London Stock Exchange.

Chairman's statement

I am delighted to report continued strong trading in what has been another successful year for Energy Assets encompassing good organic growth, major new contract wins and the acquisition and successful integration of Blyth into the Group. 

Energy Assets continues to achieve its core objectives providing metering and related services in a reliable and sustainable way and, throughout the 2015/16 financial year, the Group has continued to deliver a high quality service and strong growth which is significantly ahead of the prior year.

Profit before tax and exceptional items is up 20% to £10.7m and our owned and managed asset portfolio has increased by 23% to circa 450,000 assets. Our Siteworks business has generated revenues of £19.2m, representing an increase of 49% (2015: £12.9m). The strength of this performance is testament to the continuing and growing demand for our services and the strength and scalability of our operating systems and procedures.

The success we have achieved to date and our continued growth is pivotal as we strive towards our goal of being able to provide a full end to end multi-utility service offering across gas, electricity and water.

Strategy

The Group operates within a clearly defined, long-term strategic framework which is built around the efficient operation of and strategic investment in a balanced range of businesses across the UK I&C multi-utility metering and network markets and provides effective scope for continued expansion.

We remain well positioned to achieve our primary objectives which are:

· To further consolidate our position as the largest independent metering and data service provider to the UK I&C gas sector;

· To grow our position across the utility sector as a whole; and

· To grow our successful Siteworks business and expand the range and complexity of the services provided. 

Following the year end, the Group made a strategic decision to optimise the combined expertise of Blyth and the Energy Assets' Siteworks gas design and project management service to create a new force in gas, electricity and water utility network provision for housebuilders and I&C markets, Energy Assets Utilities. Going forward, Energy Assets Utilities will deliver all utility network services and activities as an integral part of the wider Group activities.

Acquisitions

The Energy Assets strategy focuses primarily on continuing to achieve growth both organically and through making targeted acquisitions which can add value. 

The Blyth acquisition in December 2015 has now been successfully integrated into the Group. This acquisition represented another positive growth milestone for Energy Assets and has enabled us to progress further towards meeting our primary objectives as we continue to extend our product ranges and service offering to the wider multi-utility market sector, encompassing gas, electricity and water.

Funding

In November 2015 we announced a £10m increase to our current facility with Lombard, the asset finance division of The Royal Bank of Scotland Group, taking total facilities from the Group's three main funding partners to £110m.

The expansion of the Group's relationship with Lombard increased the facility to £70m, on the same terms as previously agreed.  Additionally, an extension was also agreed in November 2015 on the Group's £35m Bank of Scotland facility which is now available for a further two years.

Dividend

At the time of the Company's IPO it was stated that it was the Directors' intention to prioritise investment to grow the Company's installed asset base. This remains the case and, in the financial year to 31 March 2016, a total of £22.9m (2015: £22.5m) was invested in assets that generate long term recurring revenue for the business. Additionally, Group return on capital employed at 31 March 2016 was 13.2%. 

The Board is, therefore, not recommending a dividend for the financial year ended 31 March 2016 but is continuing to keep the dividend policy under review as the scope and nature of the Group's activities continue to expand. 

People

We now have over 300 employees across the Group and each of these individuals has a key role to play in the successful operation of our business. In particular, we have a dedicated and talented management team who have steered the business through a period of significant growth with great success.

On behalf of the Board, I would like to thank all of our people for their hard work during this financial year and for their continued commitment to Energy Assets.

Outlook

The new financial year has started well across the business and we are on track to deliver another year of sound operating and financial performance in 2016/17 as we continue to look to the future with confidence.

Dr Christopher Masters

Chairman

7 June 2016

Business and financial review

Energy Assets is the largest independent provider of I&C gas metering services in the UK (by number of assets owned and managed) and a major provider of multi-utility network, metering and data services.

Our strategy

The Group's primary objectives are:

· To further consolidate our position as the largest independent metering and data service provider to the UK I&C gas sector;

· To grow our position across the utility sector as a whole; and

· To grow our successful Siteworks business and expand the range and complexity of the services provided. 

This strategy focuses primarily on growing the business organically while making targeted acquisitions which can add value to our core business. 

In implementing this strategy we expect to:

· Continue to grow our asset base, focussing on the I&C segment of the metering market;

· Grow and diversify the primary energy supplier client base;

· Increase direct engagement with end-user consumers;

· Offer services across a multi-utility platform; and

· Increase operational flexibility.

The Group's achievement of these key strategic priorities to date can be linked to key performance indicators as follows:

Our progress in relation to our strategy can be further highlighted through the trends in our asset base and revenue over the past few years as follows:

Business model

Energy Assets provides metering and related services in the I&C segment of the UK utility market and is the largest independent provider of I&C gas metering services in the UK, by number of assets owned and managed. 

The Group offers utility suppliers, end-user energy consumers and commercial and residential developers a broad spectrum of expert metering related services from the design, project management and building of utility networks to management of new and replacement meters and the collection and provision of energy consumption data.

Meter Asset Management and Data Services

The Group's main area of recurring revenue activity is the provision, management and maintenance of I&C gas and electricity meters and the collection and provision of consumption data and, during the year, the meter and data asset portfolio has increased by circa 85,000 assets bringing the owned and managed meter and data asset portfolio to circa 450,000 assets. 

Recurring revenue, which is generated through recurring meter rental payments and payments for the provision of consumption data from utility suppliers and end user consumers, increased by 12% to £26.1m in the current period (2015: £23.3m) representing 58% of total revenue.

The Group has relationships with some of the largest UK utility suppliers and also some of the most respected niche suppliers, operating across both gas and electricity.

In December 2015, Energy Assets announced that it has been appointed as a preferred supplier to Crown, the gas supply division of Crown Oil Ltd. The appointment is for the provision of advanced gas metering technology and data services solutions.

The Energy Assets offering encompasses a suite of innovative options and solutions to help customers manage their energy use and meet the industry's obligations on carbon reduction. The Group has a reputation for delivering high quality solutions to customers and Energy Assets will partner with Crown, and all of its existing customers, to deliver metering and data services of the highest calibre, delivering a service which merits the confidence our customers have shown in the capabilities and technology that the Energy Assets Group can offer.

Going forward the I&C asset base is expected to continue to grow as a result of existing contracts and future demand for the installation of advanced and smart gas meters being driven by Government policy which currently requires every metering point in the UK to have advanced or smart-enabled energy meters by 2020.

Siteworks

Through its Siteworks division the Group provides customers with an expert engineering, consultancy, system design and project management service of the highest standard for multi-utility networks and metering installations. 

The business is rapidly establishing a reputation as a technical leader in the design, project management and building of utility networks and metering installations enabling continued growth and revenue from Siteworks activity has increased by 49% during the year to £19.2m (2015: £12.9m).

The acquisition of Blyth, a Multi-Utility Infrastructure Provider involved in the design and construction of utility networks direct to commercial and residential developers throughout Scotland and the North of England on 9 December 2015, now enables Energy Assets to provide a complete multi-utility product offering across gas, electricity and water, in accordance with the Group's strategy. The acquisition also creates growth opportunities through targeting businesses within the UK house building sector and will enable the Group to increase the market share of its existing Siteworks division and provide a broader service offering to customers.

Following the year end, the Group made a strategic decision to optimise the combined expertise of Blyth and the Energy Assets' Siteworks gas design and project management service to create a new force in gas, electricity and water utility network provision for housebuilders and I&C markets, Energy Assets Utilities. Going forward, Energy Assets Utilities will deliver all utility network services and activities as an integral part of the wider Group activities.

Financial results and Key Performance Indicators

The Group monitors a number of financial and key performance indicators as follows:

The Group has continued to grow revenue and profits through strong performances across each of its business segments.

For the year ended 31 March 2016, revenue was £45.3m, showing an increase of £9.1m (25%) compared with the previous financial year. This increase is predominantly due to the expanding asset portfolio owned and managed by the Group and the strong organic growth of the Siteworks offering.

At 31 March 2016 recurring revenue accounted for 58% of total revenue being £26.1m compared to £23.3m in the previous year, an increase of 12%. These recurring revenues are as a result of the long term nature of the Group's metering and data contracts.

Gross profit margins have been maintained against the prior year.

During the year the Group incurred non-recurring transaction costs relating to the acquisition of Blyth amounting to £0.1m. In the prior year similar costs of £0.1m were incurred in relation to the acquisitions of Origin and SA Gas. The Group also incurred non-recurring transaction costs of £0.1m in the current year relating to the proposed acquisition by Euston BidCo Limited. 

Upon acquisition of Bglobal Metering in the prior year, the fair value of the net assets of this company was greater than the fair value of the consideration paid resulting in a gain on the acquisition of £0.8m in the prior year.

The Group implemented a number of share based payment schemes as part of the IPO on 22 March 2012. The expense for the prior year in relation to these schemes amounted to £0.2m. No further expense will be incurred in the future in relation to these schemes.

Operating profit before exceptional items increased from £12.7m to £15.2m, a rise of 20% and EBITDA before exceptional items increased by 16% from £19.4m to £22.5m.

Profit before tax and exceptional items increased by 20% to £10.7m (2015: £8.9m). Profit before tax was £10.5m (2015: £9.3m) after deducting exceptional acquisition costs.

At a divisional level, the Group has installed circa 24,000 gas meter assets during the year, increasing its total portfolio by 20% to circa 147,000 meters. Given that the design life of meters is in excess of 20 years it is expected that these assets will continue to provide a solid source of long term recurring revenue over the life of the asset which is currently forecast at £281.8m (2015: £255.3m). Current year revenue increased to £16.6m (2015: £14.1m). 

In addition, the managed electricity meter asset portfolio acquired with Bglobal Metering has increased to circa 93,000 assets by the year end, up 37% compared to the prior year end.

Revenue from our data services business has increased to £9.5m (2015: £9.2m) and the number of meter points from which data is collected has increased to circa 210,000 across gas and electricity (2015: circa 174,000). This represents one of the largest portfolios within the UK I&C sector.

The Siteworks division continues to develop with significant annual growth during the current financial year. Overall revenues improved by 49% to £19.2m as a result of significant organic growth across gas and electricity and the acquisition of Blyth in December 2015.

Blyth Utilities Limited (Blyth)

On 9 December 2015, Energy Assets acquired the entire issued share capital of Blyth, a Multi-Utility Infrastructure Provider involved in the design and construction of utility networks direct to commercial and residential developers throughout Scotland and the North of England.

The transaction consideration comprises an initial cash payment of £1.5m, 200,784 shares in Energy Assets Group plc with a market value of £1m at the time of issue, which are subject to the sellers of Blyth remaining with the Group during a restrictive period of two years, and a three year earnout consideration of up to £2.5m contingent on the future performance of Blyth.

Since incorporation in 2003, and now with a team of circa 80 highly qualified and professional employees, Blyth has built a proven track record and has a strong reputation, based on quality, expertise and delivery, as a key multi-utility network provider in the commercial and residential construction sectors within Scotland and the North of England.

This acquisition therefore enables Energy Assets to provide a complete multi-utility product offering across gas, electricity and water network design, project management and build, in accordance with the Group's strategy, whilst also creating growth opportunities to businesses within the UK house building sector.

Energy Assets recognises the importance of high quality, responsive and competitive provision of utility networks and, as such, we are excited to be able to offer Blyth the support of the wider Group to realise the potential for growth within both businesses as a result of this acquisition. 

Going forward, the Group will also examine the opportunity arising from this acquisition to grow a pipeline asset portfolio, utilising Blyth's existing Independent Gas Transporter (IGT) licence, and it is intended that the Blyth business model will be expanded across the UK using the existing Energy Assets footprint.

The acquisition is in line with Energy Assets' established strategy of making selective acquisitions which add value to the Group and the Energy Assets directors are confident that the Blyth business will provide enhanced earnings from the financial year 2016/17. 

New contracts

Crown Gas and Power (Crown)

In December 2015, Energy Assets announced that it has been appointed as a preferred supplier to Crown, the gas supply division of Crown Oil Ltd. The appointment is for the provision of advanced gas metering technology and data services solutions.

As the leading independent provider of I&C gas metering services in the UK, the Energy Assets offering encompasses a suite of innovative options and solutions to help customers manage their energy use and meet the industry's obligations on carbon reduction. The Group has a reputation for delivering high quality solutions to customers and Energy Assets will partner with Crown to deliver Meter Asset Management and AMR services of the highest calibre, delivering a service which merits the confidence Crown has shown in the capabilities and technology that the Energy Assets Group can offer.

East Lothian Developments Ltd (ELDL)

Immediately following the year end, the Group announced that it has secured a new contract with ELDL to provide utility networks for a new development at St Clements Well, Wallyford, East Lothian.

The new contract, which was signed by recently acquired subsidiary Blyth, encompasses the provision of gas, water and electricity networks for the development which will include approximately 1,450 mixed residential units along with offices, retail and supermarket units and a primary school.

With a contract value of £6m over the complete project term, this is the largest Utility Networks contract to ever be secured by Energy Assets and reaffirms the Group's strategy to provide a complete multi-utility infrastructure offering across gas, electricity and water. 

The award of this contract underpins the growth aspirations the Group has for Blyth as part of the Energy Assets Group and is testimony to the expertise and uniquely differentiated offering within the expanded business.

New branding

Following the acquisition of Blyth in December 2015, the Group made a strategic decision to optimise the combined expertise of Blyth and the Energy Assets' Siteworks gas design and project management service to create a new force in gas, electricity and water utility network provision for housebuilders and I&C markets. The new Energy Assets Utilities brand was launched immediately following the year end and, going forward, will deliver all utility network services and activities as an integral part of the wider Group activities.

Funding and financial position

In November 2015 we announced a £10m increase to our current facility with Lombard, the asset finance division of The Royal Bank of Scotland Group, taking total facilities from the Group's three main funding partners to £110m.

The expansion of the Group's relationship with Lombard increased the facility to £70m, on the same terms as previously agreed.  Additionally, an extension was agreed on the Group's £35m Bank of Scotland facility which is now available for a further two years.

We continue to enjoy good relationships with all of our banking partners, who have expressed a keen interest to continue working with the Group, and we are confident that these relationships will provide sufficient funding to facilitate our future growth plans as we work towards being the supplier of choice for customers within the UK I&C utility sector and the largest independent provider of I&C energy metering services in the UK.

Net debt at 31 March 2016 of £75.9m was £10.8m higher than the previous year mainly as a result of the increase in capital expenditure to service the growing meter portfolio. Capital investment in meters amounted to £21.7m in the year and, at 31 March 2016, Energy Assets had a gas meter portfolio of circa 147,000 meters with a net book value of £101.5m (2015: circa 123,000 gas meters with a net book value of £85.4m). 

Available facilities at the financial year end amounted to £29.5m (2015: £28.7m) and the cash at bank balance at 31 March 2016 was £6.7m (2015: £7.8m). 

Principal business risks and uncertainties

With 58% of our revenue being long term recurring revenue, over a period of up to 20 years, much of our business is considered to be predictable and relatively low risk. 

Nonetheless, potential risks to the business are continuously reviewed as part of our Operational Risk Self Assessment process and actions to mitigate these risks are identified. The key risks identified and managed are set out in the Strategic Report within the 2016 Annual Report and Accounts and are summarised below:

By order of the Board

Philip Bellamy-Lee John McMorrow

Chief Executive Officer Chief Financial Officer

7 June 2016 7 June 2016

Consolidated statement of comprehensive income

For year ended 31 March 2016

Consolidated Balance Sheet

As at 31 March 2016

Consolidated Statement of Changes in Equity

For year ended 31 March 2016

Consolidated Statement of Changes in Equity

For year ended 31 March 2016

Consolidated statement of cash flows

For year ended 31 March 2016

Notes to the consolidated financial statements

For the year ended 31 March 2016

1) Financial information

This announcement does not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but is derived from the audited accounts for the year ended 31 March 2016 for which an unqualified audit report has been received. The statutory accounts for the year ended 31 March 2016 will be delivered to the Registrar of Companies.

The Annual General Meeting (AGM) of Energy Assets Group plc is intended to take place in London on 7 September 2016. Notice of the AGM and related papers, including the statutory accounts, will be sent to shareholders at least 21 clear days before the meeting.

While the information included within this announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), it does not in itself contain sufficient information to comply with IFRS.

This information has been approved for issue by the Board of Directors of Energy Assets Group plc on 7 June 2016. Energy Assets Group plc was incorporated in the United Kingdom on 1 February 2012 which is where it is domiciled. 

2) Basis of preparation

The consolidated financial statements of Energy Assets Group plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), the Companies Act 2006 applicable to companies reporting under IFRS and the Listing Rules.

The consolidated financial statements have been prepared under the historical cost convention, as modified by financial assets and liabilities (including derivative instruments) at fair value through profit or loss.

3) Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report within the 2016 Annual Report and Accounts.

The Directors have considered these factors, the likely performance of the business and possible alternative outcomes, the financing facilities available to the Group, compliance with financial covenants and the possible actions able to be taken should new facilities not be available in the future.

Having taken all of these factors into consideration, the Directors confirm that forecasts and projections indicate that the Group and its Parent Company have adequate resources for the foreseeable future and at least for the period of 12 months from the date of this report. Accordingly the financial statements have been prepared on the going concern basis.

4) Segment information

Operating segments are reported in a manner consistent with the reports made to the chief operating decision maker. It is considered that the role of chief operating decision maker is performed by the Board of Directors.

The Group currently only operates in the UK and for management purposes is organised into three core divisions:

· Meter asset management;

· Data services; and

· Siteworks

This currently forms the basis of the Group's reportable operating segments. However, in the future as the business develops and moves towards a multi utility offering in accordance with its primary strategy, meter asset management and data services are likely to converge into a single division as customer demand increases for a combined service offering meaning it may become less relevant to split out revenue and costs associated with these divisions.

The measure of profit principally used to allocate resources is gross profit. However, as interest costs arise on borrowings which are wholly attributable to the meter asset management and data services segments, finance costs are also allocated to these segments.

EBITDA is monitored on a Group level but not at segment level and therefore this has not been presented within this note.

Certain central costs, assets and liabilities are not allocated to segments as they are managed on a Group basis. These comprise primarily central and management overhead costs, cash, accounts receivable and accounts payable.

During the year, sales to related parties amounted to £9.5m (2015: £9.0m) being sales made on an arm's length basis to a company controlled by one of the Group's significant shareholders. In addition, revenue of £5.3m (2015: £4.5m) was received from another single external customer in relation to data and metering services.

5) Exceptional items

Items that are material because of their size or nature, non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial information are referred to as exceptional items. The separate reporting of exceptional items helps to provide an understanding of the Group's underlying performance.

During the year the Group incurred non-recurring transaction costs relating to the acquisition of Blyth amounting to £0.1m. In the prior year similar costs of £0.1m were incurred in relation to the acquisitions of Origin and SA Gas. The Group also incurred non-recurring transaction costs of £0.1m in the current year relating to the proposed acquisition by Euston BidCo Ltd. 

Upon acquisition of Bglobal Metering, the fair value of the net assets of this company were greater than the fair value of the consideration paid resulting in a gain on the acquisition of £0.8m in the prior year.

The Group implemented a number of share based payment schemes as part of the IPO on 22 March 2012. The expense for the prior year in relation to these schemes amounted to £0.2m. No further expense will be incurred in the future in relation to these schemes.

6) Taxation

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

A number of changes to the UK Corporation tax system were announced in the March 2015 Budget Statement with the main rate of corporation tax reduced from 20% to 19% from 1 April 2017 and from 19% to 18% from 1 April 2020. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.

7) Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. 

This is done by calculating the number of shares that could have been acquired at fair value (determined as the average market share price of the Company's shares in the year) based on the monetary value of the exercise price attached to outstanding share options. The number of shares calculated above is compared with the number of shares that will be issued assuming the exercise of the share options.

Therefore, the earnings per share calculation is required to be adjusted in relation to the share options that are in issue under the LTIP, Deferred Bonus Plan and the IPO Award Plan as follows. None of the shares under the SIP or the Employee Retention Award Plan are potentially dilutive as these are to be settled with shares purchased on the open market.

8) Property, plant and equipment

Gas Meter additions include directly attributable costs of £5.3m (2015: £4.1m).

Borrowings are secured by a fixed and floating charge over the metering assets to which they relate.

9) Net debt/EBITDA

The Group monitors capital on the basis of net debt divided by EBITDA. Net debt is calculated as total borrowings less cash and EBITDA is calculated as operating profit before any exceptional items, interest, tax, depreciation and amortisation as follows:

10) Leased assets

The Group, as part of its core business, is a lessor of gas metering assets. These are leased to customers under operating leases. The minimum lease rentals receivable at current prices assuming the lease remains in place for its expected term are as follows:

These lease payments are subject to annual reviews and are cancellable by the customer.

11) Acquisitions

Blyth

On 9 December 2015, Energy Assets acquired the entire issued share capital of Blyth, a Multi-Utility Infrastructure Provider involved in the design and construction of utility networks direct to commercial and residential developers throughout Scotland and the North of England.

The following table summarises the consideration paid for Blyth and the fair value of the amounts recognised at the acquisition date for each major class of assets acquired and liabilities assumed, as provisionally determined. The fair value of assets acquired and liabilities assumed may be revised within the 12 month period post acquisition:

Goodwill has been reflected within intangible assets on the Group balance sheet. Goodwill recognised is attributable to a variety of intangible benefits including economies of scale from bringing the Blyth business in-house, the ability to provide a broader service offering to customers and access to the company's highly qualified team of specialist engineers and technicians.

The fair value of trade and other receivables is £2.9m and £2.3m is attributed to trade receivables. This is the gross contractual amount of which all is expected to be collectible.

In the year to 31 March 2016, revenue of £3.4m and a profit of £0.26m was included in the income statement relating to Blyth for the period from the date of acquisition. If the acquisition had taken place at the start of the year revenue of £10.4m and a profit of £0.5m would have been included. 

Acquisition costs relating to the transaction amounted to £0.1m and have been charged to exceptional administrative expenses in the income statement in the year ended 31 March 2016.

Further details of the above business combinations and the benefits that these will bring to the Group are included within the Strategic Report.