Utilitywise Regulatory News (UTW)

9 October 2012

Utilitywise plc

("Utilitywise" or the "Company")

Full Year Results

for the year ended 31st July 2012

Utilitywise, a leading independent utility cost management consultancy is pleased to announce its full year results for the year ended 31 July 2012.

o Proforma revenue increased by 25% to £14.6m (2011: £11.7m)

o Proforma EBITDA increased by 25% to £4.7m (2011: £3.7m)

o Proforma PBT increased by 23% to £4.3m (2011: £3.5m)

o Proforma EPS increased by 39% to 6.4p (2011: 4.6p)

o Net cash at the year end of £8.2 million (2011: £0.2m)

o Maiden dividend of 1p proposed - ahead of schedule

Financial Highlights

Proforma reflects situation had EMU been part of the group as at 1 August 2010 (acquired 31 January 2012)

*Excludes exceptional items relating to a one off lease termination fee of £75,000 and £316,398 of listing costs.

#Share number adjusted to 2012 fully diluted base

Corporate Highlights

o Acquisition of Eco Monitoring Utility Systems Limited ("EMU") in January 2012

o Listing on AIM on 12 June 2012 raising £6.9 million (before expenses)

o New contracted meters grew to 20,013 at 31 July 2012 from 15,000 at 31 July 2011

o Energy consultancy headcount increased to 181 at 31 July 2012 from 133 at 31 July 2011

Post Period End Highlights

·; Acquisition of Clouds Environmental Consultancy Limited

·; Energy saving partnership with City Electrical Factors

·; Board appointment of Michael Dent from Total Gas & Power as Sales and Marketing Director

Commenting on the results, Geoff Thompson, CEO said:

"This year has seen exceptional progress for our Company, including our successful listing on AIM in June. We have seen strong growth in our financial performance and continue to add and improve our service offerings. The significant investment we have continually made in infrastructure means that we are well placed to continue to grow and cater for our customers' future needs.

"The new financial year has started strongly and the recent acquisition of Clouds is the first step in our strategy of selective acquisitions to complement our organic growth. Our services have never been more relevant as they both save clients' money and help reduce overall energy consumption, and our proposed maiden dividend is evidence of our continued confidence in the future."

For further information:

Chairman's Statement

I am pleased to report our results for the year ended 31st July 2012. This is our first report as a publically quoted company, and it is therefore particularly pleasing to be able to report profits ahead of market expectations. In a difficult time in the financial markets we were delighted that we were able to successfully conclude our IPO in June.

These maiden results demonstrate that Utilitywise is a fast growing, highly profitable business with excellent prospects. Proforma revenues increased by 25% over the comparable period last year from £11.7m to £14.6m, proforma EBITDA by 25% from £3.7m to £4.7m and we are recommending a maiden dividend of 1p per share, which is 6 months earlier than initially anticipated. As a board we are committed to growing Utilitywise in a measured and controlled manner and the team have demonstrated their ability to do so efficiently and with great success.

Since the end of this financial year we have announced the acquisition of Clouds Environmental Consultancy Limited, a leading provider of energy management services, such as energy auditing, based in Portsmouth. The acquisition provides further breadth to Utilitywise's overall energy offering. I welcome them to the Utilitywise group and am confident that their team of specialist consultants and strong customer base will be of great benefit to the Group. When we joined AIM in June this year it was our stated aim to grow both organically and by acquisition and this clearly fits well with this strategy. We are continuing to investigate other potential acquisitions and I am sure this will reap rewards in the fullness of time.

I am also delighted that we have been able to announce the recruitment of Michael Dent from Total Gas and Power. We believe that Michael's appointment will be a key hire for Utilitywise and also demonstrates, by hiring such a senior and highly regarded executive, the excitement surrounding the Company's future as seen in its key markets.

I am continuously struck by the enormous potential for a professional organisation helping businesses effectively manage their energy needs. Everything I have seen since becoming Chairman has reinforced my opinion of the opportunity for Utilitywise to become the leading provider of energy solutions to commercial customers. We intend to not only increase the quantum of the services we provide to our customers but also to steadily expand the breadth of offering.

Utilitywise is led by an excellent management team. They possess a high level of specialist technical expertise and provide a first class service to our customers. It is much more than simply finding the best tariff. With our unique products and expertise we help our customers reduce their energy costs and consumption over the long term, which also helps them reduce their carbon emissions. It is a privilege to be involved with a business that is not only very profitable but also provides a valuable service by helping companies cut down on the amount of energy they consume, whilst becoming one of the largest private sector employees in the North East. Whilst the financial benefits of our services will be particularly welcome to our clients in these difficult economic times, the overall impact will be much further reaching.

I would like to thank everyone who works for Utilitywise for their continued hard work. In particular the executive team who have built and continue to develop an excellent business that demonstrates their undoubted talent and commitment. The Board is focused on providing not only a highly valuable service to our customers and a great place to work, but also delivering an excellent financial performance.

Richard Feigen

Chairman

Chief Executive's Statement

I am pleased to report Utilitywise has made a great start following the successful listing on AIM in June.

Our results demonstrate the strength of our proposition, the hard work of our people and most importantly the value we add to our customers.

Business Model

Utilitywise specialises in energy procurement and energy management services for businesses. The Company negotiates rates with energy suppliers on behalf of business customers, provides an account care service and offers a range of products and services designed to assist customers manage their energy consumption. Customers are based throughout the UK and the Republic of Ireland across a variety of industry sectors and the public sector, and range in size from small single site customers to large multi-site customers.

The business has two major focuses of activity:

Energy procurement

The Company's revenue from energy procurement is generated from two main sources. Firstly, the Company has energy consultants who contact prospective customers identified by the Company's bespoke IT search system to offer a potentially reduced energy tariff and various energy management products and services designed to assist in identifying ways to reduce that customer's overall energy consumption. Secondly, the Company operates a "partner channel" where organisations refer customers to Utilitywise and commissions generated from those customers are shared between Utilitywise and the referring organisation.

Energy management

These products and services are designed to assist customers to manage their energy consumption; they also generate additional revenues forUtilitywise. The energy management products and services include

·; Account care

·; Energy health check

·; Energy audit

·; Ecofit

·; Edd:e energy monitor

·; Utility insight

·; Smart meters

·; Carbon zero

The Directors believe that the UK market fragmentation, the low penetration of third party intermediaries (TPIs) in the UK commercial market and the Company's current share of the total potential market, means that there is an opportunity to increase the Company's market share through organic growth and acquisitions.

The Directors further believe that a forecast increase in energy prices will lead to increasing demand from customers for advice on energy management issues and that this demand creates the opportunity for the Company to continue with its recent organic growth.

In addition to the Company's aim to grow its market share of SME customers, the Directors believe that there is an opportunity to capitalise on the Company's established relationships with energy suppliers who are showing an interest in some of the Company's energy management products and services for sale into the supplier's customer base.

Highlights

·; Impressive growth in customer contracts, up 33% on our 2011 volumes, to over 20,000.

·; The acquisition of Eco Monitoring Utility Systems Limited (EMU) thereby securing a range of Energy Services offerings including:

o Our Energy Health Check Software

o Our EDD:E sub metering (M&T) solution

o Our Energy Auditing software

·; The relocation of the business to a flagship 40,000 square foot facility which provides the required infrastructure for our continued growth.

Key Performance Indicators

The key performance indicators used by the Directors are as follows:

2012 2011 Growth

Energy Consultants at 31 July 181 133 43%

Contracts secured 20,013 5,006 33%

Secured revenue at July 31 £7.1m £5.2m 37%

Contracts secured increased by 33% from over 15,000 to over 20,000 over the year. Additionally secured revenue, (representing contracts waiting to 'go live') increased by 37% from £5.2m to £7.1m. Energy consultancy headcount increased to 181 at 31 July 2012 from 133 at 31 July 2011, as we scaled up our operations to drive future growth.

Our core Energy Intermediary offering to commercial customers has continued to scale as evidenced by the volume of new customers we contracted in 2012. As at our IPO in June we had over 10,000 contracted customers and over 25,400 contracted meters. This has continued to grow to over 11,400 customers and over 32,900 meters by September 2012. We are also particularly pleased that our renewal rate has increased since IPO to over 62% as at 30 September 2012.

Our proposition continues to develop, following the acquisition of EMU, and now includes a range of innovative Energy Services components that has supported our customer acquisition activity. Energy Services has led to an increase in our average order value per meter, increasing by 13% on 2011 rates.

Further investment in Energy Services has continued with improvements to our Edd:e sub metering solution focussed on value engineering to drive out cost and on improvements to commissioning processes and reporting.

In addition the Group has continued the development and testing of its own Voltage Optimisation product which has been designed to deliver value to customers at a competitive price and with functionality not available elsewhere.

Investment has also continued in the Group's IT systems and processes to support further growth.

We remain focussed on the delivery of further organic growth through all of the above investments and on targeting appropriate acquisition opportunities to enhance the Group's growth via complimentary products and services.

Our relationships with the UK Energy supply companies remains strong and we enjoy an enviable position as a partner they can rely upon to deliver customer volume and an innovative approach to solving the business customer's energy management needs.

People

To meet the demands of our growing business we have recruited a further 110 members of staff (including 52 Energy Consultants) during the year ended July 2012 and we continue to forecast further headcount growth into 2013. This recruitment is largely focussed on selecting the correct talent to support the growth of our in house Energy Consultant team.

We remain committed to attracting the right talent and to developing the skills of our people so that our customers benefit from our knowledge and experience and from the quality of service we provide.

Acquisitions

It is our aim to grow via selected acquisitions of which all will be selected to broaden and develop our product and service offering.

I am pleased to report that since the year end we have successfully completed a further acquisition and our first since our IPO. Clouds Environmental Consultancy Limited ("Clouds") will enhance our Energy Services capabilities. Clouds, based in Portsmouth, is an independent consultancy specialising in energy management services which are designed to help clients identify areas of potential energy and cost savings. Its team of highly qualified  energy  consultants  helps  businesses  effectively  manage  their  clients'  energy  and environmental impact and, in so doing, improve resource efficiency and reduce business overheads.

With capacity to grow the Clouds team, the acquisition will provide Utilitywise with a new base from which to address the South of England, and further extends its coverage of the UK market. Clouds has a range of products and services which complement and extend the existing Utilitywise offerings in the areas  of  legislative  Compliance,  Auditing  and  Surveying  and  Feasibility  and  Design.

Outlook

The new financial year has seen continued progress. The business has an excellent infrastructure to support our outstanding offering and we look forward to a further period of exciting growth.

Geoff Thompson

Chief Executive

Financial Review

Results for the year

In 2012, the group generated revenue of £14.4 Million, an increase of 32.1% over 2011 fuelled by an increase of 52% of contracts going live and a 6% increase in the average value of contracts that went live in the period. The major factor in the engine driving growth is energy consultant headcount which has grown in line with management expectation from 133 at July 2011 to 181 at July 2012. It is this increase in headcount which feeds the revenue pipeline and resulted in the securing of £22 million of contract revenue in 2012 a 33% increase on 2011. Gross profit has remained strong despite a period of headcount growth representing continued leveraging of the energy services proposition in the market with average commission rates on new business secured increasing by 9% on 2011 helping drive a 13% increase in average contract commission value.

Administrative expenses at £2.4m, excluding exceptional items, were up 77% largely as result of the move to new offices at Market Dock and continued headcount expansion.

EBITDA excluding exceptional items at £4.1m represents an 18% increase on 2011 with profit before tax at £3.9m, a 16% increase on 2011.

Proforma results adjusted for full year

Eco Monitoring Utility became part of the group on 31st January 2012 and thereby provided a six month contribution to the Group's results. In order to provide shareholders with a realistic snapshot of performance, had EMU been in place as of 1st August 2010, the Group revenue would have been £14.6 million (2011: £11.7m), with a Gross Profit of £7.2 million (2011 : £5.8m) and EBITDA excluding exceptional items of £4.7 million (2011: £3.7m).

EBITDA is defined as profit from operations less depreciation and amortisation. Exceptional items relate to a one off lease termination fee of £75,000 and £316,398 of listing fees which are included in administrative expenses in the income statement.

Cash and Borrowings

As at the 31st July 2012 the Group had net cash balances of £8.2m (31st July 2011: £0.2m). Cash generation has remained strong throughout the period with net cash flows generated from operating activities of £5.0m (2011: £0.0m).

Balance Sheet

The Group's non current assets at 31st July 2012 were £3.2m (2011: £0.4m) which consist of property, plant and equipment £0.8m, intangible assets and goodwill of £2.4m mainly relating to the purchase of EMU.

Receivables have decreased to £1.9m (2011: £4.7m) with stock at £0.1m relating to Edd:e units. Current liabilities have increased to £3.3m (2011: £3.0m) whilst non-current liabilities have decreased to £0.1m (2011: £0.2m).

Dividend

The board is proposing a dividend for the year of 1p per share subject to the approval of the shareholders at the Annual General Meeting. The dividend per share will be paid on 14 December 2012 to shareholders on the register at close of business on 30 November 2012.

Andrew Richardson

Chief Financial Officer

Consolidated statement of total comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity 

Consolidated cash flow statement 

Notes

1. The financial information set out herein does not constitute the Group's statutory accounts for the year ended 31 July 2012 or the year ended 31 July 2011 within the meaning of section 435 of the Companies Act 2006, but is derived from those accounts. The information has been derived from the audited statutory accounts for each of those years upon which an unqualified audit opinion was expressed and which did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The audited accounts will be posted to all shareholders in due course and will be available upon request by contacting the Company Secretary at the Company's registered office.

2. Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the European Union (EU).

Utilitywise Plc is incorporated and domiciled in the United Kingdom.

The financial statements have been prepared on the historical cost basis as stated in the accounting policies.

3. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

During the current year the Group offered both energy procurement and energy management services. The Board considers that due to the aggregation criteria in IFRS 8 that the services offered form one segment for the current year. As the energy management revenues grow a reassessment of operating segments will take place.

The Board considers that the Group's project activity constitutes one operating and one reporting segment, as defined under IFRS 8. Management reviews the performance of the Group by reference to total results against budget.

Other information

4. Exceptional items

Exceptional items relate to a one off lease termination fee of £75,000 and £316,398 of listing fees incurred on admission to the AIM. £316,398 is considered to be the listing fee value attributable to shares in issue prior to the AIM listing. Costs associated with new shares issued on admission have been taken to the share premium account. Please see the Consolidated Statement of Changes in Equity. Exceptional items are included in administrative expenses in the income statement.

5. Earnings per share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume the conversion of all potentially dilutive ordinary shares.

The Group has one class of potentially dilutive ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year.

6. Acquisition

Utilitywise Plc acquired the entire share capital of Eco Monitoring Utility Systems Limited on 31 January 2012 for £2,500,000 in order to enhance the service offering provided by the group.

Goodwill on consolidation has been calculated as follows:

The goodwill reflects expected synergies from combining the two businesses.

Since the date of acquisition Eco Monitoring Utility Systems Limited has generated revenue of £101,804 and a profit before tax of £18,334 which is included in the consolidated statement of comprehensive income.

Assuming Eco Monitoring Utility Systems Limited was acquired at the beginning of the annual reporting period, group revenue would be £14,623,947 and profit before tax £4,242,408.

7. Share capital

Ordinary shares carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assetsavailable for distribution in the event of a winding up.

During the year ending 31 July 2012 the company capitalised reserves of £49,900 to give a revised share capital of £50,000. Share capital was changed from £0.01 to £0.001 per share. On 12 June 2012 a further 11,425,842 shares were issued at 60p per share, which resulted in a share premium of £6,844,079 and additions to share capital of £11,426.

8. Post balance sheet events

On 01 October 2012 the group acquired the entire share capital of Clouds Environmental Consultancy Limited. Clouds is an independent consultancy specialising in energy management services which are designed to help clients identify areas of potential energy and cost savings. The acquisition will provide Utilitywise with a new base from which to address the South of England, and further extends its coverage of the UK market. Clouds has a range of products and services which complement and extend the existing Utilitywise offerings in the areas of legislative Compliance, Auditing and Surveying and Feasibility and Design.

The total consideration is for a maximum of £985,000 with an initial £600,000 paid on completion, (subject to adjustment on the basis of completion accounts) with the deferred balance of up to £385,000 payable over the next 12 months, contingent on certain EBITDA targets being met. The acquisition will be financed equally from the Group's cash resources and through the issue of new ordinary shares in Utilitywise Plc. On the date of acquisition the Utilitywise Plc issued 394,736 new ordinary shares of 0.1p each.

Acquisition accounting has not yet been finalised and therefore disclosures around goodwill and net assets acquired have not been provided.