Preliminary Results

RNS Number : 7262O

Eneraqua Technologies PLC

14 June 2022

 

14 June 2022

Eneraqua Technologies plc

("Eneraqua Technologies", the "Company" or the "Group")

Preliminary Results

Eneraqua Technologies plc, a provider of specialist energy and water efficiency solutions, is pleased to announce its preliminary results for the year ended 31 January 2022.

Financial Highlights

	FY to Jan 2022	FY to Jan 2021	% change
Revenue	£36.2m	£14.6m	148%
EBITDA	£5.55m	£1.32m	319%
Adjusted EBITDA1	£6.72m	£1.32m	408%
Adjusted EBITDA margin1	18.6%	9.1%
Adjusted PBT1	£5.61m	£0.8	608%
Reported diluted EPS1	18.16p
Cash generated from operations	£3.0m	(£0.1m)
Cash conversion2	66%	(9%)
ROCE	26.6%	18.0%
Maiden Dividend per share	1.0p	-

Operational and Strategic Highlights

·	Successful listing on AIM on 22 November 2021, raising £8 million of new share capital to fund the next stage of growth.
·	Completed two strategically important acquisitions; HaGePe International BV (HGP), securing full control of the developers of the HL2024 technology, and Welltherm Drilling Limited, to secure the drilling skills and capacity vital to the Company's growth plans.
·	Energy and water are delivering strong organic growth with additional investment in business development, engineering and project management staff and systems to support this process.
·	Received the London Stock Exchange Green Economy Mark at IPO, an award to companies which derive more than 50% of revenues from products and services that contribute to the global green economy. Eneraqua received the Mark with 99.5% of revenue qualifying.

Current trading and outlook

·	FYJan23 has started well and the Company expects to deliver on its growth plans in the domestic and commercial energy markets as well as the water sector.
	Secured first Agritech contract to provide our ClimateSmart agricultural water efficiency solution to the State of Uttarakhand in India.
·	Awarded two English local authority contracts to deliver net water neutrality pilot programmes.
·	Focus for the year ahead to deliver strong growth and continue the expansion of the water business's operations both in the UK and in international markets.
·	The Group is in a strong position with a healthy balance sheet and a strong Order Book3 providing  revenue cover for 95% of the Boards' FYJan23 revenue target.
·	Maiden dividend brought forward from 2023 to 2022, reflecting progress since IPO and strong cash performance.

Commenting on the results, Eneraqua Technologies CEO, Mitesh Dhanak, said: "This has been a year of considerable achievement for Eneraqua. We were delighted to successfully list on AIM and we have been able to work towards the ambitions that were set out at IPO. We have continued to grow in both energy and water, with the recentcontract wins in the UK and India. This, alongside the strategically important acquisitions that we completed, shows the quality of the services that we are now able to provide our clients.

"I am incredibly proud of everything the team has achieved to date, building a market-leading offering with fantastic customer relationships. Whilst we are proud of what we have achieved, we are very much still at the start of our journey. The increasing Net Zero regulation and initiatives being introduced across the globe provide us with confidence that we can deliver long-term value for our shareholders."

¹ Adjusted to exclude IPO costs
²Cash from operating activities/EBITDA
³Order Book defined as Contract + Secured. Contracted = project contact issued and signed, with work started or ready to start. Secured = sum of a) tender process successful, awaiting project contract, and b) Directors' assumed win rate on Framework opportunities

For more information, please contact:

Eneraqua Technologies plc	Via Alma PR
Mitesh Dhanak, CEO	www.eneraquatechnologies.com
Iain Richardson, CFO
finnCap Limited - Nominated adviser and Broker	[phone]
Ed Frisby / Charlie Beeson - Corporate Finance
Andrew Burdis / Sunila de Silva - ECM
Alma PR - Financial PR and IR	[phone]
Justine James / Sam Modlin / Will Ellis Hancock	[e-mail]

Notes to editors

Eneraqua Technologies (AIM:ETP) is a specialist in energy and water efficiency. The Group designs and delivers improved energy and water systems which utilise its wholly owned intellectual property, the Control Flow HL2024.  Energy was the first market the company entered and this is the larger sector, 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 commercial clients including hotels and care homes.  It has also expanded into agritech systems.

The activities in both areas 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 Company's main country of operation is the United Kingdom. The Company's head office is in London with additional offices in Leeds, Washington (Sunderland), India, Spain and the Netherlands. The Company has 116 employees, with the majority employed within the UK. Eneraqua Technologies has received the London Stock Exchange's Green Economy Mark.

To find out more, please visit: www.eneraquatechnologies.com

Chairman's Statement

The year to 31 January 2022 was one of significant strategic and operational progress for Eneraqua Technologies. The Company delivered an excellent financial and operating performance in line with expectations, and we were pleased to join AIM in November 2021.

Delivering on our financial plans

The Company achieved its key financial objectives for the year. Compared to the previous year, the Company's turnover in the year to 31 January 2022 increased by 148% per cent to £36.2 million and EBITDA (before exceptional costs associated with the flotation on AIM) increased by 319% per cent to £5.55 million. These were stretching targets and it is a tribute to all those within the Company that they were achieved.

Operating effectively

I would like to thank our executive leadership team and all of our employees who have worked hard to not only grow and develop our business, but also to remain flexible and adaptable during the challenges of Covid 19 and as we managed our AIM listing.

We have patent protected technically advanced products and a highly skilled workforce which develops and delivers solutions to meet our customers' requirements.

The Group's target market continues to undergo substantial and sustained long term growth to meet decarbonisation and Net Zero targets. In addition to projects completed and started last year, the Company is in active dialogue with a number of existing and potential clients about how its technology and services can help them meet their decarbonisation, water efficiency and Net Zero targets. We won several flagship contracts over the year including Leeds City Council, Calderdale Council and Affinity Water.

These organisations have begun the journey to Net Zero and water sustainability, and we are proud that they have chosen us to work with them based on our technology and ability to design and deliver complex projects and programmes.

People

Eneraqua Technologies is a young company, its operating subsidiary, Cenergist Limited, was founded in August 2012. The Company is fortunate that its Chief Executive is Mitesh Dhanak who founded the Company and who had the vision to shape the business we are today.

The spirit of the founder still runs through the Company and the way it operates. Our people share the vision, they work hard, they work as a team, they have a can-do and do it right attitude. This spirit is incredibly valuable to us in delivering for our customers, particularly in difficult times.

At 31 January 2022 the Group employed 113 people, an increase of 66 people over the year. Rapid growth creates challenges but also opportunities for our people to learn new skills, to train others and to progress their careers rapidly.

We take great care in recruitment to ensure that those who join the Company share the attitudes which we think are important. At the time of the flotation on AIM we made sure that equity-based incentive schemes were in place for all senior staff so that they have a direct stake in delivering value for shareholders.

A successful flotation on AIM

On 22 November 2021 the Company's shares were admitted to trading on AIM. This was a significant milestone for the Company and allowed it to raise £8 million of new share capital to fund the next stage of growth. This strong balance sheet allowed us to make substantial investments in people and infrastructure to accelerate our growth.

The IPO also brought a key additional benefit to the Company - one of transparency. Our customers and suppliers can see who we are and that we operate to the highest standards of corporate governance, that we are socially responsible and  our whole reason for being is the environment: supporting clients to meet their Net Zero and sustainability goals through our patented technology and expertise. This undoubtedly helps our business.

Acquisitions

During the year we completed two strategically important acquisitions for a combined total of £5.1 million.

The first was to take full control of HGP, the developers of the HL2024 technology, which is so important to our business.

We identified early in the year that there was a growing shortage of drilling rigs and skilled operators to operate them. Large Ground Source Heat Pump projects often require many boreholes to be drilled to a typical depth of 150 metres. Having both the drilling skills and capacity are vital to our growth plans and we therefore acquired Welltherm Drilling Limited which has exactly the skills and resources required.

In both cases the management teams remain with the Company and are integral to our plans.

The economic background

The environment in which Eneraqua Technologies operates is complex. We provide innovative products and design solutions for clients that need to provide affordable heating and hot water while reducing the level of carbon emissions. A stable legislative framework will be essential to allow clients to invest with confidence and ensure Net Zero targets are met.

The recent increases in the prices of fossil fuels for consumers and the exacerbating impact of Russia's attack on Ukraine illustrates the imperative to not slow down the drive to Net Zero but to accelerate it. This will enable society to combat global warming, provide the ability for people - especially those on low incomes - to heat their homes at an affordable cost and protect ourselves against the instability of fossil fuel energy markets.

Dividend

At the time of our admission to AIM we indicated that it was our intention to pay modest dividends potentially commencing in 2023 in respect of the financial year ending 31 January 2023. I am pleased to say that the Board, having considered the position and particularly in light of our progress since flotation and our strong cash performance, now intends to propose to shareholders that a final dividend of 1p per share is paid in respect of the year ended 31 January 2022. If approved by shareholders, this dividend would be paid on 16 September 2022 to shareholders on the register at the close of business on 19 August 2022, with the ordinary shares becoming ex-dividend on 18 August 2022.

Future development and outlook

Our focus for the year ahead is on delivering strong growth. The year to date has started well and we expect to deliver on our plans based on growth in our domestic and commercial energy markets and also the water sector.

We are achieving good progress in our water business in the UK and Europe as well as India. Post period end, we were pleased to report in late April the award of an Agritech contract to provide our ClimateSmart agricultural water efficiency solution to the State of Uttarakhand, India. We also announced in June that we had been awarded two English local authority contracts to deliver net water neutrality pilot programmes. Both are exciting developments, and we have a strong appetite to deliver an enhanced range of services to our customers and to increase the diversity of our customer base both in the UK and overseas.

We have a range of opportunities to drive growth in future years and we are investing significantly in the quality and scale of our operating capability to ensure that we can grasp those opportunities and deliver further value for shareholders.

Guy Stenhouse

Chair

13 June 2022

CEO Statement

The last year has been transformational for the Group in terms of growing our people, developing our technology and fulfilling our ambition to join AIM, which we were delighted to achieve on 22 November 2021.

The IPO process and successful fundraise has not only given existing colleagues and customers additional confidence in terms of management, stability and governance but it also helped us attract some of the best talent in the industry. Moreover, going forward it will support us as we grow both organically and through selected acquisitions which will accelerate our client propositions and development.

With a clear roadmap for growth, in both Energy and Water, we see exciting opportunities for growth. In Energy we focus on clients with end-of-life gas, oil or electric heating and hot water systems. We provide turnkey retrofit district or communal heating systems based either on high-efficiency gas or ground/air source heat pump solutions and are at the centre of a number of development programmes across the UK, upgrading buildings and helping Local Authorities achieve their Net Zero and decarbonisation goals.

 In Water, we provide a growing service focused on water efficiency upgrades for utilities and commercial clients including hotels, general residential and care homes. Our recent contract award by The Department of Horticulture for the State Government of Uttarakhand, India marks the extension of our activities into agritech.  This will see delivery of the first ClimateSmart Irrigation programme to 340 horticultural farms across the state, further highlighting the value of our IP and the potential global opportunity.

Financial performance

Our trading through FY22 was very pleasing during an extremely difficult period for colleagues and clients who coped admirably with the challenges of the pandemic.

Revenues increased by 148%, driven by a number of successful UK contracts and Adjusted EBITDA reached £6.72 million, reflecting the value of our solutions and our careful management of costs and optimised go-to-market model. The Company generated operating cash of £3.0 million, again significantly up on the previous year and we were very pleased to finish the year with £3.9 million in net cash after the successful fundraise.

As a Board, we were delighted to recommend a final dividend for the year of 1.0p per share. This is an acceleration of the timing of the intention to pay a modest dividend as outlined at IPO.

The value of our solutions

Our activities in both the energy and water sectors 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.

Accurate flow control improves the performance of water systems and delivers both capital and operating cost savings. In addition, it also improves the end-user experience. This is essential in order to achieve long-term savings.

Climate Change is leading to increased water stress. By improving the performance of energy systems as well as reducing water wastage, our Control Flow HL2024 technology can play an important part for organisations seeking to reach Net Zero.

The markets we operate in

Governments and companies around the world are investing to reduce carbon emissions through improved energy efficiency and adopting low-carbon solutions. The war in Ukraine has increased the desire to reduce exposure to volatile global fossil fuel markets.

Net Zero targets require the decarbonisation of heating, moving away from using gas or oil. We are experts in the design and implementation of heating systems which leverage our Control Flow HL2024 technology to deliver high efficiency outcomes, often utilising heat pump systems. Technology-agnostic, we help clients identify the most relevant solution for their needs and then provide a turnkey delivery. This approach is highly appealing to our clients.

Water stress is a high profile, global issue and there are growing regulatory and environmental factors designed to ensure improved efficiency of water collection and usage. UK water companies, for example, have regulatory water efficiency targets to reduce household consumption by up to 30%. This focus on water efficiency is expected to be a long-term focus for the sector as it battles with the threat of water stress.

The two English local authority contracts that we were awarded to deliver net water neutrality pilot programmes illustrate how our technology can facilitate new build projects. By upgrading existing homes to reduce their water consumption and utility bills, our HL2024 products are freeing up available water resources to meet the needs of new build homes.

The potential of our technology globally is huge and the initial success in India highlights this. Post period end, our ClimateSmart Irrigation solution has been selected by The Department of Horticulture for the State Government of Uttarakhand, India. The £0.9m contract will see us supply our water systems to 340 horticultural farms across the state, helping to reduce carbon emissions and improving water efficiency. This is the first major zero carbon irrigation initiative of its kind in India.

Expanding our growth opportunities

We have a clearly defined strategy to build strong long term growth both organically and inorganically. Energy and water are seeing strong organic growth and we are investing in additional business development, engineering and project management staff and systems to support this process.

In addition, by expanding our product portfolio, we are opening new markets. At IPO we spoke about new products to allow entry into Agritech and the recent contract in India illustrates the progress made. Our R&D work is ongoing and allows us to refine and improve the performance of our products.

Finally, we made good progress with our M&A strategy with the completion of two acquisitions in the period. We took full control of HGP to secure the rights to HL2024 and this was followed by the acquisition of Welltherm Drilling Limited. This addressed a supply chain pinch point created by the limited borehole drilling capability in the UK.

We continue to evaluate opportunities in line with our strategy to expand our energy offering into NW Europe and to consider bolt-on opportunities to enter adjacent market sectors.

ESG

ESG is at the heart of everything we do through our day-to-day business activities, delivering carbon savings through our energy and water projects.

We have generated savings of over 37,000t/CO2 during FY22 by supporting our clients' sustainability goals; helping them to deliver their net carbon zero strategies through renewable heating solutions and our Control Flow water-saving technology.

Our business model helps reduce resource usage and the carbon emissions associated with running multiple occupancy social housing and commercial projects. Our day-to-day work alleviates everyday pressures faced by our clients, and making water and energy usage more accessible to customers. Our focus on energy efficiency is increasingly relevant given macroeconomic inflationary pressures and the current cost-of-living crisis in the UK.

We are delighted that Eneraqua Technologies is recognised by the London Stock Exchange as contributing to the global green economy. The Green Economy Mark is given to companies which derive more than 50% of revenues from environmental solutions, qualifying with over 99.5% of revenue.

We are rolling out initiatives to reduce our own environmental impact and adopting sustainable practices, such as hybrid digital working, which removes the need for unnecessary business travel, and recycling IT hardware and general waste.

We routinely conduct environmental awareness training, to educate all our employees on the importance of a sustainable relationship with the environment. Environmental Management Toolbox Talks are also conducted across our sites, to ensure we continually learn and share best practices on reducing environmental impact.

It has always been a key part of our culture to provide a supportive work environment for our employees and their partners and we were delighted to receive positive feedback from our latest staff survey. Key extracts of the annual staff survey:

-  95% of current employees believe that we go above and beyond in comparison to other companies they have worked for.

-  People are committed to quality for both clients and residents, giving us a huge advantage in the market.

Outlook

When we started the Company nearly a decade ago, our vision was to become one of the leading providers of highly efficient energy and water solutions. Last year evidenced our progress and commercial traction. Looking forward, we expect current clients to grow in size, the number of clients to grow significantly and most importantly, we envisage new use cases for our technology.

Our R&D teams are focused on developing new, more innovative solutions including looking at developing a next generation unit that can be installed alongside the water meter.  

We are very pleased with the success of our recent acquisitions, and we continue to look for opportunities which will accelerate our business in terms of technology, geography or enhancing our delivery and service.

There are of course challenges. Like all businesses we have seen supply chain disruption and have moved to manage the risk through identifying multiple suppliers. Global labour shortages are making it more difficult for businesses to hire the best people but importantly we offer an opportunity to join an exciting business operating in an accelerating market environment. Finally, there is a need for a stable legislative framework to give confidence for investment. The UK and EU have set out clear targets and introduced a range of incentives that will help organisations move forward on Net Zero.

We are confident about our prospects for the current financial year  and believe we have the right solutions to help our clients meet their Net Zero and water sustainability challenges. This provides a strong platform for future growth.

Mitesh Dhanak

CEO

13 June 2022

CFO Statement

CFO Statement

I am pleased to report on our inaugural results since Eneraqua's IPO in November 2021, for the year to 31 January 2022. 

Strategy

The Group's strategy is based on developing and delivering profitable solutions and products which help our clients reduce their carbon consumption and improve their water efficiency.

KPI's

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. All six KPIs delivered well in the year to 31 January 2022.

	2022	2021
Revenue	£36.2m	£14.6m
Revenue growth	148%	135%
EBITDA	£5.55m	£1.32m
Adjusted EBITDA	£6.72m	£1.32m
Adjusted EBITDA margin	18.6%	9.1%
R&D spend	£1.41m	£1.55m
Cash conversion*	66%	(9%)
ROCE	26.6%	18.0%

*Cash from operating activities/EBITDA

Revenue

Group revenues increased by 148% to £36.2m, (FY21: £14.6m). Excluding the Welltherm acquisition, UK revenues grew by 148% to £35.9m (2021: £14.5m). International revenues grew by 17% from £0.08m in 2021.

Profits

The improvement in revenue supported strong growth in profits and profitability. Adjusted EBITDA increased 408% to £6.7m, (2021: £1.3m), with the Group achieving Adjusted EBITDA margins of 18%, up from 9% in 2021.

Statutory operating profit increased to £4.4m (2021: £1.2m) and statutory profit before tax was £4.1m (FY21: £0.8m).

Acquisitions

In line with our growth strategy, the Group completed two acquisitions. On 23 June 2021 the Group acquired the entire share capital of HaGePe International BV ("HGP"), along with its subsidiary companies HaGePe Exploitatie BV and HL2024 Shop BV. The total consideration was £6.15m, including deferred consideration. The acquisition of HGP secured the intellectual property and "know how" associated with the Control Flow HL2024 products which are now owned and controlled by the Group, enabling it to utilise these products on an unrestricted, global basis.

On 20 September 2021 the Group acquired Welltherm Drilling Limited ("Welltherm"). The total consideration for the acquisition, including deferred consideration, is £1.18m. The rationale for the acquisition was to ensure the Group has its own direct access to drilling equipment and operational know-how to service its ground source heat pump installation projects. For the period following acquisition, Welltherm recorded revenues of £0.4m and operating profit of £0.05m.

Adjusting Items

The total pre-tax adjusting items in the year were £1.2m. These were £1.2m of costs associated with the IPO (2021: Nil).

Earnings per share

Basic earnings were 18.28p and diluted earnings per share were both 18.16p.

Dividends

For the financial year ended 31 January 2022, following a strong performance the Board is delighted to recommend a final dividend for the year of 1.0p per share. This is an acceleration of the timing of the intention to pay a modest dividend as outlined at IPO.

The Directors believe the markets the Company serves have very strong growth potential and believe it is in the best interests of shareholders that the Company prioritises the successful deployment of the Company's resources towards growing the business both organically and through acquisitions. Subject both to trading performance and the capital needs of the business, the Board's intention would be to target a progressive dividend policy.

Headcount

The Group's full time equivalent (FTE) employees at 31 January 2022 were 113 (FY21: 47). This growth reflects the acceleration in recruitment in order to support the Group's growth strategy.

Share capital & share options

Share options issued during the year under the Annual Bonus Plan were 332,673 and the total share options in issue at the year-end amounted to 332,673.

Cash flow & net cash

Thanks to the outstanding efforts of all our team, we achieved a strong performance with good cash generation

Cash conversion improved significantly from last year at 66%, with cash generated from operations of £3.0m (FY21: £118k outflow). This was achieved whilst the business experienced significant growth in its operations and corresponding changes in working capital requirements.

Total capital expenditure on property, plant and equipment amounted to £2.7m (FY21: £1.4m). In addition there was a further outflow of £5.1m for the acquisitions Of HaGePe International BV and Welltherm Drilling Limited

The Group ended the year with net cash (excluding IFRS 16 liabilities) of £3.9m compared with £0.9m of net debt at 31 January 2021 following the repayment of the Group's existing debt facility (£4.9m) upon IPO.

Post year end the Group has secured new banking facilities with HSBC UK Plc for an aggregate of £6.0m. The new facility will support the Group in its growth strategy, both in terms of working capital requirements and acquisition opportunities.

Outlook

The Group is in a strong position with a healthy balance sheet and a strong order book, which together with FY23 revenue year to date, provides 95% cover for the Board's revenue target for our current financial year.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 January 2022

	Note	2022 Unaudited £'000	2021 £'000
Continuing operations
Revenue	4,5	36,176	14,587
Cost of sales		(21,572)	(7,872)
Gross profit		14,604	6,715
Administrative expenses		(10,171)	(5,656)
Other operating income		-	113
Included within administrative expenses are:
-  Exceptional costs		(1,178)	-
-  Depreciation of property, plant and equipment		(618)	(46)
-  Depreciation of right-of-use assets		(113)	(30)
-  Amortisation of intangible assets		(381)	(75)
Adjusted administrative expenses		(7,881)	(5,505)
Adjusted EBITDA		6,723	1,323
Operating profit	7	4,433	1,172
Interest receivable and similar income		-	4
Interest payable and other similar expenses		(366)	(384)
Profit before taxation		4,067	792
Income tax	8	(8)	119
Profit for the year from continuing operations		4,059	911
Total profit for the year attributable to equity holders of the parent
Other comprehensive income		-	(10)
Total comprehensive profit for the year attributable to equity holders of the parent		4,059	901

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 January 2022

	Note	2022 Unaudited £'000	2021 £'000
Non-current assets
Intangible assets		7,218	578
Property, plant and equipment		3,095	2,741
Right-of-use assets		243	221
Deferred tax asset		-	59
Total non-current assets		10,556	3,599
Current assets
Inventory		1,186	891
Trade and other receivables		12,389	2,849
Cash and cash equivalents		4,070	4,284
Total current assets		17,645	8,024
TOTAL ASSETS		28,201	11,623
Equity attributable to owners of the parent
Called up share capital		344	3
Share premium account		10,113	456
Other		594	56
Retained earnings		5,391	1,761
Total equity		16,442	2,276
Non-current liabilities
Borrowings	9	-	4,081
Provisions		-	16
Lease liabilities		109	129
Deferred tax liability		142	-
Total non-current liabilities		251	4,226
Current liabilities
Borrowings	9	-	891
Trade and other payables		11,426	4,148
Lease liabilities		82	82
Total current liabilities		11,508	5,121
Total liabilities		11,759	9,347
TOTAL EQUITY AND LIABILITIES		28,201	11,623

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 January 2022

	Note	2022 Unaudited £'000	2021 £'000
Cash flow from operating activities
Profit for the financial year		4,059	911
Adjustments for:
Amortisation of intangible assets		381	75
Depreciation of property, plant and equipment		618	46
Depreciation on right-of-use assets		113	30
Loss on disposal of property, plant and equipment		-	1
Interest payable		330	375
Lease liability finance charge		36	8
Interest receivable		-	(4)
Taxation charge / (credit)		8	(119)
Corporation tax received / (paid)		380	(248)
Foreign exchange		(38)	59
Share based payment charge		333	69
Changes in working capital:
(Increase) in inventory		(295)	(458)
(Increase) in trade and other receivables		(9,540)	(710)
Increase / (decrease) in trade and other payables		7,278	(30)
Net cash inflow from operating activities		3,663	5
Cash flow from investing activities
Purchase of intangible assets		(549)	(338)
Purchase of property, plant and equipment		(2,722)	(1,429)
Acquisition of businesses - net of cash acquired		(5,111)	-
Interest received		-	3
Net cash outflow from investing activities		(8,382)	(1,764)
Cash flows from financing activities
Proceeds from borrowings		-	5,135
Repayment of borrowings		(4,972)	(2,283)
Net proceeds from issue of shares		9,998	-
Interest paid		(330)	(375)
Repayment of lease liabilities		(191)	(51)
Net cash inflow from financing activities		4,505	2,426
Net (decrease) / increase in cash and cash equivalents		(214)	667
Cash and cash equivalents at beginning of period		4,284	3,617
Cash and cash equivalents at the end of the period		4,070	4,284

CONSOLIDATED STATEMENT OF CHANGE IN EQUITY

For the year ended 31 January 2022

	Share Capital	Share Premium	Merger Reserve	Other	Retained Earnings		Total  Equity
	£'000	£'000	£'000	£'000	£'000		£'000
At 1 February 2020	3	456	-	(3)	850		1,306
Profit for the year	-	-	-	-	911		911
Other comprehensive income	-	-	-	(10)	-		(10)
Total comprehensive income for the year attributable to equity holders of the parent	-	-	-	(10)	911		901
Equity settled share based payments	-	-	-	69	-		69
Total transaction with owners	-	-	-	69	-		69
Balance at 31 January 2021	3	456	-	56	1,761		2,276
At 1 February 2021	3	456	-	56	1,761		2,276
Profit for the year	-	-	-	-	4,059		4,059
Other comprehensive income	-	-	-	-	-		-
Total comprehensive income for the year attributable to equity holders of the parent	-	-	-	-	4,059		4,059
Other	(3)	(456)	-	(224)	-		(683)
Merger reserve	-	-	5,490	-	(5,490)		-
Issue of shares	344	11,996	-	-	-		12,340
Share issue costs	-	(1,883)	-	-	-		(1,883)
Equity settled share based payments	-	-	-	333	-		333
Total transaction with owners	341	9,657	5,490	109	(5,919)		10,107
Balance at 31 January 2022	344	10,113	5,490	165	330		16,442

NOTES TO THE FINANCIAL INFORMATION

For the year ended 31 January 2022

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 is 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 Control Flow HL2024 technologies, which improve the efficiency of heating and water systems for customers across the UK and Europe.

2  ACCOUNTING POLICIES

2.1  Basis of preparation

The preliminary results (unaudited) (referred to as the 'preliminary results') have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee ("IFRS IC") and the Companies Act 2006 applicable to companies reporting under IFRS.

The preliminary results 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 information for the year ended 31 January 2022 does not constitute statutory accounts for the purposes of section 435 of the Companies Act 2006. The audit of the statutory accounts for the year ended 31 January 2022 is not yet complete. These accounts will be finalised on the basis of the information presented by the Directors in these preliminary results and will be delivered to the Registrar of Companies following the Company's annual general meeting.

Whilst the financial information included in this announcement has been computed in accordance with the recognition and measurement requirements of international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards, this announcement does not itself contain sufficient disclosures to comply with IFRS.

The accounting policies included herein are aligned with those presented in the Admission Document but the following points are of note:

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. These financial statements are the Company's first subsequent to its admission to AIM. In connection with the admission to AIM, the Group undertook a Group reorganisation of its corporate structure which resulted in the Company becoming the ultimate holding company of the Group.

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 rather than a reverse acquisition 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.

Please refer to note 3 for information on the Group reorganisation.

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  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  -   20% straight line

Licences  -  20% straight line

Patents  -  20% 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.

3.  GROUP RE-ORGANISATION UNDER COMMON CONTROL

The acquisition met the definition of a group re-organisation due to the Company and the Cenergist Group being under common control at the date of acquisition. As a result, and since the Company did not meet the definition of a business per IFRS 3, the acquisition fell outside the scope of IFRS 3 and the predecessor value method was used to account for the acquisition.

These consolidated financial statements represent a continuation of the consolidated financial statements of the Cenergist Group and include:

-  The assets and liabilities of the Cenergist Group at their pre-acquisition carrying amounts and the results for both periods; and

-  The assets and liabilities of the Company as at 5 October 2021 and its results for the period from 5 October 2021 to 31 January 2022.

On 5 October 2021, pursuant to the a Share Exchange Agreement the Company acquired the entire all of the shares in Cenergist Limited through the issue of 25,404,900 ordinary shares to the shareholders of Cenergist Limited.

The net assets of the Cenergist Group as at 5 October 2021 were as follows:

	£'000
Property, plant and equipment	1,492
Right-of-use assets	148
Investments	1,213
Current assets	14,033
Current liabilities	(11,013)
Non-current liabilities	(131)
Net assets	5,744

The reserve that arose from the reverse takeover is made up as follows:

	Year ended 31 January 2022  £'000
As at start of year	-
Cost of the investment in the Cenergist Group	254
Less:
Net assets of the Cenergist Group	(5,744)
As at the end of the year	(5,490)

The difference between the cost of the investment in the legal subsidiaries and the carrying value of the net assets acquired has been recorded in a merger reserve within equity.

4.  SEGMENT REPORTING

The following information is given about the Group's reportable segments:

The Chief Operating Decision Maker is the executive 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 2022 the Group operated in the three business segments according to the geographical location of its operations, those being:

-  United Kingdom

-  Europe; and

-  India

2022		United Kingdom	Europe	India		2022
		£'000	£'000	£'000		£'000
Revenue		35,918	216	42		36,176
Cost of sales		(21,350)	(187)	(35)		(21,572)
Gross profit		14,568	29	7		14,604
Administrative expenses		(8.974)	(1,079)	(118)		(10,171)
Included within administrative expenses are:
-  Exceptional costs		(1,178)	-	-		(1,178)
-  Depreciation of property, plant and equipment		(132)	(485)	(1)		(618)
-  Depreciation of right-of-use assets		(113)	-	-		(113)
-  Amortisation of intangible  assets		(339)	(42)	-		(381)
Adjusted administrative expenses		(7,212)	(552)	(117)		(7,881)
Adjusted EBITDA/(loss)		7,356	(523)	(110)		6,723
Operating profit/(loss)		5,594	(1,050)	(111)		4,433
Interest receivable and similar income		-	-	-		-
Interest payable and similar expenses		(366)	-	-		(366)
Profit/(Loss) before tax		5,228	(1,050)	(111)		4,067
Taxation		(7)	(1)	-		(8)
Profit/(Loss) after tax		5,221	(1,051)	(111)		4,059
Net Assets
Assets:		24,847	3,245	109		28,201
Liabilities		(9,208)	(2,538)	(13)		(11,759)
Net assets		15,639	707	96		16,442
2021		United Kingdom	Europe	India		2021
		£'000	£'000	£'000		£'000
Revenue		14,510	33	44		14,587
Cost of sales		(7,824)	(33)	(15)		(7,872)
Gross profit		6,686	-	29		6,715
Administrative expenses		(5,475)	(96)	(85)		(5,656)
Other operating income		113	-	-		113
Included within administrative expenses are:
-  Depreciation of property, plant and equipment		(45)	-	(1)		(46)
-  Depreciation of right-of-use assets		(27)	(3)	-		(30)
-  Amortisation of intangible assets		(75)	-	-		(75)
Adjusted administrative expenses		(5,328)	(93)	(84)		(5,505)
Adjusted EBITDA/(loss)		1,471	(93)	(55)		1,323
Operating profit/(loss)		1,324	(96)	(56)		1,172
Interest receivable and similar income		4	-	-		4
Interest payable and similar expenses		(383)	-	-		(383)
Profit/(Loss) before tax		944	(96)	(57)		792
Taxation		105	17	(2)		119
Profit/(Loss) after tax		1,049	(79)	(59)		911
Net Assets
Assets:		8,745	2,824	54		11,623
Liabilities		(8,026)	(1,315)	(6)		(9,347)
Net assets		719	1,509	48		2,276

5.  REVENUE

		2022 £'000	2021 £'000
United Kingdom		35,918	14,510
Europe		216	33
Rest of the World		42	44
		36,176	14,587

Within the sales revenue, there were 2 customers that accounted for greater than 10% of total revenue of the Group contributing £24,049,000 (2021: 4 customers - £10,310,000).

6.  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 shares in issue during the period.

		2022	2021
Profit for the year from continuing operations - £'000		4,059	911
Weighted number of ordinary shares in issue		22,204,677	253,774
Weighted number of fully diluted ordinary shares in issue		147,183	11,500
Basic earnings per share from continuing operations - pence		18.28	358.87
Diluted earnings per share from continuing operations - pence		18.16	343.31

Prior to the acquisition, the number of shares is based on Cenergist Limited. From the date of acquisition, the number of shares is based on the Company.

7.  OPERATING PROFIT

Operating profit from continued operations is stated after (charging) / crediting:

		2022 £'000	2021 £'000
Depreciation of property, plant and equipment		618	46
Depreciation of right-of-use assets		113	30
Amortisation of fixed assets		381	75
Inventories recognised as an expense		1	2
Research and development costs			494
Exchange differences		(20)	(37)
Loss on disposal of tangible fixed assets		-	1

8.  TAXATION

		2022 £'000	2021 £'000
The (charge) / credit for year is made up as follows:
Corporation tax
Corporation taxation on the results for the year		(99)	(246)
Adjustments in respect of previous periods		233	346
		134	100
Deferred tax
Origination and reversal of temporary differences		(336)	23
Changes to tax rates		-	(2)
Adjustments in respect of previous periods		194	(2)
		(142)	19
Taxation (charge) / credit on profits on ordinary activities		(8)	119

Factors affecting tax (charge) / credit for the year

The tax assessed for the year is lower than (2021: lower than) the standard rate of corporation tax in the UK of 19% (2021: 19%). The differences are explained below:

		2022 £'000	2021 £'000
Profit on ordinary activities before tax		4,059	792
Tax on ordinary activities at the standard rate of corporation tax in the UK of 19% (2021: 19%)		(771)	(150)
Effects of:
Expenses not deductible for tax purposes		(192)	(79)
Additional R&D tax relief		371	-
Adjustments to tax charges in respect to prior periods		427	344
Losses carried forward not recognised		(175)	-
Adjustments to tax charges in respect of differences between UK GAAP and IFRS		352	6
Tax rate changes		(20)	(2)
Taxation (charge) / credit on profits on ordinary activities		(8)	119

9.  BORROWINGS

		2022 £'000	2021 £'000
Current		-	891
Non-current		-	4,081
		-	4,972

Analysis of maturity of loans is given below:

		2022 £'000	2021 £'000
Amounts falling due within one year
Other loans		-	891
Amounts falling due 1-2 years
Other loans		-	769
Amounts falling due 2-5 years
Other loans		-	3,312
		-	4,972

In December 2021, the Group settled its outstanding borrowings ahead of expiry of their term, with the details of the borrowings at the date of settlement being:

Month of initial drawdown	Month for repayment	Interest rate	Drawdown amount
May 2017	June 2022	9.00%	£515,000
July 2018	August 2023	9.00%	£235,000
June 2019	July 2024	9.00%	£750,000
July 2019	July 2024	9.00%	£1,000,000
			£2,500,000

At the time of settlement of the previous borrowings, the Group entered into new borrowing arrangements with interest payable on the borrowings at a rate of 7.75% and with repayment being 48 months from date of drawdown.

Other loans are secured by fixed and floating charges over the assets of the Company and by cross guarantees from the Company's subsidiary undertakings.

The Group settled all outstanding borrowings during the current financial year.

10.  EVENTS SUBSEQUENT TO PERIOD END

On 4 February 2022, Cenergist Spain SL drew down a loan of €1.5m to invest in manufacturing facilities in Toledo, Spain.

On 2 March 2022, Cenergist Limited drew down a loan of £6m to pay the final deferred consideration on the HGP acquisition.

 

END

 

 

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