Release Date: October 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 34% in the first half, driven by a major contract win with Healthcare Group.
- Strong sales pipeline growth and a record quarter for revenue expected in Q3, with over GBP9.2 million anticipated.
- Investment in senior hires, including a new COO and CFO, to strengthen the management team.
- High gross margins in the core energy reduction services, targeting north of 40% in future periods.
- Significant market opportunities in the public sector, particularly in education and healthcare, with a large addressable market for energy efficiency and solar solutions.
Negative Points
- First-half financials were disappointing, with core revenue down to GBP6 million from GBP11 million in the comparative period.
- Adjusted EBITDA loss of GBP2 million, down from a GBP0.5 million profit in the previous period.
- Gross margins were down to 19.3% in H1 from 32.5% in the comparative period.
- Exceptional costs related to restructuring and separation impacted operating cash flows.
- Challenges in the timing of project installations, particularly in Q4 due to winter months, which could affect revenue targets.
Q & A Highlights
Q: Can you provide more detail around the GBP8 million to GBP10 million contingency of the sale?
A: Crispin Goldsmith, Former CFO: The performance periods are measured up to the end of September this year and next year. The buyer, Flow Gas, has three months to compile their accounting and notify us. We should have an initial view by the end of the calendar year, which we expect to settle quickly thereafter.
Q: How is the relationship with Luceco progressing?
A: Harvey Sinclair, CEO: The relationship is very strong. John Hornby is on our Board, and we are pleased with the service and product quality from Luceco. We have preferred terms regarding price and delivery capabilities, and we plan to invest heavily in this relationship going forward.
Q: Can you provide more clarity on the frameworks and when you anticipate the first framework win?
A: Harvey Sinclair, CEO: There are two types of framework wins: direct awards and tenders. We hope to win our first direct award by Q4, possibly with an NHS contract. For tenders, we aim to secure at least one by the end of the year, but it might happen in the first quarter of next year.
Q: How long will the NatWest facility last in the context of expected sales, and what happens when it's used up?
A: Harvey Sinclair, CEO: The relationship with NatWest is long-term, and we expect to expand the facility over time. We anticipate using the current facility over the next two to three years, possibly sooner with large deals. The facility allows us to retain 20% of project cash flows, which turns into greater returns over the contract life.
Q: Are there any plans to look at private sector opportunities?
A: Harvey Sinclair, CEO: Yes, we see significant opportunities in the commercial space, particularly with large corporate landlords and commercial tenants. We aim to secure larger deal values in the commercial sector, which will feature prominently in our strategy going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
