Energy One Limited · ASX:EOL
Energy One — H1 2020 Earnings Presentation
28 slides from Energy One's earnings presentation, Feb 21, 2020
Slide 1: Energy One Limited Investor presentation 1H20
Energy One Limited (ASX:EOL) Investor presentation 1H20 1
Slide 2: Disclaimer
Disclaimer This document has been prepared by Energy One Limited (EOL) and comprises written materials and slides for a presentation concerning EOL. This presentation is for information purposes only and does not constitute or form part of any offer or invitation to acquire, sell or otherwise dispos
Slide 3: Contents
Contents Financials results commentary 4 eZ-nergy acquisition update 15 Outlook 22 About Energy One 25 3
Slide 4: Financial Results
Financial Results 4
Slide 5: A strong first half with focused investment in product development
A strong first half with focused investment in product development Key financial metrics vs. previous corresponding period include: • $9.66M Revenue, up 61% • $2.34M EBITDA, up 46% • $0.767M NPBT, flat Pleasingly revenue and EBITDA have continued to grow. As previously advised, the company anticipat
Slide 6: EBITDA continues to grow
EBITDA continues to grow… Guidance of $4.5M EBITDA for FY20 maintained * 6
Slide 7: Short burst of additional investment in product development for FY20
Short burst of additional investment in product development for FY20 Two additional key development initiatives in FY20: 1) 5-minute settlements for Australia. 2) Integration of UK & Australian software modules following the successful Contigo acquisition. Capitalised R&D represented 9% of revenue f
Slide 8: The additional product development is already winning customers
The additional product development is already winning customers During the first half the UK business won a prestigious customer, a European state-based market operator. Pleasingly the win was based on the combination of two products: • enTrader, a UK/Contigo product; and • EnergyFlow, originating i
Slide 9: It's not just growth by acquisition, we're also growing organically
It’s not just growth by acquisition, we’re also growing organically Contigo produced a trailing twelve-month EBITDA of $1.39M, up ~10% on our forecast when we acquired the business. Trailing twelve-month EBITDA of $2.83M for Australia is up ~11.5% on the prior twelve month period with revenue up 16.
Slide 10: Building a track record of integrating good companies and their products
Building a track record of integrating good companies and their products to achieve our diversification strategy Year Company Description Diversification by: Product Market 2016 pypIT Australian gas markets 2017 Creative Analytics and ETRM 2018 Contigo ETRM for U.K. and Europe 2020 eZ-nergy*
Slide 11: Contigo integration is performing well with operational improvements showing results
Contigo integration is performing well with operational improvements showing results As mentioned Contigo’s EBITDA is up ~10% on our forecasts which is particularly pleasing given revenue was down 4% on forecasts (indicating the margin improvements achieved so far) Recurring revenues were 68% for Co
Slide 12: The strategy to diversify revenue by product and geography is creating a robust business
The strategy to diversify revenue by product and geography is creating a robust business In 2013 EOT was our biggest product with ~$1.5M in sales. This represented almost 90% of total revenue. In 2019 (pre eZ) EOT is still a significant product with ~$4.2M in revenue but importantly now only represe
Slide 13: This also means revenue by market is diversifying
This also means revenue by market is diversifying With our expansion into the U.K. and Europe, 31% of our revenue is now generated in GBP and 10% in EURO. This currency exposure is not currently hedged. The board will continue to monitor and review this exposure. 13
Slide 14: While operational cash flow was down it's expected to improve in the second half
While operational cash flow was down it’s expected to improve in the second half Factors that lead to reduced cash flow during the half: • Timing of project revenue vs. implementation costs • Some customers also pay an annual fee which is receipted in the second half. • Finance costs have increased
Slide 15: eZ-nergy acquisition update
eZ-nergy acquisition update 15
Slide 16: Outstanding Conditions Precedents to achieve completion
Outstanding Conditions Precedents to achieve completion While both legal and operational due diligence have been completed and finance is well progressed, several regulatory hurdles, including French Foreign Investment Clearance, still need to be completed. At this stage there are no obvious issues
Slide 17: Key benefits of the acquisition
Key benefits of the acquisition Merging Contigo and eZ provides a unique and comprehensive solution to European Power & Gas Trading and nomination/scheduling Provides Contigo with: UK Gas, Gemini nomination capability European Ancillary Services and physical scheduling capability Automated
Slide 18: Total cost of acquisition is €4million over 18 months
Total cost of acquisition is €4million over 18 months EURO AUD* Consideration Payable €2,000,000 $3,252,000 Cash On completion €500,000 $813,000 Equity On completion €500,000 $813,000 Cash 6 months post completion €500,000 $813,000 Cash 12 months post completion €500,000 $813,000 Cash 18 months post
Slide 19: The acquisition will be immediately earnings accretive
The acquisition will be immediately earnings accretive Given the regulatory hurdles may not be complete until the end of April 2020 there will only be two to three months of financial contribution to FY20. However we anticipate the first full year (FY21) eZ-nergy will generate income of approximatel
Slide 20: Optimise capital structure to grow the company
Optimise capital structure to grow the company • At 31 December 2019 total debt outstanding was $5.9M, down from a total of $7.28M in December 2018. This represents 1.3x FY20 EBITDA • Interest rate on loan facility is 3.5% • EOL is progressing discussions regarding financing for the eZ acquisition.
Slide 21: The acquisition of eZ-nergy fits EOL's long-term strategy
The acquisition of eZ-nergy fits EOL’s long-term strategy Diversification Grow customer base Grow by acquisition ✓ ✓ ✓ Product diversification eZ-nergy and Contigo European market have highly with SaaS cross much larger than complimentary selling opportunities Australia products 21
Slide 22: Outlook
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Slide 23: We are anticipating a strong second half
We are anticipating a strong second half • We anticipate completing the temporary burst in product development • Potential financial contribution from ez-Nergy • Implementation will begin for our large European customer • Two new large Australian projects in the pipeline • Maintain guidance for full
Slide 24: Mr Shaun Ankers - CEO and Managing Director
Mr Shaun Ankers - CEO and Managing Director Email: enquiries@energyone.com.au Level 13, 77 Pacific Highway North Sydney NSW 2060 24
Slide 25: About Energy One
About Energy One • Energy One Limited (ASX:EOL) is a leading independent global supplier of Energy Trading and Risk Management (ETRM) Systems • More than 10 years experience providing high quality software solutions for customers trading in complex and fast-paced wholesale energy markets • The Compa
Slide 26: Many energy market participants use EOL software
Many energy market participants use EOL software Electricity Exchange Traded Generators: Derivatives Energy - Solar farms Traded energy Consumers - Wind farms Spot Market - Hydro (Domestic) for Electricity - Batteries Energy - Coal fired Retailers - Gas fired OTC Contracts, PPA’s Green Certificates
Slide 27: A comprehensive suite of software
A comprehensive suite of software Physical Bidding ETRM Business Process Allows a power station to bid it’s Contract management for Automation electricity (quantity, price, time recording physical trades (PPA’s) Many systems and contracts in and place) into the National and financial derivatives (Sw
Slide 28: EOL software makes life easier
EOL software makes life easier Participant Challenges faced Energy One products Generators Accurate, compliant energy spot market bidding Efficiently dispatching generation during constrained network events Energy operations (B2B, bid preparation, monitoring, compliance) Hedging output against