Energy One Limited · ASX:EOL
Energy One — Investor Presentation (October 2019)
44 slides from Energy One's investor presentation, Oct 14, 2019
Slide 1: Energy One Limited (ASX:EOL) Investor Update for FY19
Energy One Limited (ASX:EOL) Investor Update for FY19 For personal use only 1
Slide 2: Disclaimer
Disclaimer For personal use only 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, se
Slide 3: Contents
Contents For personal use only About Energy One 4 Operational review 8 Financial review 17 Company outlook 27 Appendices 43 3
Slide 4: About Energy One
About Energy One For personal use only • 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 ener
Slide 5: Many energy market participants use EOL software
Many energy market participants use EOL software For personal use only 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
Slide 6: A comprehensive suite of software
A comprehensive suite of software For personal use only 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 fin
Slide 7: EOL software makes life easier
EOL software makes life easier Participant Challenges faced Energy One products For personal use only Generators Accurate, compliant energy spot market bidding ü Efficiently dispatching generation during constrained network events ü Energy operations (B2B, bid preparation, monitoring, compliance) ü
Slide 8: Operational review
For personal use only Operational review 8
Slide 9: A transformative year expanding off-shore
A transformative year expanding For personal use only off-shore • Established a European headquarters with the acquisition of Contigo • Now one of the largest independent vendors of ETRM systems globally 9
Slide 10: Integration of Contigo is now complete
Integration of Contigo is now complete For personal use only Energy One acquired Contigo Software in December 2018. Contigo is a leading vendor of energy trading systems in the U.K. and Europe • Operational integration has been successfully completed • Retained key staff and capabilities • Technolog
Slide 11: Contigo is exceeding expectations
Contigo is exceeding For personal use only expectations • Running slightly ahead of internal budgets with greater synergies than expected • For the 7 months to June 2019 Contigo generated : • $4.8M in sales • $1.0M EBITDA • 7 months of profitable contribution • 7 countries of operation • 7 customers
Slide 12: Contigo was a strategic acquisition to expand our market offshore
Contigo was a strategic acquisition to expand our market offshore For personal use only With a strong position in the energy ETRM space in Australia, an off shore market like the U.K. and Europe provides an exciting expansion opportunity. The market size in UK/EU is >10x the size of the Australian m
Slide 13: We're successfully executing our long term strategy
We’re successfully executing our long term strategy For personal use only Diversification Grow customer base Grow by acquisition ✓ ✓ ✓ New products Three acquisitions in 3 Established European developed / acquired years, continue to look headquarters in FY19 for other opportunities 13
Slide 14: Acquisitions have improved revenue and product diversity
Acquisitions have improved revenue and product diversity For personal use only Revenue by product and company 14
Slide 15: We now have a business with global capability
We now have a business with For personal use only global capability 100 staff in 2 countries Global support 24/7 – follow-the-sun Globally integrated operations Single back office infrastructure Global finance system Automated testing Development tools and toolkits 15
Slide 16: The Australian business has remained strong
For personal use only The Australian business has remained strong • Australian EBITDA increased 16% • Recurring revenues were $7.6M or 70% • We added ten new customers including two new large customers for EOT • pypIT had a strong year as a result of regulatory changes in the market • Creative Analy
Slide 17: Financial review
For personal use only Financial review 17
Slide 18: 6th consecutive year of profitability
6th consecutive year of profitability For personal use only Revenue increased 62% with seven months contribution from Contigo EBITDA (excl one-offs) increased 54% to $3.85M NPAT increased 26% to $1.3M 18
Slide 19: Financial results summary
Financial results summary For personal use only 30 June 18 30 June 19 Change Revenue $9,927,000 $16,065,000 62% Underlying EBITDA* $2,500,000 $3,851,000 54% Underlying NPBT* $1,718,000 $2,444,000 42% NPAT $1,040,000 $1,309,000 26% NTA / share (cents) 14.9 14.9 - 0% Cash and equivalents $728,000 $2,2
Slide 20: A continued focus on costs whilst increasing revenue improved NPAT
For personal use only $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2018 NPAT Revenue One off acquisition expenses Employee costs Other expenses Consulting & project costs Depreciation & Amortisation Finance costs Tax 2019 NPAT A continued focus on costs
Slide 21: Profit & loss statement
Profit & loss statement $’000 2017 2018 2019 Revenue 5,429 9,299 15,671 Seven months contribution from Contigo For personal use only Other revenue 688 628 394 R&D grant & interest Direct project costs (59) (257) (794) Employee benefits expense (3,065) (4,964) (8,233) Increase is in line with revenue
Slide 22: Strong EBITDA and revenue growth
Strong EBITDA and revenue growth $18,000,000 35% For personal use only $16,000,000 30% $14,000,000 25% $12,000,000 20% $10,000,000 $8,000,000 15% $6,000,000 10% $4,000,000 5% $2,000,000 $- 0% 2014 2015 2016 2017 2018 2019 Total Revenues EBITDA EBITDA margin EBITDA margin declined slightly due in par
Slide 23: Balance sheet
Balance sheet $’000 2017 2018 2019 For personal use only Cash and cash equivalents 363 728 2,216 Trade and other receivables 2,867 1,829 4,600 Increased as a result of acquisition Total Current Assets 3,457 2,733 7,290 Trade and other receivables 245 324 99 Plant and equipment 429 524 643 Software d
Slide 24: Debt was used to acquire Contigo
Debt was used to acquire Contigo For personal use only • A $7.28M debt facility was used to finance the acquisition • The business is generating strong free cash flow enabling debt repayment • By 30 June 2019 debt had been reduced to $6.48 million - less than 1.7x EBITDA • Cash and equivalents balan
Slide 25: Cash flows
Cash flows $’000 2017 2018 2019 For personal use only Receipts from customers 5,528 11,399 15,864 Government grants 751 815 693 Research & Development Payments to suppliers and employees (5,480) (8,981) (12,978) Increase due to acquisition Interest 27 9 30 Cash provided by operating activities 826 3
Slide 26: Strong EPS and dividend growth
Strong EPS and dividend growth For personal use only Directors declared an unfranked dividend of 3.0 cents per share for FY19 The DRP will issue shares at $1.85 $0.07 The DRP is $0.06 underwritten to avoid cash leakage from $0.05 the business and to provide incremental $0.04 improvements in $0.03 li
Slide 27: Company Outlook
For personal use only Company Outlook 27
Slide 28: Energy One well positioned for the new five minute market
For personal use only Energy One well positioned for the new five minute market • Our software is currently being adapted to address new market requirements • We will begin testing with our customers before the end of the calendar year • EOL is well ahead of our competitors due to our key capabiliti
Slide 29: First customer using battery bidding
First customer using battery bidding For personal use only During the year Energy One released a product enhancement that allows battery operators to submit bids into the Australian National Electricity Market 29
Slide 30: EOL's software now dispatches almost half the physical electricity in the NEM
EOL’s software now dispatches For personal use only almost half the physical electricity in the NEM and manages more than a third of the financial derivatives 30
Slide 31: Our software schedules transport of 40% of domestic gas in Australia
And our software is responsible for scheduling the transport of 40% of For personal use only the domestic gas in Australia 31
Slide 32: Leading market position in both gas and electricity trading software
This gives Energy One a leading For personal use only market position in both gas and electricity trading software and strategically positions us for future market developments 32
Slide 33: We will continue to execute our long-term strategy growing offshore
We will continue to execute our long-term strategy growing offshore For personal use only Diversification Grow customer base Invest in new products - 5min settlement Grow by acquisition Geographic expansion Cross-sell products - Expand into new - EOL products to European markets Contigo customers an
Slide 34: Strategy to diversify revenue by product and geography
The strategy to diversify revenue by product and geography is creating a For personal use only robust business In 2013 EOT was our biggest product with ~$1.5M in sales. This represented almost 90% of total revenue. In 2019 EOT is still a significant product with ~$4.2M in revenue but importantly now
Slide 35: Acquisitions have also helped diversify our customer base
Acquisitions have also helped diversify our customer base For personal use only • The combined business now has more than 200 customer installations in 11 countries • Anticipated combined recurring revenues will be >70% • Opportunity to cross- sell/bundle/package offerings to existing customers • Gr
Slide 36: The growing blue chip customer base
The growing blue chip customer base For personal use only 36
Slide 37: Contigo is well placed to access Europe
Contigo is well placed to access Europe… For personal use only • Head office in Solihull, 7.5 miles southeast of Birmingham and 180km northwest of London. • Centrally located in UK • Local international airport • Easy access to the EU • Great opportunity to grow Contigo’s market share (currently ~25
Slide 38: …and has created a large opportunity
…and has created a large opportunity For personal use only Tier 1 Tier 2 Tier 3 UK potential customers* 8 40 200 UK customers we have 4 12 13 UK market penetration 50% 33% 6% European potential customers* 40 250 800 European customers we have 1 8 2 European market penetration 2% 3% <1% *Data supplie
Slide 39: We will continue to seek synergistic acquisitions
We will continue to seek synergistic For personal use only acquisitions in both Australia and Europe as part of our diversification strategy Any investments will be need to be earnings accretive and strategic in nature Market opportunity in UK/EU is potentially 10x the size of the Australian market
Slide 40: FY20 will be a year of consolidation
FY20 will be a year of consolidation For personal use only With the move to 5-minute settlements in the National Electricity Market we are investing heavily in product development to facilitate a smooth transition for our customers. During FY20 this development cost is unlikely to be offset by a cor
Slide 41: Energy One well placed for growth in FY20 and FY21
Energy One well placed for growth in FY20 and For personal use only FY21 ü Solid financial performance for the year past ü Strong market position & good products ü Opportunities for domestic sales in FY20 and 21 ü Overseas opportunities to expand reach ü Further investment in product development ü I
Slide 42: Contact
For personal use only Mr Shaun Ankers - CEO and Managing Director Email: enquiries@energyone.com.au Level 13, 77 Pacific Highway North Sydney NSW 2060 42
Slide 43: Appendix
Appendix Additional information For personal use only 43 43
Slide 44: The benefits of geographic, product and customer diversity
The benefits of geographic, product and customer diversity For personal use only Some software vendors selling to U.K. energy retailers have recently reported an increase in bad debts arising from corporate failures. Our customer base is diversified, both geographically, Europe, Australia as well as