Eenergy Group (LSE:EAAS) — Interim Results Presentation

0:02 Good morning, ladies and gentlemen, and welcome to the EENERGY GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab It's just situated on the right hand corner of your screen. Please simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor meet company dashboard, and we will notify you by email when these are

0:33 ready for your review. Before we begin, I would like to submit the following poll. And if you give that your kind attention, I'm sure the company will be most grateful. And I'll now like to hand you over to CEO, Harvey Sinclair. Good morning to you, sir. Good morning, and welcome, everyone, to our interim results. It's been a very successful six months. And just to recap for those who are new to the, I guess, positioning and strategy for EENERGY, we are a leading digital energy services company, empowering our customers and organizations to achieve net zero. So our vision is to help organizations make achieving net zero possible, but also profitable without the need for upfront capital investment. We're in a very large addressable market where there are strong headwinds driving, I guess, the The UK and European commercial community and public sector community to net zero.

1:30 There are increasing legislation which is helping our business model achieve traction, and we don't believe we have any direct integrated competitors doing what we do in the way we do it in The UK. We're pleased to announce we've seen a 42% year on year revenue growth in the first half and a 200% plus increase in our contracted forward revenues. We've successfully completed four acquisitions since IPO, and we believe we've got a very stable scalable platform for integration and growth going forward. So just to give you a recap on those highlights. Strong year on year growth. The energy management businesses are outperforming our expectations.

2:18 And despite the integration period, we've seen no disruption in our organic growth there. The pipeline in energy efficiency has increased by 100% year on year. And despite being slightly down in h one in energy efficiency, we've seen the strongest demand in, I guess, in our customer base for net zero solutions. And we believe now that we've got a pipeline of investment grade proposals, which are at a record level to enable us to deliver our h two number. 44% of our top 50 strategic accounts that we've acquired through both Beyond and Utility team are now engaged with the EENERGY offer to be able to deliver a net zero solution.

3:07 We're seeing explosive growth in our renewables business. We launched e solar back in December and completed our first integrated on-site generation and LED solution to a commercial industrial customer. And since January, we've developed over a £10,000,000 investment grade pipeline of qualified opportunities with existing customers for, for solar solutions funded. Likewise, you may have recalled seeing the announcement of our increased investment in our smart metering platform. So having launched myZero as the rebranded, old Measure My Energy business, we've now got, a really unique proposition in the market around providing our customers with visibility around energy wastage and a performance measurement platform on energy efficiency measures. We've seen an accelerated adoption of that platform, which has been launched as a subscription model, and I'll talk you through that shortly.

4:09 The, the qualified cross sell opportunities has been really encouraging, and those 44% of our top 50 customers have generated a 10,000,000 pipeline, for net zero solutions as a service, whether that's whether it's energy efficiency through lighting and other optimization measures, smart metering, or whether it's, renewables. And in most cases, a combination of all three, we're seeing increased engagement from our customers in the backdrop of what is a very volatile high energy price market. Obviously, we've been very busy with our acquisitions. I think the last six months has been about creating a stable platform. We've consolidated our offices into two hubs. So we have an operational hub in Coventry, which is now, I guess, picking up all of our back office customer services, technical solutions, functions across the group and and as a hub for all operations across the, the different the different divisions. And then we have centralized all of our, other businesses into a new office by London Bridge. So that has helped stabilize the management team. It's been able to optimize, performance across the teams, and, again, a really a really great platform from which to grow the business.

5:27 And then finally, we've, we're delighted to have Silicon Valley Bank on board as our new banking partner. We think it's a fantastic name and an endorsement of our technology strategy, and believe we've we've now got a partner there that can really help us scale, through our different, financing needs. So it's worth just taking a moment to talk about the current energy market because I'm sure most investors will be asking, what are the risks and opportunities? And I guess that there there there's two parts to this this this answer. The first is, clearly, we've now got a very volatile energy market as a result of the sort of geopolitical situation happening in, Eastern Europe. I guess on a on on the downside, what is what is that doing? That is creating, a more difficult pricing, situation for our energy management business where despite having strong customer engagement for, customer, supply contracts, the supply market has been temporarily disrupted, but we are seeing that stabilize now, albeit at a higher a higher level. The markets are back open, and we are starting to lock in our customer supply contracts.

6:39 We don't believe that it's a mid or long term risk to the business. And in fact, what we are seeing is that because of the consultancy risk managed nature of our energy management business, there's been a flight to quality of advice from our customers looking to looking for us to help navigate what is a, you know, is a is a is a very difficult time for customers who are coming out of a three year fixed contract at, let's say, 14 per kilowatt and now facing into a 28 per kilowatt forward price. So, you know, you we're we're seeing often situations where public sector customers are seeing their annual energy bill go from 2,000,000 to 4,000,000 or more, and clearly, that is a big shock. However, from an opportunity perspective, it's playing directly into the hand to our net zero as a service offer to customers.

7:32 It is no longer now an option for customers to think about, their energy supply as a as a pure procurement exercise, and it is now all about consumption. How can our customers reduce their energy demand, and how can they address their energy wastage? We'll come to an interesting stat in a minute, which confirms that, yeah, a third of all energy consumed by commercial and public sector customers is wasted energy. So there is now a increased focus of our customers to think about reducing energy wastage and looking at reducing their demand and how can they start generating their own off grid on-site power through their own renewable solutions.

8:21 We've really focused our strategy now into four pillars of service. So, ultimately, our goal is to make getting to net zero both possible and profitable for our customers. So what that means is where you've got customers who haven't got the availability of capital or access to capital, they're able to utilize our solution to get them to net zero and unlock operating savings. So our four services can be described quite clearly. The first is to transition our customers to the lowest cost clean energy, and we're doing that through our digital procurement platform that is now running across the group that was a proprietary platform that we acquired through Beyond. And what that's helping us do is to be seen as agnostic in the pricing market, but focusing on the digital management services around how our customers can then navigate to the other three pillars of our service, which are tackling energy wastage.

9:19 So with granular data and insight, our customers are able to see where in

9:25 their buildings they're consuming their energy, and therefore, how they're able to, address operationally, measures to, address their their their wastage or by employing, energy efficiency measures, and therefore, lock into performance, measurement verification. So that is our cloud based smart metering platform with myZero. And services one and two are often packaged together through our energy management division as part of a solution for our customers when they are entering into an engagement with clean energy procurement contract. The the third pillar is all around how do we reduce energy consumption, and that is about our ability to deploy energy efficiency solutions, whether that's lighting or other technologies such as HVAC optimization or building controls, wrapped up into a solution without upfront cost that delivers, day one savings, where where whereby the customer is using the energy savings to pay for their their monthly energy service cost and, therefore, releasing surplus cash to their business.

10:34 And then finally, our new pillar, which is actually the fastest growing area from a new business perspective, is how can we deliver on-site generation to our customers, delivered as a service without upfront cost, and at the same time, discuss and help navigate and deploy an EV charging solution.

10:57 This is a customer case study graph that I've referred to in the past. It is actually an indicative case study of a particular customer. We have now deployed 70% of the solutions for this customer. And as you can see on the right hand side, the potential value of this customer over a ten year journey for EENERGY is now very significant. And just to remind everybody, the steps that we deploy are, again, one, transitioning this customer from brown energy to clean renewable energy sources and embedding effectively our energy management services around that solution, deploying energy data and insights through the MyZero platform so we can pinpoint the energy wastage and identify energy saving opportunities, and then deploying funded energy efficiency and energy reduction solutions through the as a service business model to unlock savings from lighting, controls, heating, and other optimization technologies.

12:03 So, this customer is fully engaged on this journey to net zero. They're part of a private equity portfolio. The private equity fund itself is actually using this as a case study for their other portfolio businesses from which we can then hopefully, you know, on the back of this successful case study, deploy similar solutions for all of our other clients.

12:28 I think it's worth just spending a couple of minutes on the MyZero platform. This is a really unique opportunity for EENERGY to create strong recurring revenues through a subscription model, and we believe that is an area of huge value creation. As I've mentioned, you know, 30% plus of energy consumed by commercial businesses are wasted. The differentiator here is, enabling our customers to be able to see granular energy data within their buildings from which they can be empowered to either change the behavior of how they're managing their buildings, so in simple terms, using that information to help drive behavioral changes that require no capital cost, such as, you know, their facilities team managing those buildings better through, you know, actually just being smart, turning things down, turning things off, and actually being more intelligent around the way they manage buildings, or two, enabling, actually, technologies to deliver insights, and energy reduction solutions. So it's it's a it's a really important bridge between our traditional energy management business, which is all around clean energy procurement through our platform, consulting, risk management, and advice around their complex energy needs, and actually providing deep intelligence through a simple dashboard that enables them to be empowered around reporting for compliance reasons, their scope three emissions reporting,

13:59 and making energy efficiency measures accountable on performance contracts, which is, again, an enabler for increasing conversion on those projects for for EENERGY. So since launching, we've had really, really strong uptake. We've already locked in £400,000 worth of contracted revenues within literally a twelve week period. We've deployed 400 meters under contract, and we generated from existing customers a 1,800,000 pound pipeline. And you'll see that our five year goal here shortly, which I'll talk you through, is to be able to deliver 25,000 of these meters over the next five years.

14:46 So our goal really is to use this as an enabling bridge between all of our customers', you know, journey with the energy, whether it's from energy management or energy efficiency or energy on-site generation. This is the bridge between all our services. I'll hand you over to Rick now to talk you through the numbers, and then I'll come back and start talking through some of the growth drivers we're seeing and the outlook for h two as we move forward. Thanks, Harvey. Let me start by just talking about performance at a group level, and then I'll talk a little bit about the performance in each of the divisions. So we've posted year on year revenue increases of 42% to GBP 9,600,000. That is coming from the Energy Management division, and I'll walk through the revenue bridge in a moment. But that increase in revenue and the increase in operating profitability is translating through into our improvement and more than doubling of our adjusted EBITDA, which is our primary profit measure and also the doubling of our profit before tax and exceptional items.

15:58 I think the if I stand back from the revenue for a moment, I think we put a lot of store by the value of our contracted future revenues. And those are the revenues on the Energy Management and Energy Efficiency side, where we are contracted and they will be delivered

16:15 over a period of time, the energy efficiency revenues are typically delivered within a much shorter window, so within the year and indeed within six months. And on the energy management side, which is about 90% of that contracted future revenue, that is over a three- to four year period typically. So GBP 5,300,000 of that GBP 18,300,000 will be recognized in revenue during the second half of FY 'twenty two, and over $6,000,000 is already locked in for the over $6,000,000 is already locked in for 'twenty three. One feature that we've seen, which is being accentuated by the crisis in the or the energy market crisis, has been an impact on the working capital.

17:05 I think we've talked previously about the model where suppliers energy suppliers have paid a proportion of the commissions that are payable to us upfront. Actually, the volatility and the energy crisis over the past particularly over the past six to nine months has seen a shift with the suppliers favoring payments in arrears rather than payments in advance. And that has had a bearing on our working capital cycle. Actually, has no impact on the overall cash that we collect over the life of those supply contracts. But that if you like, that work managing that working capital cycle is what's led to us reporting a net debt at the end of December rather than net cash that we had at the end of June.

17:52 And I think in terms of Harvey has already talked about us replacing our debt with a more flexible revolving credit facility, one of the benefits of that is to support us through that working capital cycle. So I'm confident in terms of the cash flow that we're generating going forward. If I talk to the individual divisions briefly, The Energy Management revenue has increased from $200,000 to $4,800,000 We had acquired Beyond in the middle of December twenty twenty. So in essence, we had

18:29 weeks of activity within the group. So that accounts for that increase in the revenue period on period. But what I'm particularly pleased about is the improvement in the EBITDA margin. Harvey has talked about the integration that we've undertaken, and that has been driving the underlying profitability. And that comes from a combination of increasing the revenue per meter and having longer term contracts, where we've seen the contract length increase from an average of twenty eight months to thirty months. And that drives that near doubling of the EBITDA margin in the Energy Management business. Now in the Energy Efficiency business, the revenues that we've reported for this first half of our fiscal year are stable compared to the second half of the last fiscal year, but are down on the comparable period for FY 2021, which was a period where we had a catch up of projects that had been deferred from the first COVID lockdown into the summer of twenty twenty and so moved into H1 twenty twenty one.

19:41 That business, that is stable in terms of the reported revenues. And what we have seen is this enormous ramp up of lead generation and proposal activity during the first half of twenty twenty two. So we've issued proposals with a value of in the six months, which is greater than the value of the proposals that we issued in the whole of FY 2021. I'm also pleased that we've been able to continue the trend of improving our gross margin. That is up four forty basis points. That is a key measure in terms of the profit that we are making on each the contracts that we installed. So I'm very pleased that we can report that progression.

20:28 I'll talk briefly to the revenue bridge because I think I've talked about most of the features here. This is really just to graphically set out where the growth is coming from, so you can see what I talked about in terms of the revenues from energy efficiency, but also bringing in Beyond and Utility team into the group. And it's very important to say that both of those businesses are performing ahead of the expectations that we had of them when we acquired them initially. And if I then walk you through the bridge for the adjusted EBITDA, Clearly, a lot of the gain on the adjusted EBITDA comes from bringing the Energy Management businesses on stream. So Energy Management, the profit has increased from 25,000 to GBP 1,400,000.

21:18 And as I say, both Beyond and Utility team have performed ahead of our expectations for the first half of this year. MyZero, as Harvey has described, is in that start up phase. We are seeing that accelerated rate of deployment, but it is not yet through the breakeven point. So we have a net investment or a net operating expense

21:43 from that start up of GBP 149,000. And then you can see the effect of the period on period revenue reduction, which is to reduce the adjusted EBITDA and energy efficiency by 600,000. But actually, the value of the improved gross margin closed GBP 200,000 of that back for us. And then because of the scale of the opportunity that we are seeing and because of the importance of engaging with the marketplace through face to face events marketing, we have invested more in our sales and marketing and operational delivery capability. So that that has accounted for, $600,000 of further investment. And that is what takes us from the $372,000 that we reported in the like for like period last year to the $807,000 that we report this year.

22:40 I just wanted to, on the next slide, sort of just set out on a half year by half year period, the progression that you can see in terms of the revenue and the adjusted EBITDA. I think, yes, this is a combination of the strong organic growth that we've shown over time, but also the impact of the strategic acquisitions. But I think the trends that you can see on this chart are very clear in terms of the direction of travel. And so I just wanted to talk to the if you like, to the outlook for the full year. There are a number of circumstances and the factors that we've talked about that are outside of our control. So we do have dependencies on those external factors.

23:27 But in terms of both in terms of the positioning for each of the principal operating divisions, so for energy management and energy efficiency, actually, where we are gives us gives us as a board confidence in our ability to

23:40 hit the expectations of the market for 2022. So I think in particular, we've got, there's a simple mathematical piece, which will have six months of utility team rather than three. We have of that contracted future revenue, pounds 4,000,000 of that is on the energy management side, and that will be recognized in this half year. And we are expecting and we are seeing maintenance of the renewal rates of contracts at the historical rates. And we have about GBP 6,000,000 worth of energy management contracts, and we typically renew north of 80% across the board. And so that gives us confidence, together with the fact that our new business pipeline regard as Harvey's talked about, the impact of high energy prices in the crisis actually means there is a greater need in the marketplace for our consulting and risk management skills, but our new business pipeline is at record levels.

24:47 On the energy efficiency side, I've talked already about the absolute increase in the level of proposals that we are that we have issued, and we are seeing those converting at the historical rates of between 3040%. So that is a big underpin for our expectations for the second half. And in particular, what we are seeing is the we have specific proposals, pounds 17,000,000 worth of specific proposals out with existing clients. And what we see with existing clients who are looking for a broader range of services is a much quicker decision making process than if you're starting from scratch with a client. And I think, as Harvey's talked about, the whole renewables, the solar, the on-site generation is an area of particular focus and particular opportunity driven by current energy prices.

25:42 And so together, these are the factors that give us confidence that on balance, we are going to hit our expected results for FY 2022.

25:56 So stand as back and look at the business and before Harvey talks to the five year goals, what I see is we've got a business here with strong annual recurring revenues, and we're well placed to be a participant in high growth markets. We've got a very strong and very clear forward view of our contracted future revenues, and that is increased and that is increasing. We've got very strong renewal rates and customer stickiness, so over 80 across the Energy Management business. And the length of relationships that we've got, on average, are are over six years. So we're seeing that repeating renewal. And and I guess, possibly most importantly, in terms of the the business, where we are with the proposal activity and the engagement with the market, we've seen that doubling of the pipeline over the past year.

26:53 Harvey, do you want to talk to the five year goals? Yeah. Sure. Thanks, Rick. So, look, where we are moving this business is to create stable recurring or reoccurring revenue streams. And if I if I look at where the big drivers of growth will come from, we see that principally in the renewable space, in the energy wastage around the MyZero space, and also in our move into EV charging, and charging as a service. So our goals are to have deployed and have between twenty and twenty five thousand meters under management. So on an average subscription rate of £20 a month, we could see ourselves aiming for a 5,000,000 annual recurring revenue stream over over a five year. So we look out towards five years. That is our goal.

27:49 With EV charging, we're looking to be in a position where we've we've established a charge point operating network of over 10,000 meters, and we see that coming from existing customers. So one of our goals is to be the educations education sector's leader, and main operator of ChargePoints. We think the opportunity to create, ownership in that niche is phenomenal, and we are well placed with our customers having established our brand in that sector as well as our other public sector, sort of, if you like, divisions. Solar is a phenomenal opportunity for the group, and we expect to have 50 megawatts installed over the next five years, and and and we think that's a a very achievable goal.

28:37 And I guess, you know, when we look at the metrics, you know, we're looking to sustain a 20% organic CAGR, and we're looking to achieve a stabilized EBITDA margin of 25% for the for the group revenues.

28:53 I think when I look at the growth drivers for each of our divisions, they're really, really clear. So in the energy management procurement so in the procures space, the demand for zero carbon energy is is clear and has never been more more relevant. And I think our position in that market is having a zero carbon marketplace for customers to get the lowest cost puts us in a really, really good position there. And the ability then blend in the data and insights piece over time gives us the opportunity to scale that customer base and the revenue per meter that we're getting from that customer base. Then in the, measure side, which is really all around that energy wastage, which is being driven by both energy management customers but also from our energy efficiency customers, I think it's all around being able to leverage our customer base and be able to offer them additional differentiated services, and we think this is gonna see exponential growth.

29:51 On the reduction side, we've talked about the market that we are now seeing. We we are in a sort of almost certain decade of high energy prices. So regardless of, you know, even the best even even with the best outcomes of what's happening on the geopolitical landscape, energy prices are set to be high, higher than previously. And therefore, I think our customers have started to accept the fact that it's all around reducing consumption and being able to optimize their buildings. And then the growth drivers, for for solar are pretty simple to explain. You know, it's it's 50% cheaper to generate your own energy than it is to buy from the grid now. And we think that's also a great segue into being able to tie up solar with EV charging, again, leveraging our 2,000 plus customer base.

30:50 I think it's worth just reflecting on the the expertise and the track record that our team have had around delivering integration. And I think when you start looking at what we've been able to achieve in our business, in particular in the Beyond business, that we've seen, you know, 27% increase in contract duration, 37% increase in revenue per meter. Our contracted forward revenues are up, and we've got a very, very attractive implied, you know, valuation multiple for our acquisitions to date. So really pleased that we've created a platform for scale. We've got a unified management team, and we've got, a really strong, tailwind of opportunities, being driven by a number of different factors.

31:43 I think it's worth just touching on our position and our sort of strategy and criteria for future acquisitions. I think it's fair to say that our focus will be on renewables. We've we've demonstrated organic traction in this market, and we think there are some really interesting opportunities. What we're looking for for future acquisition opportunities are high growth businesses with very strong and aligned leadership. We're looking for companies that are led by strong entrepreneurs who are motivated to stay with the business and motivated to be wed wed and aligned to our own motivations. And I think we're looking at attractive valuation metrics where we can see, lock ins for key lock ins for key management, and where we're we're definitely gonna see cash generative, earnings accretive, metrics coming out of those businesses.

32:37 On deal structures, you know, we're clearly looking to find structures which maximize our shareholder return, whether that's using, you know, share considerations, or borrowings and and cash reserve, you know, considerations versus coming back to the market. So we're we're definitely keen on leveraging, earn outs to ensure that we've got, locked in performance, and we don't want to leverage more than two times EBITDA. So, hopefully, that is painting out sort of a picture of our focus, in in the coming months. So just in conclusion, we believe we've had a, you know, a really strong six months on a number of, fronts, really strong pipeline, strong engagement with our additional services, a definite move towards digitization of our solutions.

33:32 I think starting to play to our strengths around the the experience and expertise that we have around the the energy markets. I think the ability to acquire, integrate has now been proven, and I think that we're looking at some some really interesting opportunities in what is a sort of a still quite highly fragmented market. So that concludes our presentation today. Thank you for your time. Harvey, Rick, that's great. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions using the q and a tab that's just situated on the right hand corner of your screen. But just while Harvey and Rick take a few moments to review those questions submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Harvey, Rick, as you can see, we have received a number of questions throughout today's presentation, and I will shortly invite you to address those where it's appropriate to do so. But if I may, wanted to start off the q and a session with this pre submitted question that came in before today's event. The question reads as follows.

34:37 Could you please give us a sense of how inflation is impacting revenue and costs? Yeah. Jake, thanks very much. In in terms of what we're seeing from there there there are clearly inflationary pressures around around technology, around installation. But actually, the inflation in energy prices is far greater than the inflation in those those inputs. And therefore, yeah, particularly on the energy efficiency side, we are able to pass those additional costs through to our clients because the savings that they are realizing from reducing their consumption are getting greater all the time. Yeah. I have a specific example, which was a single stand alone school where we had where we had done the survey and and priced the energy just before Christmas. And actually, for this single school, they would have saved £2,005 a year, got the benefits of the improved lighting, the improved environment, reduced their carbon and saved £2,500 a year, which would then increase with normal price inflation.

35:41 We are now in the process of installing that and their energy, you know, they've had their increased energy prices through because we are a fixed cost. Their savings are now £18,000 a year, which is a significant increase in the savings. And so there is inflationary pressure, but actually, we are able to pass that through because the, as I say, the cost of energy is increasing at a much greater rate than the cost of our inputs. Thank you very much for that. Harvey, Rick, if I could just ask you to run through that q and a tab, then answer any questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Okay. I'll I'll tackle a few of the sort of the nonfinancial ones, and then I think the majority are for for Rick to answer. So I think there's a there's a an interesting question here around how are we going to fund the on-site on-site generation solar opportunities.

36:38 So we've we've started working with a joint venture partner who is an end to end solutions provider. So we have two two clear funding routes for the solar projects. One is PPA contracts, a power purchase agreement, which allows us to essentially take advantage of the revenue upfront when that project has been secured, and we've sold that to the fund. And we've got a number of funds that are providing us with a a PPA solution. The second is through our existing funding arrangements with our panel of funders, which enables us to offer our customers with effectively a ten year operating lease, which is a, you know, a really attractive solution for the education sector who often don't want to sign up for twenty five year terms, which is the case for a PPA agreement. So we've got a a really interesting opportunity there, both of which allow us to recognize the revenue upfront. So I think the the answer really is, at this stage, we do not envisage taking those solutions on balance sheets. We're looking to, again, have that capital light, high margin type approach, which allows us to recognize revenues.

37:59 There was a question around the average size of energy efficiency projects being lower. It's it's a confusing stat actually because the reality is we've engaged with fewer customers with larger portfolios, which just happen to have, overall, quite a large spread of smaller schools within within their portfolios. So if we looked at the, if you like, the average revenue for a customer, which are a different picture than the average revenue for a project. So, you know, case in point, you know, we've we're seeing sort of, if you like, the average multi academy trust have between sort of ten and fifteen schools within their portfolio and upwards of 30 in some cases.

38:49 And I think actually what we'll see is we'll see a trend towards some larger projects, which will skew that number even further to the upside as opposed to the downside in terms of project value. There's a question here about the significance. How significant significant is the cost of the meters for the monitoring services? So we're pricing our meters to a customer between 20 and £50 a month, where the total receivable cost over the initial term would be somewhere between £2,500. Now the reality is that that is a very, very low monthly cost compared to the value that we're able to deliver in in period, so in in year for that customer.

39:40 And it was an interesting stat in the market, which we now are quite familiar with and our clients are resonating with, is that having access to granular energy data gives you the opportunity to see a 10% energy consumption reduction through zero cost measures as a result of changing the behavior in your in your in your business so that you can, you know, impact the the way you're managing the business in a smarter way. I think there was one other take Shall a couple of the I'll answer your questions, Harvey. So there are a few questions that have been asked about as a result of the energy crisis, whether there's a supply default risk.

40:28 And I think it is probably fair to say that we have seen and they're well publicized, a number of the smaller, less well capitalized suppliers did default in the autumn, and that risk clearly continues. However, part of our you know, part of the consulting engagement, the risk management service that we provide to our clients is about evaluating the relative, if like, the robustness of the suppliers in the energy market. And therefore, the large majority of the supply contracts that are in place are with the larger, better capitalized suppliers because that's an important feature for our customers in terms of the consistency and certainty of the price that they're contracting at.

41:14 So we have had some small bad debts, but they've not been significant at all in terms of energy suppliers that have gone bust. And actually, you know, when because of the mechanisms that are in place to protect the security of supply to customers in the event that an energy supplier goes bust, there is ultimately a supplier of last resort mechanism because, obviously, the customers need to be continue to be supplied. So there is more activity that can that that can give rise to. I think there been a series of questions around the cash flow, and I alluded to the impact in the energy management part of the business of the shift from suppliers paying in advance to in arrears.

42:07 I think both of the divisions are going to continue to be cash generative and cash positive. I think it's about a relative level on the energy management side. It's probably worth reflecting that on the energy efficiency side of the business, because of the relationship we have with our funding partners and the fact that we essentially get paid out in advance, actually, the incremental and yeah. Each energy individual energy efficiency project is cash generative from shortly after the installation. And so we are being we are being paid out in advance of paying our paying our suppliers. So I I don't I don't see that as an ongoing yeah, that's not an ongoing drag. That's a that is a positive reflection on our cash flows.

43:01 I think the I think we have there are questions there were some questions posed about the risks to achieving our FY 2022 targets. Captured think we those, but I think it is essentially it is those two things. It is the actually, the delays that may occur to the pricing of energy supply contracts. And it is the timing of decisions made by those procuring energy efficiency contracts, where we are seeing clearly that market driver, the increased priority to deliver on energy efficiency as businesses see what their future cost of energy is going to be. So clearly, it's a risk, but I think it is we have taken that into account in our expectation of being able to hit our hit our hit our the market expectation for our numbers.

44:09 Harvey, did you want to comment on the acquisition plan? There's some questions around the acquisition. Yeah. There's there's a couple of interesting questions here. So there's a there's a question around the increased cost of carbon and how that is driving client behavior. I think it's another one of those strong levers which the the which the macro market drivers are pulling in our favor. So there there's no question that the the overall cost of carbon is set to increase, and that is definitely driving more more of an awareness around reporting, more of an awareness around, you know, carbon footprint per se, and and therefore, climate climate action pledges are starting to become a common theme within our within our customer conversations.

45:00 So in terms of acquisition pipeline, we have a number of interesting, I guess, engagement engagements with opportunities at the moment. We're being extremely selective. I would say there is a quite a large there's a there's a large number of opportunities, and I think we have got, you know, a a great opportunity to pick the very best in the market for those companies that we do want to engage with. So we're looking for the very highest quality of businesses that have that mix of great entrepreneurs, great growth dynamics, and in the right sector, which at the moment for us is all around the renewables.

45:49 Clearly, there's a question here around share price. I mean, I think it's a it's always a challenge when you're looking at doing acquisitions through a mixture of cash, cash and shares. Is a balance. I think our partners that we're looking to engage with recognize that we are, a business that's going to grow and that, I think they can see that our share price probably doesn't reflect, the underlying value of the business. So it's just about being aligned with our, I guess, management teams that we're engaging with and owners of those businesses in a way which, you know, doesn't doesn't impede us in our ability to do acquisitions. But, you know, clearly, we would all like to see a higher share price, and that's our goal. But I think the the underlying performance of the business gives me confidence that we'll get there.

46:43 Okay. I I think there was there's also there's a specific question around the utility team earn out and how that is settled. To recap, earn out on utility team is based upon the audited financial outcome for the year to December 21. So so it has it has completed. It is settled in a mix of cash and shares. It is at a it is at a capped level. So the first 1,500,000 is payable in cash, and then the balance issued in shares. So up to 15,000,000 shares can be issued in consideration. So there there is a there is a full note in the r and s on on the acquisition of utility team and and and how the earn out mechanism works, but I I thought it's worth just answering that question.

47:40 But I hope there is more detail in there if if the questioner wants to if the questioner wants to take it further. Wait. There's a question here about bad debts from energy suppliers that have gone bust. I think we're in a strong position there. Maybe it's worth a commentary there. Yeah. I I think I addressed I I tried to address that earlier, I think. So so in part, we have yeah. The the the advice that we've been delivering our clients has reflected on the financial stability of the suppliers. So it isn't I don't think we don't advise people just to take the lowest price just because it's because it's the lowest, you've got to think about that over the term of the energy supply contract. We clearly do have contracts with some of those suppliers who have gone bust, and we monitor our exposure to individual suppliers very closely.

48:34 But so we have had small, completely immaterial write offs of those amounts that are due from those energy suppliers that have gone bust. Yeah. Actually, yeah. In part, that balance of some being paid in advance and and some being paid in arrears works in our favor, but but clearly, that is also one of the yeah. It's one of the drivers for the changing supplier behavior. So we have an exposure, but it is a managed exposure. It is a monitored exposure, and it is not material or has not been material to date. I think Harvey, I think that may I think we may have addressed all of the, all of the questions.

49:21 Harvey Harvey, Rick, that's perfect. Thank you very much indeed for taking the time to address all of those questions that you can have come through from investors during today's meeting. And of course, ladies and gentlemen, the company will have the opportunity to review any further questions submitted today, and we'll publish those responses where it's appropriate to do so on the investment company platform. Harvey, perhaps before redirecting investors to provide you with their feedback, which I know is particularly important to you and the company, if I could please ask you for a few closing comments to wrap up with. Sure. So, look, we think EENERGY is well positioned in the market to capture huge value from the the the overall, I guess, movement towards net zero. We've got a unique integrated solution. We think that there is, a huge demand right now getting to net zero by 2030.

50:08 We have all of the constituent parts in our business. And, actually, I think our position in the public sector is helping us capture some of those very large opportunities. So I think the outlook is very positive for us, and, I'm I'm looking forward to, seeing those results come through in the next six months. That's great. Harvey, Rick, thank you very much indeed for updating investors this morning. Could I please ask investors not to close this session? This will now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of EENERGY GROUP PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good morning to you all.