Energy Action reports financial results for HY19

Written by Energy Action


  • Operating NPAT of $0.89m - down 63% from HY18
  • Revenue for the half of $13.55m - down 25% from HY18
  • Operating EBITDA of $1.76m
  • Statutory NPAT of -$9.93m following $10.82m of significant one-off items
  • Operating cash flow of $1.94m with EBITDA to cash conversion of 111%
  • Net debt reduced by 31% from HY18 to $4.96m – extension of debt facility secured
  • No interim dividend declared
  • New senior management team in place to progress H2 priorities


Energy management consultancy, Energy Action Limited (ASX:EAX) (“Energy Action”) today reported its financial results for the 6 months to 31 December 2018, with operating profit to $0.89 million, down 63% compared to the previous corresponding period, and a 25% decrease in overall revenue.

During the half, revenue was impacted by a 46% decline within the Procurement division due to a reduction in auction volumes and values compared to the higher growth period during H1 2018 impacted by retailers directly contracting customers ahead of renewals and ineffective sales management. Contract Management and Environmental Reporting (CMER) and Project and Advisory Services (PAS) divisional revenues were also down 5.5% and 25% respectively.  While a smaller portion of the overall revenue base, revenues from the embedded networks business rose 41%.

Statutory profit was down due to significant one-off items totalling $10.8 million, with $10.6 million of this relating to non-cash items. This largely included the Impairment of goodwill of $9.94 million related to previous acquisitions, accelerated depreciation and amortisation of $0.77 million, and costs associated with an organisational restructure and previously announced strategic review.

While operating EBITDA decreased to $1.76 million, Energy Action continues to deliver solid cash generation, with operating cashflows of $1.94 million and an operating EBITDA conversion to cash of 111%. This was achieved due to a 11% reduction in operating costs. Net debt also reduced 31% on pcp to $4.96 million. 

Subsequent to the half, the Board also confirms the appointment of John Huggart as Chief Executive Officer, after assuming the interim role in December 2018, and Tracy Bucciarelli as Chief Financial Officer.

Chairman, Murray Bleach, said: “The Board accepts that the company’s performance for the half was unsatisfactory, and has instated a new management team tasked with improving the business’ earnings profile.”

Chief Executive Officer, John Huggart, said: “The business remains profitable, however, the deterioration in performance has refocused management’s efforts on core operations that create value for our customers. Specifically, improving sales for platform-based services that scale across our customer base.”

“We have clear priorities for the second half to improve Energy Action’s financial performance, with a number of initiatives underway. This includes commencing a substantial change to the sales and service model to accelerate customer acquisitions and improve customer service, strengthen platform-based technology capabilities, maintaining strong commercial discipline and building a high performance culture,” Mr Huggart added.
 

Key financial metrics

ASX Financials

 

















Operational savings

Energy Action continued its focus on cost management, with operating overheads decreasing to $10.5 million during the half, down from $11.8 million in the previous corresponding period. This includes increased business process outsourcing, the closure of 4 rental premises, restructuring of management roles and a decrease in Directors fees.

Operational highlights

  • Securing a multi-year contract to supply retail billing services to CS Energy with a successful go live in January 2019.
  • Profitable growth of Embedded Networks business with tenancies under management growing 46%.
  • Recent adoption of a leaner and flatter leadership team, including a dedicated CFO no longer responsible for jointly assuming the COO role and lift of operational management to the senior leadership team.
  • High conversion of cash, ongoing cost savings and recent renewal of long-term debt provide ongoing access to funding where required.