EOL - Energy One

[Dona Ferentes]

sometimes I go for 'free carry' but in this instance I will continue to hold sll my EOL. There has been steady buying with only limited release onto the Sell side. And it has been that way for a while, at the SP moved through $5 and into the 6's with little retracement

 

[Dona Ferentes]

· Group revenue (and other income) of $14.0M up 45%
· EBITDA of $4.17M up 78%
· NPBT was $2.68M up 250%
· NPAT of $2.0M up 398%

We are also pleased to note basic earnings per share of 7.85 cents (diluted: 7.73 cps), up 341% from 1.78 cps (Diluted 1.76 cps) in the prior comparative period.

The first half of FY21 has been very strong, and we expect the second half to be slightly reduced in comparison

We now hold strong positions in the physical and contract trading software for electricity and gas and have an increasing presence in Europe. We also remain committed to building on our existing product range, reputation and customer base to make EOL a one-stop shop for energy trading software and services in our target markets here and abroad.

With this in mind, the Board expects that the full-year FY21 will produce a result in the order of Revenue $27.5M and EBITDA (excluding any one-offs) of $8.0M. NPAT is expected to be in the order of $3.7M

(HOLD) (no dividend this Half)

 

[Dona Ferentes]

Europe is a new growth engine

• We have a strong market share in Australia, Europe gives us another area for strong growth
• 53% of group revenue is now being generated in Europe
• Further synergies available via product and solution integration
• EOL still has less than 5% European market share
• Focus is on integrating eZ-nergy
• Scope exists for another complementary European acquisition
• US expansion being considered in the next 2-3 years should the right opportunity arise

Sticky customer base
• Churn much lower in the first half (e.g. AU lost only 1 customer, market exit)
• Energy One looks to sell more than one product from the range to customers. We currently average 1.2 products per customer with 4 products the highest

 

[barney]

· Group revenue (and other income) of $14.0M up 45%
· EBITDA of $4.17M up 78%
· NPBT was $2.68M up 250%
· NPAT of $2.0M up 398%
We are also pleased to note basic earnings per share of 7.85 cents (diluted: 7.73 cps), up 341% from 1.78 cps (Diluted 1.76 cps) in the prior comparative period.
The first half of FY21 has been very strong, and we expect the second half to be slightly reduced in comparison (HOLD) (no dividend this Half)

Good results!!

Nice Chart!!

Amazing 3 years for EOL (DNH unfortunately )

 

[Dona Ferentes]

Announcing another year of profitable growth for the Group, with Revenues up 35% on FY20 and net profit after tax (NPAT) up 125% on the prior year.

While headquartered in Australia, the Energy One Group has built a presence in Europe with Contigo Software in the UK and more recently in France with the acquisition of eZnergy in France.

Our products and solutions involve enterprise software for energy trading of bulk wholesale energy (typically electricity and gas). Consequently, the software is inherently mission critical to many customers and we therefore experience low churn. As a result, we have found that acquisitions are a reliable method to acquire new customers and enhance organic revenue growth from the cross selling of modules and services.

This strategy has proven successful with some 54% of our FY revenue now being generated in UK/Europe. All of it profitable. The Group has customers in 17 countries and is well positioned as an independent global provider of energy trading software.

And a 6c unf dividend


OUTLOOK
With a strong balance sheet and solid operating cash flows the Group will continue to actively seek strategic growth through prudent acquisitions and strategic relationships with highly complementary businesses.

Additionally, the Company intends to invest in further sales, technical and managerial resources, in order to capitalize on our European opportunities and reflect on the Group increasing global footprint. We will also continue our process of management structure refinement to increase and/or deploy resources where best needed across the group.

The company currently has a number of projects in the pipeline and until the outcome and timing of these becomes clearer we will maintain FY21 guidance for the year ahead until we have a greater degree of certainty regarding our performance and growth prospects for FY22.

 

[Dona Ferentes]

from today's Investor Briefing and Information Session:

Rapidly changing energy markets are presenting new growth opportunities
• The energy market is fragmenting. In the future there will be fewer large generation units and more distributed energy resources.
• For example rather than a single 2,500MW thermal coal generator there might be 5 x 200MW solar farms plus 5 x 200MW wind farms combined with 5 x 200MW batteries. This fragmentation is termed Distributed Energy Resources or DER.

Dispatching distributed energy resources into electricity networks can be more difficult
• The growing share of green distributed power generation increases the complexity in both the European and Australian energy markets
• Given the smaller size of Distributed Energy Resources it is often uneconomical for operators to man 24/7 control rooms to dispatch energy. Furthermore, the two sided market (users also nominate) is active in Europe and coming to Australia
• While eZnergy offers the software to facilitate market operations it also offers a bureau service to submit market notices on behalf of customers.
• This is done based on an agreed set of operational/commercial parameters. (i.e. EOL do not take energy market risk)

Energy One will launch a new product offering to address this rapidly growing market by selling software with a service
• We intend expanding the types of services currently provided by eZnergy.
• Aspiring to a global 24/7 operations function to complement our software
• Our automation software (enFlow) means EOL is well placed to automate these manual operations on behalf of customers
• Goal is to expand this offering not only in Europe but also introduce it to Australia

Guidance for FY22
• Focus will be on consolidating a strong FY21 and leveraging our technologies and eZ capability in the dispatch services space.
• We will invest in additional managerial resources in Europe to facilitate additional growth.
• Group revenue consists of 80% recurring revenue and 20% project revenue.
• As we enter the second year of Covid19 travel restrictions are making it more difficult to close the large new project work.
• The company currently has a number of projects in the pipeline. Until we have greater certainty regarding our growth prospects for FY22 we expect revenue and earnings to be similar to FY21.
• Pleasingly we are already beginning to see the easing of travel restrictions in Europe.
• With a strong balance sheet and cash flow we continue to seek strategic acquisition opportunities

 

[Dona Ferentes]

and another purchase

Established in 2008, the EGSSIS business has been developed by its Founders to be a significant provider of energy scheduling and nomination software and associated 24/7 trading services to European gas and power market participants.

Egssis will join eZ-nergy (and Contigo) as a major software vendor in the European Energy Trading and Risk Management markets. In particular, eZ and Egssis are highly complementary, offering modern SaaS products and services to customers, while sharing a similar culture of being highly responsive to customers and providing exceptional levels of customer service. Coupled with Contigo’s contracts and derivatives trading software, the transaction enhances our pan-European trading capability in both physical and financial markets.

As well as being complementary, the Egssis acquisition offers us strategic opportunities:
 Even broader European reach - eZ, Egssis and Contigo now serve markets across 17 European countries
 Enhanced ability to win customers - The Energy One group now comprises 2 of the 3 vendors in Europe who offer software plus 24/7 operational (bureau) services. Together, eZ and Egssis provide 24/7 operational services for 29 customers and software to over 100 customers. The increased capability from merging eZ and Egssis will provide strong alternatives to the remaining (incumbent) vendor those customers using in-house solutions
 Building capability for a global 24/7 energy services business. Egssis enhances our capability to establish global 24/7 operations (bureau) services and potentially establish an Australian services business to complement Europe

“Egssis is a great business, providing high quality software and services to the European energy trading market and we are very excited to welcome them into the family. Our European businesses comprise a strong and highly-capable team for pan-European energy trading solutions, assisting customers operating in Europe’s fast paced 24/7 wholesale energy markets. I’d like to welcome Tom Dufraing, MD of Egssis to our European leadership team alongside Johann Zamboni of eZ-nergy and headed up by Simon Wheeler, our European CEO”; said Shaun Ankers, Group CEO.

Energy One Limited purchased Egssis for a total outlay of €4,250,000 (approx. A$6.8M at the current exchange rate), to be paid in cash and equity, in instalments over an 18-month period. The initial payment comprises €2,500,000 cash and €750,000 in EOL shares. The acquisition will be funded from the existing cash reserves and debt facilities.

 

[Dona Ferentes]

The market is responding well to EOL's announced acquisition of a SA based company CQ Energy, which offers bidding and dispatch and control room services to wind farms, solar farms, industrial gas customers and other clients, as well as consulting and broking.

CQ Energy is the leading provider of operational energy services to the Australian gas and electricity sector. They provide similar 24x7 operational services as our European businesses eZ-nergy and Egssis, as well as running a sophisticated risk transfer/broking business.

Energy One Limited purchased CQ Energy for a total outlay of $36,000,000 to be paid in cash and equity, over a 12-month period. The initial payment comprises $26,400,000 cash and $6,000,000 in EOL shares. The acquisition will be funded using a combination of debt and equity (issued to the founders). The later cash instalment will be funded internally from cash flow.

Energy markets across the globe are decarbonizing and de-centralising. As large thermal power stations become a thing of the past numerous new smaller renewable generation assets will fill the gap. Given the smaller size of distributed energy generation assets it is often uneconomical to operate 24/7 control rooms to dispatch/schedule energy. CQ energy provide bidding and dispatch services as well as control room services.

EOL is talking about an addressable market much larger, mainly through smaller decentralised generation. This segment has shown an increase use of outsourced services to compliment their software.

 

[Dona Ferentes]

EOL has pushed higher , and is some 10% higher in the last few days

With the energy market changing so quickly we have seen the emergence of a new rapidly growing segment, the provision of energy services. Having observed the emergence of this new market in both Europe and Australia we have concluded it is a highly desirable segment and one we are ideally suited for given our world class software.

Over the last five years a number of acquisitions have been integrated into the Energy One group. Each operating under their own brand. Going forward all business within the group will now operate under the Energy One brand.

1. Energy One Software
2. Energy One Services

 

[Dona Ferentes]

good to see Regal Funds Mgmt come onboard, now holding 1.412million shares. The disclosures show purchases since Oct 2021 (no sales) and, with a $3million or 500K share purchase recently, it has tipped over to 5.32% holding.

I have been a long term holder but find it illiquid, the bots nibble away but sometimes the revealed spread can be 10% ((yesterday was B: 6.26 and S: 6.72 for most of the day, until 145 + 1 went through at 6.69 !)

 

[Dona Ferentes]

EOL has pushed higher , and is some 10% higher in the last few days

and another 10%. Took out $7.00 and nibbling at $7.16 now .... an ATH

 

[sptrawler]

I've been waiting for a correction, starting to look like it ain't going to happen with this one.

 

[Dona Ferentes]

I've been waiting for a correction, starting to look like it ain't going to happen with this one.

i wanted to top up when it was briefly below $6, but there was no volume disclosed and, as noted, the spread was ridiculous at times.

now B 7.45; S 7.55

 

[sptrawler]

i wanted to top up when it was briefly below $6, but there was no volume disclosed and, as noted, the spread was ridiculous at times.

now B 7.45; S 7.55

I'm ever hopeful, there has to be an orchestrated correction soon, hopefully this rally is the cat bouncing.
It was a toss up between EOL and WBC recently when EOL dipped, WBC won on the div side, time will tell.

 

[Dona Ferentes]

I've been waiting for a correction, starting to look like it ain't going to happen with this one.

There has been a lack of conviction in the SP; holding around mid $6's but any attempt to go higher gets slapped down. And still the low volume, with bots nibbling away on a 50c+ range of Buy/ Sell offers. Not conduicive to building a parcel.

And now it would seem the growth by acquisition plans are still in place, and likely to be in Europe?

EOL Formalises Finance Facility Agreement to Support CQ Energy (Australia) Acquisition

Energy One Limited (ASX:EOL) today announces it has finalised a formal three-year debt finance agreement with National Australia Bank Limited (NAB) providing $30million of acquisition funding.

 

[Dona Ferentes]

AGM today

In Europe, E-world Energy & Water is being held in June for the first time in a number of years. E-world is the meeting place for the energy industry in Europe and offers EOL the opportunity to showcase our business and capabilities as one. E-world was previously a key driver of leads and sales and as such is a greatly anticipated event. In advance of the E-world show, the company has seen an uptick in interest from customers for market solutions. Our European business continues to sign customers and entertain opportunities for larger projects. All of this encourages our thinking that FY23 will see a market led resurgence, post-Covid.....

....The 2022 financial year has seen the business continue its profitable operation with performance on a normalised basis within the ranges communicated to the market. Reaching completion of the CQ acquisition took a month longer than expected, as a result, we now anticipate revenue for FY22 circa $AUD 31.4m (FY21 27.9) and EBITDA circa $AUD 9.2m (FY21 8.1).

... Actually can now get to meet cistomers, and the acquired companies, after two years !!

 

[Dona Ferentes]

must be a bit hard to make money when there is no market

The Australian Energy Market Operator has announced the electricity market across every state except Western Australia was suspended at 2:05pm AEST. In a market notice issued this afternoon, AEMO declared the spot market in NSW, Queensland, South Australia, Tasmania and Victoria suspended from trading as it was “impossible to operate the spot market in accordance with the rules”.

“Dispatch prices for the first one or two dispatch intervals of this market suspension will be reviewed manually.”

EOL operates Energy Trading and Risk Management (ETRM) software systems and services. A Hybrid business model of recurring (SaaS) revenue (80%) and project T&M (20%)
• Solutions for the trading of energy derivatives and the scheduling of physical energy (including green power, electricity, gas, liquid commodities and environmental and carbon trading).

 

[peter2]

The price of EOL has bounced nicely off the recent low.
I'm unaware if EOL was effected by the recent suspension of Aust East Coast energy market. There were no comments from EOL, so I suspect not. EOL has seemed to me to be a great buy the dip type of stock. Volatility in the energy markets will continue to remain high thanks to the Russian invasion of Ukraine and the possible cutting off of gas supplies to the EU. If their software can find the bargains when they appear in the energy markets and transact automatically I imagine this should be valuable. I am unaware of how their software functions.

 

[Dona Ferentes]

FY22 was another year of profit and growth, with

• revenues up 16% and underlying EBITDA growing by 15% over FY21 (net of one-off costs).
• recurring revenues continuing to grow both organically and via acquisition with recurring revenue growth of 29% over the prior year (to be 92% of total revenue) and Annualised Recurring Revenue (a forward-looking measure) growing by 24%.
• organic recurring revenue grew by 11%. Recurring revenues for the business arise from evergreen contracts with customers for licence fees, software support and hosting fees and recurring operational services such as market scheduling, nominating, monitoring etc.
• Since 2012, the company has consistently grown recurring revenues achieving a CAGR of 35% per year.

Unfranked dividend of 6c per share announced.

Investing for growth
"Over the next 2 years, we will invest in building our global capability in the software and services business, specifically related to the follow-the-sun, 24/7 market operations services. As such we intend to invest $1.5M-$2M in each of the next two financial years to achieve this goal.

"Building out this global capability will require investment in best-practice cybersecurity frameworks; legal, contractual and technical standards; technical (systems and software) and key global personnel and expertise to shape our capability and become the leading international supplier of these types of services. To our knowledge, we have an early or first-mover advantage globally, as no other vendor offers a similar global service. Given the strength of the existing business this investment will be funded from internally generated cash flows.

"... investing for future growth will obviously come at the expense of short-term performance. As such, guidance for FY23 is for revenue of approximately $44.0mil and EBITDA of approximately $12.5mil. This represents an increase in revenue of 37% and EBITDA of 33% over FY22 even after the additional investment in developing a global platform."

(Hold)

 

[Dona Ferentes]

Energy Market disruption will help Energy One in the long term

"Given the recent (and well publicised) disruptions in energy markets both in Australia and Europe a common question I get asked relates to whether this turbulence will have an impact on EOL’s business, particularly via its effects on junior energy retailers.

We do not have any material exposure to the small retailers currently experiencing financial difficulties or believe that we will. Each year, as we report, we lose a few smaller customers (usually new-entrant retailers) to market exits and corporate activity which is to be expected.
However, we have a very diverse customer base that includes not only retailers, but also generators, traders, infrastructure providers, investment banks etc. It’s worth noting the larger, vertically integrated retailers are better placed to manage wholesale market volatility as parts of their portfolio benefit from the increased prices. We witnessed similar market turmoil in the U.K. a couple of years ago, without material impact on our business.

It’s worth remembering that for every customer paying these high energy prices, another customer is receiving them on the basis they are producing the energy. Indeed, many of our clients are benefiting of our software, given that trading and scheduling of energy in real time is becoming increasingly important with markets becoming more volatile. To this end, as energy markets become more complex and volatile the need for sophisticated software to help manage portfolio positions will only increase.

In addition, given the high wholesale prices and renewed focus on energy policy, we see an acceleration in the roll out of additional renewable generation. In that sense, the longer-term effects of these energy crises will act as a further tail wind.