Schools to become focus for eEnergy amid Covid-19

Energy efficiency-as-a-service provider eEnergy Group updated the market on its third quarter of trading on Monday, as well as the effect of the Covid-19 coronavirus pandemic on its business, reporting that from 1 January to 3 April, it signed 48 new contracts, including 21 schools in the UK and Ireland.

The AIM-traded firm said that combined, it expected to save those schools more than £0.36m in energy costs, and 618 tonnes in carbon emissions each year.

It said the new contracts included some of the UK's leading independent schools, such as Marlborough College in Wiltshire and Wycliffe College in Gloucestershire.

Other notable contracts in the UK were the group's first project with a multi-academy trust, and with some state primary schools.

The high number of contracts reflected the success of the group's sales operation, which had generated €12.5m of new proposals in the same period.

It said it was currently seeing a “strong” sales cycle in the education sector, with 40% of proposals to UK schools being converted to signed contracts.

The time taken to convert each proposal into a signed contract had been reduced by 25% to 35 days, with eEnergy saying it was actively engaged with more than 150 school proposals.

Despite the spread of Covid-19, no signed projects had been cancelled, although some school installations had been delayed to the summer holidays.

Looking at the impact of the pandemic, eEnergy said all 32 of its employees were now working remotely, and its installation partners were said to be observing all social distancing precautions when it was appropriate to work.

Its board said its experience was that organisations were already planning for “life after Covid-19”, adding that the decision by the UK and Irish governments to close schools for the foreseeable future had led to a spike in interest in its lighting-as-a-service proposition.

Many schools were looking to complete maintenance and upgrade projects, including switching to LED lighting, in what could be an extended period with either no or reduced numbers of students on site.

To help support businesses and schools, eEnergy said it was offering new lighting-as-a-service clients a three-month payment rebate as an incentive to accelerate their transition to LED lighting.

That incentive was being combined with a “deep hygiene clean” to reduce the risk of future Covid-19 infections, it said.

The firm’s board said it believed that the education sector represented a “huge opportunity” for it, saying that at present, around 80% of schools had not transitioned to energy-efficient lighting.

In Ireland, its sales strategy was being rebalanced away from the commercial small-to-medium enterprise sector, which had been hit hardest by Covid-19, towards public sector schools in Ireland and Northern Ireland.

The board said it was expecting those will reopen for the group to work with before the commercial SME sector.

Looking ahead, eEnergy said that in each month in the quarter, it secured contracts worth around €1m, which was 2.5 times higher than for the same period of the prior year, and was in line with market expectations.

Based on its estimated pipeline, the board said it expected to maintain the average level of contract order intake through to the end of the calendar year, despite the impact of Covid-19.

However, the impact of some installations being delayed until the summer meant that revenues would be generated later than expected, which would push back its operating profit breakeven point to the second half of 2020.

That shift would have a negative impact on revenues and earnings for the financial year ending 30 June, although the group said it had a “strong” balance sheet with cash of €1.4m as at 31 March.

“eEnergy has had a successful start to life on AIM,” said chief executive officer Harvey Sinclair.

“We are pleased with the momentum we have achieved driven by a large number of contract wins.

“Like all businesses, we are working hard to meet the challenge presented by Covid-19.”

Sinclair said he was “delighted” with how its employees had adapted to what he described as “difficult” circumstances.

“With cash flow expected to become an even greater concern for organisations, there is a clear opportunity for us as we help schools and businesses reduce energy spend and free up cash.

“One potential outcome of the current situation may be the acceleration of the switch to LED lighting and other energy-efficient technologies.

“eEnergy is well placed to meet this demand.”

At 1620 BST, shares in eEnergy were down 2.86% at 3.74p.