1800-272-662
Shopping Cart 0
countryflagAU
Login

small-cap

Energy Action Limited : An Attractive Proposition

Aug 18, 2015 | Team Kalkine
Energy Action Limited : An Attractive Proposition

Energy Action Limited
 
  • Energy Action is a leading energy management consultancy firm and a major player in the Australian energy management market in which it provides services which reduce the impact of rising electricity costs for businesses. The company created the market for online reverse auctions in electricity and has settled approximately $ 7 billion worth of electricity contracts since 2009. It has market leading capabilities including procurement, monitoring and Project and Advisory Services. It is an established thought leader in the global energy efficiency community and has played an important role in the establishment of numerous technical standards including the NABERS and the CBD Lighting ratings. It has more than 5000 customers and 23,000 sites under management across a wide range of sectors in commerce and industry. It has more than 160 staff in its head office in Parametta in New South Wales and sales and services offices in Sydney, Canberra, Melbourne, Brisbane, Adelaide, Perth and New Zealand.
      
      Operating NPAT (Source - Company Reports)

Half yearly results for FY 2015
 
  • The highlights of the half yearly results were a 30% growth in revenue to $ 15.6 million with a 107% growth in revenues from Projects and Advisory Services and an operating NPAT of $ 1.7 million. The half-year dividend was 2.59 cents per share. The integration is tracking according to plan and future contracted revenues reached a record high of $ 77.4 million. The operating NPAT was 12% less than in the previous year and the statutory NPAT loss was $ 0.4 million. Operating earnings per share came to 6.67 cents per share The growth in revenue was needed are contributions from the recent acquisition of EnergyAdvice and Exergy.
       
       Operating Profit (Source - Company Reports)
  • Revenue growth has been strong across all divisions with PAS up by 107%, Procurement by 44% and Monitoring by 6%. EnergyAdvice has contributed $ 2.17 million since its acquisition and, excluding this, the growth for PAS is 68%, Procurement 23% while Monitoring is down by 6%.

  • Among the operating highlights were the acquisition in August 2014 of EnergyAdvice which is a specialist energy procurement and Contract Management consultancy headquartered in Melbourne with offices in Sydney and Brisbane whose customer portfolio includes more than 15% of the top 400 energy users in the country. The company has highly complementary skill sets and after the acquisition, the focus has been on successfully integrating management teams and exploiting revenue synergies.
  • A major operating milestone for the company was the launch in January 2015 of its customer portal which allows customers to monitor energy consumption, carbon footprint and spend across complex portfolios of hundreds of sites and multiple retailers. The initial feedback from customers has been very encouraging and the portal is a good foundation for the company to launch new premium service offerings in FY 2016.The company also enhanced the Australian Energy Exchange (AEX) to facilitate auctions in the Western Australian market. The service was launched in December 2014 and has generated an immediate increase in customer and retailer activity in that market. 960 successful auctions or tenders were completed during the half year compared to 680 for the same period of the previous year. Despite the conclusion of service delivery for several large clients, future contracted revenue has grown after the acquisition of EnergyAdvice. Sales performance of future contracts has improved and future contracted revenues grew by 4% from $ 74.5 million as at 30 June 2014 to $ 77.4 million as at 31 December 2014. This significant revenue stream underpins growth and provides an annuity style income.

  • CEO Scott Wooldridge said that the first half performance was affected by lower-than-expected performance at the Projects and Advisory Services business and an unexpected gap between the conclusion of a number of large Contract Management service engagements and the commencement of newly acquired contracts. PAS sales opportunities are expected to improve in the second half of FY 2015 following an increase in the level of the generation of new business. He is confident that the new initiatives combined with improvements in several business areas will ensure that the company is well placed to take advantage of future growth opportunities. He said that integration remains the main priority and other key priorities would include driving the uptake of the customer portal, continued focus on sales growth including procurement in Western Australia and the cross selling of group products and further investment in the AEX platform.

 
Trading update
 
  • The operating NPAT for FY 2015 is expected to be in the range of $ 2.6 million to $ 3 million compared to the figure of $ 4.5 million for the previous year. The two key issues which have impacted profitability are lower than anticipated sales revenues and the write-off of certain receivables related to the largest metering agent as well as some other overdue receivables. The earlier anticipated growth in sales revenues expected to be 30% will now be 25% and the reduction has a direct correlation to the reduction in operating NPAT. A comprehensive audit dating back to FY 2008 has been conducted by the largest metering provider to the company and the process has thrown up a number of discrepancies which measures being put in place to prevent future occurrences. A number of uncollectible receivables were also identified and need to be written off and represent an impact of $ 630,000 on operating NPAT much of it relating to previous periods.
        
        EAX Chart (Source - Company Reports)
  • The company had earlier advised of the opportunities associated with a renewal cliff where up to 75% of the customers in the market customers in the market have electricity contracts due for renewal within a period of 18 months with a peak in December 2015. The company has not seen a significant increase in revenues associated with the renewal cliff as originally forecast because of a combination of customers in Queensland and Western Australia holding off renewals because of high wholesale rates and continuing low rates in NSW and Victoria impacting commissions per customer.

  • There is no doubt that the results for the first half of FY 2015 are disappointing and that the results for the full year will also be below expectations. However, we think that corrective action has been taken in time and the new acquisition augurs well for future growth while the record future contracted revenues provide a solid platform. We believe that 2016 will be a much better year and accordingly recommend that you buy the stock at the current price of $1.16.

 
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
Copyright
Copyright © 2014 Kalkine Pty Ltd ABN 34 154 808 312. No part of this website, or its content, may be reproduced in any form without the prior consent of Kalkine Pty Ltd.
Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.
 

Mid-Cap
Technical Analysis on One NYSE-Listed Uranium Stock- UEC
Mar 13, 2026 Team Kalkine
Small-Cap
One NASDAQ- Listed Semiconductor Stock at Resistance Level- HIMX
Mar 13, 2026 Team Kalkine
Blue-Chip
MQG Scales AUM and Private Credit Capabilities to Drive Growth
Mar 13, 2026 Team Kalkine
Small-Cap
Technical Analysis on Two ASX-Listed Stock – RAU, HRN
Mar 13, 2026 Team Kalkine
Mid-Cap
Technical Analysis on One NYSE- Listed Mining Stock- ERO
Mar 12, 2026 Team Kalkine

Past performance is not a reliable indicator of future performance.