UTW update shows significant growth in revenue, but modest growth in EBITDA
Companies: Utilitywise
Utilitywise plc (AIM:UTW), released its FY16 trading update this morning, reporting significant growth in revenue (+19%) and improved cash flow, but seeing very modest growth in EBITDA +2% y-o-y.
City broker finnCap covered the results in a report published this morning, highlighting staff attrition as a significant challenge to the company in H2, but saying cash flow had improved and net debt has been significantly reduced.
finnCap believe staff attrition has presented a significant challenge to the company in H2, reducing productivity and limiting EBITDA:
"Energy Consultant headcount was 625 at July 2016, flat on the end of H1. Staff attrition has continued to be a challenge, limiting sales growth to 19% in FY 2016 and reducing productivity so that EBITDA is now expected to be up slightly on last year (greater than £18m)."
However, despite low profit growth, Utilitywise's enterprise customers grew 21% y-o-y and an estimated 75% of sales came from new customers.
Analyst Guy Hewett also highlighted that the company had improved its commercial terms and cash flow, meaning net debt was down considerably:
"Net debt at the year-end was £0.2m, down from £10.2m at H1 and better than our original forecast of £3m. We estimate operating cash conversion was approaching 100% in the full year (over 200% in H2), significantly better than the £2.5m operating cash outflow in 2015 as improved commercial terms benefited."
Geoff Thompson, Chief Executive of Utilitywise, commented:
"Whilst we have seen significant revenue growth and increased customer numbers in the period, it has been a challenging year with staff attrition in the Enterprise division resulting in a weaker overall performance than we would have liked.
We continue to drive the transition within the two divisions and focus them on the longer term objective of building our Energy Services offering with a large customer base and adjacent revenue streams."
