eEnergy Group Plc (A1Z1.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the eEnergy Group plc investor presentation. [Operator Instructions] Before we begin, we would just like to submit the following poll, which will just appear on your screens now. And I would now like to hand you over to the executive management team from eEnergy Plc. Harvey, good morning, sir.

Good morning, and welcome, everybody, and thank you for attending this morning's presentation. Before we start, I'd just like to say that we've taken on board a lot of investor comments and concerns, and I hope that today's meeting is going to provide you with an update on what we feel is a really important inflection point for the company. So look once again, on behalf of the Board, we do apologize for the lateness of the '24 accounts, but we hope that you'll agree that the publication of the half year results yesterday within 3 weeks of period end is a testament to the new team and the processes in the finance function at eEnergy under John's leadership. So let's now move on to the trading update, so I can give you a full update. I think there are a few key points that I would like to first start on, and that is to emphasize that this is our fifth year of consistent revenue growth. Revenue year-on-year for the first half is now up 67% to GBP 10.1 million. Adjusted EBITDA has improved by GBP 2.5 million to generate GBP 0.5 million in profit. But more importantly, the half year period is cash positive. And this is a very, very important crucial inflection point for organic growth and the efficiencies that we're delivering through to the business. It's the strongest sales pipeline in the period that we've ever built. So I think that demonstrates quite how much investment is now coming through from all of the hard work we put into the back end of last year. The Redaptive partnership is going from strength to strength. The GBP 100 million facility that we've secured has already been used. We've deployed GBP 7.6 million very quickly from the get-go. And we've been named as a dedicated U.K. delivery partner for the Redaptive strategy for the U.K. region. And we can start to see really strong pipeline opportunities coming through from Redaptive and we continue to work with them on a daily basis to explore new opportunities, both that we generate for funding and that they generate for us to do delivery. SolarLife is now providing recurring revenue streams. We believe that the O&M market, that's operations and maintenance for solar is a very attractive, very fragmented and very profitable market. We've now got 78 systems under contract worth in total just GBP 100 million. That's unlocking recurring revenues of circa GBP 90,000 a year. We hope to significantly improve that over the next year. And we think that's going to give sustainable and long-term recurring revenue streams that will be attractive to investors. As you know, channel strategy for growth has been a key pivot for us as we complement our direct sales strategy. We're now on 5 active frameworks, and we've had lots of early wins across NHS Trust and Multi Academy Trust. This is a significant change in our business model. That's not to say that we are doing anything different in direct sales. This is completely complementary. And as a leader in education, we're starting to expand into the different silos of education, in particular, higher education and universities. And these frameworks are starting to become extremely lucrative for us and our pipeline in the future has seen significant growth in this area. In the period on our pipeline, we've generated a record GBP 83 million in the period and GBP 38 million of that is at the investment grade development process. That means that we've gone past the point of commercial qualification, and we've started to invest in the project either assessment or investing further down the investment pipeline phase where we're talking about D&O applications post commercial signing terms. And this is evident now having signed a record GBP 15 million of heads of terms in period that will be on plan for H2, and I'll talk a little bit further about that shortly. But I'm going to hand over to John now to talk about the results, and then I'll talk a little bit more about the outlook.

Good morning, everybody. Let me start by saying that we were pleased with the first half results, but we're not complacent. This is just the start of further improvements to come through. It's clear that the stringent control environment we've introduced are driving material improvements in the results. The headline numbers show revenue of GBP 10.1 million, up 67% on the first half of last year of GBP 6 million. Adjusted EBITDA of GBP 0.5 million is GBP 2.5 million ahead of the GBP 0.5 million adjusted loss we reported in the first half of last year. And most pleasingly of all for me is we've got positive net cash flow of GBP 0.8 million in the first half of the year. Adjusted EBITDA and cash flow are now tracking one another. So as we see profit coming through, we see cash coming through. So we've clearly now aligned and adjusted for and matched the cash and profit coming through from trading activities, which is really important. Cash at the 30th of June was GBP 3.1 million compared to GBP 2.3 million at the end of last year. So significant improvement in the first half of this year with we expect significant further improvement in the second half of this year. So as Harvey said, the interim results have been produced in 3 weeks. Last year, it took us 3 months to produce the interims. We've combined the trading update and interim results into one announcement, which thank you very much to my team, their professionalism and hard work to get us to this point, is demonstrable of the improvements we've made in our financial reporting and the stringent financial controls we've introduced are really helping drive financial improvement across the business. And we're seeing that in all of our key financial metrics. Everything is moving in the right direction. We're not complacent. This is just the start. I can also see and sort of finance are helping facilitate this, we're working much more closely across the business as one team, which is really making us joined up and much more efficient. As I said, we expect to be cash positive in the second half of 2025, and that will actually make us cash positive over the year as a whole, which is really, really pleasing. Cash remains our principal KPI. Looking at some of the other financial metrics, they also all demonstrate solid progress. Pleasingly, gross margin improved to still 41.6%. This compares to the first half of last year at 19.2% and financial year 2025 at 34.6%. These are very material significant improvements. And we've done this through clear messaging with vendors, with no PO, no go. If you don't have a purchase order, we're not going to be paying for your extra project costs. Everything needs to be preapproved via a purchase order. It's giving us really tight control over all projects that are in flight. And so the margin leakage, which we were experiencing historically, has been significantly tightened up. I'm also approving all quotations that go out to customers. So we get a chance to check and review all the costings prior to submission of the quote to the customer to make sure we've got everything included so that when we give a quote to the customer, they know and we know it's a fixed-price job, and we can be comfortable and confident that the costings we've included are accurate. All of this is coming through a higher gross margins, which is really pleasing. And the sales team have done a great job selling new business into the market at margins, which are showing margin enhancement for us. So better sales activity in conjunction with tighter financial controls and a favorable sales mix because there were a lot more of LED sales in the first half of this year has helped drive up the gross margin in the first half. So very pleased with that. Adjusted EBITDA pre-central costs increased to GBP 1.4 million. This is the EBITDA that we generate from the operating business pre-central costs. That's equivalent to 14.4% of revenue. I think this has got scope to significantly increase over time as we scale up the business. Effectively, we've got -- we've improved our operational gearing because we've reduced the total operating costs of the LED and solar business by 10% to now 27% of revenue, which is helpful because it means that more of the incremental revenue drops down to the bottom line in terms of profit and cash flow critically. We made some further reductions in the cost base around the half year with the benefit to flow through in Q3 and Q4, which will be helpful. And Harvey and I have looked at the cost base quite clearly, and we are confident that where we are today, we can support a significant increase in the revenue from the current cost base, which is really good news. Central costs were held at GBP 0.9 million, same as they were last year, not much to say there. I just want to touch on this. It's quite important. There's only one adjusting exceptional item in the first half of this year. And that one adjusting item is a noncash share-based payments charge of GBP 0.4 million. And the restructuring costs that we have incurred, which are circa GBP 0.2 million, have all been included within the operating cost line. As I said back in the January trading update, we would not have any other sort of restructuring and exceptional costs coming through the P&L this year, which obviously has a tendency, given that it's bad news to sort of to push it below the line, we've not done that. We've actually taken that as part of the ongoing business. So our GBP 0.5 million would have actually been GBP 0.7 million had we not done that. So some of the restructuring costs that we will incur, it's quite normal for a business to do that, is now part of the normal operating costs unless they were very substantial. Clearly, post the sale of the Energy Management division, there was a substantial amount of restructuring work that had to take place and obviously, the costs were separately disclosed. Last year, the -- an exceptional charge was GBP 2.3 million, which obviously included the GBP 2 million restructuring cost post the sale of the Energy Management business. Total charge was $2.3 million, of which $2 million was restructuring and $300,000 of share-based payments. So just to summarize, cash generation remains a principal focus. We are all aligned across the business. People know it's important to us. We're totally focused on it. And the Redaptive funding deals are helping to improve our cash flow by advancing cash to us more quickly than other funders. So it's really helpful to have Redaptive sitting alongside us funding our customer-funded deals, it's really good news. I'd also just like to say that there are further significant opportunities we've identified where we think we can reduce net working capital through better planning and improving vendor supply terms, which will also help boost cash in the second half of this year. So we're not complacent. We're pleased with the first half. There's considerably more work to be done, and we expect to see further improvement in the second half of this year. Thank you, Harvey. I'll hand back to you.

Great. Thanks, John. Just touching on the market opportunity because we see these questions come up regularly across both the investor discussions we have and also on presentations. We're principally a public sector business moving into healthcare from a very strong leadership position in education. The education market is still a very large niche, 65% addressable market, where we're starting to see increasing appetite for Gen 1 energy-efficient lighting to be upgraded to Gen 2, which is further increasing the availability of our revenue growth because our existing 1,200 customers are now starting to come to the end of 5- to 7-year contract terms where we haven't previously forecast that being an opportunity. The expansion into higher education is where we're starting to access GBP 1 million-plus projects. And for business of our size having migrated from GBP 100,000 average order value projects 2 to 3 years ago with single client entities. As you know, we migrated to multisite projects where we were able to get average order values up to GBP 200,000 to GBP 300,000. We're now starting to see average order values going up to GBP 500 to GBP 1 million, and we've got a number of million pound plus projects and some several million pound projects that we're tendering for. This is typically in the higher education campus, multisite, college and university market, which is very, very cash constrained, very low budget allocations for infrastructure upgrades and which is now very, very interested in the off-balance sheet funding, and we think this is going to be a significant opportunity for growth. We've seen huge improvement in our case study delivery across the NHS and health care market. That is now enabling us to use those case studies for tenders, and we're starting to see huge pipeline growth in the private and public healthcare space. And we think that due to our strong case studies over the last 6 months, we're going to really see the NHS and the private healthcare become a strong sector, in particular, from the framework and tenders that we're submitting. A number of notable contract wins on the right there. I don't need to go into those, but I do want to just talk about some of the long-term drivers of growth that we see for multimillion pound projects we're now very focused on, and that is tender-driven, compliance being an important factor for finance with a very unique product in a Redaptive solution that's truly off balance sheet, approved by auditors that we think is a unique product in the market that can unlock huge appetite for energy savings where there is no budget availability and a pressing need to get to net zero. One of the bullet points that's not on this slide is our commercial strategy for solar. The real estate landlord market is our principal targeted market sector through channel partners, through agents and through our own network of our partners is where we see the mid- to long-term growth. This is both advising on PPA agreements that will be self-funded deals from the client and therefore, delivering those projects. But also by providing on and off balance sheet funding for those projects, and we've got a huge and growing pipeline in that area. Just touching lightly on the routes to market, we have a very consistent, very predictable direct consultative sales model, in particular for schools that is growing rapidly. To give you some context on that growth, this time last year, we were forecasting GBP 12 million to GBP 13 million of direct sales into education sector. That now looks like it's more like GBP 16 million to GBP 18 million this year. So we're seeing 25% to 30% revenue growth in direct sales, partly through our new regional approach, partly because of our move into higher education and partly because of the new financing products that are opening up new opportunities. So that is staying on course, but growing organically. Layering on top of that is a fundamental shift, which we've now embedded as part of the core fabric of eEnergy, which is a framework and tender platform, that's both technology enabled. It's both framework enabled, but it's also intrinsically part of our development structure. So we're now monetizing huge members of the team that previously did not carry targets. Previously, only the direct sales team were revenue bearing. Now we have another 20% of our overall cost base in the business actually carrying targets as part of bids and tenders. So we started to gear operationally the profitability of our business, not by expanding new team members, but by having existing developers in the business now starting to be revenue carrying. The strategic partnership route, I've touched on it is extremely important to us that we build out a commercial industrial solar business, both for delivery of projects, but also for operations and maintenance. I would say probably the key differentiation for the eEnergy in solar is to position ourselves as a high-service quality, high service delivery model, not selling on price, we're selling on complexity. So doing complex projects, big large curve roofs, solar carport schemes is becoming a very strong niche for us. We're one of only a handful of players in the U.K. market that has got significant at-scale case studies. And you'll start to see some announcements coming through in the coming weeks of some great successes we're having in this particular sector. And it's being strategically positioned as one of the strongest growth, highest margin areas for U.K. solar to grow, which is off the roofs, off the fields and into carports where you've got unmonetized space for both tenants and landlords. For those that are new to the call and new to the investor story, 4 key business models, reduction, driving energy savings through efficient lighting and controls and data analytics, delivering 40% to 45% gross margins, obviously lower when we're tendering higher on direct kind of focused projects, but strong margin business, strong growth, high addressable markets, market-leading position. We've got to fix on the supply chain. We've got a very efficient and growth model for delivery, and we're seeing that grow consistently, and it's a real pillar of our whole core proposition. Generation is all around solar, roof, ground and carport schemes, lower margin, but larger money margin projects, so larger value projects, and we're typically targeting GBP 500 million to GBP 5 million projects. We are moving away from small projects. We're outsourcing those if we get the leads and we take a small developer fee to our partner companies. And we're very careful about what projects we want to bid on. We don't now bid on projects where there is clearly a race to bottom pricing. We quickly move away from those projects because we don't think that's where our focus should be. Our focus is on complex projects where there's risk solutions required, where there's insured concerns over tenanted buildings, where there is complexity and structural issues that's where our team is excelling and that's where we're seeing our kind of margins being sustained at the 30% level. We still do have a strong EV position in the market in the sense of our capabilities and our service offering. We're not pushing it strongly as an individual solution, but we are starting now going to see some significant tenders coming through and some significant multisite rollouts for existing customers. And we're quietly confident that this revenue line will start to wake up again. We just haven't been driving it hard like we have been driving LED and solar. But I do feel confident that there will be some pleasant surprises in our revenue forecast in the next 6 to 12 months that's currently not in budget. This is all upside. And then wrapping everything we do is a complete off-balance sheet, capital-free service wrap that's self-funded to enable clients to deliver both their carbon savings, but also their cash energy savings without having to invest any capital. It's a unique proposition. There are very few people that have the capability in the public sector to even offer funding because of the complex nature of compliance, but we're the only people that have a genuine off-balance sheet solution. And we know that for sure because we have completely scraped the market for suppliers, for service providers and indeed, on both client side, we are absolutely confident we're the only off-balance sheet solution available in the market that will be approved by a top 6 audit firm, and we think that's going to unlock 7-figure deals in the future, in particular for the NHS. Many years ago, we invested in the concept of automation for our end-to-end service proposition, enabling the assessment of LED projects to be done outside of a manual process. In the last 12 months, we've reinvested a lot of time and some capital to the extent of taking that to a fully end-to-end product. We've got something truly unique in our -- effectively our eEnergy app that's going to be significant in the growth capabilities of this business and the gearing and scale and pace at which we can move. Just to give you an example, it typically takes anywhere between 2 to 3 weeks to assess a physical collection of buildings and then another one to 2 weeks to move through to a process of designing and delivering with specific designers and specifiers a solution for that client. We can now fully automate from survey with our app, a proposal within 24 hours and be within 1% to 2% accurate on both the energy saving specification and turnkey solution. And we've got evidence that we can go from survey to contract close in less than 30 days, where previously we were thinking our estimate best case was 90 to 120 days. So we've saved our end-to-end process, a 70% time saving. But more importantly, we've reduced the number of people working on projects, and we've doubled the amount of projects we're working on. So this has the capacity internally to create mass scale and create mass efficiencies in our business, and we will expect to move this over to the other technologies that we work on in metering and also in solar in the coming months. And there is a possibility that we will explore a licensing model for both other contractors to use and monetize our offering here, but that's not currently in FY '25's budget. We may think about a 2026 business plan to stand out a digital platform for scaling this app. So to summarize, in the last 6 months, I think what has been demonstrated that our strategy is working. We've grown revenue. We talked about the increase in pipeline, and we talked about the increase in our margin. We're winning bigger contracts. We're moving into multisite contracts in NHS. We're no longer just an education schools focused business. We've secured an institutionalized funder. And despite some of the challenges we've had, this funder is 100% committed and the testimony of being able to raise GBP 100 million partnership fund demonstrates the belief in our business model. We've deployed that cash and we started generating positive cash flows. We've launched an O&M business, which is from a standing start, already generating recurring revenues of nearly GBP 90,000 a year. We've appointed -- been appointed rather to 5 frameworks. These are difficult frameworks to get on. They are a very important right to play within certain sectors and it's giving us strength in our reliability and derisking direct sales and giving us scale. Partly, our boosting of ESG credentials has enabled us to score high on these submissions. So we've worked hard on our ESG credentials. We've worked hard on our compliance, and we've worked hard on the platform investment to get us to that point. We've proven the scale of EBITDA. We've now shown that as we look over H2 of last year and H1 of this year, this business is starting to scale and deliver profitability. And this period now demonstrates cash generation. So we've got the capability of driving GBP 35 million to GBP 40 million revenues without an increase in our cost. We're demonstrating that. H1, we've demonstrated nearly 70% growth year-on-year. We're now expecting to do the same revenue in H2 of this year as we did last year. So there is, of course, upside, but we want to manage the downside and we want to manage expectations. So we are very confident that we have got the capability to deliver H2 in the same way we delivered it last year, albeit at greater profitability and on greater cash generation terms. Our pipeline year-to-date, strongest ever generation, GBP 83 million of pipeline generation year-to-date. This time last year, it was probably more like GBP 20 million to GBP 30 million. So a 300% to 400% increase in pipeline generation in period. GBP 38 million of that is under assessment, but more importantly, GBP 15 million of that has been signed commercially at heads of terms for H2 delivery. And I'll talk you through what that means on a weighted forecast basis in a minute. So when we look at this pipeline, what we've got here is 2 graphs. We've got an LED graph at the top and the solar graph at the bottom. We've got GBP 2.5 million of contracted, that's in-flight projects where we've got an expectation of delivering GBP 10 million in the second half. We've got a total pipeline of GBP 29.5 million, GBP 18 million of that -- sorry, GBP 9 million of that GBP 18 million is weighted, and we've got a target of GBP 10 million. So we've got plenty of coverage where we feel confident of delivering a GBP 10 million revenue for H2, which would give us in broad sense of GBP 19 million LED business for the year, which is up 30% year-on-year, significant growth year-on-year for the LED business. On solar, we've got in-flight projects that are being installed right now at GBP 1.7 million. We've got a total GBP 64 million, of which that GBP 1.7 million sits within and a weighted forecast of GBP 12.4 million of revenue that we expect to deliver from that pipeline, but GBP 15 million of that has signed heads of terms, and we've got a target of GBP 8 million. So we've got an GBP 18 million number that we are expecting to deliver on market expectations that gets us to GBP 28 million for the year. GBP 8 million of that is from solar, GBP 10 million of that is from LED. This demonstrate the kind of coverage we now have this time last year, the total pipeline was our forecast. We did not have any coverage. Now we have coverage. So we do expect, obviously, there to be some slippage. That's why we've got a weighted forecast. But the great news is that we all slip into Q1 '26. So we're now starting to work on H1 '26 from a solar perspective. And in fact, all of our focus now for solar is about FY '26, and it's about delivery of the weighted forecast. So these are really important stats, and I think you'll agree this demonstrates mass improvement and also much more visibility for investors about what we're doing and internally, how we manage risk in the business. So revenue during cash flow are now at an inflection point. John and his team have done an amazing job. We've got a really close knit strong management team. We've got much more controls in the business, organically focused. We've got no more distractions around historic legacy issues that have come out of a very busy M&A period. We're focused on cash. As you can see from John's philosophy, it's all about cash and profitability or margins. The cash coming through is starting to be stronger quarter-on-quarter. We've got a big focus on H2 around the improvements we can make on increasing both margin and EBITDA, and that's really the theme of our management strategy. So as we look to the outlook, clean and stable balance sheet, strongest pipeline in our history, Board confident, we're going to maintain revenue growth for H2. We're maintaining our market expectations. We feel confident we've got coverage. We've got solar growth coming through and accelerating, and we've got unique products, technology and financing abilities. So I hope you can see the progress we've made since our last update and indeed over H1. Obviously, we look forward to updating you as we go through the next trading period. Thank you.

Perfect. Harvey, John, if I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions]. We have received a number of questions throughout your presentation this morning, and thank you to all of those on the call for taking the time to submit their questions. But Katie, at this point, if I may hand over to you just to chair the Q&A with the team. And if I pick up from you at the end, that would be great.

Thank you very, Jake. Thanks, Harvey, John. So I've got a few questions come in. So we'll start with the pre-submitted question, which was about the share price and why do you feel like it doesn't respond to good news and keep up the momentum?

Yes. Sure. Okay. So look, it is one of the challenges of being a small cap public company. We have sporadic and strange liquidity issues within our stock. We don't have a strong institutionally led share cap table. We clearly have either a single seller or a group of sellers that are willing to sell at a 4P price. It's incredibly frustrating, both myself, management and the Board are all shareholders in this business. We share the same frustrations. So the question is, what are we doing about it? Try to build confidence in our shareholder base to turn sellers into sort of holders. That's the first and most important thing to do, create belief that this is an undervalued business, which we all internally believe it is. Compared to our peer group, we feel we should be trading at an 8, 9p share price. There's nothing much I can do about the seller other than try and convince the sellers that holding is a better strategy than selling. The second thing we can do is we can put our brokers under immense amount of pressure to come up with a strategy to provide new investor appetite, either at the institutional, family office or a high net worth individual level that can either take block sale opportunities from sellers or come into the secondary market and start effectively becoming a holder, not a seller. So we're doing that. We've got meetings today with Canaccord. Frankly, they're going to be under a lot of pressure, and we're going to be demanding a much greater level of focus and attention. And I hope to see a different outcome. We'll also be deploying other investment channel ideas through investor presentations, roadshows. Now that we've got the past behind us, my focus will be on trying to sort the issue out of our capital structure. I hope I answered the question.

Thank you, Harvey. Yes, we had another question about addressing the stock overhang, which I think your answer also addressed. Moving on, there is a question about the Redaptive partnership and how close energy is to the first project win?

Look, very close. We've signed heads of terms with several million pound plus deals. These are clients of Redaptives in the U.S. that are doing U.K. rollouts. With solar, there is a lot of complexity. We've got engagement. We've got [indiscernible]. We've got engagement with the client. I believe our solutions are first class. There are always third-party dependencies within the solar business model, which are grid connections, building condition reports, structural surveys and often landlord tenant divide around who's approving and who's agreeing to take the risk. These are all things that we have to navigate, but we're at an advanced stage. I am confident that we will deliver our first project in Q3, as I say, deliver sign and then hopefully deliver by the end of the year. But we have a number of very exciting projects working, and we continue to see new ones each week.

Harvey, there's a question around the split in H1 revenue of GBP 10.1 million. And saying they were told that it was GBP 7 million booked for Q1, which they think means Q2 was GBP 3.1 million. Can you give any more kind of detail and color around that, please?

We did have quite a bit of slippage. So we have locked in GBP 7 million of contracted that we were expecting to deliver all in Q1. Some of that slipped into Q2. One of the frustrations about our business is it's a projects business. Things do happen, things do slip. We've also got a lot of stuff that has already slipped into Q3 already. So it's a gain of 2 halves in many sense. We contract, we win and then often, we can't recognize because the project gets delayed. We've got a lot of overhang coming into the July to October period. That's great because it means we're underpinning H2 already. So I think the -- it's a slightly skewed picture. I don't think it's a slowing -- it's definitely not a slowing down picture of, oh, we did 7 in Q1, we only did 3 in Q2. No, it's just a shift of when the revenue got recognized. And I think overall, actually, Q2 was a much stronger performance than Q1. So I hope that answers the question.

Thanks, Harvey. And actually, another question slightly in line with that is to meet 2025 numbers, GBP 18 million needs to be earned in H2. How confident are you that this will be achieved?

So I think I've tried to explain as best I can, and I've gone into probably a lot more detail than would be normally expected on the presentation like this. But we did GBP 19-plus million H2 last year. We need to do GBP 18 million this year. Of course, we're targeting more, but we are expecting to do GBP 18 million. GBP 10 million from Lighting, GBP 8 million from solar is our current split. It may end up being GBP 9 million and GBP 9 million. Again, it all depends upon some of the larger solar projects, how quickly we can get them signed and part recognized and then part installed. I am confident. I think we've got a very predictable lighting business now, which has a shorter sales cycle. The solar business does have a longer tail. That's why the weighting is so important. We've got GBP 15 million of heads of terms signed where clients have engaged contractually. Those deals are happening subject to 2 third-party dependency. One is inability to get a grid connection. We've never had a client being refused to grid connection. It's just a timing issue, okay? Structural surveys are done in advance, so we're not concerned about that. So generally, it's a timing issue. It's a phasing issue. We've got to deliver GBP 8 million of solar. We've got a GBP 15 million head of terms pipeline of signed contracts. So it's a case of making sure we can accelerate at the front half of the period, that we can deliver those projects quicker and enable them faster so that we've got enough time to get them completed. I've got total confidence in my delivery teams. And in fact, the operational teams have never been as efficient as they are now. And our 2 operations directors that run Lighting and Solar work very closely with John on a procurement and on a margin predictability perspective. But on a delivery perspective, they are first class and are on plan and above budget.

You mentioned about the kind of solar GBP 50 million booked. And there was a question around how much of this would be recorded in H2 2025?

Yes. So just -- that's a sort of follow-on. We think circa GBP 8 million to GBP 9 million of that is going to be actually recognized. And that's simply a factor into some of that GBP 15 million will start but not finish in time. Some will start and finish. Some will start and finish in Jan, Feb, March. So that's why we're very focused on the phasing and the waiting, and we spend every week reviewing the heads of turn schedule, myself, John and our operations team. And we think we've got enough coverage.

Again, slightly following on from what you just said about the weighting. There was a question about, could you explain further the calculations or assumptions to arrive at your weighted forecast?

We have a weighting per phase of our development customer life cycle. So in simple terms, we don't wait anything until it's gone through to assessment. So the upfront forecast pipeline doesn't count in the forecast I deliver to investors or to the Board. In other words, leads, opportunities don't count in my numbers until we've gone through a series of qualifications and on-site assessment. That's Phase 1. After we've done a survey or an assessment, we've got a predictable phasing forecast and qualification status that we've seen over the last 9 to 10 years that gives us confidence how we can weight that. That's based on client's appetite to starting a project, clients' ability to have budget, clients' appetite to use funding and whether it is or isn't a competitive process. Once we've delivered the proposal, it's then an investment-grade proposal, which means that it's gone through the full phasing of qualification internally from our side and from the client side. It's been delivered to the decision makers, and we now have a weighting according to time. And then based on time and based on engagement and based on progress, it gets weighted accordingly. So we use Salesforce for the complete end-to-end customer life cycle. Our new Chief Commercial Officer, spent a lot of time over the last 3 months, re-cleansing data, re-cleansing stages, re-cleansing all of the project status. And so I would say we're probably the most sophisticated business I've ever seen on a business of this size in the way it manages pipeline and the accuracy of the it's forecasting.

Moving on to the NatWest loan facility. And someone jas asked, please can you confirm how much of the NatWest loan was bought out by the new facility?

John, do you want to answer that one?

Yes. So the total is about GBP 6.3 million, which has been drawn down from NatWest and redaptive purchase store.

Another question is, please, can you provide some examples of aspects of the projects where the new focus on cash flow has changed the structure of your bid or where you've possibly decline to bid?

So there are many opportunities coming through the business, which have an expectation on a price per kilowatt to build a project, which we rule out straight away because we're so close to build costs in the solar sector, for example, that where we see an aspiration by a client to achieve a certain level, we'll just walk away will just walk away straight away. We're not interested in competing in an open environment with 3 or 4 other people if the margins are going to be sub our target. So that's one example. The other example is where we have a very large project with a right to play and we think a right to win, we will, of course, take a view as to whether or not we will adjust our margins. Now because the money margins are so significant on a multimillion pound solar deal. And if we think we've got a right to win, and we think the drivers of the customer in the right way, we will always consider doing a lower-margin deal if the terms are right, if the right to win is right. If it's a several million pound project, the expectation is it won't be as high margin as a sort of a single source project. So that's been an example where we will be flexible. And then I think it's a case of being confident in the route to market that we've got and the client engagement.

And there's been a question around how contracts work and if you can explain a little more around them. For example, if you announce a GBP 1 million contract and income is generated over 10 years, do you book GBP 100,000 revenue a year?