eEnergy Group Plc (EAAS) Earnings Call Transcript & Summary

Good morning, and welcome to the eEnergy Group plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll, which I kindly ask you to submit your responses to. I'd now like to hand over to the management team. John, good morning.

Good morning, everybody. We're delighted to present the financial year 2025 results and provide an update on Q1 trading. I'll start the presentation with some interesting numbers and then hand over to Harvey. So FY 2025 financial highlights. We said we would focus on cash flow as our main priority, and I was pleased to see that we generated GBP 2.8 million of net cash inflow from operations, which compares to a GBP 16.6 million outflow in the previous year. Obviously, that was affected by the sale of the Energy Management division. Maximizing cash generation is our top priority. Every single quotation that goes to customers, we look at the cash profile to make sure that as far as possible, that project remains net cash positive throughout the life of the project. It's really important for us as a business. And we know that the key credit terms that we have with customers, which are typically 7 days from date of invoice, we need to make sure customers stick to those terms and pay us within terms to help us manage the cash flow carefully. Adjusted EBITDA was GBP 2.2 million. It's actually increased by GBP 2.9 million year-on-year compared to 2024. We're pleased with that overall result. We've achieved it on a lower level of revenue of GBP 19 million. The principal reasons for the increase, we've had some significant improvements in operating efficiencies. The business unit costs that we've got, the people delivering the projects on the ground have delivered significantly more revenue. So the -- sort of the pound of revenue per pound of output compared to what we put into the business unit cost is significantly greater year-on-year, which is great. And also, we put a lot of work into breaking down the cost of all of the projects to try and reduce our build costs for LED and for solar projects. And that's seen us enjoy a significant increase in gross margin year-on-year. So overall, GBP 2.9 million increase in adjusted EBITDA for the year is a solid performance, we think. Gross margin overall improved year-on-year at 33.1%, up from 25.5% in the previous year. And we've seen increases in gross margin across all 4 major project groups, partially through buying, partially through sharper quotations. I still review every quotation before they go to customers and partially through tight operational delivery of the project to make sure that there are -- there is no margin leakage and that the cost that we budget the cost that comes through, and those are the costs that we invoice the customer for and recover. Cash at the end of the year had reduced to GBP 0.9 million. We have seen, and it's outlined in the results, quite a build in working capital, particularly in relation to the MACE contract, which has seen cash reduce over the course of 2025. However, as that working capital unwinds, we expect the cash -- the working capital to turn into cash, which is obviously positive, and we'll see that impact in the first half and the second half of 2026. Net debt has significantly reduced. It's now down to GBP 1.3 million. That's including the lease liabilities. Previously, it was GBP 2.9 million. So we're continuing to pay down net debt year-on-year, which is good to see. In exceptionals, again, this year, we had nothing. We didn't have anything in the second half of 2025, where we have not created an exceptionals part. The temptation is to continue to push cost into that line and report it below the line of profitability, but we've not done that. So actually, exceptionals, we have incurred some restructuring costs, which are probably just in the order of around GBP 100,000, but those costs are reported within adjusted EBITDA. So no exceptionals. We're not calling them out. Everything is included within adjusted EBITDA. The only add back to EBITDA is the share-based payment charge, which is the noncash charge in relation to the group's share-based payments arrangements. So forward order book at the end of December 2025 had doubled. We were sitting on GBP 14 million of contracted, so signed contracts with customers, GBP 14 million order book at the end of December 2025, which we've been delivering as we get through start of 2026. And there's still a significant proportion of that revenue to be delivered in the first half of this year, which we expect to land on around -- revenue of around GBP 24 million for the first half of this year. So a really pleasing start to the year for sure. Moving on to talk about the change in the revenue recognition. So one of the things we have done during the course of 2025 was to review the revenue recognition policy. And effectively, we have restated it, and we've applied the impact retrospectively back to 2024 where appropriate. What we do now is we effectively recognize a much, much smaller proportion on contract signing. So effectively, for solar, we used to take 30% on signing for solar and batteries. We now only recognize 5% of the revenue, which broadly equates to the costs which we've incurred up to the point of signing the contract. And for LED and EV, the costs incurred up to the point of signing the contract are significantly lower. And therefore, we don't recognize any revenue on signing LED and EV contracts. So it's gone from 30% to 5% for solar and EV and 30% to 0% for LED and EV. I guess from my perspective, it makes the business much easier to understand because effectively, operating profit and cash flow from operations are now much more closely aligned as we recognize a lot less revenue on signing. And I think the other point to make is we still recognize revenue on a pro rata basis between the start on-site SOS and finish on-site FOS in line with the installation program. So effectively, the revenue and the cash flows of the business are now much more closely aligned. I think it will make the business easier to understand. As a key takeaway of what is the impact of the accounting change over 3 years, we can see that there's -- we expect there will be a net 3% reduction over 3 years, which you can see on the table on the right-hand side of around GBP 2.6 million with some reduction in '24, '25 and a slight increase in 2026. So we've actually increased the market expectation revenue from the GBP 34 million up to GBP 38 million to reflect the net GBP 4 million increase impact in 2026. We've left adjusted EBITDA for 2026, the market expectation EBITDA at GBP 4.5 million, principally because we also recognized a contract asset in relation to all the work which we did with MACE in the second half of last year, which will then be expensed in 2026. So this is an asset that's built up on the balance sheet, reflecting costs incurred to service the MACE work, and we amortize those costs against the extra profit on the GBP 4 million of revenue coming through in 2026. So from a net profit from an adjusted EBITDA perspective, there's no overall impact. And I think the last point to make is there's no cash impact as a result of these changes. So this is just a much more conservative revenue recognition policy. It doesn't have any cash impact on the business whatsoever. There's no change to the economics of the contract. It is purely a timing difference as to when we recognize revenue. And as I say, it will make the business much, much easier to understand and aligns the cash flow and the revenue in line with the operational performance and the operational delivery of the projects. I'll hand over to Harvey. Thank you.

Great. Thank you, John. Good morning, everybody. I think it's clear to see that last year was a transformational year. I think the business has gone through a huge inflection point, and that's evident in the results that John has just presented. It's great to see the business now generating positive cash flow. It's excellent to see that our margins are improving, and I'm really pleased with the way in which we've been able to amend our operating model to drive those efficiencies. We've obviously made a huge amount of change operationally in the business with our systems and processes to focus in on cash. We're seeing record growth. Our pipeline is building. And in the back end of 2025, the pipeline generation has stood us in a fantastic position for 2026. So given the project cycle and the life cycle of our various journeys to customers, we're always 6 months behind where we see the revenue. So the evidence that we saw at the back end of last year gives me great confidence as I look forward into 2026. We've pivoted as a business from being a heavily focused direct sales education platform. And 2 years ago, that was essentially the service offering in this division. We're now a multi-sector across healthcare, both private and public; and across commercial and industrial; multichannel business selling multiple technologies using a central operating platform. And that's what's seeing such huge efficiencies being escalated through the business from revenue through to profit. We are no longer reliant on direct sales. We've spent a huge amount of time in the last 2 years building out our position on frameworks, creating a platform from which we can tender efficiently and cost effectively. We've built some amazing strategic partners, which I'll go on to talk about a little bit later in this presentation, all of which support the direct sales team. So we're multitasking our headcount, but we are using multiple channels now from which to effectively originate customers. And those customers tend now to be larger, multisite future forecastable. In other words, we're seeing Phase 1, Phase 2, Phase 3 of most of our large customers where either they're doing a regional expansion or where they're starting with LED and then platforming into renewables or EV and increasingly more and more battery energy storage, which I'll talk about. Another huge turning point for this business was our ability to win and secure a government contract. This is a testament to the work we've been doing in compliance, in our certifications, in the way in which we position ourselves from an ESG perspective to be credible and competent to be able to win such a large contract with GB Energy just demonstrates how much work and investment we've been putting into the business from which to expand. And in addition to that, we also secured a number of new contracts for the NHS. So that in itself is a huge turning point because, again, it's giving us future visibility, as I'll talk about, on multiple rollouts for those partners. We continue to invest in our technology platform. One of the things that differentiates this business from traditional contracting business is the fact that we see ourselves as a platform, not just from a development perspective, but also from an assessment, design specification through to delivery. So in order to gain those operating efficiencies and operating profit margin improvements, we're relying very heavily on technology to optimize the processes we do on site. And to that end, the survey -- the energy survey app, which was launched originally 4 years ago, went through a second relaunch last year and is going through a continued iteration of evolvement on product capabilities. So it's now becoming an assessment through to contract creation, automated sort of proposal generation platform, but now also a workflow management system, which means that at any touch point on a customer's journey, both internal and external stakeholders can review where they are in the project, whether that's from a contractual perspective, whether that's from a procurement perspective, whether it's from a delivery perspective. That gives more accountability to our contractors that work for us on the install side or from our customers' perspective, who are looking at stage milestones, delivery and quality assurances. I can't underestimate or underemphasize just quite how much that technology platform is going to enhance this business. And as we migrate from LED into solar and renewables, this platform will help optimize the other parts of our business. Multi-technology is now the core theme of any of our customer conversations. Last year, clearly, LED was still a major part of our revenue. It's becoming more evenly balanced, and I would expect this year there to be an even split between solar and LED, possibly with even solar outreaching the LED performance. Obviously, solar is a larger, more addressable market. The project sizes are bigger, but the lead gestation cycle to contract close is longer. We make greater margins in our LED business, but the project size in solar are generally quite a lot bigger. So hugely important parts of our business being developed differently. And often LED is the entry point from which a customer can reduce their energy costs, get their baseline minimize to lack of energy wastage and then they can talk about their renewable strategy, derisking them from the grid. EV has started to become more of a theme for our customers. But probably the biggest, I guess, growth area that we are now starting to focus a lot of time on is battery energy storage. And as I'll explain shortly, we've done over 50 battery projects in the first quarter of this year alone. We're very excited at the concept of layering batteries into our historical projects, particularly for retrospective solar installations, and we think there's going to be a huge growth opportunity over the next 3 years. Our business is definitely working on larger and more complex projects. So we sell into complexity now. One of the things that I think we've avoided doing is tendering purely on price, and we try and resist competing with, I guess, competitors on projects where price is the major driver. We are specializing in harder to specify and deliver projects. So whether that's solar carports, whether it's complex roof structures, whether it's complex smaller sites as part of the portfolio, whether that's complicated mechanical electrical solutions that are required, whether there's integrated batteries. These are the areas we're starting to differentiate ourselves. There's less price sensitivity. There is much more of a risk-adjusted focus now for landlords. So we're leaning into how we can derisk landlords perception of solar in tenancies for their buildings and how we can demonstrate high-quality, high-service delivery solutions, and that's where we're now focused. And then just touching on our Redaptive facility, which was announced at the beginning of last year. This facility is now really developing into a major differentiator for our business. The key aspect of one of the new products that we have is an IFRS 16 approved off-balance sheet performance contract, much in the same way that a solar power purchase agreement, PPA, works, which is customer only pays for the energy that's delivered to them from the service that's on their building, not owned by them. And energy efficiency performance contract is only able to be off balance sheet if there's uncertainty in the way in which savings are paid for. So unlike fixed-term hell or high water payments that typical customers pay for an asset financing energy contract, the contract we have with Redaptive allows us to offer performance guarantees and metered savings being invoiced quarterly. This is a unique product and has opened up the NHS market in an unprecedented way in which no other competitor can compete or can get a product to compete. So the NHS has a number of very clear restrictions and that they can't easily finance or prohibited from financing any asset that goes on the balance sheet. And given their capital constrained budgets generally and the aged nature of their buildings, there's a perfect sweet spot for us to sell into NHS Trust hospitals, energy performance contracts funded through an off-balance sheet measured solution and particularly focusing on LED lighting. And these projects range from GBP 1 million to GBP 5 million in value. And whilst the deal life cycle will be longer, when we win, we will be winning big. We've already secured our first contract, albeit a small one, just under GBP 0.5 million, which we'll talk about later, and that proves the concept. So we're incredibly excited about how we have differentiated ourselves in the market with off-balance sheet funding solutions. And we think this is going to be one of the big growth drivers for the business going forward. That, in addition to deal flow coming our way from Redaptive is also incredibly encouraging as the U.S. customers with U.K. subsidiaries are starting to engage with us. So just talking about the beginning of FY '26, record quarter, delivery revenue GBP 11 million with EBITDA of GBP 0.7 million. This is a transformational change. It reflects the pipeline build from last year. It reflects the momentum we've got in the business, and we've already contracted and underpinned GBP 11 million in the second quarter. So we're confident of being able to deliver close to GBP 24 million, which will be well over double what we did this time last year in the first half of '25, which was GBP 10.1 million. So stripping out the benefit of the deferred revenue, we're still doubling the size of our business like-for-like in the first half. And I expect the profitability to come through in the second quarter, much more stronger than the first quarter as the margins regularize themselves. The MACE gross margins were lower than our traditional margins because we competed very competitively, but they're starting to wash through now. So normal project margins are starting to bring the average margin up for the business year-to-date. The MACE contract has been a huge operational challenge. It's enabled us to focus on operational growth and efficiencies in the solar business. We delivered our largest ever installation of solar projects in the first quarter, 73 schools in total, and we're on track for completion in the next couple of weeks. So we're very excited about what the future holds with GB Energy. I'll talk about that shortly, but we think there's a long-term relationship being built there on the back of quality performance in the first phase of the project. So as we look towards the full year outlook, revenue guidance has now been increased to GBP 38 million, up from GBP 34 million, partly reflecting the GBP 4 million deferred revenue that came over from '25, which has no net incremental benefit on EBITDA. But underlying that, still a strong H2. You will notice that the balance between H1 and H2 has now switched. That is a slight anomaly. It doesn't mean that the business is going backwards in H2. It just means that the nature of some of our projects do have cyclical natures. We are less reliant on the education seasonality as we start to even out with NHS contracts. And GBP 14 million for the second half will still be almost double what we did in the last half of '25. So still seeing huge growth. We're seeing momentum in our pipeline, and we're confident that we'll be able to maintain the earnings forecast for the year at GBP 4.5 million. Just wrapping up on post-period highlights before I talk about some of the growth drivers. Obviously, very pleased with the first quarter and the outlook for the second for giving us a strong H1, evidence that we're now a platform business. It's one of the key themes that we talk about in our business, which is how do we differentiate, how do we become scalable? How are we building this business to grow to GBP 100 million of revenue in the coming years without incurring huge cost increases so that the EBITDA margins can go north of 20%. That's the ultimate vision for the business. We've obviously launched our NHS-ready funding solutions, which I just talked about. That's probably one of the key revenue drivers for the year. And that first contract with Symphony Healthcare, which is Somerset NHS proves that the contract form is an engaging format for a counterparty to engage with, and we're comfortable that, that now can provide a platform for scale. We also won a couple of great contracts, one with Plymouth NHS and one with Unity, both great deal values, as you can see, GBP 1.1 million and GBP 0.7 million in values, respectively. This again demonstrates just quite how far the business has come. Two years ago, we were seeing average order values of GBP 100,000 to GBP 200,000. We're now sort of 10x that size. And we're looking again to try and get into the multimillion pound contracts so that we can be more predictable in our near-term and midterm revenue forecasting. Regarding Board matters, it's great to have Nick Mills join the Board as a non-exec, bringing a huge amount of experience in various different sectors and various different revenue business models. So great to have him on the Board. If I could just move now to some of the drivers that we're seeing. For the last 2 years, there's definitely been some Net Zero fatigue in the market. I think in '20, '21, '22, Net Zero was the buzzword for every business, a lot of greenwashing, rising energy prices, panicking around Net Zero targets, panicking around ESG certifications. And then in '23, '24 and to some extent, '25, there's been a tailing off, and I think a lot of fatigue in the market as people focus in on core operating business challenges rather than, let's say, energy certification and energy Net Zero goals. That has changed. And we've seen in the last half of '25 and the beginning of '26, an absolute mind shift, partly driven by the volatility of the energy markets. And you can see now at the fuel pumps, quite what an impact that's having on the residential markets. I think solar has seen a 10x scale in the last 90 days of inquiries and solar panels being ordered. That impact hasn't quite yet hit the commercial B2B market. So a lot of investors are often asking why are you not seeing a huge surge of solar projects? Well, for 2 reasons. One, because most commercial businesses haven't yet seen the energy volatility hit their forward price on their renewals, which is coming up in September and October, they will do. And we are expecting anywhere between 30% and 40% increase, possibly more. And then secondly, because of the development cycle of projects, even with a motivated client with all the approvals in place, which is rarely a thing, you're still seeing 3 to 6 months gestation cycles on solar projects. So we do expect in the latter half of H2 for there to be significant momentum as a result of the, I guess, the volatility and the energy crisis that's looming and will continue to get worse in my view. So that's going to drive more energy security concerns on battery energy storage complementing solar and people wanting to derisk the grid. So when you think about solar, you've got to think about the average commercial customer being able to reduce their demand from the grid by about 30%. So if the price of electricity is likely to increase by 30%, i.e., their baseline pre any energy efficiency measures or energy renewable measures, there's a margin of 60% gain to have by moving to solar. That, combined with battery energy storage and the ability to derisk on a security of supply perspective, it's becoming almost a necessity for anyone who has got high daytime demands to be maximizing their solar solutions. Policy tailwinds are working strongly in our favor as evidenced by the GB Energy contract, which we've won. We are building that relationship, and we expect to see the future tenders coming to the energy as part of a Phase 2 approach later this year and then a larger, more broader 3-year program being launched next year. So we are hopeful to be participating in that. There's no certainty about whether we will or how much we will win on those initiatives, but we are highly invested, building a strong relationship and helping support and advise the Department of Education on how the commercial private sector can also support grant-funded monies as well going into those verticals. We also think that, that will also lean into the NHS in the coming years as well. So very much a tailwind in our favor there, working closely to try and optimize our opportunities and very excited about the future there. We've talked about multiple routes to market. We're now very framework focused with strategic partners becoming a key theme for our business. We've talked about solar being a strong tailwind generally. We are now a very credible mid-market solar solutions provider, not just doing rooftop PV solutions that range from typically 100 to 1 meg, but now very focused on the solar carport, so the car park canopy solutions. We had a very successful project last year, which we are now using as a case study. And these projects are typically GBP 1 million to GBP 2 million in value, and we're building out a pipeline of very exciting projects there. We've got our largest ever solar project about to go to contract. It's a 2-year development cycle that we've been nurturing. It's a GBP 2 million off-grid ground-mount solution for a leisure facility in the Southwest that we think is going to be a great case study for future rollouts. We talked a little bit about the technology focus in our business. That is a key driver for margin. We're investing across the platforms so that the solar business can benefit. And we hope we'll see a number of percentage improvement points on margin as those platform efficiencies come through and shorten delivery cycles. And then lastly, the multi-sector momentum we're getting, particularly in the NHS is something that I think is going to be one of our big growth drivers. And if I look out for 4 years, I think our NHS Healthcare business will be the same size as our education business. So essentially, we're looking to double the size of our business in the next 3 to 4 years. And if we looked at that, I'd be expecting 30% or 40% of that revenue to be coming from private and public health as well as education and commercial-industrial. Keep talking about us being a platform. eEnergy is a much more sophisticated business now, and it's definitely in 2 parts. That commercial development platform, which is all around routes to market, using technology, multichannel origination at a low cost of acquisition, where we're then able to efficiently assess with our app at low cost and high accuracy and then specify and develop through to design an investment-grade proposal for a customer in short order whilst the customer is still engaged. That's typically not the norm in this industry and being able to have a high conversion rate is probably one of our secret sauce formulas. And that's going to continue to develop. In the first quarter of FY '26, we developed typically GBP 12 million of investment-grade proposals for LED alone, and we would expect to see 50% of those to close. So within a 3- to 6-month cycle, we're starting to see a very predictable GBP 4 million to GBP 5 million a quarter LED business start to gain momentum as a result of the way in which our pipeline is essentially funneled through our platform with great sense of predictability. And then the second part is our EPC development platform -- sorry, delivery platform. And that's all around optimizing process and systems, having a hybrid model, which is capital-light, being able to upscale quickly on the back of large contract wins. So we're not carrying large inherent people costs that are sitting unutilized. So we always want to work at high utilization rates for our supply chain, for our delivery project management team and for our install completion teams. So high optimization is something we measure and being able to scale with a capital-light model through our contracting frameworks that we've got with our partners is a key theme. We're developing our O&M business, which is effectively operations and maintenance after care solutions. That's a high-margin business, recurring revenues on 3- to 5-year contracts. It's quietly building in the background. It's not something we heavily report on at the moment because it's a business model that we're incubating, but I do see a huge opportunity to grow that revenue line over the next 12 months, not just for our own projects, but for other asset owners who are looking for higher-quality O&M solutions providers. I often show this slide in presentations. I don't want to dwell on it. I think one of the key pillars here that I'll just focus on is battery energy storage is now almost at a commercial inflection point where one thing we're seeing coming through as predicted is cost reduction in the overall cost of a kilowatt to store energy, i.e., the battery costs. And within a year from now, if those cost reductions continue, we will see the ability to finance in a cash flow positive way, a 10-year battery energy storage solution. Alternatively, what will compound that in our favor is an increase of your underlying kilowatt charge to 30p. As soon as the price for electricity goes beyond 30p, battery energy storage starts to work. Current underlying price for energy is around 24p for our customers. The key on our markets is they are large niches. They are addressable. So in education, we still see over a 50% addressable market, possibly more in some pockets. So in universities and colleges, arguably, we see a higher percentage of addressable market availability. In healthcare, we're seeing 50% of all NHS buildings still yet to switch to LED. Those 2 markets are GBP 3 billion to GBP 4 billion in size from a market share revenue capture perspective. They are huge markets, and there are relatively few players offering multi-technology off-balance sheet and/or multisite solutions in the way we do. So I think there's a huge opportunity for growth there. 80% of roofs in the U.K. commercially still don't have solar on them. We're focused on landlords. We're focused on multisite commercial-industrial, commercial-retail, business parks, retail parks are the general areas where we focus. And then sports and leisure is starting to become a very exciting space for us, and we're starting to look at stadiums. We're starting to look at golf clubs. We're looking at -- we did our first paddle center last year. So there are lots of new exciting projects that we're developing, largely for solar, but more increasingly, battery energy storage and also for EV solutions. Just to talk about a few operational highlights that I've not yet captured. I think the gross margin for projects is probably one of the key 3 things that myself and John focus on, on a weekly basis. We know the importance of what 1% or 2% increase in gross margin does for our business. So it's got extreme investment internally. And we think that by procuring better, by being more efficient in the way in which we deliver our development around price for build projects and price for build delivery, we will be able to see some improvement in those areas. That large contract for GB Energy is a huge inflection point for the business, and we are hopeful that we might be able to capture similar revenues going forward over the next 3 years, not currently, by the way, in our budget. We're on a number of new frameworks and we expect to acquire another 2 or 3 positions this year. So that's a very exciting growth area for us. The GBP 14 million order book is testament to the way in which our pipeline is starting to develop at an earlier stage and be more forecastable. And winning, I think, the large ground-mount solar project for us is another step change into new areas of renewables. As we sit here today, we've got a GBP 127 million investment-grade pipeline. We would expect to close 50% of that based on historic conversions. Obviously, not all of that will close this year. Some of our projects do have a 1- to 2-year long tail, and we're increasing that by the tune of GBP 3 million to GBP 5 million every month, depending on whether we're in a key selling month or not. Looking out to FY '26, having had a strong start, we're excited about the prospect of doubling our revenue this year and doubling our profitability. And I think that would be another step change for this business. We've got more revenue visibility than we've ever had before. We're confident that we've got locked in nearly GBP 22 million, GBP 23 million for H1 already with a few weeks to go before projects start to go to installation delivery. We're maintaining our guidance of GBP 4.5 million EBITDA on GBP 38 million of revenue. The pipeline continues to grow. As I mentioned, we've got new revenue lines in battery energy storage. We're looking at cash generation for every project being more closely aligned to the way in which we manage the business. And we think the market tailwinds are in our favor, and we think that the opportunity now for faster growth in this space is absolutely the right place to be. Thank you very much.

[Operator Instructions] Brilliant. Thank you both for your presentation this morning. [Operator Instructions] For your reference, a recording of today's presentation will be available on the Investor Meet Company platform shortly after the meeting has ended. But for now, Katie, if I could just ask you to chair the Q&A, that would be great, and I'll pick up from you at the end.

We've had a few pre-submitted questions that have been touched on during the presentation. For example, the current MACE contract is near completion, and this is to be the first in a number of initiatives that will be rolled out over the next 5 years or so following the government's recent news. As there a partner, are you expecting your pipeline of contracts to grow here? And then someone is also asking around the GB Energy margins higher than the standard contract. And yes, do you expect repeat or similar contracts going forward?

Okay. So there is a very clear pathway that GB Energy have for deployment of government-backed energy solutions for the Department of Energy and the, I guess, the schools network. We're clear about what that looks like. We have no certainty on being able to say with certainty we're going to win a place on those future awards. We've built a strong relationship with the department, and we've built a strong relationship with our winning contracting partner, MACE. We will be ensuring that we optimize our chances in the next couple of months. There will be an award later this year, which will be contained for FY '26. And then next year, the tenders will be opening up to more regions. And we are, therefore, confident of putting our best foot forward to win a 3-year place on their rollout as well. So yes, there is opportunity. Yes, I'm heavily invested in the relationship, making sure our business does the right things. The margins are lower than our typical gross margins for projects because we are being competitive on our pricing. But I think that is a trade-off that's absolutely worth investing in.

Another question or there's a few questions around growth on specific offerings. So solar has been a big growth sector of the business over the last 12, 18 months. Do you still see this being a main growth sector for the foreseeable? And also for batteries, they appear to be a new offering. How did this start? And how do you see this progressing over the next 12 to 18 months?

So look, absolutely, solar is one of the key drivers from a technology and from a sector availability perspective. It's the -- 80% of all commercial buildings still don't have solar on their roofs. So there is a tailwind here. And as energy volatility continues, the demand for solar is going to increase. So between now and 2030, there is a race for all of the brownfield rooftop space, absolutely. And we see that as being one of our biggest drivers. Everybody in the market has been waiting for prices on batteries to become financeable because the majority of customers will not be wanting to invest CapEx into a battery solution themselves unless it's for security of supply motivation. So the return on investment has to clearly make sense, and we see that now reaching its inflection point for financing of 10-year battery solutions. So as I've said, in the next 1 to 2 years, batteries will become one of our key revenue drivers.

A question has come in about which companies are the big players in the multimillion pound segment of the market?

We have to think about our competitors in a number of ways. So there are -- there's 3 parts of the market. There's the SME market, which we don't play in, and then there's the utility scale infrastructure side of the market, which we don't play in. Those 2 ends of the market have actually very big players. So in the utility scale, large infrastructure scale, so 5 meg to 50 meg projects, we are not focused on competing in those project spaces. So you've got the utilities companies, you've got your large energy services companies, ENGIE Equans, Centrica, SSE, all focusing on large multisite rollouts for infrastructure-grade energy projects. In the SME market, you've got a very fragmented small, medium and large players. Where we are in the mid-market, for solar, there's probably 10 to 15 credible players that we follow carefully. You've got the FM businesses that have energy services divisions. You've got some pure-play players in renewables. You do have very few, less than a handful of multi-technology, multisite capability, national coverage with funding capabilities for projects, certainly not off balance sheet that we see as a direct competitor. So it's a fragmented market. There are some large players who are obviously monetizing their own customer bases, and you also have a lot of fragmented players. So it is quite a complicated market, but there are very few direct competitors. And therefore, what's important for us is to make sure we position our service offering of multisite capability, multi-technology with funding capability at the profile of customers that actually need that level of service, which is why we've been so clear on our vision for where we target our sector attention.

A question has been asked around whether you can explain why Q1 2026 appeared to have a low EBITDA amount. They were stating that they were possibly thinking around 15% based on earnings, but it's around 10%.

John, would you like to answer that one?

That's because there's such a high proportion of our revenue, which comes from MACE, which overall is significantly lower margin. I think it's also worth pointing out that we had a contract asset, which we booked in December 2025, and we've expensed GBP 300,000 in the first quarter. We expect to offset some of the profit on that incremental revenue, and there'll be a further GBP 300,000 to be expensed in Q2. So that's why when we come back to running the business at a normalized level of profitability, we expect the gross margins in the second half of the year to significantly improve.

I've got a multi-question one here from someone saying congratulations on the great results. And just 2 questions around the Canaccord note and one on Redaptive. So starting on the note, the sales forecast for full year is GBP 38 million and for full year '27 is GBP 38.5 million. Why is it only 0.5% higher? I'm just asking about your confidence in the -- is your confidence in the company's momentum too cautious?

Well, it's an expansive question because clearly, we're taking the benefit of GBP 4 million. So like-for-like, we're going from GBP 34 million to circa GBP 38.5 million for next year. So whilst we are reporting GBP 38 million, like-for-like, we're a GBP 34 million revenue business this year, and that's the way we look at it internally. I think there is the possibility of significant outperformance, but being a small cap public company, getting it wrong has quite negative consequences. So we would rather be quietly confident internally and only until such time where we have got something that's materially outperforming our expectations, would we seek to improve the guidance. So I think the strategy that John and I have is to be conservatively optimistic to be grounded on cash, grounded on margins and do what we say we're going to do and try and outperform where we can.

And just the second one on the Canaccord note is surrounding the debt and how it moves from GBP 3 million to GBP 0. When will the debt be paid down? And how cautious will you be on available capital and working capital and cash flow?

So let me pick up on that one. So in November 2025, we drew down GBP 1.5 million from Harwood, which we knew we were going to need because of the extended credit terms on the MACE work. Mace work is typically paid 28 days from date of invoice as opposed to 7 days. So effectively, we've got almost a month's worth of debt -- extra debtors to fund, and that's what that loan was for. As we got into 2026, we had some delays in the project. We needed some additional working capital. We took a further GBP 1 million from Harwood in February of this year, which is all previously announced. I think in the balance of this year, we'll certainly repay the GBP 1 million Harwood loan early. That's got a repayment date, a backstop date of the 31st of July, but we're going to repay that early. We may well pay some of it in the first half of this year because the MACE cash flows are coming through very strongly now, which is great to see. And I think our plan is at the moment is to roll over the GBP 1.5 million loan for a further 6 months, which is within our gift to do so. So I think on the cash flow, we've tried to be conservative in how we forecast it. But I think in summary, yes, we'll repay the GBP 1 million loan this year. So that's a net cash out of GBP 1 million, and we'll effectively roll the GBP 1.5 million of the loan that we had from last year. We'll extend it for another 6 months.

And finally, from this investor, they just are questioning around whether Redaptive will offer us more capital if our deployment accelerates?

Yes. I think the relationship with Redaptive is excellent. They have a desire to deploy as much capital as possible. I think we are absolutely confident that if we were to utilize the GBP 100 million earlier than expected, that would be seen as a hugely positive step from both parties.