Energy One Limited (EOL.AX) Earnings Call Transcript & Summary

Good morning, all. Thank you very much for coming, and I'm pleased to welcome those attending this meeting in North Sydney here and online. So welcome. Joining myself, Andrew Bonwick, as Chairman, we have members of the Board. So from left to right, Ian, Mike, Shaun, Richard and Leanne. Thank you very much for coming. I'll also point out that Erik Vennekens is here, who is the Nominee Director from Fluxys should the transaction proceed. And Erik will be pleased to talk to shareholders at the end of the meeting. We confirm that the notice of the meeting was duly given and the meeting has been properly convened. Please note that only shareholders, proxy holders and shareholder company representatives may vote, and I note that there's a quorum present. I therefore declare the meeting open. I'll kick off by making the Chairman's address, which I note has been announced to the ASX prior to this meeting. So welcome to the Extraordinary General Meeting of Energy One Limited. The business of today's meeting is to consider and if thought fit, approve the issue of shares to Fluxys U.K. Limited as consideration for Energy One's purchase of 100% of the shares in Gas Management Services Limited, GMSL. Firstly, I'd like to comment on the strategic and operational rationale for the transaction, then discuss the mechanics of the transaction. We welcome questions from shareholders, and we'll speak to those submitted by e-mail and from the floor at the conclusion of my remarks. I've introduced Erik Vennekens, who will be Fluxys' Nominee Director under the acquisition agreement and a bit more about that later. Erik has a wide industry background and will bring a number of valuable skills to the Board. Energy One has grown from a combination of key -- small number of key acquisitions in Australia and Europe and with organic growth and margin enhancement from those acquisitions. The GMSL transaction is a strategic milestone that accelerates Energy One's proven software and services growth strategy and is the next step in the evolution of our one-stop shop strategy to build a broader, more capable software and services platform for energy market participants, our customers. GMSL strengthens and complements Energy One's existing foundations across software, services, customers, market operations and geographic reach. The combination of the two businesses will create the leading European provider of software and services for energy market -- energy trading markets. Energy One expects the GMSL transaction to strengthen the group's European platform, increase exposure to high-quality companies and to recurring revenue and create a larger base from which to pursue customer expansion, product cross-sell and operational leverage opportunities. By bringing together highly complementary software services and market operations capabilities, the combined group will be better positioned to support customers operating in an increasingly complex series of energy markets. The transaction is expected to expand our capability, increase customer access and broaden market reach. Following completion, Fluxys is expected to become Energy One's largest shareholder and a long-term strategic partner through our ongoing provision of services by GMSL to Fluxys. This demonstrates Fluxys' continued confidence in GMSL and the growth potential of the combined group. The relationship supports Energy One's continued growth in Europe and reflects the strategic alignment between the parties. Financial implications. The proposed transaction is expected to be materially value accretive to Energy One shareholders. The all-scrip consideration implied an enterprise value at signing of approximately $99.8 million for GMSL, which represents approximately 9.4x FY '26 pro forma EBITDA before identified synergy benefits. The transaction is expected to be approximately 35% FY '26 pro forma EPS accretive and to increase the combined group's European revenue exposure to approximately 70% of group revenue out of Europe. Energy One has identified potential EBITDA benefits of up to $4.1 million per annum, comprising additional revenue opportunities and operational efficiencies with full realization targeted by the end of FY '28. An overview of the acquisition. Energy One has entered into a share purchase agreement with Fluxys, under which Energy One will acquire 100% of its shares in GMSL. The proposed acquisition is structured as an all-scrip acquisition. Energy One will issue 7,089,780 Energy One shares to Fluxys as a consideration for 100% of GMSL. This implies an enter price value of $99.8 million based on the 15-day volume weighted average price of $14.08 at 18th of August today. The consideration shares will be subject to a 12-month voluntary escrow period, subject to agreed exceptions. Completion of the proposed acquisition is conditional on the satisfaction or waiver of various conditions, including Energy One receiving all required shareholder approvals for the issue of the shares, including the approval sought at this meeting and Fluxys obtaining foreign investment approval for the acquisition of the shares under the Foreign Acquisitions and Takeovers Act, 1975 Commonwealth. I'm pleased to report that this approval was received on the 30th September 2026. Following completion, Fluxys is expected to hold 18.26% of Energy One. In connection with the acquisition agreement, Energy One has agreed to grant certain rights to Fluxys, in particular, following completion and as long as Fluxys maintains a holding in Energy One of 10%, Fluxys will have the right to nominate one director to the Board. If Fluxys shareholding goes over -- reaches 20% or over, they're allowed to appoint two shareholders to the Board. Energy One expects completion on or around 30th of October this year, another couple of weeks, subject to satisfaction of the remaining condition, which is the approval sought at this meeting. The Board of Energy One unanimously supports the proposed acquisition and unanimously recommends in the absence of superior proposal that Energy One shareholders vote in favor of the proposed acquisition of this meeting. Subject to the same qualification, each of the directors of Energy One has confirmed that they intend to vote all Energy One shares held or controlled by them in favor of the proposed acquisition. Thank you. Moving to the resolution. So the resolution for consideration today can only be voted on by shareholders, proxy holders and shareholder company representatives. I propose to call a poll on the resolution. Those in attendance who have not submitted a proxy vote may only vote on the provided voting form, and that form is to be handed at the end of the meeting, which is Resolution 1 set out in the Notice of Meeting is to be considered as an ordinary resolution and as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. Resolution 1, approval to issue consideration shares. To consider and, if thought fit, pass the resolution as an ordinary resolution. For the purposes of Listing Rule 7.1 and for all purposes, other purposes, shareholders approved the issue of 7,089,780 consideration shares to Fluxys U.K. or another entity as nominated by Fluxys as consideration for the acquisition of GMSL on the terms and conditions set out in the explanatory memorandum. There have been no questions provided in advance. Are there any questions from those present? Certainly, sir. Brian, there's a microphone just so that the people online can hear you out.

[ Brian Allison ] shareholder. My question is very much from an investor's point of view. The franking credits will be greatly diluted by the takeover and also the foreign ownership tends to not like dividends as much as Australian investors do. So I'd just like to get a view from people as to -- and what is the outlook for future dividends and I know there's no dividend this year.

Yes. I'll take the first part, Brian, and I'll get Jason to comment on the franking. The Board regards dividends is very important, and we've had a 40% of profit dividend policy for quite a long time now. The interest of a particular shareholder are less relevant than the role of dividends for the entire shareholder base. And so the Board will continue to make decisions based on the interest of all shareholders. So I hope that clarifies that.

Could you give a little more information on the related dividend this year?