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

Good morning. Today, we're very pleased to welcome you to the Annual General Meeting... [Technical Difficulty] Thank you. Again, I'll say we're very pleased to have shareholders and attendees at the Annual General Meeting, both online and also in the meeting room here. Joining myself, Andrew Bonwick, we have members of the Board. So Ian, Mike and Shaun, Richard, Leanne, and we also have Ian Hooper in attendance from BDO. Ben Tranier is our Chief Executive, who you recognize, and I'd also like to welcome Jason to his first Annual General Meeting. We confirm that the notice of meeting has been duly given and the meeting has been properly convened. Please note that only shareholders, proxy holders or shareholder company representatives may vote. As there is a quorum present, I will declare the meeting open. I will now give the Chairman's address and advise that a version of -- that the address was submitted online to the ASX this morning. So with pleasure, I'm able to report that the Energy One Group has achieved its 12th consecutive year of profitability and continuing growth of organic recurring revenues. In financial '26, the Energy One Group delivered continued growth in recurring revenue, up 17% to $63.5 million. Total revenue up 14% to $69.9 million. Underlying cash EBITDA up 42% to $14.9 million, a margin of 21% and underlying NPAT up 56%. Statutory net profit increased 38% to $8.1 million after absorbing $1.5 million of one-off costs primarily associated with the CEO transition. The Board is very pleased with the progress made during the year. Our core markets remain underpinned by the long-term structural changes occurring across global energy systems, including increased renewable generation, electrification, environmental markets and the growing sophistication and speed, particularly of wholesale trading operations. These trends continue to create attractive opportunities for Energy One's software and services. The group's recurring revenue base remains a key strength and continues to provide a stable foundation from which the company can invest, innovate and grow. We are fortunate to support a diverse customer base across multiple geographies and market segments with our products and services embedded within many of our customers' critical operational processes. I encourage shareholders to review the FY '26 results presentation online, which highlights the continued growth of recurring revenues, the breadth of our customer relationships and the ongoing investment in products and technology platforms, including the increasing utilization of specific AI processes within the company. The presentation also demonstrates the balance we seek to maintain between growth, profitability and investment in long-term shareholder value. The international energy transition continues worldwide and remains a powerful long-term tailwind for the company. Our breadth of products, market expertise and geographic reach position us well to benefit from these trends. Looking forward, the company entered FY '27 from a position of strength, closing FY '26 in a net cash position and with approximately $5.1 million of contracted ARR not yet billed. Our underlying business continues to perform well, and we see opportunities to further expand our presence within existing customer accounts, extend the product footprint and increase the value delivered to customers across the energy trading life cycle. While customer attrition was elevated in parts of the business during the year, management is focused on improving retention through continued investment in customer success and cross-sell initiatives. A significant milestone for the company has been the proposed acquisition of GMSL, which shareholders approved earlier this month. The acquisition represents an important step in Energy One's ongoing growth and strategy and further strengthens our European wholesale energy -- position within the European wholesale energy markets. GMSL brings highly complementary capabilities, customers and market expertise to the group. The transaction will establish Energy One as the clear leader in European scheduling and market access solutions, an important step-up in scale and our market position. We will broaden our product offering using existing EOL and GMSL products and services, taking advantage of existing and upcoming EOL integration products like EnFlow. The transaction creates additional opportunities to cross-sell to an increasingly complex and interconnected energy landscape an established capability of Energy One. As previously mentioned, the transaction is also financially compelling, expected to increase earnings per share by 35% on a pro forma basis before any revenue or cost synergies. GMSL has significant expertise in its customer-facing capability, and Energy One will bring synergistic sales capability and overhead support, driving efficiency and sales effectiveness. The Board believes the acquisition is strategically compelling and consistent with the disciplined growth strategy that's underpinned Energy One's success over many years. The Board remains focused on capital allocation as well. We continue to balance organic investment opportunities with selective acquisition opportunities that strengthen long-term prospects for the business. Financial '26 was also a significant year from a leadership perspective. During the year, Ben was appointed Chief Executive Officer and Managing Director, succeeding Shaun Ankers after 15 years of outstanding leadership. On behalf of the Board and the shareholders, I would again like to thank Shaun for the enormous contribution he made to this company. Shaun played a pivotal role in building the company from a small Australian software provider into an international software and services business serving customers across Australia, the United Kingdom and Europe. His leadership, vision and commitment helped establish the strong platform from which the company now operates. We are pleased that Shaun continues to contribute to the company as a Non-Executive Director, and he is standing for election at today's meeting. I would also like to acknowledge Ben's contribution since his appointment as Chief Executive Officer. Ben and the executive team, a number of whom are here today, have continued to execute through the period of transition, and the Board is encouraged by the opportunities that lie ahead for our company. I would like to thank my fellow directors for their guidance and support during the year. I also thank Ben, the executive team and all of our employees across Australia, the United Kingdom and Europe. Their dedication, expertise and commitment to our customers continue to underpin the company's success. Finally, I would like to thank shareholders for their ongoing support and confidence in Energy One, and I look forward to discussing the company's progress with you today and answering any questions. Thank you. Now moving to the resolutions. The resolutions for consideration today may only be voted on by shareholders, proxy holders and shareholder company representatives. I propose to call a poll on each of these resolutions. Those in attendance who have not submitted a proxy vote may only vote on the provided AGM voting form, and that form is to be handed in at the end of the meeting, please. Resolutions 2 to 10 set out in the Notice of Meeting are to be considered ordinary resolutions and as such, must be approved by a simple majority of shareholders voting today and voting on the resolution. We note that Resolution 7 is made up of 3 separate resolutions to be voted on separately. Resolution 1, the financial statement and reports. There is no requirement in the Corps Act or the constitution of the company for shareholders to approve these results. I will, however, move that the shareholders approve the directors' report, financial statements and the independent audit report for the financial year ended 30 June '26. There have been no questions provided in advance. Are there any questions from those present or online? There being no further questions, I seek approval from those present, the annual report containing the financial statements for '26 on a show of hands, please. The annual report is adopted on show of hands. Resolution 2. I'll note that for resolutions 2 to 10, they'll be placed as a poll. The poll will be resolved after the meeting and closes 5 minutes after the meeting closes. And so the results will then be released to the ASX later today. Resolution 2. I move that the remuneration report for the financial year 30th of June be adopted. There have been no questions provided in advance. Are there any questions from those present, please or online?

No.

No? Okay. The undirected proxies will be voted in favor of the resolution. I now put the motion. Please fill in the poll voting card if you're in the meeting today. Resolution 3, the resolution of Mr. Ian Ferrier as a Director of the company. I now move that Mr. Ian Ferrier, in accordance with the EOL constitution as well as ASX listing rules and being eligible, offers himself for reelection to be elected as a nonexecutive of the company be adopted. There have been no questions provided in advance. Are there any from those here present? There being no further questions, we put the resolutions to a poll. Thank you. Resolution 4, reelection of Mr. Michael Ryan as a Director. I now move that Mr. Michael Ryan, in accordance with the EOL constitution as well as ASX listing rules and being eligible, offers himself for reelection, to be elected as a Nonexecutive Director of the company be adopted. There have been no questions in advance. Are there any from the room, please or online? Thank you. As there are no further questions, we will put the resolution to a poll. Please vote on the form. Undirected proxies will be voted in favor of each resolution. Resolution 5, reelection of Mr. Shaun Ankers as a Director. I now move that Mr. Shaun Ankers, in accordance with the EOL constitution as well as ASX listing rules and being eligible offers himself for election, be elected as a Nonexecutive Director of the company be adopted. There have been no questions or salutations provided in advance. Are there any online? Thank you. There being no further resolutions questions, we put the resolutions to a poll. Resolution 6. Grant of performance rights and service rights to the CEO, Mr. Ben Tranier. I now move that for the purpose of ASX Listing Rule 10.14 and for all other purposes, shareholders approve the issue of performance and service rights to the value of $3.1 million to the CEO, Ben Tranier. There have been no questions provided in advance. Are there any in the room, please, or online? Thank you. There being no further questions, we put the resolution to a poll. Undirected proxies will be voted in favor of the resolution. Grant of service rights to Mr. Ian Ferrier. I now move that for the purpose of ASX Listing Rule 10.14 and for all other purposes, shareholders approve the issue of service-based share rights valued at $50,566 to Mr. Ian Ferrier. There being no questions provided in advance. Are there any in the room, please or online? No. Thank you. As there are no further questions, we will put the resolution to a poll. Please vote in the room on the polling form. Undirected proxies will be put to in favor of the resolution. Resolution 7B, grant of service rights to Mr. Mike Ryan. I now move that for the purposes of ASX Listing Rule 10.14 and for all other purposes, shareholders approved the issue of service-based share rights valued at $23,796 to Mr. Mike Ryan. There have been no questions provided in advance. Any in the room, please or online? No? There being no questions, we put the resolutions to a poll, please. And the last one in this group, Resolution 7C, grant of service rights to Richard Kimber. I now move that for the purpose of ASX Listing Rule 10.14 and for all other purposes, shareholders approve the issue of service-based share rights valued at $50,566 to Mr. Richard Kimber. There have been no questions provided in advance. Are there any in the room, please? Or online? No? There being no questions, I'll put the resolution to a poll. Undirected proxies will be voted in favor of the resolution. Resolution 8. I now move that for the purpose of ASX Listing Rule 10.17, Section 119 of the company's constitution and for all other purposes, the total aggregate amount of directors' fees payable to nonexecutive directors is increased by $200,000 per annum from $700,000 to $900,000. There have been no questions provided in advance. Are there any in the room, please? Or online?

No.

Thank you. There being no questions, we put the resolution to a poll. Undirected proxies will be voted in favor of the resolution. Resolution 9, approval of the Energy One share plans. I now move that for the purposes of Listing Rule 7.2, Exception 13 and for all other purposes, shareholders approve any issues of securities under the Energy One Limited Equity Incentive Plan, the Contigo Software Limited share incentive plan, which is the U.K. company, performance share rights for key employees of eZ-nergy, which is the French company, 2024-2025 performance share rights plan for key people of EGSSIS, which is the Belgian company and the sub plan for share allocation for the employees of EGSSIS being the Belgian company. The approval of the share plans will be considered as a single resolution to be voted on by shareholders. There have been no questions provided in advance. Are there any in the room, please? No? Thank you. There being no questions, we'll put the resolution to a poll. Please vote on the form. Undirected proxies will be voted in favor of the resolution. Resolution 10, approval of leaver benefits for key office holders. I now move that for the purposes of Listing Rule 10.19 and Part 2D.2 of Corporations Act 2001, Commonwealth and for all other purposes, approval be given for the giving of benefits by the company to key office holders in relation to amounts paid on termination of employment as set out in the explanatory memorandum. There have been no questions provided in advance. Are there any in the room, please, or online? There being no questions, we put the resolution to a poll. Undirected proxies will be voted in favor of the resolution. As I stated before, the final results of the poll will be announced at the ASX later today. The poll will close 5 minutes after the closure of the formal part of this meeting. Shareholders present are reminded about the yellow card voting, please. Ladies and gentlemen, thank you. That brings the formal part of the meeting to a close.

We will now take questions. There's been one advanced question. I'll take them from the meeting first. Are there any questions out of the floor, please?

Thanks, Andrew. My name is Shawn. I have been a shareholder for a few years. This is sort of just a general question. I think the old CFO had -- I may not get the exact wording right. But in terms of operational leverage in the business, that basically revenues sort of like costs are going to grow half the rate of revenues. You've got the acquisition coming on, which probably a fair bit. But just in terms of -- can you just speak generally -- I noticed that sort of dropped a bit out of the narrative. Is that -- can you just talk generally about operational leverage going forward in the business? How do you see that?

So no, it hasn't dropped out of the statements the company has made that we still expect revenues to grow at 15% to 20% and the cost to grow at about half that. And that's been very successful in the company under both Shaun and Ben's leadership, that's been very successful. The acquisition of GMSL will add significant profit and revenue to the business, but it's important for shareholders to see the progress as we continue to grow operational leverage within Energy One. And part of that is coming from improved efficiency and effectiveness within the business. Part of it is coming from AI and part of it is coming from a focus where the employees know and as they are all shareholders as well, that it's important to shareholders. So -- but we will report GMSL and Energy One separately over the next year or so, so that shareholders can see that progress without blending by Energy One. Ben, some comments about improving operational leverage?

No. I mean, I do agree with you. So on a business as usual basis, without GMSL, we still expect, as I said, to grow 15% to 20% and the cost pretty much half of that. The goal is also, again, to report both separately for the next -- I mean, upcoming half year. So for the shareholders, you will be able to see the synergies, you will be able to see the organic growth on both sides and the combined effect on it. In terms of operational leverage, we're definitely making progress with AI. So we're actually -- we're a lot more efficient. We don't need to hire that many people compared to before to develop new software. And definitively keeping an eye on our spend and to make sure that's the case. So it's in line with our statements.

I hope that helps. But thank you for the question. I mean a lot of people will be thinking the things that you asked. So it was great. Any other questions from in the room, please? There was a previous -- there's no questions from online, but there's a previously provided question, which I'll read out. Thank you for offering the opportunity to ask a question at the AGM, but that's important because transparency is an important part of the way that you see how the company runs. I'd like to offer the following question in relation to the change in power systems as renewables become affordable but create a mismatch in deployment. As electricity accelerates, as electrification accelerates, many households and businesses are increasingly constrained not only by their ability to generate electricity, but by their ability to export, store or monetize it. As a shareholder who experiences this firsthand, how does Energy One intend to capture value from the growing mismatch being distributed between energy production and grid capacity? And how do you see export constrained solar batteries and EVs becoming a material growth opportunity for the company over the next 5 years? So I'll answer the question from an energy policy point of view and a lot of it relates to smaller businesses and residential customers. So basically, the electricity transmission and distribution system worldwide has developed over the last 150 years, basically to take electricity from large power stations of high voltage through to customers at lower and in residential case, 240 volts. That design does not suit well the wish of modern customers to actually have own generation and solar and to push the energy back the other way. And basically, what happens is you basically force it back up the system. That creates a number of problems. So when you're driving home and you look up in the street, you see power distribution systems and the transformers on the top of the poles, and that's a major problem. There's a lot of research going on worldwide, a lot of companies working on how do you actually manage that system to get more solar out. And Australia is right at the edge, in fact it's been over the edge of getting access to that system, which is why your solar system is constrained. It doesn't apply to large wholesale, which is where our company operates. But a lot of customers are moving from behind the meter to major customers to in front of the meter, so they can take advantage of our systems, and that is an important growth.