Utilitywise plc Trading update (5079M)
July 31 2017 - 1:01AM
UK Regulatory
TIDMUTW
RNS Number : 5079M
Utilitywise plc
31 July 2017
31 July 2017
Utilitywise plc
("Utilitywise", the "Company" or the "Group")
Trading update
Utilitywise, a leading independent utility cost management
consultancy, today announces an update on trading for the financial
year ended 31 July 2017.
Based upon trading in July 2017 to date and under the Group's
existing revenue recognition policy, IAS 18 (Revenue) the Group now
anticipates that its revenue for the year ended 31 July 2017 will
be GBP4.0 million to GBP4.5 million below previous management
expectations. The revenue shortfall primarily comprises revenue
from same supplier renewals contracts ("Renewals Contracts") which
form a substantial proportion of the revenue secured by the Group
in the final months of the financial year.
Investors should note that the Group has also announced today
that it will adopt the new accounting standard, IFRS 15 (Revenue
from Contracts with Customers) on 1 August 2017, as a result of
which it will change its accounting policy in respect of timing of
recognition of revenue related to Renewals Contracts. For the
reasons set out below, had the Group adopted IFRS 15 as at 1 August
2016, the fall in signed Renewal Contracts against expectations
would not have materially impacted Group revenue or profits for the
year ended 31 July 2017.
Under IAS 18, the Group currently recognises revenue upon the
signature by a customer of a Renewal Contract with their existing
supplier. Furthermore, the Group currently recognises revenue upon
the commencement of a new customer contract under IAS 18.
During the later months of the Group's financial year, a
substantial proportion of the revenue secured by the Group relates
to Renewal Contracts, as revenue from Renewal contracts will be
immediately recognised under current accounting policies, whereas
revenue from any new customer contract signed is less likely to be
recognised in the same financial period as the new contract is
signed, as a new contract would typically commence one to four
months later. Additionally, the Group's monthly revenue has
historically been weighted towards the end of each calendar month.
Given the Group's relatively fixed cost base, substantially all of
the shortfall in revenue will impact the profit before tax of the
Group. Notwithstanding the reduction in profitability, the Group
will remain in compliance with the financial covenant requirements
of its banking facility.
The financial year ended 31 July 2017 will be the final year for
which the Group will present its financial results with revenue
accounted for under the existing accounting standard, IAS 18. As a
result of the adoption of IFRS 15, the results for the year ended
31 July 2017, expected to be announced on 17 October 2017, will
also be restated to reflect the position as if IFRS 15 had always
been in place.
Under IFRS 15, revenue in respect of Renewal Contracts will be
recognised upon the commencement of the contract, rather than upon
signature. Accordingly, revenue associated with such contracts
signed at a late stage of the year would be much less likely to be
recognised in the same financial period under IFRS 15, as the
contract would commence in a later financial year. This would then
increase the closing order book at the end of the financial period
in which the Renewal Contract was signed, which represents future
revenue secured, to be recognised in later periods. Consequently,
had the Group adopted IFRS 15 as at 1 August 2016, the fall in
signed Renewal Contracts against expectations would not have
materially impacted Group revenue or profits for the year ended 31
July 2017
The Group expects to report gross order book additions in the
year ended 31 July 2017 which are c. 18% higher than in the year to
31 July 2016.
The Group will issue a further trading update in respect of the
year ended 31 July 2017, including in respect of closing revenue
pipeline, still to "go-live", on 24 August 2017.
For further information please contact:
Utilitywise plc 0330 303 0233
Brendan Flattery (CEO)
Richard Laker (CFO)
finnCap (NOMAD and broker) 020 7220 0500
Matt Goode/Henrik Persson (Corporate
Finance)
Simon Johnson (Corporate Broking)
Liberum (Joint broker) 020 3100 2000
Robert Morton/Steve Pearce
Redleaf Communications 020 7382 4730
Robin Tozer/David Ison
About Utilitywise
Utilitywise is a leading independent utility cost management
consultancy, which has established trading relationships with a
number of major UK and European energy suppliers and provides
services to its customers designed to assist them in achieving
better value out of their energy contracts, reduced energy
consumption and lower carbon footprint. Utilitywise is a UK company
quoted on the AIM market of the London Stock Exchange. For more
information, please visit www.utilitywise.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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