Switched off and smart

If you think switching off the lights and heating at every opportunity is the only way to cut those soaring fuel and energy bills, you haven’t met Utilitywise’s Geoff Thompson.

Don’t be misled by his red Bentley Continental Supersport parked outside the office. Geoff Thompson’s a man of many parts - happy in the absence of a PA, for example, to retreat to the kitchen and operate as teamaker to his visitors.

It’s remarkable, though, that he can drag himself away from his panoramic office window giving one of the most absorbing views a chief executive could enjoy.

It overlooks the Tyne where the dainty pedestrian ferry plying between South and North Shields punctuates the comings and goings of the Nissan transporter, freighters and continental ferries.

For Geoff it’s beyond comparison to his earlier days when he built Utilitywise behind barred windows and with no desk of his own. Clearly opportunistic, he recently made a major strategic acquisition just three months after enlisting Utilitywise on the Alternative Investment Market at the London Stock Exchange, the first North East newcomer for five years – and a family business at that. He now expects an additional acquisition in the next 12 months.

By the end of Q1 2013 another 100 staff could be hired too, raising the workforce to 414. Doubts this 50-year-old had in youth about abandoning an apprenticeship in engineering were unnecessary.

Investors, particularly canny in today’s wobbly economy, seem to have had few reservations about Utilitywise. The initial public offering raised almost £7m, while allowing Geoff to keep the business largely in the family.

Unlike many businesses persuading customers at this time to part with more money, for a reasonable sum at South Shields Utilitywise promises to save its customers money. It’s an energy and power brokerage and consultancy, driven by technology - a much needed child of its time.

As Geoff observes: “A coming energy crisis, a rising cost of living, a green factor - where to go from here, many firms ask themselves? I like to think our proposition meets a genuine need well timed.”

He was surprised on first learning his company was the North East’s first for five years to countenance a listing.

“We’d no aspiration to break new ground,” he admits. “For us it was simply the right thing to do. We’d gone through quite a bit of growth over recent years and were looking at how to continue that. We’d looked at options.

“We had approaches from private equity players but felt an IPO was the right route. It’s still early days but a number of things follow from the listing. There’s an important corporate governance and corporate layer that perhaps didn’t apply as a private company. That’s a useful and positive discipline. But most importantly, it gives access to the capital markets, and a way to continue growing.

“Already we’ve had support from some strong institutional shareholders we’re keen to develop relationships with, to attract new shareholders and continue the growth organically and by acquisition. Without enlisting it would have been more difficult. We diluted our equity to raise the cash for the business, though only 20% of the stock is with external shareholders.

“Other options besides private equity would have been bank debt or a combination. Now we’ve ideas and activities towards gaining more businesses with complementary products and services in energy management.”

The City valued the firm at about £36.9m - a company still only six years old. Its first post-flotation buy, Clouds Environmental Consultancy of Portsmouth, has cost £985,000 - a shade more than one year of Clouds’ turnover.

Clouds will still be run from Portsmouth, enhancing the range of technical expertise available to Utilitywise’s diverse energy management products. It also introduces Utilitywise to Clouds customers such British Airways, O2, global pharmaceutical group Eli Lilly, defence giant Thales, the National Gallery, and NHS trusts. It also provides additional access to the South.

Geoff knows the 10-year-old firm and its founding directors well. It’s quite small and future buys may be bigger but in this deal, funded equally from Utilitywise’s own reserves and an equity issue, Clouds brings revenues of £945,000 alongside its other benefits.

Last January Utilitywise bought Eco Monitoring Utility (EMU) Systems Ltd, gaining access to important intellectual property. Since the IPO, the number of contracted customers has risen 14% to around 12,000 based anywhere between Land’s End and John O’Groats, and there has been a 29% increase in contracted meters, giving more than 100,000 meters in total.

The overall energy spend of about £300m has been achieved on a debt free basis. Geoff says: “It’s not just about volume growth. It’s also about adding real value to our customers’ business. We’re trying to help them buy their energy at best rates. We help them identify waste, inefficiencies, opportunities for improvement and cost reduction from an energy perspective. Once we were primarily procurement led. Now we have a range of products and services quite unique.”

For example, Utilitywise has its own submetering solution with its own IP for which an international patent is pending. Made in the UK, it is installed on clients’ sites to detail at any time their energy usage, right down to an individual circuit.

A company may be found to be devouring up to 30% of its energy even when the building is empty. Where the waste and inefficiency lies must be pinpointed. Maybe sensors need to be installed or lighting improved by LED introduction. Maybe air-conditioning is running inefficiently.

Besides measuring, Utilitywise can quantify the return on investment. The detective is edd:e, a sub-metering product. Soon it will also employ its own voltageoptimiser, uniquely featured and deployed at distribution board level. This buck and boost voltage regulator will ensure voltage is regular, Geoff says. Energy saving software developed by Utilitywise gives room by room information in assessing a building. It also considers influences like building fabric, water, lighting, timers and controls, and the boiler.

“What ifs” can also be considered – scenarios within the software. Clients can then choose from a menu of efficiency measures. There’s a detailed return on investment calculation, and a proved saving post-audit. All this can be done paperless, with a laptop.

Geoff says: “We always try to beat any renewal offer from an existing supplier, then bundle in a range of value services.

“The Government is mandating that smart metering will be rolled out domestically and commercially. We have a smart metering proposition which we don’t manufacture but do install and project-manage. We’ll push data from the smart meter onto our reporting platform then give the client all the information they need to understand exactly what’s happening.”

Clients of Utilitywise get their own energy consultant, readily reachable, who’s part of a small team. Managers of each team are widely experienced in business energy. Consultants can call on this pooled experience and expertise whenever further guidance is needed.

Large clients with many sites, many meters or complex energy needs may have several energy consultants, usually from the same team. Smaller firms that can’t afford in-house energy management in effect can gain a member of management by having a Utilitywise consultant.

Quantifying savings depends on numerous factors. But Geoff says double digit savings and double digit cost reductions aren’t rare. Utilitywise was advised on its flotation by Clive Owen Corporate Finance led by partner Angus Allan, and Robert Phillips, partner and head of the corporate finance team at commercial law firm Muckle.

It was advised in its ensuing acquisition by Eversheds law firm and Clive Owen & Co. Allan says they look forward to seeing the business grow further. The company announced with its results that Michael Dent has joined from Total Gas & Power as sales and marketing director, and will have a seat on the board.

A dividend of 1p a share for the year is proposed, payable on December 14 to shareholders registered at close of business on November 30. Geoff has two sons and a stepdaughter in the business.

He holds 48% of the equity. Adam his oldest son, 25, was the third employee and now is chief operating officer. He holds 16%. Investec UK Smaller Companies Fund holds 9.9%, Geoff’s wife Andrea 8.1%, and chief financial officer Andrew Richardson (who’s spent four years there) holds 8%.

Geoff’s second son Calum, 20, is a team manager. Stepdaughter Stephanie, 24, is also in the business. Stepson Philip’s a schoolboy but, one day, who knows?