Dec quarter estimates, page-19

I’ve been tying to get my head around the big difference between “billing or under management” and the cash flow statements. I also looked back thru past releases to see if there was any reason for flat receipts over the last 2 quarters despite growing GWh. 

Initially they just used the term "Billing". In the Sept '17 Qtly they used the term "Billing contracts under management (UM)" and continued using that term till the Sept '18 Qtly where they called it "energy under management".

The deliberate move away from the term billing to me indicates it doesn’t mean invoicing that amount of GWh, but something else. Maybe it’s a figure based on average consumptions multiplied by the number of dwellings? Maybe some of these units are vacant? Maybe the average useage is down?

As per my last post, in Nov 2017 they said all billing was monthly. reading back thru some of their announcements, I noticed this in the March 2018 Quarterly, 

“While the majority of LPE accounts are on monthly billing cycles, management anticipate increasing to a higher proportion of accounts on quarterly billing cycles, as dictated by the growing market trend for quarterly billing”

That would account for pushing cash receipts out another 2 months on what I previously stated. Although it won’t affect the half and full year (accrual) figures, it will have a big effect on the cash flow statements. If I was a customer, I'd certainly choose to pay Quarterly not Monthly.

On Jan 24 2018 they said the debt facility was at advanced stages of finalisation, a facility was put in place in March, however for whatever reason didn’t draw on it, in Oct another facility replaced the former and they straight away drew on it. I can only assume something went wrong with the 1st facility, hence not drawing on it, and the 2nd facility was put in place 6 months later, so there was clearly a delay in the financing as stated in the latest Qtly which apparently impacted GWh expansion.

They annoyingly didn’t announce the GWh under management this Q, June 30 they had 204 GWh under management and forecast $44m in sales for FY19. In Nov 2017 they said they get $220,000 per GWh annually. If you multiply 204 by $220k you get $44m. Now we’re looking at $32m. That $220k figure will be reduced as per the Qtly narration, the 204MWh should now be higher, though not as high as it could have been given the loan delay. With the trend towards Quarterly billing we don't know which Quarter the funds will be received in.

I'm still confused by the term "under management". As the figure is stated before they bill the new customers, it must be based on an average projected usage. The good news is that it is growing & the Quarterly cashflows will hopefully catch up. Certainly the audited Half Yearly & Full Year financial results, being accrual based, will give a clearer picture. Having said that I think the sale will be recorded when it is invoiced so could still have a 3 month delay. Maybe someone with an accounting back ground could clarify that. In any case their guidance is for $32m in sales which will be very nice.