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LPE Set to Boost Earnings with the Acquisition of 4,000 New Customers

9 June 2023 11:27
ASX: LPE

Locality Planning Energy’s growth strategy continues to pay dividends, with the embedded electricity provider gaining 4000 new customers following its acquisition of utility management company All Power To You Pty (AP2U).

Boosting Earnings

The new customer base is located across 44 strata communities throughout south-east Queensland and represents a 14 per cent increase to the Company’s base of billable customers, which now stands well above 32 thousand customers across Australia.

The complementary acquisition provides LPE with additional stable long-term revenue as many of the new customers have long-term service contracts for up to 10 years, with the new customer base estimated to add $500,000 in additional gross profit annually.

The Company believes that as its new fixed-costs are set to remain stable, the acquisition should pay off its $900,000 dollar price tag and deliver profit within the next two years.

Shift in Strategy

The acquisition and growth it is set to bring is just another demonstration that LPE’s significant reorganisation the Company undertook last year has been a massive success, turning the Company into 2023’s turnaround stock.

The top-down reorganisation saw the Company retire all its debt and bring $17.8 million dollars up to the front after the Company secured its hedge position, giving it working capital to advance its strata business base and develop the growth potential of its vertically integrated renewable assets.

LPE was able to drop operating costs by 16 per cent and bring in $1.8m in positive cash flow immediately following the resource, placing the Company on track to hitting its $40 million revenue guidance for this financial year.

Looking Forward

The Company said it plans to pursue similar earnings-enhancing acquisitions alongside organic growth, remaining in line with its strategic theme of “creating value powering strata communities.”

“Acquiring AP2U is exactly the type of earnings accretive transaction the Company has been targeting. Having stabilised the Company’s fixed cost base whilst reorganising the business over the past 12 months, a material proportion of any incremental
revenue should flow directly to the bottom line,” Chairman Justin Pettett said.

“The Company remains focused on growing its customer base and revenues via further acquisitions and organically, with the aim of delivering a transition to profitability in FY24.”

LPE’s Australian Stock Exchange-listed share price has risen 2.04 per cent today, currently trading at 5.0c (10:54 am UTC+ 8 hours).

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