Eneraqua Technologies PLC on Wednesday said it will miss annual market consensus due to uncertainty over the recent changes to nutrient neutrality legislation.
Shares in Eneraqua plummeted by 57% to 39.40 pence each in London on Wednesday morning.
In the six months ended July 31, the London-based energy and water efficiency solutions provider swung to a pretax loss of £441,000 from a £3.0 million profit a year prior, as administrative expenses grew 29% to £8.9 million.
However, revenue increased by 7.4% to £26.0 million from £24.2 million the year before, driven by ‘contract wins and project completions.’
The company added that the UK government’s August announcement in which it proposed changes to the legislation that governs the development in nitrate-sensitive areas has resulted in its customers deferring investment decisions while they await regulatory clarity. As a result, Eneraqua expects full-year profit and revenue to be ‘substantially below’ market expectations.
Chief Executive Officer Mitesh Dhanak said: ‘Post-period end, the group has faced dual headwinds. The continued and increased budgetary pressures on local government are leading to discussions on slowing down project delivery and deferring works into [financial 2025]. This compounds the impact of the recent unexpected government policy change in relation to net nutrient neutrality. As a result, the board now expects some projects to be delivered more slowly with revenues moving into next year and reduced operational leverage affecting margins. As a result, we expect to see a material reduction in revenues and out turn in profitability during [financial 2024].
‘The board remains confident that the longer-term opportunity for the business driven by the social and economic imperatives driving the carbon transition remains in place.’
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