The ASX listed software company Energy One (EOL) commands a market-cap of $1.78 million at its current share price of 10 cents. This market cap now is slightly higher than the company's cash in the bank of $1.72 million.
The company generated sales revenue of just $1.84 million in the June 2013 year, down 18% from 2012. The company to its credit has taken $1 million costs out of its business when compared with 2012.
Energy One essentially is a holder of business knowledge and software smarts around Australian energy trading. Its business model is yet to be commercialised with an investment in Energy One for all intents and purposes a venture capital investment.
The company attribute the lack of new software sales in 2013 to the ongoing depressed state of the Australian electricity market. The mass of regulatory changes beset on the energy industry is also said to be stifling new software investment. The company also highlight tight budgets for government owned electricity companies in New South Wales and Queensland as well as Federal Government uncertainty around the carbon tax as reasons for the poor sales performance.
Energy One have continued to invest during these tough times in broadening its software offering (work-flow module, bidding system acquired, carbon solutions module developed, business intelligence module developed). The ongoing investment enables Energy One to claim the generous Federal Government research and development tax incentive with $720K expected back in the company coffers in the 2014 financial year.
The company suggest there is some thawing of software spend with the below commentary.
"Nonetheless, there are signs that customers are now seeking improved performance via efficiencies such as the reduction of the number of legacy systems, the automation of manual processes and through outsourcing of both business processes and support systems".
Energy One needs to grow its existing Australian software business albeit its a tough market. The company needs to be flexible and morph into business niches that may emerge around the energy market. The company needs to continue to invest and innovate.
