TIDMINSE
RNS Number : 5402A
Inspired Energy PLC
27 March 2017
27 March 2017
Inspired Energy plc
("Inspired" or the "Group")
Final Results for the year ended 31 December 2016
Inspired Energy plc (AIM: INSE), a leading energy procurement
consultant to UK corporates, announces record final results for the
year ended 31 December 2016.
HIGHLIGHTS
Financial Highlights
2016 2015 2016 % Increase
====================================== ========== ========== ================
Revenue GBP21.51m GBP15.19m 42%
====================================== ========== ========== ================
Gross profit GBP17.31m GBP11.57m 50%
====================================== ========== ========== ================
Adjusted EBITDA* GBP8.26m GBP5.69m 45%
====================================== ========== ========== ================
Adjusted Profit Before Tax** GBP7.02m GBP5.07m 38%
====================================== ========== ========== ================
Profit Before Tax GBP4.02m GBP3.49m 15%
====================================== ========== ========== ================
Cash Generated From Operations GBP4.98m GBP2.72m 83%
====================================== ========== ========== ================
Net Debt GBP10.79m GBP8.90m 21%
====================================== ========== ========== ================
Dividend per share*** 0.45p 0.35p 29%
====================================== ========== ========== ================
Adjusted EPS 1.27p 1.00p 27%
====================================== ========== ========== ================
Basic EPS 0.71p 0.65p 9%
====================================== ========== ========== ================
Procurement Corporate Order Book**** GBP28.00m GBP24.50m 14%
====================================== ========== ========== ================
* Adjusted EBITDA is earnings before interest, taxation,
depreciation and amortisation, excluding exceptional items and
share based payments.
**Adjusted Profit before Tax is earnings before amortisation,
excluding exceptional items and share based payments.
***Full year dividend of 0.45p, includes interim dividend of
0.13p (2015: 0.10p), and 0.32p final dividend (2015: 0.25p).
**** Refer to page 5 for definition of the Procurement Corporate
Order Book.
Operational Highlights
-- Significant growth in the Corporate Division as a result of:
-- Strong conversion of new business wins in both commercial and
public sectors in addition to record renewals
-- Acquisition of Informed Business Solutions Limited
("Informed") in September 2016:
-- Broadening the Group's customer base and strengthening its
presence in the multi-site retail and leisure markets
-- Fully integrated, with the entire Informed team now relocated to the Group's head office
-- Record revenue, profits and organic Procurement Corporate
Order Book Sales during the year
-- Robust organic growth, with the Procurement Corporate Order
Book, excluding the impact of the acquisitions of WPUK, STC and
Informed, increasing by 9% to GBP19.1 million as at 31 December
2016 (2015: GBP17.5 million).
-- The Group's SME Division performed strongly in the year,
providing material contribution to cash generation
-- High client retention rates maintained:
-- Risk Management division maintained 100% client retention
-- Renewals across the Corporate Division at 85%
-- Average headcount increased by 68% to 200 staff as a result
of Corporate acquisitions and investment within the operational
team
Commenting on the results, Janet Thornton, Chief Executive
Officer, said: "I am delighted to report our sixth consecutive year
of record revenues and profits. The investment we have made in
people, acquisitions and technology over the past years has allowed
us to develop into a market leader in our industry and to provide
best in class services to our customers.
"I am proud of the accomplishments of our talented and dedicated
team, whose hard work has delivered strong growth on all fronts.
Our growth has been further enhanced by the successful acquisition
of Informed, which has integrated extremely well in a relatively
short period of time and has continued to perform well as part of
the enlarged Group. We are also pleased to today welcome Richard
Logan to the team as an Independent Non-Executive Director.
"Our model of strong organic growth with selected, complimentary
acquisitions is proven and we look forward to 2017 with
confidence."
For further information, please contact:
Inspired Energy plc www.inspiredenergy.co.uk
Janet Thornton (Chief Executive) +44 (0) 1772 689250
Paul Connor (Finance Director)
David Foreman (Corporate Development +44 (0) 7717 707 201
Director)
Shore Capital (Nominated Adviser and
Joint Broker)
Bidhi Bhoma
Edward Mansfield +44 (0) 20 7408 4090
Panmure Gordon (Joint Broker)
Ben Thorne
Erik Anderson +44 (0) 20 7886 2500
Gable Communications +44 (0) 20 7193 7463
Justine James +44 (0) 7525 324431
John Bick inspired@gablecommunications.com
CHAIRMAN'S STATEMENT
I am delighted to report another record year for the Inspired
Group in 2016. The business continued to deliver across all fronts;
excelling operationally and posting strong financial results in
line with management expectations.
The results set out herein represent another record year with
Group revenue increasing by 42% to GBP21.51 million (2015: GBP15.19
million) and adjusted EBITDA increasing by 45% to GBP8.26 million
(2015: GBP5.69 million). Adjusted profit before tax increased by
38% to GBP7.02 million (2015: GBP5.07 million) and Adjusted EPS
increased by 27% to 1.27 pence (2015: 1.00 pence). Importantly, the
Group generated cash from operations of GBP4.98m, an increase of 83
per cent, from GBP2.72m in 2015.
The results are testament to the talent and dedication of the
entire Inspired team. Their commitment has once again delivered our
organic growth strategy, supplemented by selective earnings
enhancing acquisitions, which have enabled us to maintain and
improve our robust core business model. During the year, we
completed the acquisition of Informed and I am pleased to report,
as expected, that Informed has broadened the Group's customer base
and strengthened the Group's presence in the multi-site retail and
leisure markets for corporate energy procurement. I would also like
to thank the entire Informed team for their dedication post
acquisition, during which period the entire business operation has
relocated to Inspired Energy's head office.
As in previous years, the core business' Corporate Procurement
Order Book is a consistent guide to the future performance of the
Group and provides strong visibility of revenues for FY 2017 and
the next three years. Accordingly, we are pleased to announce that
the combined (including acquired businesses) Corporate Procurement
Order Book totals GBP28.0 million as at 31 December 2016,
representing a year on year increase of 14% (2015: GBP24.5
million). Excluding the impact of the acquisitions of Wholesale
Power UK ("WPUK"), STC Energy and Carbon Holdings Limited ("STC")
and Informed, the Procurement Corporate Order Book increased by 9%
to GBP19.1 million as at 31 December 2016 (2015: GBP17.5 million).
This growth was driven by an 11% like-for-like increase in
Procurement Corporate Order Book Sales, excluding the impact of
WPUK, STC and Informed, to GBP13.5 million in the year to 31
December 2016 (2015: GBP12.2 million).
As outlined in previous announcements, our strategy to build out
the Corporate Division, via both organic and acquisitive growth.
Group revenue from the Corporate Division has increased to
approximately 76 per cent, an increase of 9 per cent. against 2015
(67 per cent.). This trend towards the Corporate Division growth is
expected to continue into the short and medium term, as we continue
to focus our acquisition strategy on Corporate businesses.
In addition to the strong performance from the Corporate
division, the Group's SME Division performed strongly in the year
and in line with management expectations. Increasingly, the
division continues to make a material contribution to cash
generation for the Group, which is reflected in the strong
operating cash generated by the Group during the year. We have
benefitted in the year from previous investments made to
infrastructure and operational expertise, with a 2% increase in SME
revenue, delivering an impressive 14% increase in SME EBITDA.
Accordingly, the Board is pleased to propose a final dividend of
0.32 pence per share subject to shareholder approval at the AGM in
June. This combined with the interim dividend payment of 0.13 pence
per share, results in a full year dividend of 0.45 pence per share,
a 29% increase on 2015 (2015: 0.35 pence). The dividend increase in
the year of 29% is a demonstration of the Board's confidence in the
future for the enlarged Group.
With the Group structure firmly embedded, a proven strategy
which combines organic growth with selective acquisitions, and the
integration of the acquired businesses continuing as planned, we
have a very strong platform from which to continue our growth. 2017
has started positively with the performance seen in 2016 continuing
into the current year and the Board is confident that the Group
will continue to go from strength to strength in 2017.
Michael Fletcher
Chairman
27 March 2017
CHIEF EXECUTIVE OFFICER'S STATEMENT
The Board is delighted with the performance of the Group in the
year to 31 December 2016, delivering record growth, enhanced by the
complementary acquisition of Informed Business Solutions Limited
("Informed") in September 2016.
The growth achieved by the Group both in 2016 and during its
time as a public company is a testament to the value of our
customer proposition and the talent and dedication of our staff.
The enlarged Group has a very strong platform from which to
continue to build on the organic growth of the business, onto which
we can add new service lines and sector specialisms via acquisition
as demonstrated with Informed. We look forward to the coming year
with confidence.
Corporate Division
Overview
The Group's Corporate Division comprises:
-- Inspired Energy Solutions (founder business);
-- DEP (acquired in 2012);
-- WPUK (acquired in 2015);
-- STC (acquired in 2015); and
-- Informed (acquired in 2016).
The Division's core services include the review, analysis,
negotiation and bureau of gas and electricity contracts.
Organic Growth
2016 was an outstanding year for our Corporate Division,
delivering record revenue, profits and Procurement Order Book
Sales. The success of the division is built upon delivering a high
level of service to corporate customers combined with continuous
development of the product suite available to clients from energy
suppliers.
In addition, through increased utilisation and optimisation of
IT platforms which continue to be developed, the Corporate team has
been able to increase efficiency whilst delivering increased levels
of service to our valued clients. This is demonstrated by the
continued superb client retention rates in excess of 85% with Risk
Management retained at 100%.
The year was an exciting one for new business wins and renewals,
with key client wins including Victrex PLC, Travis Perkins PLC and
Samworth Brothers which reinforces our strong track record of
tendering and winning high profile, significant users of energy in
the UK Corporate space. We are also particularly pleased to be able
to report further strong client wins within the Public Sector
arena, a market which Inspired believes can deliver significant
growth through the introduction of a specific public sector focused
team, comprising key individuals with significant experience in
successfully negotiating the OJEU (the Official Journal of the
European Union) tender process in addition to the expertise in this
arena from the STC team. Key client wins in this market include
West Thames College, Metropolitan Housing Trust, Westminster CC,
The David Ross Education Trust and St Helens College.
2016 Acquisitions
Inspired completed the acquisition of Informed in September
2016. Informed is an energy procurement and environmental
compliance consultancy based in Kirkham, Lancashire which has now
been integrated into the Group's headquarters. Informed has a
strong presence in the multi-site retail and leisure markets for
energy procurement and has complemented its service offering
through the development of environmental compliance auditing
services, which it launched in 2014. As expected, the acquisition
has complemented Inspired's core Corporate Division and further
extended the Group's sector specialism.
Informed was acquired in September 2016 for an initial
consideration of GBP2.25 million, with a further contingent
consideration of up to GBP2.00 million subject to achieving certain
financial performance hurdles.
Corporate Division Financial Highlights
Highlights In the year include:
-- Revenue increased 62% to GBP16.32 million (2015: GBP10.74 million)
-- The Corporate Division generated adjusted EBITDA of GBP7.60
million (2015: GBP4.97 million), a 53% year on year increase
-- Like-for-like Procurement Corporate Order Book Sales,
excluding the contribution of WPUK, STC and Informed, the
acquisitions made in 2015 and 2016, increased by 11% to GBP13.5
million in the year to 31 December 2015 (2015: GBP12.2 million)
-- Like-for-like Procurement Corporate Order Book (previously
reported as 'Corporate Order Book'), excluding WPUK, STC and
Informed increased by 9% to GBP19.1 million as at 31 December 2015
(2014: GBP17.5 million)
-- Procurement Corporate Order Book exceeded GBP28.0 million,
representing a year on year increase of 14%
-- High customer retention rates maintained, at 85% across the
Group (100% in Risk Managed), whilst delivering strong new customer
win performance
Procurement Corporate Order Book
The Group is proud to be able to report organic and acquisitive
Procurement Corporate Order Book growth in the year to a record
GBP28.0 million. This represents an increase of 14% during the
year.
Procurement Corporate Order Book Analysis GBP'm
Procurement Corporate Order Book b/f at 31 December 2015 17.5
Add: Procurement Corporate Order Book Sales in period
(excl. WPUK, STC and Informed) 13.5
Less: Revenue recognised from Procurement Corporate Order
Book in period (excl. WPUK, STC and Informed) (11.9)
Add: Acquired Procurement Corporate Order Book less revenue
recognised in the period 8.9
------------------------------------------------------------- -------
Procurement Corporate Order Book c/f at 31 December 2016 28.0
The Procurement Corporate Order Book is defined as the aggregate
revenue expected by the Group in respect of signed contracts
between an Inspired client and an energy supplier for the remainder
of such contracts (where the contract is live) or for the duration
of such contracts (where the contract has yet to commence). No
value is ascribed to expected retentions of contracts.
The Procurement Corporate Order Book only relates to the
Corporate Division, and does not include any SME revenue or
contracts within it. The growth of the Procurement Corporate Order
Book provides an indicator of the latent growth of the business
which has yet to be recognised as revenue of the Group. This is
because no revenue is recognised by Inspired's Corporate Division
until the energy is physically consumed by the client.
Procurement Corporate Order Book Sales
Procurement Corporate Order Book Sales values represent the
aggregated expected revenue due to the Group from contracts secured
within a defined period. Expected revenue is calculated as the
expected commission due to the Group from signed contracts between
a client an energy supplier for an agreed consumption value at an
agreed commission rate.
A Procurement Corporate Order Book Sales Value which is in
excess of revenue recognised, within a defined period, will
increase the Procurement Corporate Order Book of the Group,
providing an indicator of expected future growth already secured by
the Group. In 2016, organic Procurement Corporate Order Book Sales
(excluding WPUK, STC and Informed) were 13% in excess of revenue
recognised in the year, which is manifested in the increase of the
Procurement Corporate Order Book (excluding WPUK, STC and Informed)
of GBP1.6 million.
SME Division
The Group's SME Division includes:
-- EnergiSave Online ("EnergiSave")
-- KWH Consulting ("KWH") and
-- Simply Business Energy ("SBE").
Within the SME Division, the Group's energy consultants contact
prospective SME clients to offer reduced tariffs and contracts
based on the unique situation of the customer.
The SME Division has delivered another strong set of results in
2016. Following a period of investment in the team and operational
infrastructure, the SME Division has become a strong, mature and
consistent performer within the Group. Following a strategic
decision to maintain, rather than increase, headcount, the division
has delivered a 11% increase in Gross Profit to GBP2.74 million
(2015: GBP2.47 million)and 14% increase in EBITDA to GBP1.75
million (2015: GBP1.54 million) in 2016, resulting in an increase
in EBITDA margin to 34% (2015: 30%). The division continues to
provide material cash generation to the Group.
Following a year of expected stability, the Board may look to
modestly increase headcount in the division in order to deliver
increased growth in the division in the short to medium term but
will ensure that cash generation is maintained at an appropriate
level after taking into account any investment in staff.
Acquisition strategy
The Board continues to investigate opportunities for the Group
to participate in industry consolidation. To create an enlarged and
improved business, as demonstrated with the 6 acquisitions since
admission to trading on AIM, we believe that potential targets
should offer one or more of the following criteria:
-- Additional technical and/or service capability;
-- Sector specialism and diversification; and
-- Increased geographic footprint
The Board continues to seek acquisition opportunities which fit
with the Group's strategy in order to augment the Group's services,
products or markets and is delighted to have completed the
acquisition of Informed in H2 of 2016.
Exceptional Deal Related costs
Exceptional costs of GBP530,285 have been incurred in the year,
all of which relates to fees and restructuring associated with the
two acquisitions in H2 of 2015 and the acquisition of Informed in
2016. These costs are considered by the Directors to be either
material in nature or non-recurring and therefore require separate
identification to give a true and fair view of the Group's result
for the period.
Cash and Borrowings
As at 31 December 2016, the Group had a cash balance of GBP1.0
million. As at that date, the Group had outstanding balances on its
term debt facilities of GBP13.6 million comprising;
-- senior term debt of GBP8.6 million
-- GBP1.75 million drawn of the GBP3.5 million acquisition facility and;
-- GBP1.5 million drawn of the GBP1.5 million revolving credit facility.
Capital repayments of GBP1.4m per annum are made on the senior
term debt.
As at 31 December 2016, net debt stood at GBP10.79 million,
which is an increase of GBP1.89 million in comparison to 31
December 2015.
The increase in net debt reflects a year in which the cash
generation of the Group was offset by the payment of GBP1.75
million of initial cash consideration to the vendors of Informed
and GBP2.0 million of deferred cash consideration to the vendors of
STC and WPUK.
To finance the acquisition of STC in November 2015, the Group
entered into a new facility agreement with Santander UK plc
("Santander"), replacing the GBP5.0 million term loan facility and
GBP0.6 million of drawn RCF facilities. The new facility agreement
("Facility") was for a GBP10.0 million term loan. GBP7.0 million of
the term facilities ("Tranche A") amortise over a period of five
years with the balance, and the remaining GBP3.0 million ("Tranche
B"), repayable by way of a bullet repayment on 16 May 2021. The
Facility has an interest rate of 3.0% over LIBOR in respect of
Tranche A and 3.25% over LIBOR in respect of Tranche B. There are
no ongoing monitoring fees.
In addition, the Group has also entered into a new revolving
credit facility with Santander, for the sum of GBP1.5 million, of
which GBP1.5 million is drawn, to be used for the purposes of
satisfying future working capital requirements (the "RCF") and an
acquisition facility of up to GBP3.5 million to fund future Group
acquisitions ("Acquisition Facility"), of which GBP1.75 million is
currently drawn. The Acquisition Facility can be drawn on the same
commercial terms as the Facility at the election of the Group and
subject to bank approval of any proposed acquisition.
Dividends
The Board is delighted to propose a final dividend of 0.32 pence
per share subject to approval at the annual general meeting of the
Group. Following the payment of an interim dividend of 0.13 pence
per share, the total dividend payable for the year ended 31
December 2016 is 0.45 pence per share. This represents an increase
of 29% over the dividend payable in respect of 31 December 2015,
being 0.35 pence per share.
The dividend will be payable to all shareholders on 13 July 2017
to shareholders on the register on 9 June 2017 and the shares will
go ex-dividend on 8 June 2017.
Focus on our people
The Group believes that investment in staff development and
welfare builds a stronger business and we will continue to make
appropriate investment in order to further develop our team and our
environment. This is demonstrated by the Group supporting employees
through professional qualifications and work based learning.
National Vocational Qualifications (NVQs) continue to be a great
success, with employees delivering 100% pass rate in 2016. In
addition, a number of staff are undertaking professional
qualifications including ACCA/AAT qualifications to support their
development within the business.
Throughout the year, Directors of the Group provide guidance and
mentor employees, engaging in consultation with them to ensure that
their views are heard and considered.
Applications for employment by disabled persons are given full
and fair consideration for all vacancies in accordance with their
particular aptitude and abilities. In the event of employees
becoming disabled, every effort if given to retrain them in order
that their employment with the Group may continue.
Outlook
I am delighted with the Group's achievements over the past year,
delivering strong growth on all fronts as we continue to deliver
value-added services to our customers. Our strong organic growth
has been further enhanced by the successful execution of the
acquisition of Informed which has integrated seamlessly into the
Group and performed in line with expectations.
Integration of Informed is now complete, and we continue to
advance our position as a market leader. On behalf of the Board, I
would like to thank all of the Inspired team for the hard work over
the past year, and we look forward to another exciting year of
growth and development of the business.
Janet Thornton
Chief Executive Officer
27 March 2017
INSPIRED ENERGY PLC
The Group
Inspired Energy PLC provides energy procurement consultancy to a
range of UK business customers. The Group's core services are
primarily the review, analysis and negotiation of gas and
electricity contracts on behalf of our clients. The Group generates
the majority of its income from commissions received from energy
suppliers.
In addition to providing expert consultancy on the negotiation
of energy contracts, the Group provides on-going services to our
clients throughout the life of each contract, including energy
bureau, billing and management services.
Customers
Our size and reputation enables us to partner with UK energy
suppliers to offer exclusive contracts to our customers.
Through optimising energy procurement on behalf of our clients,
Inspired enables them to achieve greater certainty of their energy
costs and in many cases delivers significant savings.
The Group currently manages and negotiates gas and electricity
supply agreements for more than 100,000 meters across the UK,
operating on behalf of c.10,800 customers.
Corporate Division
The Corporate Division, which includes Inspired Energy
Solutions, DEP, Wholesale Power UK, STC Energy and Carbon Holdings
and Informed Business Solutions Limited, delivers core services,
which are the review, analysis and negotiation of gas and
electricity contracts on behalf of corporate clients. In addition,
the division provides customers with leading energy bureau, billing
and management service.
Energy review and benchmarking
The Group's team of energy analysts reviews the historical
energy consumption and purchasing on behalf of clients in order to
understand and analyse the client's energy needs. Following this
review and in-depth discussions with clients regarding their
individual requirements, energy purchasing goals and appetite for
risk, a bespoke, tailored energy purchasing strategy is
designed.
Negotiation
Based on the agreed tailored purchasing strategy the analyst
team will negotiate, on the client's behalf, with energy suppliers
ensuring that the client has a choice of the most appropriate
energy contracts available in the market. The choice of contracts
available to Inspired clients includes a number of contracts that
are exclusive to the Group which have been created in partnership
with the energy suppliers. Typically these include a range of
caveats, carve outs or options which offer the client increased
flexibility within a fixed price framework, allowing our clients to
fix their budget at the time of purchase but with the opportunity
to benefit from any fall in commodity prices.
All tenders also include a thorough review and explanation of
the additional pass through charges applicable on an energy
contract, ensuring that the client is fully informed and aware of
all costs prior to signing an energy contract. The contracts run
for between twelve and 36 months.
Bureau and bill validation
In addition, the Group offers a market leading energy bureau and
bill validation service to all clients. Experienced bureau
managers, utilising a bespoke end-to-end contract management IT
platform, analyse each client's energy bills throughout the period
of their contract, confirming that usage, pass through charges and
tariffs are all correctly charged to their energy supplier.
In instances of dispute, the bureau team acts on behalf of the
client to resolve queries and ensure that only valid charges are
paid.
Additional services
In addition to the above core services, a number of additional
services are offered to customers:
-- CRC Reporting - production of management information for
customers to comply with Carbon Reduction Commitment
legislation.
-- Retrospective Auditing - review of last six years' energy
procurement charges to ensure no over-charges have been made. The
Group operates on a share of savings revenue model in respect of
rebates achieved.
-- Power Purchasing Agreements - the Group is able to trade
green energy certificates on behalf of renewable energy
producers.
Risk managed trading
Managed frameworks
The Group's Corporate Division benefits from a market leading
trading team of six analysts has continued, who actively focus on
high volume consumers and allow customers to operate more complex,
long-term energy 'frameworks' based on agreed risk management
strategies.
Comprehensive approach
Inspired's approach to risk management is comprehensive. The
team actively manages the entire energy procurement process from
wholesale commodity level to total cost at meter. This is necessary
in order to create a succinct, robust and dynamic risk policy
tailored to each individual client. Prior to commencement, Inspired
undertakes a strategy workshop with clients to establish financial
objectives, risk parameters and market engagement rules.
Market leading terms
Inspired's risk management team ensures clients are offered
market leading supplier terms which support the trading strategy,
ensuring each client meets their specific procurement
objectives.
'Whole of market' access
Combined with the team's considerable industry experience and
knowledge, the trading team uses all of the LEBA broker platforms
and exchanges for the energy markets across the UK and Europe,
which ensures all opportunities to mitigate price risk are
identified and utilised. In addition to these platforms, the team
also has access to leading-edge news and commentary, technical
analysis, statistical models and other proprietary tools which
helps provide clients with clear views on market behaviour and what
future movements could be.
Budget clarity
All of our risk managed products are supported by sophisticated
internal systems which generate pricing automatically so clients
are always aware of their total budgetary position.
SME Division
The SME Division was launched in October 2012 and has grown
rapidly since its launch. SME energy consultants contact
prospective clients to offer reduced tariffs and contracts based on
the unique situation of the customer.
Leads are generated and managed by the Group's internally
generated, bespoke CRM and case management IT system. Tariffs are
offered from a range of suppliers and the Group is actively working
with new suppliers to increase the range of products available to
SME clients.
Following the acquisitions made in 2014, the division has
developed a fully automated, fully operational online quoting
platform for SME customers looking to switch their energy supplier
and it has agreements in place with the majority of energy
suppliers within the SME sector. The web enabled capability is
offered to prospective new, online, customers, and is also used by
the sales agents in the division.
Group statement of comprehensive income
For the year ended 31 December 2016
2016 2015
Note GBP GBP
----------------------------------------------------------------------------- ----- ------------- ------------
Revenue 21,514,911 15,188,071
Cost of sales (4,205,931) (3,622,110)
------------------------------------------------------------------------------ ----- ------------- ------------
Gross profit 17,308,980 11,565,961
Administrative expenses (12,470,995) (7,651,117)
------------------------------------------------------------------------------ ----- ------------- ------------
Operating profit 4,837,985 3,914,844
------------------------------------------------------------------------------ ----- ------------- ------------
Analysed as:
Earnings before exceptional costs, depreciation,
amortisation and share-based payments costs 8,257,775 5,688,954
Exceptional costs 3 (530,285) (480,128)
Depreciation (422,279) (194,358)
Amortisation of intangible assets (2,149,198) (786,705)
Share-based payment costs (318,028) (312,919)
------------- ------------
4,837,985 3,914,844
----------------------------------------------------------------------------- ----- ------------- ------------
Finance expenditure (742,085) (358,593)
Other financial items (77,315) (61,658)
------------------------------------------------------------------------------ ----- ------------- ------------
Profit before income tax 4,018,585 3,494,593
Income tax expense 4 (616,430) (651,344)
------------------------------------------------------------------------------ ----- ------------- ------------
Profit for the year and total comprehensive income from continuing operations 3,402,155 2,843,249
------------------------------------------------------------------------------ ----- ------------- ------------
Attributable to:
Equity owners of the company 3,402,155 2,843,249
------------------------------------------------------------------------------ ----- ------------- ------------
Basic earnings per share attributable to the equity holders of the company
(pence) 5 0.71 0.65
Diluted earnings per share attributable to the equity holders of the company
(pence) 5 0.68 0.62
------------------------------------------------------------------------------ ----- ------------- ------------
Group Statement of Financial Position
At 31 December 2016
2016 2015
Note GBP GBP
------------------------------- ----- ------------- -------------
ASSETS
Non-current assets
Goodwill 7 12,987,651 9,400,834
Other intangible assets 7,390,982 7,537,906
Property, plant and equipment 6 1,331,603 1,360,303
Non-current assets 21,710,236 18,299,043
------------------------------- ----- ------------- -------------
Current assets
Trade and other receivables 8 12,408,789 9,460,174
Cash and cash equivalents 984,403 1,604,851
------------------------------- ----- ------------- -------------
Current assets 13,393,192 11,065,025
------------------------------- ----- ------------- -------------
Total assets 35,103,428 29,364,068
------------------------------- ----- ------------- -------------
LIABILITIES
Current liabilities
Trade and other payables 1,712,175 1,357,231
Bank borrowings 3,337,500 2,000,000
Deferred consideration -
Contingent consideration 2,460,354 1,654,601
Current tax liability 2,413,464 1,144,139
------------------------------- ----- ------------- -------------
Current liabilities 9,923,493 6,155,971
------------------------------- ----- ------------- -------------
Non-current liabilities
Bank borrowings 8,286,462 8,490,569
Trade and other payables 61,866 50,000
Deferred consideration -
Contingent consideration 797,433 1,788,506
Interest rate swap 149,120 76,571
Deferred tax liability 1,010,869 1,495,244
------------------------------- ----- ------------- -------------
Non-current liabilities 10,305,750 11,900,890
------------------------------- ----- ------------- -------------
Total liabilities 20,229,243 18,056,861
------------------------------- ----- ------------- -------------
Net assets 14,874,185 11,307,207
------------------------------- ----- ------------- -------------
EQUITY
Share capital 606,987 589,505
Share premium account 2,318,619 1,901,747
Merger relief reserve 14,913,911 13,675,249
Share-based payment reserve 794,120 631,023
Retained earnings 7,623,321 5,892,456
Reverse acquisition reserve (11,382,773) (11,382,773)
------------------------------- ----- ------------- -------------
Total equity 14,874,185 11,307,207
------------------------------- ----- ------------- -------------
Group Statement of Changes In Equity
For the year ended 31 December 2016
Share Merger Share-based Reverse Total
Share premium relief payment Retained acquisition shareholders'
capital account reserve reserve earnings reserve equity
GBP GBP GBP GBP GBP GBP GBP
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Balance at 1 January 2015 529,602 1,596,028 8,925,737 457,728 4,120,212 (11,382,773) 4,246,534
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Profit and total comprehensive
income for the period - - - - 2,843,249 - 2,843,249
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Shares issued (1 April 2015) 2,675 84,707 - - - - 87,382
Shares issued (20 May 2015) 3,704 - 296,296 - - - 300,000
Shares issued (31 July 2015) 5,800 - 494,200 - - - 500,000
Shares issued (21 August 2015) 6,740 221,012 - - - - 227,752
Shares issued (17 November
2015) 40,984 - 3,959,016 - - - 4,000,000
Share-based payment cost - - - 312,919 - - 312,919
Share options lapsed/exercised - - - (139,624) 139,624 - -
Dividends paid - - - - (1,210,629) - (1,210,629)
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Total transactions with owners 59,903 305,719 4,749,512 173,295 (1,071,005) - 4,217,424
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Balance at 31 December 2015 589,505 1,901,747 13,675,249 631,023 5,892,456 (11,382,773) 11,307,207
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Profit and total comprehensive
income for the period - - - - 3,402,155 - 3,402,155
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Shares issued (19 January 2016) 2,188 131,565 - - - - 133,753
Shares issued (3 May 2016) 1,672 122,859 - - - - 124,531
Shares issued (23 May 2016) 6,906 743,094 - - - 750,000
Shares issued (2 September
2016) 1,347 97,760 - - - - 99,107
Shares issued (28 September
2016) 4,432 - 495,568 - - - 500,000
Shares issued (3 November 2016) 937 64,688 - - - - 65,625
Share-based payment cost - - - 318,028 - - 318,028
Share options exercised - - - (154,931) 154,931 - -
Dividends paid - - - - (1,826,221) - (1,826,221)
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Total transactions with owners 17,482 416,872 1,238,662 163,097 1,730,865 - 3,566,978
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Balance at 31 December 2016 606,987 2,318,619 14,913,911 794,120 7,623,321 (11,382,773) 14,874,185
------------------------------- ------- --------- ---------- ----------- ----------- ------------ -------------
Merger relief reserve
Merger relief reserve represents the premium arising on shares
issued as part or full consideration for acquisitions, where
advantage has been taken of the provisions of section 612 of the
Companies Act 2006.
Reverse acquisition reserve
The reverse acquisition reserve relates to the reverse
acquisition between Inspired Energy Solutions Limited and Inspired
Energy plc on 28 November 2011 and arises on consolidation.
Share-based payment reserve
The share-based payment reserve is a reserve to recognise those
amounts in equity in respect of share-based payments.
Group Statement of Cash Flows
For the year ended 31 December 2016
2016 2015
GBP GBP
Cash flows from operating activities
Profit before income tax 4,018,585 3,494,593
Adjustments
Depreciation 422,279 194,358
Amortisation 2,149,198 786,705
Share- based payment costs 318,028 312,919
Finance expenditure 742,085 358,593
Other financial items 77,315 61,658
Cash flows before changes in working capital 7,727,490 5,208,826
Movement in working capital
Increase in trade and other receivables (2,948,615) (2,200,656)
Increase/(decrease) in trade and other payables 199,551 (289,165)
-------------------------------------------------------- ------------ ------------
Cash generated from operations 4,978,426 2,719,005
Income taxes paid (532,786) (987,833)
-------------------------------------------------------- ------------ ------------
Net cash flows from operating activities 4,445,640 1,731,172
-------------------------------------------------------- ------------ ------------
Cash flows from investing activities
Contingent consideration paid (1,250,000) (50,000)
Acquisition of subsidiaries net of cash acquired (1,374,189) (5,571,279)
Payments to acquire property, plant and equipment (368,873) (246,091)
Payments to acquire intangible assets (1,071,274) (529,772)
Proceeds for disposal of property, plant and equipment - 19,911
-------------------------------------------------------- ------------ ------------
Net cash used in investing activities (4,064,336) (6,377,231)
-------------------------------------------------------- ------------ ------------
Cash flows from financing activities
New bank loans (net of debt issue costs) 2,623,750 7,363,158
Proceeds from issue of new shares 423,015 315,134
Repayment of bank loans (1,509,375) (613,158)
Interest on bank loans paid (712,921) (355,192)
Dividends paid (1,826,221) (1,210,629)
Repayment of hire purchase agreements - (23,225)
-------------------------------------------------------- ------------ ------------
Net cash (outflow)/inflow financing activities (1,001,752) 5,476,088
-------------------------------------------------------- ------------ ------------
Net (decrease)/increase in cash and cash equivalents (620,448) 830,029
Cash and cash equivalents brought forward 1,604,851 774,822
-------------------------------------------------------- ------------ ------------
Cash and cash equivalents carried forward 984,403 1,604,851
-------------------------------------------------------- ------------ ------------
.
NOTES TO PRELIMINARY RESULTS
1. Basis of preparation
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the year ended
31 December 2016. The auditors reported on those accounts; their
report was unqualified and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006. The statutory
accounts for the year ended 31 December 2016 will be delivered to
the registrar of Companies following the Company's Annual General
Meeting.
Whilst the financial information included in this preliminary
announcement has been computed in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRS), this announcement in itself does not contain sufficient
information to comply with IFRS. Details of the accounting policies
are those set out in the annual report for the year ended 31
December 2015. These accounting policies have remained unchanged
for the financial year ended 31 December 2016.
Going Concern
The Group's forecasts, which have been prepared for the period
to 31 December 2018 after taking into account the contracted order
book, future sales performance, expected overheads, capital
expenditure and debt service costs, show that the Group should be
able to operate profitably and within the current financial
resources available to the Group.
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Group financial statements.
The preparation of financial statements, in conformity with
generally accepted accounting principles under IFRS, requires
management to make estimates and assumptions that affect the
reporting amounts of assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reported period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results may ultimately differ from those
estimates.
1.1 Revenue recognition
Corporate Division
Commissions received from the energy suppliers are based upon
the energy usage of the Corporate customer at agreed commission
rates with the energy suppliers. Commission income is recognised in
line with the energy usage of the Corporate customer over the term
of the contract, which is considered to be the point at which
commission income can be reliably measured. This is due to the
impact of the observed variability of actual to estimated energy
usage on Corporate customer contracts on the substantial order book
of the Corporate Division.
The majority of contracts are entered into as 'direct billing'
contracts, whereby commissions are received in cash terms in line
with the billing profile of the ultimate customer, which can be on
a monthly or quarterly basis. For a minority of suppliers,
'up-front payment' contracts are entered into, whereby the supplier
pays a percentage of the commission on the contract commencement
date, with the remaining percentage on contract reconciliation at a
future specified date.
Accrued income for the Corporate Division represents commission
income recognised at the year end in respect of customer energy
usage prior to the year end which has not been settled by the
energy supplier at that point.
For risk-managed contracts, where a number of services are
provided to the Corporate customer over the term of the contract,
commission income is similarly recognised in line with the energy
usage of the customer which approximates to recognition on a
straight-line basis over the contract period.
In respect of contracts for ongoing services billed directly to
the Corporate customer, including bureau services, which have
increased since the acquisition of STC Energy and Carbon Holdings
Limited, revenue represents the value of work done in the year.
Revenue in respect of contracts for ongoing consultancy services is
recognised as it becomes unconditionally due to the Group as
services are delivered and is measured by reference to stage of
completion as determined by cost profile.
SME Division
The SME Division provides services through procuring contracts
with energy suppliers on behalf of SME customers and generates
revenues by way of commissions received directly from the energy
suppliers. No further services regarding procurement are performed
once the contract is authorised by the supplier. Commissions earned
by the SME Division fall into two broad categories:
Change of tenancy agreements (COTS)
COTS agreements are largely entered into by customers on moving
into new premises. Revenue relates to an up-front fixed commission
received from the energy supplier on setting up a new supply
agreement. The commission received has no linkage to future energy
usage and hence revenue can be reliably measured at the point the
contract has been authorised by the energy supplier. Revenue is
recognised at the point the contract has been authorised by the
energy supplier.
Other SME agreements
For other SME agreements, commissions are based upon the energy
usage of the SME customer at agreed commission rates with the
energy suppliers. The expected commission over the full term of the
contract is recognised at the point the contract is authorised by
the supplier. Where actual energy use by the business differs to
that calculated at the date the contract goes live, an adjustment
is made to revenue once the actual data is known.
The cash received profile relating to these revenues varies
according to the contract terms in place with the energy supplier
engaged and can be received before the date the contract goes live
or spread over the terms of the contract between the energy
supplier and the end customer, which can be for a period of up to
three years. This amount is not discounted as the impact would be
immaterial. Accrued revenue relates to commission earned, not yet
received or paid.
2. Segmental information
Revenue and segmental reporting
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Group's Executive Directors.
Operating segments for the year to 31 December 2016 were determined
on the basis of the reporting presented at regular Board meetings
of the Group which is by nature of customer and level of
procurement advice provided. The segments comprise:
The Corporate Division ("Corporate")
This sector comprises the operations of [Inspired Energy
Solutions Limited, Direct Energy Purchasing Limited, Wholesale
Power UK Limited, STC Energy and Carbon Holdings Limited and
Informed Business Solutions Limited. Corporate's core services are
primarily in the review, analysis and negotiation of gas and
electricity contracts on behalf of Corporate clients. Additional
services provided include energy review and benchmarking,
negotiation and bill validation. The Group's Corporate Division
benefits from a market-leading trading team, who actively focus on
high volume customers, providing more complex, long-term energy
frameworks based on agreed risk management strategies.
The SME Division (SME)
This sector comprises the operations of EnergiSave Online
Limited, KWH Consulting Limited and Simply Business Energy Limited.
Within the SME Division, the Group's energy consultants contact
prospective SME clients to offer reduced tariffs and contracts
based on the unique situation of the customer. Leads are generated
and managed by the Group's internally generated, bespoke CRM and
case management IT system. Tariffs are offered from a range of
suppliers and the Group is actively working with new suppliers to
increase the range of products available to SME clients.
PLC costs
This comprises the costs of running the PLC, incorporating the
cost of the Board, listing costs and other professional service
costs such as audit, tax, legal and Group insurance.
2016 2015
--------------------------------------------------- -------------------------------------
Corporate SME PLC costs Total Corporate SME PLC costs Total
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Revenue 16,320,105 5,194,806 - 21,514,911 10,073,654 5,114,417 - 15,188,071
Cost of sales (1,752,147) (2,453,783) - (4,205,930) (981,536) (2,640,574) - (3,622,110)
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Gross profit 14,567,958 2,741,023 - 17,308,981 9,092,118 2,473,843 - 11,565,961
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Administrative
expenses (7,838,521) (1,437,217) (3,195,258) (12,470,996) (4,430,546) (1,286,006) (1,934,565) (7,651,117)
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Operating
profit 6,729,437 1,303,806 (3,195,258) 4,837,985 4,661,572 1,187,837 (1,934,565) 3,914,844
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Analysed as:
EBITDA 7,596,048 1,751,987 (1,090,259) 8,257,776 4,973,426 1,543,532 (828,004) 5,688,954
Depreciation (387,334) (34,945) - (422,279) (177,681) (16,677) - (194,358)
Amortisation (169,459) (405,026) (1,574,713) (2,149,198) (134,173) (339,018) (313,514) (786,705)
Share-based
payments (309,818) (8,210) - (318,028) - - (312,919) (312,919)
Exceptional
costs - - (530,286) (530,286) - - (480,128) (480,128)
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
6,729,437 1,303,806 (3,195,258) 4,837,985 4,661,572 1,187,837 (1,934,565) 3,914,844
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Finance
expenditure (742,085) (358,593)
Other financial
items (77,315) (61,658)
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Profit before
income tax 4,018,585 3,494,593
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Total assets 15,150,679 3,142,071 16,810,678 35,103,428 10,804,672 4,376,283 14,183,113 29,364,068
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
Total
liabilities 2,394,173 653,166 17,181,904 20,229,243 1,505,147 2,347,433 14,204,282 18,056,861
--------------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
3. Exceptional costs
2016 2015
GBP GBP
Fees associated with acquisition 407,750 480,128
Restructuring costs 122,535 -
---------------------------------- -------- --------
530,285 480,128
---------------------------------- -------- --------
One off costs include costs of GBP122,536 relating to
restructuring programmes and costs associated with business
combinations of GBP407,750 which would not normally be seen as
costs or income relating to the underlying principal activities of
the Group.
4. Income Tax Expense
The income tax expense is based on the profit for the year and
comprises:
2016 2015
GBP GBP
----------------------------------------------------------------------- ---------- ----------
Current tax
Current tax charge 1,212,067 638,969
Adjustments in respect of prior periods 65,050 (39,044)
----------------------------------------------------------------------- ---------- ----------
1,277,117 599,925
----------------------------------------------------------------------- ---------- ----------
Deferred tax
Origination and reversal of temporary timing differences (489,625) 51,419
Adjustments in respect of prior periods (171,062)
(660,687) 51,419
Total income tax charge 616,430 651,344
Reconciliation of tax charge to accounting profit:
Profit on ordinary activities before taxation 4,018,585 3,494,593
----------------------------------------------------------------------- ---------- ----------
Tax at UK income tax rate of 20.00% (2015: 20.25%) 803,717 707,655
Disallowable expenses 33,805 82,350
Share options (46,050) (99,617)
Adjust closing deferred tax to reflect change in tax rate (69,030) -
Effects of current period events on current tax prior period balances (106,012) (39,044)
Total income tax charge 616,430 651,344
----------------------------------------------------------------------- ---------- ----------
5. Earnings per share
The basic earnings per share is based on the net profit for the
year attributable to ordinary equity holders divided by the
weighted average number of ordinary shares outstanding during the
year.
2016 2015
GBP GBP
--------------------------------------------- ------------ ------------
Profit attributable to equity holders
of the Group 3,402,155 2,843,249
Fees associated with acquisition 407,750 480,128
Restructuring costs 122,536 -
Amortisation of intangible assets 2,149,198 786,705
Deferred tax in respect of amortisation
of intangible assets (299,195) (62,703)
Share-based payment costs 318,028 312,919
--------------------------------------------- ------------ ------------
Adjusted profit attributable to owners
of the Group 6,100,472 4,360,298
--------------------------------------------- ------------ ------------
Weighted average number of ordinary
shares in issue 478,910,478 434,844,094
Dilutive effect of share options 20,216,912 24,005,835
--------------------------------------------- ------------ ------------
Diluted weighted average number of ordinary
shares in issue 499,127,390 458,849,929
--------------------------------------------- ------------ ------------
Basic earnings per share (pence) 0.71 0.65
Diluted earnings per share (pence) 0.68 0.62
Adjusted basic earnings per share (pence) 1.27 1.00
Adjusted diluted earnings per share
(pence) 1.22 0.95
Alternate adjusted basic earnings per
share (pence) 1.15 0.88
Alternate adjusted diluted earnings
per share (pence) 1.11 0.83
------------ ------------
The weighted average number of shares in issue for the basic and
adjusted diluted earnings per share include the dilutive effect of
the share options in issue to senior staff of the Group.
Adjusted earnings per share represents the earnings per share,
as adjusted to remove the effect of fees associated with
acquisitions, restructuring costs, the amortisation of intangible
assets and share-based payment costs which have been expensed to
the Group Income Statement in the year. The adjustments to earnings
per share have been disclosed to give a clear understanding of the
Group's underlying trading performance.
Alternate adjusted earnings per share represents the earnings
per share, as adjusted to remove the effect of the fees associated
with acquisition/listing, amortisation of intangible assets
(excluding internally generated amortisation related to computer
software and customer databases), share based payments and
exceptional items which have been expensed to the income statement
in the period.
6. Property, plant and equipment
Fixtures and Motor Computer Leasehold
fittings vehicles equipment improvements Total
GBP GBP GBP GBP GBP
------------------------------------------- ------------ -------- --------- ------------ ---------
Cost
As at 1 January 2015 315,873 38,326 263,071 183,796 801,066
Acquisitions through business combinations 30,802 13,100 724,349 - 768,251
Additions 101,768 - 109,460 34,863 246,091
Disposals - (38,326) - - (38,326)
------------------------------------------- ------------ -------- --------- ------------ ---------
At 31 December 2015 448,443 13,100 1,096,880 218,659 1,777,082
Acquisitions through business combinations 15,929 - 8,777 - 24,706
Additions 150,930 - 123,733 94,210 368,873
Disposals - - - - -
------------------------------------------- ------------ -------- --------- ------------ ---------
At 31 December 2016 615,302 13,100 1,229,390 312,869 2,170,661
------------------------------------------- ------------ -------- --------- ------------ ---------
Depreciation
As at 1 January 2015 98,086 12,478 111,673 18,599 240,836
Charge for the year 68,876 8,213 96,950 20,319 194,358
Disposals - (18,415) - - (18,415)
------------------------------------------- ------------ -------- --------- ------------ ---------
At 31 December 2015 166,962 2,276 208,623 38,918 416,779
Charge for the year 98,035 1,456 297,902 24,886 422,279
Disposals - - - - -
------------------------------------------- ------------ -------- --------- ------------ ---------
At 31 December 2016 264,997 3,732 506,525 63,804 839,058
------------------------------------------- ------------ -------- --------- ------------ ---------
Net book value
At 31 December 2016 350,305 9,368 722,865 249,065 1,331,603
------------------------------------------- ------------ -------- --------- ------------ ---------
At 31 December 2015 281,481 10,824 888,257 179,741 1,360,303
------------------------------------------- ------------ -------- --------- ------------ ---------
Included within the net book value is GBP147,330 (31 December
2015: GBPnil) relating to assets held under hire purchase
agreements. The depreciation charged to the financial statements in
the period in respect of such assets amounted to GBP31,695 (31
December 2015: GBP5,938).
7. Intangible assets and goodwill
Computer Trade Customer Customer Customer
Total other
software name databases contracts relationships intangibles Goodwill Total
GBP GBP GBP GBP GBP GBP GBP GBP
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
Cost
At 1 January 2015 954,903 - 516,015 1,835,850 - 3,306,768 2,075,739 5,382,507
Additions 101,487 - 428,285 - - 529,772 - 529,772
Acquisitions
through business
combinations 3,009,000 115,000 - 1,638,000 1,989,000 6,751,000 7,325,095 14,076,095
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
At 31 December
2015 4,065,390 115,000 944,300 3,473,850 1,989,000 10,587,540 9,400,834 19,988,374
Additions 696,084 - 375,190 - - 1,071,274 - 1,071,274
Alteration to
initial
recognition - - - - - - 605,726 605,726
Acquisitions
through business
combinations - - - 931,000 - 931,000 2,981,091 3,912,091
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
At 31 December
2016 4,761,474 115,000 1,319,490 4,404,850 1,989,000 12,589,814 12,987,651 25,577,465
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
Amortisation
At 1 January 2015 210,035 - 217,044 1,835,850 - 2,262,929 - 2,262,929
Charge for the
year 259,570 677 339,018 128,860 58,580 786,705 - 786,705
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
At 31 December
2015 469,605 677 556,062 1,964,710 58,580 3,049,634 - 3,049,634
Charge for the
year 771,259 5,750 405,026 469,913 497,250 2,149,198 - 2,149,198
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
At 31 December
2016 1,240,864 6,427 961,088 2,434,623 555,830 5,198,832 - 5,198,832
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
Net book value
At 31 December
2016 3,520,610 108,573 358,402 1,970,227 1,433,170 7,390,982 12,987,651 20,378,633
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
At 31 December
2015 3,595,785 114,323 388,238 1,509,140 1,930,420 7,537,906 9,400,834 16,938,740
------------------ --------- ------- --------- --------- ------------- ----------------- ---------- ----------
Computer software is a combination of assets internally
generated and assets acquired through business combinations.
Amortisation charged in the period to 31 December 2016 associated
with computer software acquired through business combinations is
GBP601,800. The additional GBP169,459 charged in the period relates
to the amortisation of internally generated computer software.
Amortisation of customer databases of GBP405,026 is also in
relation to internally generated intangible assets.
8. Trade and other receivables
2016 2015
GBP GBP
------------------- ----------- ----------
Trade receivables 2,610,360 1,998,904
Other receivables 57,276 3,238
Prepayments 819,463 798,648
Accrued income 8,921,690 6,659,384
------------------- ----------- ----------
12,408,789 9,460,174
------------------- ----------- ----------
9. Business Combinations
Informed Business Solutions Limited (IBSL)
On 28 September 2016, the Group acquired 100% of the issued
share capital and voting rights of Informed Business Solutions
Limited, a company based in the United Kingdom. The principal
reason for the acquisition was to strengthen the Group's existing
service offering to its core Corporate customers, as well as
providing the Group with environmental consultancy services which
was seen to broaden the Group's overall service offering to
corporates.
The acquisition of IBSL was completed for a total consideration
of GBP4,250,000. The initial GBP2,250,000 payment was satisfied by
GBP1,750,000 cash and the issue of 3,545,596 ordinary shares (with
an aggregate value at completion of GBP500,000) of Inspired Energy
PLC. In addition, GBP2,000,000 is contingent upon IBSL achieving
challenging revenue targets until 30 June 2018, and will be payable
in four instalments, on 31 July 2017, 30 September 2017, 28
February 2018 and 31 July 2018. The agreed cash consideration
totalled GBP1,750,000 prior to calculation of the normalised
working capital position of the business. A further GBP479,000 was
added to the cash consideration to reflect excess cash in the
business at acquisition.
The acquisition was financed through the drawdown on the Group's
existing facility with Santander. The details of the business
combination are as follows:
Recognised amounts of identifiable net assets
Provisional
Book fair value Provisional
value adjustment fair value
GBP GBP GBP
----------------------------------------------------- --------- ----------- -----------
Property, plant and equipment 24,706 - 24,706
Intangible assets - 931,000 931,000
Trade and other receivables 303,224 - 303,224
Cash and cash equivalents 854,811 - 854,811
----------------------------------------------------- --------- ----------- -----------
Total assets 1,182,741 931,000 2,113,741
----------------------------------------------------- --------- ----------- -----------
Trade and other payables 257,791 - 257,791
Current tax liability 150,314 152,000 302,314
Deferred tax liability 6,118 176,890 183,008
----------------------------------------------------- --------- ----------- -----------
Total liabilities 414,223 328,890 743,113
----------------------------------------------------- --------- ----------- -----------
Provisional fair value of identifiable net assets 1,370,628
Provisional goodwill 2,981,091
----------------------------------------------------- --------- ----------- -----------
Fair value of consideration transferred 4,351,719
----------------------------------------------------- --------- ----------- -----------
Satisfied by:
- cash consideration paid 2,229,000
- shares issued 28 September 2016 500,000
- contingent consideration 2,000,000
- discounting impact on contingent consideration (377,281)
----------------------------------------------------- --------- ----------- -----------
4,351,719
----------------------------------------------------- --------- ----------- -----------
Net cash outflow arising from business combinations:
- cash consideration paid 2,229,000
- cash and cash equivalents acquired (854,811)
----------------------------------------------------- --------- ----------- -----------
Net cash outflow 1,374,189
----------------------------------------------------- --------- ----------- -----------
Goodwill
The goodwill arising on this acquisition is attributable to
niche market expertise enabling cross-selling opportunities
achieved from combining the acquired customer bases and trade with
existing group.
Identifiable net assets
A provisional fair value exercise to determine the fair value of
assets and liabilities acquired in relation to IBSL has been
carried out. The fair value of the customer contracts was
calculated as GBP931,000, which includes only values ascribed to
valid energy supply contracts and letters of authority granting
IBSL exclusivity to negotiate future energy supply contracts. No
value was ascribed to the customer relationships themselves, or any
likely renewals of contracts outside of a period of
exclusivity.
The Group estimates costs incurred in relation to the
transaction to be GBP102,675. These costs are included within
exceptional costs in the Group statement of comprehensive
income.
10. Preliminary Announcement
This preliminary announcement, which has been agreed with the
auditors, was approved by the board of directors on 27 March 2017.
It is not the Group's statutory accounts. Copies of the Group's
audited statutory accounts for the year ended 31 December 2016 will
be available at the company's website shortly and a printed version
will be dispatched to shareholders thereafter.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKADPCBKDDNB
(END) Dow Jones Newswires
March 27, 2017 02:05 ET (06:05 GMT)
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