TIDMINSE
RNS Number : 4010Y
Inspired Energy PLC
09 September 2020
9 September 2020
Inspired Energy plc
("Inspired Energy" or the "Group")
Results for the six months ended 30 June 2020
Inspired Energy (AIM: INSE), the leading consultant for energy
procurement, utility cost optimisation and legislative compliance
in the UK and Ireland, announces its consolidated, unaudited half
year results for the six-month period ended 30 June 2020.
Financial Highlights
2020
H1 2020 H1 2019 % change
*Restated
------------------------------- --------- --------- ---------
Revenue GBP26.86m GBP21.56m 25%
Gross profit GBP20.84m GBP18.56m 12%
Adjusted EBITDA** GBP8.14m GBP8.79m -7%
Adjusted profit before tax*** GBP5.66m GBP6.94m -18%
Profit before tax GBP1.42m GBP2.39m -41%
Cash generated from operations GBP9.99m GBP4.55m 120%
Adjusted Diluted EPS**** 0.66p 0.82p -20%
Diluted Basic EPS 0.14p 0.25p -44%
Net Debt GBP33.68m GBP25.09m 34%
Corporate Order Book GBP61.50m GBP55.40m 10%
Interim dividend per share 0.10p 0.22p -55%
------------------------------- --------- --------- ---------
-- The Corporate Division delivered record revenues, growing 34%
to GBP24.94m (H1 2019: GBP18.68m), contributing 93% of Group
revenue for the period (H1 2019: 87%).
-- As a result of COVID-19 pandemic, organic revenue in the
Corporate Division declined 5% in H1 2020 (2019: +6%), due to an
average 14% decline in energy consumption in the period, offset in
part by underlying growth.
-- The Corporate Division's Adjusted EBITDA increased 2% to
GBP9.18m (H1 2019: GBP8.97m), with the reduction in margin
resulting directly from the short-term reduction in consumption
experienced across the Corporate client portfolio due to the impact
of the COVID-19 pandemic.
-- The SME Division, representing 7% of revenue, was materially
impacted by COVID-19, generated revenues of GBP1.91m (H1 2019:
GBP2.88m) and Adjusted EBITDA of GBP0.50m (H1 2019: GBP0.97).
-- Cash generated from operations (excluding restructuring costs
and the impact of deal fees), which benefitted from deferral of VAT
and PAYE payments totalling GBP2.76m, increased by 52% to GBP10.34m
(H1 2019: GBP6.80m), noting subsequent to the period end, all
agreed deferred PAYE payments have been paid.
-- The Corporate Order Book increased to GBP61.50m in the period
(31 December 2019: GBP57.50m) with strong customer retention and
robust performance from significant new customer wins.
-- At 31 August 2020, the Group's net debt was GBP12.5m,
following the GBP31.3m placing in July 2020. The placing and the
acquisition of Ignite, with its associated EBITDA and cash flow
contribution, has significantly deleveraged the Group's balance
sheet and provided significantly increased headroom on its revised
banking covenants.
-- Reinstatement of the interim dividend of 0.10 pence per share
(H1 2019: 0.22 pence) in line with the Group's adopted policy with
initial dividend cover of at least 3.0x earnings.
Post period end
Placing
-- Completed a fundraising of GBP31.3m (before expenses) in July
through an oversubscribed placing of GBP30.0m, with a further
GBP1.3m raised via an open offer.
-- The net proceeds from the placing financed the initial cash
consideration for the acquisition of the balancing interest of
Ignite Energy LTD ("Ignite"), and the balance will provide the
Group with financial strength and flexibility to execute on its
pipeline of targeted opportunities, and accelerate its successful
acquisition strategy, whilst deleveraging the Group's balance
sheet.
Acquisitions
-- Inspired Energy acquired the balancing interest of 60 per
cent of Ignite on 17 July 2020 for an initial consideration of
GBP11.0m, on a cash free: debt free basis. Further contingent
consideration of up to a maximum of GBP19.0m, may be payable
subject to the achievement of challenging financial targets from
completion to FY 2023.
-- The acquisition of Ignite was swiftly followed by the
completion of the bolt-on acquisition of LSI Energy Holdings
Limited ("LSI") in August which further expands the Group's "Units
of Opportunity".
Board changes
-- Sarah Flannigan was appointed to the Board as a Non-Executive
Director with effect from 28 July 2020, bringing a wealth of
experience in the energy sector and technology transformation.
-- Having served as a Non-Executive Director since January 2018,
Gordon Oliver will step down from the Board on the 31 December
2020. On behalf of the Board and all at Inspired Energy, we would
like to thank Gordon for his valuable contribution during a
transitional phase for the Board, and a period of significant
growth for the Group.
-- Following Gordon's departure, the Board will consist of two
Executive Directors supported by a Non-Executive Chairman and two
Non-Executive Directors, both of whom the Board consider to be
independent in accordance with the QCA guidelines, representing a
broader mix of skills and diversity to align with the Group's
evolving strategy.
Current trading and outlook
Following the outbreak of COVID-19, the Board undertook detailed
scenario planning to manage the financial position and risk. The
Board considered a "downside scenario" for the purpose of agreeing
amendments to the Group's banking covenants which assumed a >40%
reduction in energy consumption for Q2 and Q3 2020.
To date, market data indicates year-on-year industrial and
commercial consumption reductions of 9% in March, 27% in April, 24%
in May, 18% in June and 16% in July with the Group continuing to
see a recovery in consumption levels since the period end, but
remaining cognisant of a significant year-on-year consumption
reduction in the near term. As such, Group EBITDA remained
comfortably ahead of the Board's "downside scenario" in H1 and in
July 2020. Trading remains in line with the Board's expectations
and the Board believe the Group is well positioned to take
advantage of the acquisitive growth opportunities that continue to
exist for Inspired Energy and which may be accelerated by the
disruption caused to its markets in 2020 by the COVID-19
pandemic.
Commenting on the results, Mark Dickinson, CEO of Inspired,
said: "Whilst the six month period to 30 June 2020 has presented
challenging market conditions and we undoubtedly remain in a period
of economic uncertainty, the Group's strength has been affirmed in
the robust trading performance and cash generation throughout the
period. The results are testament to the hard work and dedication
of the Inspired Energy team through these unprecedented times.
"Post the period end, the Board was delighted to have received
strong levels of support in our fundraising from new and existing
investors, enabling the acquisition of the outstanding 60% interest
of Ignite. This represents an important milestone in Inspired
Energy's strategic development, accelerating the Group's
Optimisation Services offering and enabling us to develop market
share in the GBP850m+ corporate optimisation services market.
Inspired Energy will now be able to leverage off its existing
platform to accelerate cross selling into its customer base,
maximising the commercial overlap between the optimisation and
assurance services market. The Group is already seeing the benefits
of this with the first cross sell executed, and a pipeline of
pilots underway with clients.
"Together, the funds raised in the July fundraising, and the
benefits of the Ignite acquisition leave the Group in a strong
financial position with the ability to make further progress in its
organic and inorganic growth strategies. The pipeline of
acquisition opportunities remains strong and the Board continues to
review a number of potential transactions which could deliver
strategic and financial benefits to the Group and long-term value
to its shareholders.
"The Group's profitable and cash generative nature, coupled with
continued growth in the order book and substantial liquidity at its
disposal, will see it well placed as the economy navigates through
the current period of uncertainty. On behalf of the Board, I would
like to thank our staff, customers and wider stakeholders, whose
health, safety, and wellbeing remains our overriding priority."
* 2019 is restated to reflect an increase in share-based payment
charge. See CFO statement for further details
** Adjusted EBITDA is earnings before interest, taxation,
depreciation and amortisation, excluding exceptional items and
share-based payments.
**Adjusted profit before tax is earnings before tax,
amortisation of intangible assets (excluding internally generated
amortisation related to computer software and customer databases),
exceptional items, share-based payments, the change in fair value
of contingent consideration and foreign exchange variances. (A
reconciliation of this can be found in note 3 of the financial
statements).
*** Adjusted diluted earnings per share represents the diluted
earnings per share, as adjusted to remove amortisation of
intangible assets (excluding internally generated amortisation
related to computer software and customer databases), exceptional
items, share-based payments, the change in fair value of contingent
consideration and foreign exchange variances.
For further information, please contact:
Inspired Energy plc www.inspiredplc.co.uk
Mark Dickinson, Chief Executive Officer +44 (0) 1772 689 250
Paul Connor, Chief Financial Officer
Shore Capital (Nomad and Joint Broker) +44 (0) 20 7408 4090
Edward Mansfield
James Thomas
Michael McGloin
Peel Hunt LLP (Joint Broker)
Mike Bell
Ed Allsopp +44 (0) 20 7418 8900
Alma PR +44 (0) 20 3405 0205
Justine James +44 (0) 7525 324431
Josh Royston Inspired@almapr.co.uk
David Ison
Chairman's Statement
The robust trading performance through a globally challenging
first half of the year demonstrates the resilience of our business
model. This, combined with the oversubscribed fundraising in July,
coupled with the acquisition of the balancing interest in Ignite,
provides a strong platform to continue to navigate through the
challenges presented by the COVID-19 pandemic. Notwithstanding the
current wider economic backdrop, the Group is better placed than
ever to further accelerate our market leading position as a
third-party intermediary (TPI) in the Industrial & commercial
(I&C) sector as the economy emerges from the current period of
volatility.
I would like to thank our existing shareholders for their
continued support, demonstrated through the successful equity
fundraising, and I would like to extend a warm welcome to several
new institutional investors who joined the register. The net
proceeds will provide substantial liquidity and enable the Group to
take advantage of its active pipeline of potential acquisition
targets.
The acquisition of the balancing interest in Ignite will enable
the Group to have full operational control and accelerate
integration to cross-sell the Ignite services into the Group's
existing customer base, enabling acceleration of the organic growth
opportunity.
The successful fundraising, combined with the profit and cash
flow benefits of wholly owning Ignite and the funding of the
acquisition via equity, has significantly deleveraged the Group
from a banking covenant perspective, ensuring the Group has the
ability to act decisively where value enhancing acquisition
opportunities arise as a result of economic uncertainty.
Inspired Energy subsequently completed the value enhancing
acquisition of LSI in August, which will further broaden the
Group's customer base, and increase the number meters under
management. We are delighted to welcome the LSI team to the
enlarged Group.
Whilst the Group delivered revenue of GBP26.86m in H2 2020 (H1
2019: GBP21.56m), representing growth of 25%, the Corporate
Division saw a 5% organic decline (H1 2019: +6%) in the period
directly as a result of the short term impact of the pandemic on
energy consumption by the Group's Corporate customers offset, in
part, by underlying organic growth.
Notwithstanding the current contraction of energy consumption in
the market, the Group reported EBITDA which was comfortably ahead
of the Board's "downside scenario" modelled for H1 and July
2020.
Since its IPO in 2011, Inspired has established a track record
of delivering on financial forecasts which has facilitated a
consistent and progressive dividend policy. However, considering
the exceptional circumstances from the impact of the COVID-19
outbreak, the Board deemed it prudent to defer declaration of the
FY 2019 final dividend and reassess the position on release of the
FY 2020 interim results.
The Board remains confident in the Group's ability to continue
to pay a dividend and therefore it proposes, subject to no material
deterioration in conditions, to recommence payment of dividends
with the declaration of an interim dividend of 0.10 pence (Interim
Dividend 2019: 0.22 pence). The interim dividend aligns with the
Board stated policy of a dividend cover of at least 3.0x earnings,
being mindful to adopt caution and prudence in the immediate term,
with the objective of delivering a progressive dividend policy
moving forward.
The ex-dividend date is 12 November 2020 with a record date of
13 November 2020. The dividend will be paid to shareholders on 9
December 2020.
On 28 July 2020, the Board was pleased to welcome Sarah
Flannigan to the Board as a Non-Executive Director. Her significant
experience in the energy sector and technology transformation will
be valuable to the Board at a time when we are looking to
revolutionise our sector with a full digitisation programme for our
valued customers.
In addition, Gordon Oliver will stand down from his position of
Non-Executive Director on the 31 December 2020. On behalf of the
Board and all at Inspired Energy, I would like to thank Gordon for
his valuable contribution during a transitional phase for the
Board, and a period of significant growth for the Group.
I would like to take this opportunity to thank the whole
Inspired Energy team for their hard work.
Despite the economic uncertainty, the robust financial
performance in the period is testament to the robustness of our
business model and to the enduring support and professionalism of
our team and the support and advice they provide to our clients,
which in these challenging times is more important than ever.
Michael Fletcher
Chairman
8 September 2020
CEO's Statement
I am pleased to report on Inspired Energy's H1 2020 results, a
period in which we delivered a robust performance despite extremely
challenging conditions for the Group and wider economy.
Whilst we undoubtedly remain in a period of economic
uncertainty, the profitable and cash generative nature of the
model, demonstrated in our H1 2020 trading, ensures we are well
positioned to endure the impact of the COVID-19 crisis whilst
retaining the ability to deliver substantial organic and
acquisitive growth going forward.
OUR DIVISIONS
As every commercial energy consumer in the UK and ROI markets is
a potential customer for Inspired Energy, it is important we
segment our product offering so that we meet the needs of each of
our clients. This segmentation ensures that we maintain a
market-leading solution for each client that closely aligns to
their differing needs and is augmented by one of the largest
technology deployment processes in the market plus a continued
focus on strategic acquisitions.
Corporate Division
The Corporate Division has seen significant growth both
organically and through acquisition. The division delivers core
services, including energy and water procurement, energy
accounting, compliance consultancy and optimisation services for
Corporate clients.
The Corporate Division is the core of the business operation,
typically focusing on consumers who spend more than GBP100,000 per
year on energy. In this division we help the consumer manage the
whole energy cost equation and deliver their own Net Zero Carbon
and ESG objectives.
Different types of consumer require different approaches to
deliver their strategic objectives and as such we segment our
Corporate services into four divisions:
Energy intensive: These consumers tend to have fewer buildings
and meters associated with their sites, but a large amount of
consumption with energy typically a feedstock to their business
process. Our services are focused on optimising the timing of the
buying decisions, securing all tax breaks and incentives available
to the client, monetising any flexibility in the portfolio through
demand Side response and maximising opportunities for
self-generation and supply.
Estate intensive: These consumers tend to have many properties
throughout the country. The estates can be volatile in terms of the
opening and closing of properties, requiring the need for quick and
effective new connections. Our services are focused on managing the
movements in the property estate, accounting for the energy across
a complex portfolio, delivering repeatable energy saving projects
across different properties.
Following the acquisition of Ignite the Group has created a
subsegment, focused on the Group's larger estate intensive clients,
who would initially benefit from Ignite's Optimisation Services.
The first cross sell has been achieved with a pipeline of pilot
projects ongoing.
Public sector: The needs of a Public Sector client are generally
the same as those of an estate intensive client with the added
complexity for OJEU procurement regulations. The sector is split
into NHS, Education and Local Authority and is an area of
significant growth potential. Historically, this sector has been
served by public buying organisations (PBOs) which are often not
able to adequately resource services to meet client needs.
Mid-market: Where business consumers are neither energy
intensive or estate intensive but spend more than GBP100,000 per
year on energy, our Mid-Market team ensures that they have bought
professionally, accounted properly, and complied with the law.
Through the initial strategic investment in Ignite in August
2019 and subsequent acquisition of the balancing interest in July
2020, the Group has extended its sector specialism, most notably
within the optimisation services sector, further broadening our
overall service offering to Corporate clients.
SME Division
SME energy consultants contact prospective SME clients to offer
price comparison services and contract arrangement services based
on the unique situation of the customer.
Leads are generated and managed by the Group's internally
developed CRM and case management IT system. Tariffs are offered
from a range of suppliers and the Group works with suppliers to
increase the range of products available to SME clients.
Strategy
Growth of Assurance Services
The Corporate Division, which includes our traditional assurance
services designed to help energy consumers manage the price side of
their cost equation ("Assurance Services"), continues to grow the
scale of the customer base with a target of 6% to 8% underlying
organic growth.
Organic growth acceleration through Optimisation Services
Despite the disruption caused by the pandemic, H1 2020 saw the
development of cross-selling of optimisation services to existing
clients, helping them manage the consumption side of that cost
equation ("Optimisation Services"). We expect the contribution of
Optimisation Services to materially grow in FY 2021 and create a
platform capable of delivering double digit organic growth.
The validity of this strategy was underpinned by our strong
start in Q1 2020 where we successfully completed our first cross
sell of an existing Inspired Energy customer to Ignite and moved to
a trial stage for another major UK retailer. We have commenced the
integration of the Ignite business where we will combine an initial
54 Inspired Energy customers with 24 Ignite clients to create a new
Strategic Clients division focused on developing optimisation
solutions for these clients to deliver their Net Zero Carbon
objectives.
Continued acquisitive growth
The Group has an M&A and Integration infrastructure which
has capacity to complete four to five acquisitions per year. The
net proceeds from the GBP31.3m equity placing completed in July
2020, funded the initial cash consideration for the acquisition of
the balancing interest of Ignite, with the remaining funds enabling
the Group to take advantage of the active pipeline of potential
acquisition targets.
For H2 2020 our primary focus of acquisitive growth is further
consolidation of the energy advisory sector with respect to
Assurance Services.
In parallel, the Group will continue to evaluate opportunities
to: continue to build Optimisation Services capability; develop ESG
capabilities; and initiate internationalisation.
Monetisation of software solutions
FY 2019 saw the Group scale up the capability of the technology
development engine delivering new products in relation to:
1. SECR (Streamlined Energy and Carbon Reporting)
2. Profile alerts
3. Online client portal
4. Adoption of DocuSign technology for client interactions.
Our technology development engine is designed to deliver six
solutions per year.
These solutions not only underpin the operations of the
Corporate Division but they are licenced on a SaaS basis to other
energy advisory businesses. Our software solutions are provided by
our Systemslink subsidiary which operates on an arm's length basis
to the Group. Since the acquisition of Systems-link, 19 new energy
advisory businesses have started using our software solutions.
This growth has been achieved without deploying any new
technology capability to such energy advisers. The state-of-the-art
solutions we invested in over the last 12 months are being deployed
to these clients in October 2020 which we expect to underpin
further organic growth in revenues from software solutions in
2021.
Development of ESG solutions
Over H1 2020 the Board identified a potential solution gap in
the market for the provision of ESG assurance solutions to UK and
ROI businesses and the portfolio companies of investors and private
equity firms. The skills and capability to meet this market needs
are largely the same as those which already exist in the Assurance
Services of the Group and the board had decided in H2 2020 to
organically build out this capability. We expect this to be a
GBP500,000 investment and to generate first revenues in H2 2021 and
become cash generative in H2 2021.
Acquisitions
The Board is mindful of the uncertainty presented by the
COVID-19 crisis and has taken a number of actions to reinforce its
financial position in the short term. Notwithstanding this prudent
approach, the Group continues to develop its pipeline of
acquisition opportunities.
Inspired Energy is a leader in its markets, the evolution of
which will be accelerated by the current backdrop and the Board
believes that there will continue to be significant opportunities
to accelerate the Group's strategic momentum in the future.
Ignite
The acquisition was consistent with Inspired Energy's stated
dual track strategy of generating growth organically and through
acquisition.
The UK Optimisation Services market is a GBP850+m opportunity,
twice the size of the Assurance Services market, and remains
relatively immature with only one in six corporate consumers using
an energy adviser. In addition, service delivery models in this
area, which are typically project based rather than recurring are
expected to evolve over time as customer demand is accelerated due
to the growing demands of consumers and investors with respect to
Net Zero Carbon and ESG. Against this backdrop, the Board has been
focused on ensuring that, whilst it continues to build out its
Optimisation Services capabilities, the Group remains flexible and
able to adapt its offering in this area in line with market
developments.
As part of this strategy, the Group acquired an initial 40%
interest in Ignite on 2 August 2019, with the outstanding balance
of 60% acquired in July 2020. Ignite has achieved material
improvements in the energy efficiency for its clients delivering
significant reduction in costs.
Ignite achieved 15% CAGR organic growth from 2016-2019 prior to
the benefit of access to Inspired Energy's energy intensive
customer base. In FY 2019 Ignite generated revenues of GBP15.9m
from c.23 clients.
The acquisition has enabled Inspired Energy to have full control
and utilise its position to leverage off its existing platform to
cross-sell the broader range of capabilities and services that the
Group provides into Ignite's customer base. Despite the disruption
to Ignite's trading in Q2 2020, as a result of the inability to
access clients' premises as a result of the on-going pandemic,
Ignite continues to progress. The implementation of demand side
reduction projects for the first Inspired Energy customer cross
sell has now commenced and the implementation of projects at pilot
sites for a further Inspired Energy customer is underway. Both
customers are major UK retailers.
LSI Energy Holdings Limited
Following completion of the fundraising in July the Group has
executed the first acquisition from its pipeline through the bolt
on acquisitions of LSI Energy Holdings Limited ("LSI"). This was
completed in August, further expanding the Group's number of meters
under management which underpins the overall cross sell opportunity
for Optimisation Services and the delivery of Net Zero Carbon
opportunities.
The Group acquired LSI paying nil initial consideration at
completion on a cash free, debt free basis. Contingent
consideration may be payable subject to the realisation of the
acquired order book revenue, renewal of the acquired order book,
and the contribution of new business to the Group. The structure
was devised in light of the ongoing economic uncertainty and to
mitigate a number of risks associated with the COVID-19
pandemic.
-- LSI provides energy management solutions to commercial energy
consumers in the UK, focusing on energy procurement, carbon and
energy management
-- The consideration structure for LSI was constructed to
mitigate the risks posed by ongoing economic uncertainty, including
under consumption and business failure risk.
Underlying trading
Corporate Division
The decision to increase our resources with respect to
Optimisation Services over the last two years has left us
favourably positioned to meet the emerging and prevailing client
needs to deliver in a Net Zero Carbon world which protects our
Assurance Services revenues, whilst giving the opportunity to
increase organic revenue and profit growth.
Our scalable platform will allow us to continue our considered
approach to market consolidation and increased capability to invest
in our platform to further our offering with respect to the ESG
rating of our clients.
H1 2020 saw a short-term reduction in energy consumption across
this increased customer base due to the COVID pandemic directly
impacting organic revenue growth in the period. Consolidation of
the market for Assurance Services remains a key focus of the group
in H2 2020 as we deploy the capital recently raised.
SME Division
Within the SME Division, the Group's energy consultants contact
prospective SME clients to offer price comparison and contract
arrangement services based on the unique situation of the
customer.
The financial performance of the Group's SME Division continues
to be particularly impacted by the on-going pandemic, with the
division continuing to experience a reduction in demand for energy
supplier switching services. The Board expects the downturn in
performance of the SME Division to continue for the remainder of
2020.
Our SME business represented 7% of Group revenues in H1 2020 (FY
2019: 11%).
COVID-19 update
The health, safety and wellbeing of our employees, their
families, our customers, and stakeholders remains our overriding
priority. We continue to support our employees during this
unprecedented time and are actively encouraging them to precisely
follow the latest Government guidance on COVID-19. In March we
successfully implemented our business continuity plan and c.80% of
our workforce continue to work remotely.
Outlook
We are continuing to see a positive recovery in consumption
levels and remain comfortably ahead of the Board's downside
scenario planning. Trading continues to strengthen and whilst we
undoubtedly remain in a period of economic uncertainty, the robust,
profitable and cash generative nature of the model, ensures we are
well positioned to endure further impact of the COVID-19 crisis
whilst retaining the ability to deliver substantial organic and
acquisitive growth.
Looking ahead the completion of the Ignite acquisition is
already gaining solid traction, with Ignite achieving the first
major new client win under Group ownership to complement the first
cross sell conversion and the implementation of projects at pilot
sites progressing on the second cross sell; all three of which are
with major UK retailers. This is further complemented by the
scaling up of our state-of-the-art technology solutions, which we
have invested in over the past year and will be deployed to clients
from October 2020.
This confidence is further underpinned with the reinstatement of
the dividend, whilst being mindful to adopt caution and prudence
due to the challenges of predicting COVID-19 into the winter
months.
On behalf of the Board, I would like to thank our staff,
customers and wider stakeholders, whose health, safety and
wellbeing continues to be our overriding priority
Mark Dickinson
Chief Executive Officer
8 September 2020
CFO's Statement
H1 2020 has presented its challenges, and notwithstanding the
significant change to working practices in Q2 2020, the Corporate
Division delivered record revenues, growing 34% to GBP24.94m (H1
2019: GBP18.68m), and contributing 93% of Group revenue for the
period (H1 2019: 87%).
As a result of the COVID-19 pandemic, organic revenues in H1
2020 declined by 5 % in the Corporate Division (2019: 6%) driven by
declines in energy consumption by our Corporate customers. The
blended decline in consumption across H1 2020 was 14%, due to the
marked decline in Q2 2020 noted below. The associated decline in
revenue was mitigated in part by strong underlying growth in sales
from the Group.
Putting this into context, it is important to consider the
Board's "downside scenario" for the purpose of agreeing amendments
to the Group's banking covenants completed in May 2020, which
assumed a >40% reduction in energy consumption for Q2 and Q3
2020. To date market data indicates year on year industrial and
commercial consumption reductions of 9% in March, 27% in April, 24%
in May, and 18% in June, with energy consumption continuing to
recover since the period end. Group EBITDA therefore remained
comfortably ahead of the Board's "downside scenario" in H1 and into
July 2020. However, the Board remains cognisant of a significant
YoY consumption reduction in the near term.
The Corporate Division contributed adjusted EBITDA of GBP9.18m,
an increase of 2% (H1 2019: GBP8.97m), with the reduction in margin
resulting directly from the reduction in consumption experienced
across the Corporate client portfolio.
The Corporate Order Book increased to GBP61.50m in the period
(31 December 2019: GBP57.50m) with strong customer retention and
robust performance from significant new customer wins providing
significant visibility to the Group.
The SME Division , which represents 7% of revenue for the
period, was materially impacted by COVID-19 and generated revenues
of GBP1.91m (H1 2019: GBP2.88m) and adjusted EBITDA of GBP0.50m (H1
2019: GBP0.97), with the Board expecting the downturn in
performance of the SME Division to continue in the near term. As of
30 June 2020, the Group had not experienced any material change in
the collection of the SME accrued income balance as a result of the
impact of the pandemic on the consumptions levels and business
failure rate within the Group's SME portfolio. The Board will
continue to the assess the impact of the pandemic on the
recoverability of the SME accrued income throughout H2 2020.
Cash generation was robust in the period with cash generated
from operations (excluding restructuring costs and the impact of
deal fees) of GBP10.34m (H1 2019: GBP6.80m), an increase of 52%
over the prior period.
At the height of the uncertainty the Group took the prudent
decision to take up the Government initiative to defer payment of
GBP1.7m of PAYE and NI during Q2 to mitigate the uncertainty of any
immediate financial impact of the pandemic on the Group. Subsequent
to the period end, the Group has now made these payments and is up
to date with HMRC. Cash generation of the Group in Q2 2020 also
benefited from a GBP1.0m deferral of VAT, which will be paid in
line with the revised government timetable.
In addition, the Group received GBP0.48m in H1 2020 from the
utilisation of the Government Coronavirus Job Retention Scheme
("CJRS") and the Irish equivalent. At the start of the scheme the
Group had c.140 employees under the protection of such schemes
primarily in the SME Division. The Group is currently using these
schemes for 62 employees in the SME Division.
The Group welcomed the intent and purpose of the CJRS which was
to protect jobs and prevent redundancies. The scheme has saved c.80
jobs that would have been lost at the start of the crisis in the
SME Division which would be loss making without the benefit of the
scheme.
The Board is cognisant that the impact of the COVID-19 pandemic
remains on-going and the ultimate impact is difficult to predict.
The Board welcomed the support the CJRS provided at the most
impactful time of the pandemic and will continue to review the
requirement of the funding from the scheme within the SME
division.
Financial position and liquidity
In May 2020, the Group agreed with its banks to increase its
leverage covenant covering the test periods ending 30 June 2020
through to 30 June 2021 (inclusive) as part of its prudent and
measured response to the COVID-19 pandemic.
In July 2020, the Group raised GBP30.0m (before expenses)
through an oversubscribed placing of 200,000,000 new ordinary
shares, with a further GBP1.3m raised through an open offer to
qualifying shareholders.
The net proceeds from the placing funded the initial cash
consideration for the acquisition of the balancing interest of
Ignite, with the remaining funds enabling the Group to take
advantage of its active pipeline of potential acquisition
targets.
In addition, the acquisition of Ignite has had a material
benefit to the Group's financial position. The Group now receives
the full free cash flow benefits of wholly owning Ignite, having
previously only received 40% of profits distributed by Ignite every
six months via dividends.
From a banking covenant perspective, prior to the acquisition of
the balancing interest of Ignite in July 2020, under the Net
Adjusted Leverage definition per the facility agreement, the EBITDA
contribution from Ignite was not included within Group EBITDA.
However, the Group now benefits from 100% of Ignite's contribution
to Group EBITDA on an LTM basis. The treatment of Ignite EBITDA,
the FCF of ownership and the funding of the transaction via equity,
has significantly increased the headroom available to the Group
from a covenant perspective. As a result, the Board are in
discussions with its banking partners as to whether the reset
covenant positions are no longer necessary. These conversations
remain on-going.
At 31 August 2020 the Group's net debt was GBP12.5m, following
the GBP31.3m raise in July. In addition to cash and cash
equivalents of GBP33.0m on hand as at 31 August 2020, approximately
GBP14.0m of the Group's GBP60.0m Revolving Credit Facility is
undrawn with an additional GBP25.0m accordion option available,
subject to covenant compliance.
Dividend
The Board is pleased to announce the reinstatement of an interim
dividend of 0.10 pence per share (H1 2019: 0.22 pence) in line with
the Groups' revised policy of paying dividends initially covered by
at least 3.0x earnings.
The ex-dividend date is 12 November 2020 with a record date of
13 November 2020. The dividend will be paid to shareholders on 9
December 2020.
Share-based incentive arrangements
Share-based incentive arrangements are provided to management
and certain employees. In addition to share options granted under
the Inspired Energy PLC Share Option Scheme 2011, the Group
implemented a Long-Term Incentive Plan ("LTIP") in July 2017, with
awards to date made in July 2017 and May and December 2018. The
structure of the LTIP scheme is complex and the price to be paid
for any awards under the scheme depends on the share price of the
options available to the recipient. Prior to 30 June 2019, the
underlying calculation did not recognise the element of the share
price at grant attributable to Inspired Energy EBT Limited's
("EBT's") interest in the ordinary share held by the option
holder.
After taking additional advice from an external expert in H2
2019, the calculation was amended to reflect the full price of the
option awarded, taking account of the nil-cost option the option
holder receives at the award date over the EBT's interest. The
amend resulted in an increase in the share-based payment charge in
the final 2019 results. As this amend was made in H2 2019, the H1
2019 interim charge has been restated to align with the full year
2019 charge.
Paul Connor
Chief Financial Officer
8 September 2020
Group Statement of Comprehensive Income
For the six months ended 30 June 2020
Year ended
31 December
2019
Six months
Six months ended 30
ended 30 June 2019
June 2020 (unaudited
(unaudited) &restated) (audited)
Note GBP000 GBP000 GBP000
------------------------------- ----- ------------- --- ------------ --- ------------- ---
Revenue 26,855 21,559 49,298
Cost of sales (6,011) (2,998) (8,371)
------------- ------------ -------------
Gross profit 20,844 18,561 40,927
Administrative expenses (18,124) (15,524) (35,015)
------------- ------------ -------------
Operating profit 2,519 3,037 5,912
------------- ------------ -------------
Analysed as:
Earnings before exceptional
costs, depreciation,
amortisation and share-based
payment costs 8,141 8,786 18,830
Fees associated with
acquisition (159) (269) (725)
Restructuring costs (73) (901) (1,691)
Change in fair value
of contingent consideration (90) (51) (136)
Depreciation (880) (598) (1,657)
Amortisation of acquired
intangible assets (2,571) (2,304) (5,329)
Amortisation of internally
generated intangible
assets (768) (545) (1,218)
Share-based payment
costs (880) (1,081) (2,162)
------------- ------------ -------------
2,720 3,037 5,912
------------------------------- ----- ------------- --- ------------ --- ------------- ---
Finance expenditure (1,300) (650) (1,200)
Other financial items - - 41
------------- ------------ -------------
Profit before income
tax 1,420 2,387 4,753
Income tax expense (312) (501) (745)
------------- ------------ -------------
Profit for the period 1,108 1,886 4,008
------------- ------------ -------------
Attributable to:
Non-controlling interest 1,025 - 602
Equity owners of the
company 83 1,886 3,406
------------- ------------ -------------
Other comprehensive
income:
Exchange differences
on translation of
foreign operations 966 (25) (414)
Profit for the period
and total comprehensive
income 2,074 1,861 3,594
============= ============ =============
Attributable to:
Non-controlling interest 1,025 - 602
Equity owners of the
company 1,049 1,861 2,992
Note
Diluted earnings per
share attributable
to the equity holders
of the Company (pence) 3 0.14 0.25 0.53
Adjusted diluted earnings
per share attributable
to the equity holders
of the Company (pence) 3 0.66 0.82 1.74
------------------------------- ----- ------------- --- ------------ --- ------------- ---
Group Statement of Financial Position
At 30 June 2020
Six months
Six months ended 30
ended 30 June 2019 Year ended
June 2020 (unaudited 31 December
(unaudited) & restated) 2019 (audited)
Note GBP GBP GBP
----------------------------- ----- ------------- ------------- ----------------
ASSETS
Non-current assets
Investments 897 632 648
Intangible assets 6 70,013 58,034 71,120
Property, plant and
equipment 4 3,398 2,689 2,684
Right of use assets 5 3,651 3,005 3,710
-------------
77,959 64,360 78,162
Current assets
Trade and other receivables 30,225 23,263 29,637
Cash and cash equivalents 11,759 2,459 5,241
------------- ------------- ----------------
41,984 25,722 34,878
Total assets 119,943 90,082 113,040
------------- ------------- ----------------
LIABILITIES
Current liabilities
Trade and other payables 12,388 5,237 10,464
Lease liabilities 1,294 695 1,125
Bank borrowings - 3,892 -
Current tax liability 2,615 2,245 3,618
Contingent consideration 1,470 544 3,311
-------------
17,767 12,613 18,518
Non-current liabilities
Bank borrowings 45,439 23,658 38,614
Trade and other payables - 141 -
Lease liabilities 2,123 2,226 2,595
Contingent consideration 264 1,211 1,280
Deferred tax liability 2,040 1,841 1,993
Interest rate swap 156 136 95
-------------
50,022 29,213 44,577
Total liabilities 67,789 41,826 63,095
------------- ------------- ----------------
Net assets 52,154 48,256 49,945
============= ============= ================
EQUITY
Share capital 898 892 892
Share premium account 37,422 37,422 37,422
Merger relief reserve 15,535 15,535 15,535
Retained earnings 6,802 9,793 6,719
Share based payments
reserves 4,403 2,442 3,523
Investment on own
shares (6,742) (6,742) (6,742)
Translation reserve 873 297 (92)
Reverse acquisition
reserve (11,383) (11,383) (11,383)
Equity attributable
to shareholders 47,808 48,256 45,874
Non-controlling interest 4,346 - 4,071
Total equity 52,154 48,256 49,945
============= ============= ================
Group Statement of Cash Flows
For the six months ended 30 June 2020
Six months
Six months ended 30
ended 30 June 2019 Year ended
June 2020 (unaudited 31 December
(unaudited) & restated) 2019 (audited)
Note GBP GBP GBP
------------------------------- ----- ------------ ------------ ---------------
Cash flows from operating
activities
Profit before income
tax 1,420 2,387 4,753
Adjustments
Depreciation 880 598 1,657
Amortisation 3,339 2,849 6,547
Share based payment costs 880 1,081 2,162
Finance expenditure 1,300 650 1,159
Exchange rate variances 112 (75) 82
Other financial items 90 51 136
Cash flows before changes
in working capital 8,021 7,541 16,496
Movement in working capital
Decrease in Inventories 242 - 15
Increase in trade and
other receivables (831) (1,043) (5,200)
Increase/(decrease) in
trade and other payables 2,562 (1,945) (962)
------------ ------------ ---------------
Cash generated from operations 9,994 4,553 10,349
------------ ------------ ---------------
Income taxes paid (1,304) (1,394) (1,873)
Net cash flows from operating
activities 8,690 3,159 8,476
Cash flows from investing
activities
Purchase of property,
plant and equipment (1,063) (819) (1,479)
Payments to acquire intangible
assets (1,533) (1,057) (2,654)
Contingent consideration
paid (3,250) (1,656) (2,156)
Acquisition of subsidiary,
net of cash (120) (600) (3,718)
Dividends paid by NCI
to third parties (1,650) - (2,400)
------------ ------------ ---------------
(7,616) (4,132) (12,407)
Cash flows from financing
activities
New bank loans 7,000 2,850 49,335
Debt issue costs - - (580)
Repayment of bank loans - (690) (35,033)
Finance expenses (1,300) (599) (1,159)
Repayment of lease liabilities (305) (371) (978)
Net proceeds of equity 6 - -
Dividends paid - - (4,595)
------------ ------------ ---------------
Net cash flows from financing
activities 5,401 1,190 6,990
Net increase in cash
and cash equivalents 6,475 217 3,059
Cash and cash equivalents
brought forward 5,241 2,190 2,190
Exchange differences
on cash and cash equivalents 43 52 (8)
------------ ------------ ---------------
Cash and cash equivalents
carried forward 11,759 2,459 5,241
============ ============ ===============
Group Statement of Changes in Equity
For the six months ended 30 June 2020
Share Merger Share-based Investment Reverse Total
Share premium relief payment Retained in own Translation acquisition Non-controlling shareholders'
capital account reserve reserve earnings shares reserve reserve interest equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January 2019 892 37,422 15,535 1,361 7,908 (6,742) 322 (11,383) - 45,315
------- ------- ------- ----------- -------- ----------- ------------ ----------- --------------- -------------
Profit and
total
comprehensive
income for
the period - - - - 3,406 - (414) - 602 3,594
Acquisition of
subsidiary
undertaking - - - - - - - - 6,769 6,769
Share-based
payment cost - - - 2,162 - - - - - 2,162
Share options - - - - - - - - - -
exercised
Dividends
declared - - - - - - - - (900) (900)
Dividends paid - - - - (4,595) - - - (2,400) (6,995)
------- ------- ------- ----------- -------- ----------- ------------ ----------- --------------- -------------
Total
transactions
with owners - - - 2,162 (1,189) - (414) - 4,071 4,630
------- ------- ------- ----------- -------- ----------- ------------ ----------- --------------- -------------
Balance at 31
December 2019 892 37,422 15,535 3,523 6,719 (6,742) (92) (11,383) 4,071 49,945
------- ---------------
Profit and
total
comprehensive
income for
the period - - - - 83 - 965 - 1,025 2,073
Share options
exercised 6 - - - - - - - - 6
Dividends paid - - - - - - - - (750) (750)
Share-based
payment costs - - - 880 - - - - - 880
---------------
Total
transactions
with owners 6 - - 880 83 - 965 - 275 2,209
------- ------- ------- ----------- -------- ----------- ------------ ----------- --------------- -------------
Balance at 30
June 2020 898 37,422 15,535 4,403 6,802 (6,742) 873 (11,383) 4,346 52,154
------- ------- ------- ----------- -------- ----------- ------------ ----------- --------------- -------------
1. Accounting Policies
Basis of preparation
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the period ended
30 June 2020. Whilst the financial information included in this
interim announcement has been computed in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRS). They have been prepared on an accrual basis
and under the historical cost convention except for certain
financial instruments measured at fair value. 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 2019. The accounting
policies in this announcement are consistent with those set out in
the annual report for the year ended 31 December 2019.
Going Concern
For the purposes of assessing the appropriateness of preparing
the Group's accounts on a going concern basis, the Directors have
considered the current cash position, available banking facilities
and the base financial forecast through to 31 December 2022,
including the ability to adhere to banking covenants.
The Directors believe the Group has a strong balance sheet
position, having refinanced its banking facilities in October 2019
through to October 2023, with an option to extend to October 2024.
Furthermore, in July 2020, the Group completed a fundraise of
GBP30.0m (before expenses) through an oversubscribed placing of
200,000,000 new ordinary shares, with a further GBP1.3m via an open
offer to qualifying shareholders.
As a result, at 31 August 2020 the Group's net debt was
GBP12.5m, reducing from GBP33.5m at 30 June 2020 (GBP33.4m at 31
December 2019). In addition to cash and cash equivalents of
GBP33.0m on hand as at 31 August 2020, approximately GBP14.0m of
the Group's GBP60.0m Revolving Credit Facility is undrawn with an
additional GBP25.0m accordion option available, subject to covenant
compliance. The facility is subject to two covenants, which are
tested quarterly, adjusted leverage to Adjusted EBITDA and Adjusted
EBITDA to net finance charges.
Having considered this information, excluding the potential
impact of COVID-19, which is considered below, the directors
conclude that the Group has adequate resources to continue to trade
for the foreseeable future and that the accounts should be prepared
on a going concern basis.
The uncertainty as to the future impact on the Group of the
recent COVID-19 pandemic has been separately considered as part of
the consideration of the going concern basis of preparation. As a
Group, we earn our revenue based on providing advice and expertise
in commercial utility consumption in the UK and ROI which is a
fundamental input into any economy. Therefore, there will naturally
be a reduction in utilities consumption and demand for associated
consultancy and revenues in the UK and ROI commercial markets, as a
result of the on-going Covid19 pandemic.
Market data indicates year on year industrial and commercial
consumption reductions of 9% in March, 27% in April, 24% in May,
18% in June and 16% in July. Putting this more into context, it is
important to consider the Board's "downside scenario" for the
purpose of agreeing amendments to the Group's banking covenants
completed in May 2020, which assumed a >40% reduction in energy
consumption for Q2 and Q3 2020. The assumption applied to the
potential energy consumption reduction was deemed to be severe but
was cognisant of the levels of uncertainty at the time of
completing the scenario analysis. As a result, Group EBITDA
remaining comfortably ahead of the Board's "downside scenario" in
H1 and into July 2020.
In addition, the acquisition of Ignite has had a material
benefit to the Group's financial position. The Group now receives
the full free cash flow benefits of wholly owning Ignite, having
previously only received 40% of profits distributed by Ignite every
six months via dividends.
From a banking covenant perspective, prior to the acquisition of
the balancing interest of Ignite in July 2020, under the Net
Adjusted Leverage definition per the facility agreement, the EBITDA
contribution from Ignite was not included within Group EBITDA.
However, the Group now benefits from 100% of Ignite's contribution
to Group EBITDA on an LTM basis. The treatment of Ignite EBITDA,
the FCF of ownership and the funding of the transaction via equity,
has significantly increased the headroom available to the Group
from a covenant perspective.
Clearly, the ultimate impact, and duration of the COVID-19
pandemic is difficult to predict and as such, we have considered
scenarios when stress testing the downside scenario forecasts for
the period to December 2022.
Our stress testing indicates that to breach the banking
covenants reset in May 2020, the Group would have to miss forecast
LTM EBITDA per the downside scenario by more than 55% for the LTM
test period ending 30 Sept 2020, with the levels of headroom
increasing further to 90% in December 2022.
Noting the Group has significantly deleveraged under it's
banking covenants as a result of the equity placing and acquisition
of the balancing interest of Ignite post the period end, the Board
are in discussions with it's banking partners as to whether the
reset covenant positions are no longer necessary. These
conversations remain on-going.
Our stress testing indicates that to breach the original banking
covenants set at the point of refinancing in October 2019, the
Group would have to miss forecast EBITDA per the downside scenario
by more than 40% in Sept 2020, increasing to 90% in December
2022.
The Directors note that the Group traded comfortably ahead of
the downside scenario in H1 and July 2020.
Therefore, despite the ongoing uncertainty created by the
pandemic, the Directors believe that the Group is well placed to
manage its business risks and, after making enquiries including a
review of forecasts and scenarios, taking account of the impact of
the pandemic on YTD 2020 trading, reasonably possible changes in
trading performances in the next 12 months and considering the
available liquidity, including banking facilities, and the increase
in adjusted leverage covenant, have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the next 12 months following the date of approval of
this interim results statement. Therefore, the Directors continue
to adopt the going concern basis of accounting in preparing the
financial statements
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 2019 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 segment comprises the operations of Inspired Energy
Solutions Limited, Direct Energy Purchasing Limited, Wholesale
Power UK Limited, STC Energy and Carbon Holdings Limited, Informed
Business Solutions Limited, Flexible Energy Management Limited,
Churchcom Limited, Horizon Energy Group Limited, Energy Cost
Management Limited, SystemsLink 2000 Limited, Professional Cost
Management Group Limited, Squareone Enterprises Limited, Inprova
Finance Limited, Ignite Energy Ltd, Waterwatch UK Limited and
Independent Utilities Limited. Corporate's core services are the
review, analysis and negotiation of gas and electricity contracts
on behalf of UK and ROI Corporate clients. Additional services
provided include energy review and benchmarking, negotiation, bill
validation, cost recovery, optimisation services and software
solutions. The Group's Corporate Division benefits from a
market-leading trading team, which actively focuses on energy
intensive and public sector customers, providing more complex,
long-term energy frameworks based on agreed risk management
strategies.
The SME Division ("SME")
This segments 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.
Six months ended 30 June 2020 Six months ended 30 June 2019
Corporate SME PLC costs Total Corporate SME PLC costs Total
GBP GBP GBP GBP GBP GBP GBP GBP
Revenue 24,942 1,913 - 26,855 18,676 2,883 - 21,559
Cost of sales (4,670) (1,341) - (6,011) (1,319) (1,679) - (2,998)
------------------ --------- ------- --------- --------- --------- ------- --------- --------
Gross profit 20,272 572 - 20,844 17,357 1,204 - 18,561
------------------ --------- ------- --------- --------- --------- ------- --------- --------
Administration
expenses (12,909) (103) (5,112) (18,3124) (11,184) (353) (3,987) (15,524)
------------------ --------- ------- --------- --------- --------- ------- --------- --------
Operating profit 7,363 469 (5,112) 2,720 6,173 851 (3,987) 3,037
------------------ --------- ------- --------- --------- --------- ------- --------- --------
Analysed as:
EBITDA 9,180 498 (1,537) 8,141 8,966 970 (1,150) 8,786
Depreciation (746) (23) (111) (880) (555) (41) (2) (598)
Amortisation (839) (6) (2,494 (3,339) (477) (68) (2,304) (2,849)
Share-based
payments - - (880) (880) (845) - (236) (1,081)
Exceptional costs (232) - (90) (322) (916) (10) (295) (1,221)
--------- ------- --------- --------- --------- ------- --------- --------
7,363 469 (5,112) 2,720 6,173 851 (3,987) 3,037
------------------ --------- ------- --------- --------- --------- ------- --------- --------
3. Earnings Per Share
The earnings per share is based on the net profit for the period
attributable to ordinary equity holders divided by the weighted
average number of ordinary shares outstanding during the
period.
Year ended
31 December
2019
Six months Six months
ended 30 ended 30
June 2020 June 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------------ ------------- --- ------------- --- ----------------- ---
Profit attributable to equity
holders of the Group 1,108 1,885 4,008
Amortisation of acquired
intangible assets 2,571 2,304 5,329
Deferred tax in respect of
amortisation (282) (252) (843)
Changes in fair value of
contingent consideration 90 51 136
Foreign exchange variation 353 (51) (414)
Fees associated with acquisition 159 269 725
Share-based payments costs 880 1,081 2,162
Restructuring costs 73 901 1,691
Covenant reset arrangement
fee/Accelerated write off
of capitalised debt facility
arrangement fees upon refinancing 110 - 333
Adjusted profit attributable
to equity holders of the
Group 5,062 6,188 13,127
------------- ------------- -----------------
Weighted average number of
ordinary shares in issue
(000) 714,562 713,973 713,973
Dilutive effect of share
options (000) 51,810 41,329 38,736
Diluted weighted average
number of ordinary shares
in issue (000) 766,372 755,302 752,709
Basic earnings per share
(pence) 0.15 0.26 0.56
Diluted earnings per share
(pence) 0.14 0.25 0.53
Adjusted basic earnings per
share (pence) 0.71 0.87 1.84
Adjusted diluted earnings
per share (pence) 0.66 0.82 1.74
The weighted average number of shares in issue for the adjusted
diluted earnings per share include the dilutive effect of the share
options in issue to senior staff of Inspired.
Adjusted earnings per share represents the earnings per share,
as adjusted to remove the effect of the fees associated with
acquisition, amortisation of intangible assets (excluding
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. Adjusted profit before tax
is calculated as follows:
Year ended
31 December
2019
Six months Six months
ended 30 ended 30
June 2020 June 2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
------------------------------------ ------------- --- ------------- --- ------------- ---
Profit before tax 1,420 2,387 4,753
Share-based payments costs 880 1,081 2,162
Amortisation of acquired
intangible assets 2,571 2,304 5,329
Foreign exchange variation 353 (51) (414)
Exceptional costs/(items):
Fees associated with acquisition 159 269 725
Restructuring costs 73 901 1,691
Write off of debt facility
arrangement fees upon refinancing 110 - 333
Change in fair value of
contingent consideration 90 51 136
Adjusted profit before tax 5,656 6,942 14,715
------------- ------------- -------------
4. Property, plant and equipment
Motor
Fixtures and fittings vehicles Computer equipment Leasehold improvements Total
GBP GBP GBP GBP GBP
Cost
As at 1 January 2019 961 133 2,162 711 3,967
Acquisitions through
business combinations 46 13 19 - 78
Transfer of asset to
right of uses assets -
on adoption of IFRS 16 (231) - - - (231)
Additions 68 1 1,075 337 1,481
Disposals - - (566) - (566)
Foreign exchange
variations (1) (6) (7) (1) (15)
At 31 December 2019 843 141 2,683 1,047 4,714
Additions 432 35 493 102 1,062
Disposals - - - - -
Foreign exchange
variations - 5 10 2 17
At 30 June 2020 1,275 181 3,186 1,151 5,793
--------------------- --------- ------------------ ---------------------- -----
Depreciation
As at 1 January 2019 494 25 1,211 154 1,884
Charge for the year 123 35 447 102 707
Disposals - - (561) - (561)
At 31 December 2019 617 60 1,097 256 2,030
Charge for the period 58 23 228 56 365
Disposals - - - - -
At 30 June 2020 675 83 1,325 312 2,395
--------------------- --------- ------------------ ---------------------- -----
Net Book Value
At 30 June 2020 600 98 1,861 839 3,398
--------------------- --------- ------------------ ---------------------- -----
At 31 December 2019 226 81 1,586 791 2,684
--------------------- --------- ------------------ ---------------------- -----
5. Right of use assets
Fixtures and fittings Motor vehicles Property Total
GBP GBP GBP GBP
Cost
As at 1 January 2019 - - - -
On adoption of IFRS 16 - 118 3,389 3,507
Acquisitions through business combinations - 135 410 545
Transfer of assets from property, plant and
equipment - on adoption of IFRS 16 231 - - 231
Additions 241 66 70 377
At 31 December 2019 472 319 3,869 4,660
Additions 192 - - 192
Disposals - (80) - (80)
At 30 June 2020 664 239 3,869 4,772
--------------------- -------------- -------- -----
Depreciation
As at 1 January 2019 - - - -
Charge for the year 69 103 778 950
At 31 December 2019 69 103 778 950
Charge for the period 31 41 383 455
Disposals - (80) - (80)
At 30 June 2020 100 64 1,161 1,325
--------------------- -------------- -------- -----
Net Book Value
At 30 June 2020 564 175 2,708 3,447
--------------------- -------------- -------- -----
At 31 December 2019 403 216 3,091 3,710
--------------------- -------------- -------- -----
6. Intangible assets and goodwill
Computer Trade name Customer Customer Customer
software GBP databases contracts relationships Goodwill Total
GBP GBP GBP GBP GBP GBP
Cost
At 1 January
2019 9,350 115 1,596 14,687 2,231 44,366 72,345
Additions 2,595 - 58 - - - 2,653
Acquisitions
through
business
combinations - - - 2,861 5,280 6,984 15,125
Adjustments
to previous
business
combinations - - - - - 992 992
Foreign
exchange
variances - - - (338) - (109) (447)
At 31
December
2019 11,945 115 1,654 17,210 7,511 52,233 90,668
Additions 1,520 - 13 - - - 1,533
Acquisitions
through
business
combinations - - - - - 173 173
Foreign
exchange
variances - - - 374 - 153 527
At 30 June
2020 13,465 115 1,667 17,584 7,511 52,559 92,901
------------- ------------- ------------- ------------- ------------- -------- ------
Amortisation
As at 1
January 2019 3,862 18 1,437 6,087 1,597 - 13,001
Charge for
the period 2,121 6 134 3,473 813 - 6,547
At 31
December
2019 5,983 24 1,571 9,560 2,410 - 19,548
Charge for
the year 1,273 3 - 1,656 408 - 3,340
------------- ------------- ------------- ------------- ------------- -------- ------
At 30 June
2020 7,256 27 1,571 11,216 2,818 - 22,888
------------- ------------- ------------- ------------- ------------- -------- ------
Net Book
Value
At 30 June
2020 6,209 88 96 6,368 4,693 52,559 70,013
------------- ------------- ------------- ------------- ------------- -------- ------
At 31
December
2019 5,963 91 83 7,650 5,101 52,233 71,120
------------- ------------- ------------- ------------- ------------- -------- ------
Computer software is a combination of assets internally
generated and assets acquired through business combinations.
Amortisation charged in the period to 30 June 2020 associated with
computer software acquired through business combinations is
GBP505,000. The additional GBP768,000 charged in the period relates
to the amortisation of internally generated computer software.
6. Availability of this announcement
This announcement together with the financial statements herein
and a presentation in respect of the interim financial results are
available on the Group's website, www.inspiredplc.co.uk
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR DBGDCGXGDGGI
(END) Dow Jones Newswires
September 09, 2020 02:00 ET (06:00 GMT)
Inspired (LSE:INSE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Inspired (LSE:INSE)
Historical Stock Chart
From Apr 2023 to Apr 2024