Regulatory Story
Go to market news section View chart   Print
RNS
Inspired Energy PLC  -  INSE   

Final Results

Released 07:05 27-Mar-2017

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

 

 

HIGHLIGHTS

                                                                                                                                         

Financial Highlights

 

 

2016

 

2015

 

2016 % Increase

Revenue

£21.51m

£15.19m

42%

Gross profit

£17.31m

£11.57m

50%

Adjusted EBITDA*

£8.26m

£5.69m

45%

Adjusted Profit Before Tax**

£7.02m

£5.07m

38%

Profit Before Tax

£4.02m

£3.49m

15%

Cash Generated From Operations

£4.98m

£2.72m

83%

Net Debt

£10.79m

£8.90m

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****

£28.00m

£24.50m

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 £19.1 million as at 31 December 2016 (2015: £17.5 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." 

 

Inspired Energy plc

Janet Thornton (Chief Executive)
Paul Connor (Finance Director)

David Foreman (Corporate Development Director)

 

www.inspiredenergy.co.uk

+44 (0) 1772 689250

 

+44 (0) 7717 707 201

 

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

Justine James

John Bick

+44 (0) 20 7193 7463

+44 (0) 7525 324431

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 £21.51 million (2015: £15.19 million) and adjusted EBITDA increasing by 45% to £8.26 million (2015: £5.69 million). Adjusted profit before tax increased by 38% to £7.02 million (2015: £5.07 million) and Adjusted EPS increased by 27% to 1.27 pence (2015: 1.00 pence). Importantly, the Group generated cash from operations of £4.98m, an increase of 83 per cent, from £2.72m 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 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.

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 £2.25 million, with a further contingent consideration of up to £2.00 million subject to achieving certain financial performance hurdles. 

Corporate Division Financial Highlights

Highlights In the year include:

·      Revenue increased 62% to £16.32 million (2015: £10.74 million)

·      The Corporate Division generated adjusted EBITDA of £7.60 million (2015: £4.97 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 £13.5 million in the year to 31 December 2015 (2015: £12.2 million)

·      Like-for-like Procurement Corporate Order Book (previously reported as 'Corporate Order Book'), excluding WPUK, STC and Informed increased by 9% to £19.1 million as at 31 December 2015 (2014: £17.5 million)

·      Procurement Corporate Order Book exceeded £28.0 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 £28.0 million. This represents an increase of 14% during the year.

Procurement Corporate Order Book Analysis

£'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 £1.6 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 £2.74 million (2015: £2.47 million)and 14% increase in EBITDA to £1.75 million (2015: £1.54 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 £530,285 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 £1.0 million. As at that date, the Group had outstanding balances on its term debt facilities of £13.6 million comprising;

·     senior term debt of £8.6 million

·     £1.75 million drawn of the £3.5 million acquisition facility and;

·     £1.5 million drawn of the £1.5 million revolving credit facility.

Capital repayments of £1.4m per annum are made on the senior term debt.

As at 31 December 2016, net debt stood at £10.79 million, which is an increase of £1.89 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 £1.75 million of initial cash consideration to the vendors of Informed and £2.0 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 £5.0 million term loan facility and £0.6 million of drawn RCF facilities. The new facility agreement ("Facility") was for a £10.0 million term loan. £7.0 million of the term facilities ("Tranche A") amortise over a period of five years with the balance, and the remaining £3.0 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 £1.5 million, of which £1.5 million is drawn, to be used for the purposes of satisfying future working capital requirements (the "RCF") and an acquisition facility of up to £3.5 million to fund future Group acquisitions ("Acquisition Facility"), of which £1.75 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

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

 

£

£

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

£

£

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

 

£

£

£

£

£

£

£

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

 

£

£

 

 

 

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

 

£

£

£

£

£

£

£

£

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

(1,090,259)

8,257,776

4,973,426

(828,004)

5,688,954

Depreciation

(387,334)

-

(422,279)

(177,681)

-

(194,358)

Amortisation

(169,459)

(1,574,713)

(2,149,198)

(134,173)

(313,514)

(786,705)

Share-based payments

(309,818)

-

(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

 

£

£

Fees associated with acquisition

407,750

480,128

Restructuring costs                

122,535

-

 

530,285

480,128

 

One off costs include costs of £122,536 relating to restructuring programmes and costs associated with business combinations of £407,750  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

 

£

£

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

 

£

£

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

 

£

£

£

£

£

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 £147,330 (31 December 2015: £nil) 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 £31,695 (31 December 2015: £5,938).

 

 

7. Intangible assets and goodwill

 

 

Computer

Trade

Customer

Customer

Customer

 

 

 

 

software

 name

databases

contracts

relationships

Total other intangibles

Goodwill

Total

 

£

£

£

£

£

£

£

£

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 £601,800. The additional £169,459 charged in the period relates to the amortisation of internally generated computer software. Amortisation of customer databases of £405,026 is also in relation to internally generated intangible assets.

 

 

8. Trade and other receivables

 

 

 

 

2016

2015

 

 

£

£

 

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 £4,250,000. The initial £2,250,000 payment was satisfied by £1,750,000 cash and the issue of 3,545,596 ordinary shares (with an aggregate value at completion of £500,000) of Inspired Energy PLC. In addition, £2,000,000 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 £1,750,000 prior to calculation of the normalised working capital position of the business. A further £479,000 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

 

£

£

£

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 £931,000, 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 £102,675. 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
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Final Results - RNS