Inspicio Share Discussion Threads

[honiton] 16/9/2006 19:07

jonthedog

thanks. i don't subscribe to shares mag. i topped up my holding on monday pre results at 1.27 and q. happy.

if you are interested CRM and GSK worth a look. RBS good one to tuck away.

[jonothedog] 16/9/2006 09:38

Honiton
Tipped in Shares Mag last Thursday 160 price target

[mr hangman] 15/9/2006 15:23

137-142 now sailing nicely upstream

[honiton] 15/9/2006 08:58

could rise over next few weeks as share is tipped and sentiment improves.

nb

[robsy2] 14/9/2006 18:34

The interims read well.Much talk of things like
consolidating a fragmented market
earnings enhancing acquisitions
synergy between different divisions
strong organic growth
external factors drivingthe business eg increasing legislation etc
stronger second half to come
improving operating margins


The good ship Inspicio appears to be in good shape and manned by a crew that knows where its going and how to get there.
This looks like one to tuck away.

[jonwig] 14/9/2006 12:44

Bridgewell says buy Inspicio...

[bloodsports] 13/9/2006 09:34

Market seemed to like them anyway up a bit more.

[jonwig] 13/9/2006 07:54

Post #52.
Do we need all that? It must have taken you ages to type it up....

Yes, Honiton, encouraging, but I always find it difficult to make sense of early-stage accounts, especially in cases such as this, where a cash shell acquires a mix of businesses.
The fact that they are trading in line with their own expectations is nice to hear, but it doesn't mean much to the rest of us!

[honiton] 13/9/2006 07:39

encouraging

[jonothedog] 13/9/2006 07:26

Inspicio plc

Interim results for the six months to 30 June 2006

Inspicio plc ("Inspicio" or the "Company"), the UK and international inspection
and testing business, today reports results for the six months ended 30 June
2006.

Operational Highlights:

• Strong trading in Inspectorate (Inspicio's largest operating subsidiary) and
turnaround on track

• Successfully delivering strategy to build a leading international inspection
and testing business

• Acquisition of Environmental Services Group Ltd (ESGL) for £16m

• Acquisition of remaining 25.1% of Mertcontrol Rt in Hungary and 51% stake in
Acacus Inspection International Limited in Libya

• Further strengthening of the board and management team, including the
appointment of Richard McBride as Finance Director, and the promotions of Jeff
Luesley to Chairman of Inspectorate and ESGL, and Neil Hopkins to Managing
Director of Inspectorate. Julie Dedman joined the Group as Managing Director
of the Eclipse Scientific Group in August.

Financial Highlights:

• Group turnover at £67.8m (2005: £nil)

• Operating profit before amortisation of goodwill and exceptional items
of £2.6m (2005: loss £0.1m) before charging share option costs of £0.2m (2005:
£nil)

• Profit before interest and tax of £1.4m (2005: loss £0.1m)

• Operating margin in Inspectorate at 3% and progressing on target

• Full year expectations remain unchanged


Commenting on the results, Inspicio's Chief Executive Officer, Mark Silver,
said:

"We have seen strong trading at Inspectorate and are encouraged with the
performance of the ESGL business. The turnaround of Inspectorate is on track and
profit margins are progressing as expected. We remain on target to achieve
improved operating margin for the full year.

We are also delivering on our strategy to consolidate the fragmented inspection
and testing industry. We made further significant progress in this regard after
the end of the period with the acquisition of the Eclipse Scientific Group. Our
acquisitions can all leverage Inspectorate's international network to create a
company of global scale.

The first half financial performance provides a good platform to meet our 2006
financial expectations. Our principal focus now is on the businesses we
currently have within the Inspicio Group and we continue to be confident of
delivering the financial targets we set during the acquisition of Inspectorate."

For further information please contact:

Mark Silver, Chief Executive Officer, Inspicio plc 020 7248 0802
Richard McBride, Finance Director, Inspicio plc
Chris Blundell, Brunswick 020 7404 5959

Analyst presentation

An analyst presentation will take place today at 9.30am at Brunswick, 16
Lincoln's Inn Fields, WC2A 3ED.


Chairman's statement

I am very pleased to report the interim financial statements for the Inspicio
group for the six months to 30 June 2006. The results show strong trading in
Inspectorate, the first operating group that we acquired in October 2005, and
demonstrate that we are well on track with its turnaround strategy. We also
acquired the Environmental Services Group Limited (ESGL), Inspicio's second
major acquisition, on 2 May 2006.

Trading in the first half of the year has been strong. Turnover was £67.8m
(2005: £nil), which included £7.6m (2005: £nil) from acquisitions, principally
ESGL. Operating profit before amortisation of goodwill and exceptional items was
£2.6m (2005 operating loss: £0.1m) before charging £0.2m (2005: £nil) in share
option costs.

The first six months of 2006 have been very busy, as we have actively
implemented the Group's strategy. We are already seeing improvements in
Inspectorate's results, both in turnover growth and margin progression, and
continuing this improvement remains our priority. We have also continued to
build the Group's competencies and scale through acquisition, adding businesses
that will be able to leverage Inspectorate's existing international
infrastructure. In addition to the purchase of ESGL and in-fill acquisitions in
Libya and Hungary, which were completed during the first half of the year, we
have subsequently completed the strategically important acquisition of the
Eclipse Scientific Group in August. Eclipse offers significant growth
opportunities in the higher margin food testing sector. We also completed
further in-fill acquisitions in Australia and Portugal.

The Group's businesses continue to be driven by increasing regulation, high
barriers to entry and growing world trade, all of which underpin the Group's
growth strategy.

Chief Executive's Review

The results for the six months to 30 June 2006 comprise six months of trading
from Inspectorate and two months of trading from ESGL. The comparative period to
30 June 2005 only comprised 12 weeks of operation and was before the first
acquisition had been made. It therefore only includes central head office costs
to 30 June 2005. In the notes to the financial statements, a pro forma profit
and loss for Inspectorate has been included to show the results in the largest
business within Inspicio.

All 2005 comparatives are nil for Inspectorate and ESGL as the six months to 30
June 2005 were prior to their acquisition.

Inspectorate

Trading in Inspectorate has been strong in the first six months of the year.
Turnover was £60.2m which represented growth of 20.2% on a pro forma basis for
continuing operations. Operating profit was £1.8m at a margin of 3%. This level
of operating margin was as expected and Inspectorate is on track to deliver an
improved margin for the full year.

In the six months to 30 June 2006, Inspectorate acquired the remaining 25.1% of
Mertcontrol Rt in Hungary as well as a 51% stake in Acacus Inspection
International Limited in Libya. Such in-fill acquisitions will be a continuing
feature of the group's strategy. We will target the buy out of minority
shareholders, oil and petroleum agents and continue to move closer to the mining
and exploration clients in the metals and minerals sector.

Operational Review

Americas

The Americas generated revenue of £29.9m representing 49.6% of Inspectorate's
revenue and growth of 20.3% over the same period in 2005. The US Oil & Petroleum
division continued to perform well even though parts of the Gulf Coast region
were still heavily affected by the impact from Hurricanes Katrina and Rita
throughout the first half of the year. New contracts were won in US Metals and
Minerals on the back of the investment in the Reno laboratory.

Asia

The Asia business generated £4.3m of revenues representing 7.1% of
Inspectorate's revenue and growth of 39.1% over the same period in 2005. The
growth continues to come from the Singapore laboratory and Chinese coal and coke
businesses. The laboratory upgrade in Singapore is on schedule and will
significantly increase capacity.

UK, Continental Europe, Middle East and Africa

The combined revenue of UK, Continental Europe, Middle East and Africa was
£26.1m representing 43.3% of Inspectorate's revenue and growth of 18% over the
same period in 2005. In UK Metals and Minerals the new management and sales team
continue to gain increased business from traders as well as new customers.

In Eastern Europe revenues were flat compared with the same period in 2005 as
the year began with difficult trading conditions in Russia mainly due to
unprecedented bad weather conditions. The shortfalls associated with this period
are gradually being recovered. The EMEA business continues to be driven by the
Indian and Middle East operations and further investment is still being made in
these high growth areas. Holland is improving, albeit at a slower pace than
anticipated.

After 30 June 2006, and therefore not included in the financial results for the
first half of the year, we continued with our strategy of making in-fill
acquisitions. In August we acquired Renton Laboratories Pty Ltd in Perth,
Australia. Trading as Standard and Reference Laboratories, this provides high
precision analysis of metals and mineral products to clients including major
global mining companies. In the same month we acquired a majority stake in our
Portuguese agent, Inspeccoes, Peritagens E Controlo LDA ("IPEC"), which provides
petroleum surveys, agri-commodities and metals and minerals testing as well as
services in relation to cargo insurance claims, and on hire and off hire
surveys. These acquisitions strengthen both our commercial position and
geographic reach according to the aims of our in-fill strategy.

Environmental Services Group

On 2 May, the Group acquired the entire share capital of Environmental Services
Group Limited from Mowlem plc (now owned by Carillion plc) for a total
consideration of £16.0m. This was funded by a cash placing of 3.75m ordinary
shares and an increase in the Company's debt facilities of £10m. ESGL's main
businesses include Soil Mechanics and TES Bretby. Soil Mechanics is the UK's
leading ground investigation contractor providing drilling, sampling, testing
and advice for geotechnical, groundwater, geological, environmental,
contaminated land and marine survey purposes. TES Bretby is one of the UK's
largest mineral and waste testing laboratories. By using Inspectorate's
worldwide infrastructure, there is significant scope for international growth in
ESGL's businesses.

The six months to 30 June 2006 include two months of ESGL's results. Turnover
was £7.5m and operating profit before amortisation and exceptional items was
£0.4m at an operating margin of 5.7%.

Progress has been made in identifying and developing the synergies between the
Inspectorate and ESGL businesses, especially in coal inspection and testing.

The financial performance of ESGL for the two months post acquisition has been
in line with expectations. Prospects for ESGL for the remainder of this
financial year and into 2007 are encouraging, particularly in the Soil Mechanics
and TES Bretby business lines, with a strong forward order book from existing
term contracts and framework agreements underpinning future sales growth. The
key market drivers include increased environmental regulation and compliance,
climate change (affecting, amongst other things, flood defences and slope
stability) and UK energy shortfall as well as global energy demand.

Financial Results

Overview

Turnover for the six months to 30 June 2006 was £67.8m (2005: £nil). Of this,
£60.1m (2005: £nil) was generated from continuing operations in Inspectorate and
£7.6m (£nil) was generated from acquisitions including £7.5m from ESGL.

In the six months to 30 June 2006, there were exceptional charges of £0.2m
(2005: £nil) in respect of the restructuring of the management of ESGL and of
Inspectorate within Europe. Further restructuring charges are expected in the
second half of the year.

Earnings before exceptional items, interest, tax, depreciation and amortisation
(EBITDA) were £4.7m (2005: loss £0.1m). After depreciation, EBITA was £2.6m
(2005: loss £0.1m) before charging £0.2m (2005: £nil) for share options. Profit
before interest and tax was £1.4m (2005: loss £0.1m) and pre-tax profit was
£0.9m (2005: loss £0.1m).

Unaudited information has been included for Inspectorate for the six-month
period to 30 June 2006 and compared to pro forma results for the same period
ended 30 June 2005. Turnover was £60.2m (2005 pro forma: £50.0m). Acquisitions
in 2006 comprised £0.1m (2005: £nil) of turnover. The organic growth rate was
20.2%. Operating profit before exceptional items, fair value adjustments and
transitional items was £1.8m (2005 pro forma loss: £2.3m) at an operating margin
of 3.0%.

Inspectorate's business is cyclical. Turnover and operating profit tend to be
higher in the second half of the year than the first. This is a result of the
stockpiling of oil during the autumn months in advance of winter use.

Interest and tax

Net interest cost amounted to £0.5m and was covered 4.9 times by EBITA.

Management believe that the long-term tax rate of the Group will be around 35%
(before goodwill and share option charges). Our aim is to achieve the long-term
tax rate of 35% during the second half of 2007. In the six months to 30 June
2006, tax has been charged at 45% (before goodwill and share option charges)
(2005: nil), which is the estimated rate for the 12 months to 2006.

EPS

Basic earnings per share for the six months to 30 June 2006 were a loss of 0.4p
(2005: loss 5.4p). Adjusted earnings per share (calculated on profit before the
amortisation of goodwill and exceptional items) were 1.5p (2005: loss 5.4p).

Cash and financing

Net debt at 30 June 2006 was £17.1m (2005: £nil) compared to £3.4m at 31
December 2005.

In the six-month period to 30 June 2006, there was an operating cash inflow of
£3.0m (2005 outflow £0.1m). Servicing of finance represented a cash outflow of
£0.8m (2005: £nil), tax paid was £1.2m (2005: £nil) and capital expenditure, net
of disposals, was £0.8m (2005: £nil).

£18.5m was spent on acquisitions (2005: £nil), including £16.0m on ESGL and
£2.2m as the final payment to BSI for the acquisition of Inspectorate. During
the period, 3.75m shares were issued, raising £4.3m net of costs, and borrowings
increased by £18.4m.

IFRS

As Inspicio is quoted on AIM, it is not required to adopt International
Financial Reporting Standards ("IFRS") until its 2007 year end. The attached
financial statements have therefore been prepared under UK GAAP. In 2005,
however, the Group adopted early certain recent UK accounting standards which
form part of the ongoing process of convergence between UK GAAP and IFRS. In
particular, under FRS 20, the financial statements do include a share-based
payment charge on a basis consistent with IFRS 2 and, under FRS 26, derivative
financial instruments have been measured at fair value.

The share based payment charge against operating profit included in the six
months to 30 June 2006 was £0.2 million.

Dividends

The Board is not recommending a dividend for the six months to 30 June 2006.

Post balance sheet events

On 11 August 2006, the Group acquired the entire share capital of Eclipse
Scientific Group Ltd for a total consideration of £47.0m with a possible
deferred consideration of up to £3.0m dependent on the growth of profits over
the next three years. The acquisition was funded by the cash placing of 25.1m
ordinary shares, the issue of 2.1m ordinary shares to the vendors and an
increase in debt facilities of £22.0m. Eclipse is a leading food testing
business in the UK with the opportunity to grow globally using Inspectorate's
international expertise and infrastructure.

On 24 August 2006, the Group acquired the entire share capital of Renton
Laboratories Pty Ltd, a metals and minerals testing company in Australia for a
consideration of AU$2.6m cash and 424,950 ordinary shares issued to the vendors.

On 4 August 2006, the Group acquired a majority stake in our Portuguese agent,
Inspeccoes, Peritagens E Controlo LDA ("IPEC"), for €620,000 in cash.

The cash consideration for these in-fill acquisitions was funded by the cash
placing of 1,818,182 ordinary shares.

Strategy

Inspicio has undergone a significant transformation since its admission to AIM
on 29 April 2005. We have delivered upon our strategy of acquiring and managing
companies and businesses in the UK inspection, testing and performance
conformity market through the acquisitions of Inspectorate, ESGL and Eclipse
along with a number of smaller acquisitions.

The Board's focus is currently on developing these existing businesses and
enhancing shareholder value.

Our strategy of acquiring businesses that are capable of growth by utilising the
infrastructure of Inspectorate is well demonstrated by the integration of ESGL
into the Group. A joint initiative on Coal Testing has been launched between
Inspectorate and TES Bretby and plans are being developed to move Soil Mechanics
into the Middle East before the end of the year. Elsewhere in ESGL we have
announced and implemented the integration of the Global food testing business
into Eclipse.

Eclipse, which we acquired in August, will operate as a standalone business
within Inspicio, but again will look to utilise the international infrastructure
of Inspectorate.

Current trading and outlook

Overall we are pleased with progress to date. In particular, the turnaround of
the Inspectorate business is on track to deliver the expectations we set at the
time of its acquisition. We continue to look for in-fill acquisitions in certain
areas to enhance the value of this business.

We have seen strong sales in the first half of the year, organic growth being
around 20% year on year.

We continue to believe that the testing and inspection market will grow into the
future. Increasing legislation and regulation, the growth in world trade and the
barriers to entry arising from the reputation of our businesses continue to
drive demand.

Mark Silver
Chief Executive Officer

[bloodsports] 11/9/2006 09:49

The news and current trends are certainly going the way of this stock. It seems to be moving up quickly, long may it continue

[robsy2] 08/9/2006 15:02

Nice post
The word is getting out about this company.Hence the momentum.In investment terms this is beginning to look like the Holy Grail,a great company operating in a great business area.
Anything that benefits from "tightening regulation" seems like a good bet!
Hold tight!

[jonwig] 07/9/2006 07:57

Shares Mag this morning:

New US rules for closer monitoring
of sulphur content in diesel are set
to drive up sales at oil tester Inspicio
(INP:AIM). Monday's interims from
rival Intertek (ITRK) revealed tightening
regulation had boosted revenues.
This bodes well for Inspicio's own
half-year numbers next week.
Nick Spoliar, analyst at Inspicio's
house broker Bridgewell, says, 'We
would flag the strong outperformance
of Intertek as another buy signal.'
Intertek comfortably beat market
expectations, its numbers exceeding
Spoliar's estimates and prompting
analysts at Merrill Lynch to upgrade
their 2006 and 2007 forecasts by 2%,
despite a weakening dollar.
Intertek's shares posted a 6.3% rise
on the day of the results, leaving all
eyes focussed on Inspicio.
Both companies derive a large
portion of their revenues from oil
testing and have a strong exposure
to the US market. Inspicio, whose
clients include oil giant BP (BP.),
secured its position in the oil testing
business with the acquisition of
Inspectorate in October, after
reversing into a cash shell company.
But it is not only the top-line on
which investors should be focusing,
chief executive Mark Silver is on a
cost-cutting mission too. Silver aims
to bring operating margins in line
with Caleb Brett, the oil testing arm
at Intertek.

[jonwig] 06/9/2006 12:20

Surprise - sometimes I'm lucky ...

[robsy2] 06/9/2006 11:32

Yes I know what you are saying very well and for me INP was no exception, but she's fairly flying along now. Everyone must be following your lead!!

[jonwig] 05/9/2006 14:41

Hello Robsy.
I've just bought a few - so wait for the share price to fall ...

A new issue in the same area is Velosi [VELO], which has been tipped in a UK-Wire e-mail I got. I haven't bought any, but am doing some research on it, and I've started a thread.

[robsy2] 05/9/2006 13:50

Jonwig

Thanks again.Inp looks cheap in comparison to ITRK especially if INP can hit 8% margins which would still be a lot lower than ITRK.The INP share price is perking up a bit on heavy volume so maybe people are waking up to that and switching into INP from ITRK?
All the best

[jonwig] 04/9/2006 18:23

Intertek [ITRK] brought out some strong interims this morning.
INP slow to respond ... me, even slower!

[robsy2] 30/8/2006 20:28

Thanks Jonwig
I saw this article as well and am very heartened by it.I am convinced that this share is currently overlooked. It would appear to have all the ingredients for success. Of course the managemnet have to deliver but they should be able to do it firstly because they have done it all before, so I don't see that as being a problem. The prospècts for the market they operate in also looks good and they have strong institutional backing.
If they get anywhere near their projections over the next few years this share will move up a lot. How much I don't know but it seems a steady business area to be in which for me menas solid earnings and dividends and a high rating. Say they had a per of 15 and did 18 million in 2008 then we have a mc of 270 million we are around the 100 million mark at the moment. Thats good enough for me so I think its a strong buy at this price!

[jonwig] 25/8/2006 08:48

Independent article:

Our view: Buy

Share price: 112.5p (unch)

In less than a year Inspicio has gone from cash shell to major player in the global testing and inspection market. It has done this via a series of acquisitions, and yesterday came news of two more - in Portugal and Australia.

By Inspicio's standards these purchases were small. However, the slew of deals completed by the group in the 12 months has led to worry that its management have lost focus on its key task of turning around the Inspectorate business they bought in October, and this has weighed on the group's shares.

Inspectorate operates mainly in the oil and mining industries, checking the concentration of hydrocarbons or the quality of precious metals.

When Inspicio bought the business, it promised to make it more profitable by cutting costs. Its aim is to increase profit margins at Inspectorate from 1.7 per cent to 8 per cent by 2008. Many peers enjoy margins of over 10 per cent. If the group's management achieve this, profits should take off.

Analysts predict last year's £2.7m loss at Inspicio will be turned into a profit of £4.3m this year, rising to £11.7m in 2007 and maybe reaching £18m in 2008. This puts the shares on a forward rating of under 13 times.

[robsy2] 12/5/2006 18:40

I would like to think so but I am not sure when that will be.

[huwrayhenry] 11/5/2006 22:56

on way to 200P ?

[robsy2] 11/5/2006 11:44

Yes
It all looks very solid . These guys have done it all before in the public sector and, not unreasonably, would like to do it again in the private sector so they can roll in the Benjamins!
They have the know-how,the contacts,the motivation and the institutional backing. Combine that with the fundamental need for standards and testing in an increasingly commodicised and interrelated World then it all looks very positive.
The new acquisition has been handled smoothly and looks a great fit.
And lfinally,this stock is not high profile, yet. This is beginning to happen now as the broader investment community catch onto the explosive growth prospects as well as the defensive ie. solid nature of the business.
Bingo!
Like I've said before I am very comfortable with this holding.

[honiton] 11/5/2006 09:09

Harrogate

I agree. Niche player, interesting sector.

[harrogate] 11/5/2006 09:05

Inspectorate have been a sleep giant in the industry for years - they can do a lot to turn it round quickly and get the margin to where they are aiming.

SGS could be a good home for it eventually - the sector needs to consolidate