Inspired Share Discussion Threads

[1gw] 26/3/2024 09:00

Acquisition-led growth doesn't make it easy to understand the financials does it?

Adjusted PBT of £16m vs Statutory loss before tax of £6m in [correction] 2023.
Cumulative adj PBT of £50m over the last 4 years vs statutory LBT of £14m.
Statutory loss in 3 of the last 4 years.
Retained losses of £28m.
Goodwill of £77m.

But they've grown adj EBITDA to £25m in 2023 from £13m in 2020 and adj PBT to £16m from £7m.
And they have now amortised a large majority (£24m out of £29m) of the acquired intangibles in the "customer contracts" & "customer relationships" categories.

The hit to profit this year due to revaluation of contingent consideration looks ugly, but is a consequence of acquired business(es) performing better than expected at the time of acquisition. Had they valued the business "correctly" (with the benefit of hindsight) at the time of acquisition(s) then it would have perhaps made the acquisition(s) harder to finance and would probably have led to the difference in valuation largely being attributed to goodwill.

It would increase transparency no end if they could now have a year or two without major acquisitions and with acquired businesses performing in line with current expectations so that there are no further major changes to contingent consideration valuation and no major exceptional charges. As remaining acquired intangibles (excluding goodwill) are progressively amortised away that should allow much clearer financial statements. Acting against that desire for simplicity and transparency of financial reporting there will always be the temptation to take advantage of perceived opportunities to grow the business through further acquisition.

[rivaldo] 26/3/2024 07:32

Good, solid results are actually slightly ahead of those flagged in the trading update, with £25.2m EBITDA (against the £25m in the update). The adjusted EPS is 13.4p, so a P/E of just 4.7.

The divi is up 7% to a tasty 2.9p, a 4.6 yield.

Cash generation from operations is healthy at £18.7m and has improved greatly in this Q1 with the unwinding of working capital.

Of course some won't like the net debt increase and huge adjustments to get to the statutory figures. But this is primarily down to the additional consideration due on acquisitions which have paid off hugely (see the CFO's statement).

Most importantly, the outlook is extremely confident:

"Current trading and outlook

The secular demand from companies to reduce energy consumption, drive efficiencies and report against progress remains unchanged and underpins demand for the Group's services.

FY24 has started strongly, with the Group trading in line with expectations and with substantial cash generation as the working capital investment in Q4 2023 unwound.

The growing demand, and demonstrable success, of selling into new and existing customers, underpins the Board's confidence in the outlook for FY24."

[kumbuka] 20/3/2024 21:17

Very good bully boy pj full of good content that post.

[diesel] 20/3/2024 19:50

There’s a storm brewing in energy contract mis selling, may not involve INSE, but going to make investors a bit wary.

[1224saj] 20/3/2024 15:39

Just asked the BOD why are they not investing in their company at 66p per share.They'll probably say they're in a closed period, but it has not been in that period for the last 4 months!!!

[earwacks] 20/3/2024 06:44

Tend to agree Saj and pj. They can’t fudge the balance sheet. Net asset per share is going down, now minus 3.75p. Debt is 48 million with a market cap of 68 million. They have promises will be reduced in full year. Another company that bangs on about increasing Ebitda rather than real profit, when in fact it is still loss making and paying a dividend funded out of debt. Looks like a train wreck. Hope full year is markedly improved. It needs to be

[pj 1] 17/3/2024 10:50

If INSE had good news they would share it. Newsflow is usually not positive on AIM.

Be careful what you ask for.

[1224saj] 14/3/2024 11:45

" limited newsflow " I'm surprised that as a respectable investment fund they don't bring pressure to keep the market informed. The BOD are a disgrace, not fit for purpose

[rivaldo] 14/3/2024 08:25

Strategic Equity Capital plc, who have a £7.32m investment in INSE, note in their interims today that a the shares fell "despite strong current trading and limited newsflow".

They summarise as follows:

"Inspired Energy

Investment Thesis

UK B2B corporate energy services and procurement specialist with strong ESG credentials
Leading player in a fragmented industry; significant opportunity to gain market share through client wins, proposition extension and M&A
Valued at a substantial discount to comparable private market transaction multiples

Developments

High energy costs have driven accelerated growth in optimisation services

ESG revenues accelerating from a low base"

[rivaldo] 11/3/2024 08:55

INSE will announce their results on 26th March:



As a reminder, Liberum forecast £16.2m PBT for last year, rising to £18.3m PBT this year.

That equates to 13p EPS rising to 13.7p EPS this year - a P/E of just 5.2.

Liberum also forecast a 2.7p dividend for last year, rising to 2.9p this year (a 4.3% yield).

[smackeraim] 22/2/2024 17:04

Well you could say the low a week or two back was the first higher low for a long while. Let's see if it can make a higher high for the year.. good luck!

[diesel] 22/2/2024 13:44

This has been in a long term downtrend for 2 years, another since May last year and on a macro level one since the beginning of the year. It is going to take a while before a reversal is confirmed, I’ve been adding at these levels as the results look solid but admit this is a risky approach.

[smackeraim] 22/2/2024 12:14

Volume, albeit still small, has notably increased since late January. Probably time to begin the climb higher.

[rivaldo] 21/2/2024 15:25

Good to see INSE holding a webinar with over 400 people attending, mainly focusing on a number of net zero and ESG topics as outlined in the article:

[rivaldo] 19/2/2024 09:52

Liberum forecast a 2.7p dividend for last year, rising to 2.9p this year (a 4.3% yield). It's too early as yet to know a definite ex-div date AFAICS?

Liberum also forecast £16.2m PBT for last year, rising to £18.3m PBT this year.

That equates to 13p EPS rising to 13.7p EPS this year - a P/E of just 4.9.

[1224saj] 19/2/2024 09:45

I thought the div declared date was 27th March?

[bda3490] 16/2/2024 17:46

As ever under lying rubbish and ESG talk

No dividend and share price trashed v 5 years ago

No divi no profits

[1224saj] 02/2/2024 08:52

Well said ?

[1224saj] 01/2/2024 10:29

Good results, price goes down. If this was the USA they would be putting the flags out

[rivaldo] 31/1/2024 09:01

Good to see all buying this morning (one 10k trade marked as a sell is undoubtedly a buy), and the price moving up 2.5p on a modest £40k or so of volumes which suggests not much stock around.

Liberum have retained their Buy and 200p price target.

They conclude:

"A CY 24 P/E of 5.4x is attractive given the growth. Inspired has a low carbon beta, but that should change as its ESG credentials become more apparent. Growth in newer areas like Optimisation, Software and ESG, should accelerate growth and drive a re-rating. Our SoTP suggests a TP of 200p."

They also see a nice comparison with the recent sale of eEnergy:

"The eEnergy disposal supports our valuation of the Assurance division

We see the sale of Energy management by eEnergy, earlier in January, as relevant to Inspired. eEnergy’s FY 22 R&A says that its ‘Revenue is comprised of fees received from customers or commissions received from energy suppliers, net of value-added tax, for the review, analysis and negotiation of gas and electricity contracts on behalf of clients in the UK.’ It is therefore comparable to Inspired’s Energy Assurance business, which we view as Inspired’s lowest rated business, given its lower growth. The adjusted consideration appears to have been £30m or £40m including max consideration of £10m, and the FY23 adj EBITDA for that division was £4.4m, which suggests a trailing EV/EBITDA of 6.8x to 9.1x, which is consistent with our SoTP valuation of 8.0x."

[rivaldo] 31/1/2024 07:26

Indeed it does. INSE is at last rediscovering its mojo.

Nicely in line with Liberum's forecasts at £25m EBITDA and likely £16.2m PBT, which implies around 13p EPS.

That's a historic P/E of only 5.6.

Net debt should come down sharp-ish from here and is also in line with expectations taking the January inflows into account.

Revenues are actually below forecast, which makes INSE's performance even better as margins are rising and product mix improving, so with continued revenue gains then profits should climb fast.

Above all, the business seems to be thriving and the outlook is confident. Optimisation is striding ahead up 13%, ESG is now EBITDA-profitable and growing revenues annually at 100%, and Software is also growing nicely at 15% with high margins.

The outlook is very strong:

"The Group started Q1 2024 strongly with substantial cash generation as the working capital investment in Q4 2023 unwound and is confident in the outlook for FY24.

This momentum is expected to continue, giving the Board confidence in its previously stated aspiration to maintain double-digit organic growth and, by FY27, double Adjusted EBITDA organically from that achieved in FY22. The associated cash generation will also lead to a deleveraging of the Group in relative and absolute terms."

[1gw] 31/1/2024 07:09

TU reads well, if anyone notices...