Inspired PLC Final Results 2022 (5407U)

TIDMINSE

RNS Number : 5407U

Inspired PLC

29 March 2023

29 March 2023

Inspired PLC

("Inspired" or the "Group")

Final Results 2022

Results and FY23 outlook in line with expectations, with robust operational performance and strong cash generation

Inspired (AIM: INSE), a leading technology-based service provider supporting businesses to control energy costs and enable their journey to net-zero, announces its consolidated, audited final results for the year ended 31 December 2022.

Financial Highlights

 
                                                            % 
                                      2022      2021   change 
-------------------------------  ---------  --------  ------- 
Revenue                           GBP88.8m  GBP67.9m     +31% 
-------------------------------  ---------  --------  ------- 
Gross profit                      GBP57.7m  GBP50.7m     +14% 
-------------------------------  ---------  --------  ------- 
Adjusted EBITDA*                  GBP21.0m  GBP19.8m      +6% 
-------------------------------  ---------  --------  ------- 
Adjusted profit before tax**      GBP14.0m  GBP13.4m      +4% 
-------------------------------  ---------  --------  ------- 
(Loss)/profit before tax         (GBP4.0m)   GBP1.1m      N/A 
-------------------------------  ---------  --------  ------- 
Underlying cash generated from 
 operations***                    GBP21.7m  GBP10.2m    +113% 
-------------------------------  ---------  --------  ------- 
Adjusted diluted EPS****             1.31p     1.30p      +1% 
-------------------------------  ---------  --------  ------- 
Diluted basic EPS                  (0.37p)     0.16p      N/A 
-------------------------------  ---------  --------  ------- 
Net debt                          GBP37.2m  GBP32.9m     +13% 
-------------------------------  ---------  --------  ------- 
Corporate order book              GBP69.0m  GBP67.5m      +2% 
-------------------------------  ---------  --------  ------- 
Dividend per share                   0.27p     0.25p      +8% 
-------------------------------  ---------  --------  ------- 
 
 
 --   Group revenues increased 31% to GBP88.8 million (2021: GBP67.9 
       million), with all four of the Group's divisions generating 
       growth in 2022. 
 --   Underlying Group cash generated from operations (excluding 
       non-recurring fees associated with restructuring costs and 
       deal fees) was GBP21.7 million (2021: GBP10.2 million), up 
       113% driven by strong working capital management within the 
       Optimisation Services division. 
 --   The increase in Group net debt of GBP4.3 million reflects 
       a year in which the cash generation was offset by the payment 
       of GBP10.8 million of performance payments, in the form of 
       contingent cash consideration for acquisitions reflecting 
       the Group's strategy to pay for EBITDA when delivered, not 
       on the basis of forecast EBITDA. This strategy has proven 
       to be effective in protecting shareholders during periods 
       of volatility in 2020 and 2021. 
 --   Group Adjusted EBITDA margins reduced to 24% (2021: 29%), 
       reflecting the change in revenue stream mix and increased 
       PLC costs. 
 --   Adjusted profit before tax of GBP14.0 million (2021: GBP13.4 
       million) reflecting the increase in finance costs from a higher 
       level of debt over the year and increased interest rates. 
 --   Under IFRS measures, the Group reported a loss before tax 
       for the year of GBP4.0 million (2021: profit of GBP1.1 million), 
       with statutory profit before tax in the year significantly 
       impacted by charges for changes in the fair value of contingent 
       consideration, the amortisation of intangible assets as a 
       result of acquisitions, share-based payment charges and restructuring 
       costs. 
 

Operational and Strategic Highlights

Strong performance across all four business divisions, which are underpinned by long term structural growth drivers:

Assurance Services

 
 --   Record year for new business which counteracted an increase 
       in client churn because of the unprecedented conditions in 
       UK energy markets. 
 --   Delivered revenues in line with expectations with increased 
       overheads to maintain service level quality standards whilst 
       addressing client needs during the energy crisis, leading 
       to a modest reduction in margin in the period. 
 

Optimisation Services

 
 --   Revenues grew 64% to GBP47.7 million (2021: GBP29.1 million) 
       driven by significant demand as the ongoing energy crisis 
       significantly sharpened clients' focus on the economics of 
       investment in energy reductions, combined with the drive for 
       delivering net-zero. 
 --   Optimisation Services are a key component in increasing the 
       lifetime value of our clients as the repeatable demand for 
       solutions to deliver net-zero and reduce costs address the 
       strong macro themes of ESG and managing responses to climate 
       change. These macro themes offer the opportunity to significantly 
       drive absolute EBITDA growth for the Group over the long term 
       albeit at lower blended Group EBITDA margin. 
 

ESG Services

 
 --   ESG revenue up 167% on FY21, in line with uplifted expectations 
       post the Group's interim results, as the expanded service 
       offering continues to gain significant traction. 
 --   ESG services not only offer an opportunity to increase the 
       lifetime value of the existing client base but also to bring 
       new clients to the Group including Videndum plc, Naked Wines 
       plc, QA Limited, City Electrical Factors (CEF) and John Wiley 
       & Sons. 
 

Software Services

 
 --   Performed in line with expectations, working with several 
       flagship clients including Peabody, NHS Property Services, 
       Laser and SMS plc. 
 --   A number of significant software solution modules are expected 
       to be released in 2023, providing opportunity for further 
       upside growth. 
 

Current Trading and Outlook

 
 --   Trading in Q1 2023 started with considerable momentum across 
       the business which is consistent with management expectations 
       of double-digit percentage EBITDA growth in year. Despite 
       the ongoing macroeconomic and geopolitical uncertainties, 
       the Board is confident of the Group's continued ability to 
       deliver full year results in line with expectations. 
 --   The Group has a substantial addressable market underpinned 
       by an extensive and blue-chip client base. The 'new normal', 
       created by the energy crisis, has resulted in increased demand 
       for the Group's products and services with optimisation and 
       ESG becoming a revenue centric item for most businesses. 
 --   For 2023, the Group intends to continue to refine its operating 
       model in Assurance Services, whilst adapting service levels 
       to the new environment. 
 --   Specific focus during the year will also be given to increasing 
       the 'life-time value' of clients by increasing penetration 
       across the Group's suite of services. 
 --   The improved processes for managing working capital within 
       the Optimisation Services division have continued to operate 
       well as we start the year providing confidence that cash conversion 
       for the year should operate in the 80% to 90% range. 
 

Commenting on the results, Mark Dickinson, CEO of Inspired, said: "I n what has been the most challenging year ever seen in the UK energy markets, when the need for our services has never been more apparent, I am incredibly proud of the Group's performance across all divisions. We delivered significant growth in Group revenues, adjusted EBITDA and strong underlying cash, demonstrating the increased demand for our services, which we expect to continue into the new financial year and beyond.

"The unprecedented conditions in the UK energy markets, which we believe has started a transition to a 'new normal', have sharpened our clients' focus on ensuring they have invested effectively in carbon and energy reduction. The energy crisis has accelerated the focus on ESG objectives as a key priority at board level across our client base and our evolving strategy is well aligned to meet the resulting market demands and requirements.

"Whilst mindful of the current backdrop, the long-term opportunities for the Group are clear and we have entered FY23 in a robust position, building on momentum from the prior year. We have a substantial addressable market, high profile clients, and a record new business pipeline, underpinning the Board's confidence in the long-term growth and success of the Group."

Note

*Adjusted EBITDA is earnings before interest, taxation, depreciation, and amortisation, excluding exceptional items and share-based payments.

**Adjusted (loss)/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 gains/(losses) (A reconciliation of Adjusted profit before tax to reported (loss)/profit before tax can be found in note 5)

***Underlying cash generated from operations is cash generated from operations, as adjusted to remove the impact of restructuring costs and fees associated with acquisitions.

****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 gains/(losses).

Enquiries please contact:

 
Inspired PLC                                 www.inspiredplc.co.uk 
 Mark Dickinson, Chief Executive Officer      [phone] 
 Paul Connor, Chief Financial Officer 
 David Cockshott, Chief Commercial Officer 
Shore Capital (Nominated Adviser and 
 Joint Broker) 
 Patrick Castle 
 James Thomas 
 Rachel Goldstein                             [phone] 
Liberum (Joint Broker) 
 Edward Mansfield 
 Will Hall 
 Antonia Brown                               [phone] 
Alma PR                                      [phone] 
 Justine James                                [e-mail] 
 Hannah Campbell 
 Will Ellis Hancock 
 

Chairman's statement

2022 was a year of significant progress across all business divisions, with a strengthened platform created, capable of generating long term growth, against a very challenging backdrop in UK energy markets. As a Board, we are incredibly proud of what our team has achieved during these unprecedented times. We continue to overcome the challenges the UK market faces, positioning the Group as the leading provider of services to help businesses to respond to climate change and meet their net-zero targets.

The year started with the impact of the war in Ukraine causing significant volatility and uncertainty across commodity and energy markets. The crisis further highlighted energy as an essential board level priority and the Group continues to take every opportunity to help all clients mitigate the cost of energy and manage their energy consumption and carbon emissions during these unprecedented times.

We are delighted with the resilient revenue and margin performance of the Assurance Services in 2022. The last three financial years have been an especially challenging time for our Assurance Services, with COVID-19 impacting both 2020 and 2021, and the energy crisis impacting 2022. Our drive to continue to provide a first-class level of service to our Assurance clients has led to an increase in our overheads during the year, an investment in our cost base which we believe is essential if we are to continue to be the market leader.

Our decision to diversify, firstly into Optimisation Services in 2019 and subsequently into ESG services in 2021, has proven to be an excellent strategic choice. Optimisation has grown rapidly and now represents the majority of Group revenues whilst ESG, from a standing start, is already experiencing rapid growth. Both continue to provide significant opportunities for long-term growth. Inspired has the benefit of a substantial client base developed over the years through its Assurance division. The energy crisis has provided the additional catalyst to potentially accelerate that growth through increasing levels of cross selling into our client base supplementing continued new business generation.

Together with the strong foundation of the performance of the Assurance operation, we have created the platform for an exciting period of opportunity for the business.

Environmental, Social & Governance (ESG)

As a service provider helping businesses deliver market leading ESG disclosures, it is important that the Group is at the forefront of ESG performance.

During 2022, the Group made the following progress towards its ESG objectives:

   1.     Modelled our net-zero pathway. 

2. Piloted half hourly monitoring at our head office which will be rolled out across our estate to drive energy efficiency and reduce our carbon emissions.

   3.     Introduced an Electric Vehicle scheme to employees. 
   4.     Introduced a new suite of professional skills development courses for employees. 
   5.     Prepared our third voluntary Task Force on Climate-Related Financial Disclosure (TCFD). 
   6.     Prepared our third voluntary ESG report aligned with the Global Reporting Initiative (GRI). 
   7.     Submitted our first CDP disclosure and achieved a B score. 

For 2023, the Group's planned ESG deliverables can be summarised as:

1. Submit our near-term and net-zero targets for validation to the Science-Based Targets Initiative (SBTi).

   2.     Engage with our top suppliers on ESG. 
   3.     Start conducting life cycle assessments (LCA) on top selling products. 
   4.     Develop our STEM scholarship programme. 
   5.     Prepare our first Task Force on Nature-Related Financial Disclosure. 
   6.     Prepare our fourth Task Force on Climate-Related Financial Disclosure (TCFD). 
   7.     Prepare our fourth voluntary ESG Report aligned to the Global Reporting Initiative (GRI). 

Dividend

Since IPO, Inspired has established a track record of delivering profitable and cash-generative growth which has facilitated a consistent and progressive dividend policy.

Accordingly, the Board is pleased to propose a final dividend of 0.14 pence (2021: 0.13 pence) subject to shareholder approval at the AGM in June, resulting in a full year dividend of 0.27 pence (2021: 0.25 pence). The dividend aligns with the Board's stated policy of a dividend cover of at least 3x earnings, with the objective of delivering progressive dividend growth over time and reflects the Board's confidence in the business.

The dividend will be payable on 26 July 2023 to all shareholders on the register on 16 June 2023 and the shares will go ex-dividend on 15 June 2023.

Staff

On behalf of the Board, I would like to thank all our employees who continue to overcome the challenges of these difficult times. We have continued, throughout, to invest in our valued team and the business. The Group takes every opportunity to help all clients mitigate the cost of energy and manage their energy consumption and carbon emissions during these unprecedented times.

Board update

On 2 March 2023, Sarah Flannigan stepped down from the Board and we welcomed Peter Tracey, as a Non-Executive Director. I wish to thank Sarah for her contribution to the Group's achievements since joining the Board in June 2020. Sarah has been a trusted and valued member of the Board, providing strong support and guidance throughout the COVID-19 pandemic and subsequent unprecedented energy market volatility. Peter adds significant capital markets experience and brings with him a skill set that complements those of the existing Non-Executive Board members. The Board looks forward to benefitting from Peter's knowledge and experience as we work towards another year of significant growth and development.

The Board will continue to consist of three Executive Directors supported by a Non-Executive Chairman and three independent Non-Executive Directors, representing a broad mix of skills and diversity to align with the Group's evolving strategy.

Richard Logan

Chairman

28 March 2023

Chief Executive Officer's statement

In what has been the most challenging year ever seen in the UK energy markets, when the need for our services supporting clients in their drive to net-zero, controlling energy costs and managing their response to climate change has never been more apparent, Inspired's performance has been very strong, both financially and operationally.

The unprecedented conditions in the UK energy markets, which we believe has started a transition to a 'new normal', have sharpened our clients' focus on ensuring they have invested effectively in carbon and energy reduction. The energy crisis has accelerated the focus on ESG objectives as a key priority at board level across our client base and our evolving strategy is well aligned to meet the resulting market demands and requirements.

The secular market tailwinds are now well established, as the business represents a pure play investment on the exciting macro ESG and net-zero themes, providing a significant opportunity for the Group to grow and capture a larger market share. Our strong performance this year is testament to our evolving offering within each of our four divisions and the teams we have working across our business.

The increased demand delivered a considerable acceleration in revenue growth of 31% above FY21, at GBP88.8 million, ahead of previous market expectations. With significant demand for Optimisation Services, a solid H2 performance in Assurance Services, combined with encouraging momentum in our ESG Services division, the Group delivered adjusted EBITDA of GBP21.0 million, being 6% ahead of FY21. We delivered strong underlying cash generation in the period, with cash generated from operations increasing 113% to GBP21.7 million, driven by improved working capital management within Optimisation Services. The need for energy efficiency initiatives continued to drive strong demand for our services and we expect this momentum to continue heading into the new financial year and beyond.

Whilst mindful of the current backdrop, and in particular the risk posed by prolonged inflation in energy costs to our clients, which we constantly look to help them mitigate, the long-term opportunities for the Group have been made even more apparent in FY22. As a result, we have entered FY23 with considerable momentum across the business which is reflected in our FY23 EBITDA growth expectations. We have a substantial addressable market, high profile clients, and a high-quality business model driving growth in revenue, Adjusted EBITDA and cash generation. These factors, coupled with a record new business pipeline, underpin the Board's confidence in the long-term growth and success of the Group.

During this period of uncertainty, the Group has continued to work tirelessly to support clients in the face of such challenges and, on behalf of the Board, I would like to thank all colleagues, clients and suppliers for their efforts and collaboration during these challenging times.

Strategy

In 2021, the Group evolved to Inspired plc, with four key reporting segments. During 2022, it has become clear that Optimisation Services are the logical conclusion for clients who utilise our Assurance Services or our ESG Services, as both lead to the implementation of a carbon action programme to reduce energy costs and deliver net-zero. There remains a substantial opportunity to provide the full suite of services across our client base who may currently only purchase one of the Group's services. This will not only embed the Group as a trusted provider and advisor to its clients but also substantially increase the lifetime value and level of repeat revenues underpinning the future growth of the business. All divisions are supported by our proprietary software provided by our Software Services division.

This focus on client lifetime value ("CLV") has identified the opportunity to materially change the client lifetime value of c.2,500 of our 3,500 clients. For example, a retailer that the group has worked with for 13 years has an Assurance Services CLV of c. GBP1.5 million. Its CLV from Optimisation Services, where the Group has received repeat demand on 10 of the last 13 years, is over GBP20 million, an increase in CLV over the last 13 years of over 10 times with more to come. This provides a substantial organic revenue growth opportunity if applied effectively across the Group's client portfolio.

If we consider the wider portfolio in terms of 10-year CLV opportunity, we can see that of our 850 larger clients there is the opportunity to increase their CLV from GBP0.2 m illion to GBP3.1 million and of our 1600 smaller clients there is the opportunity to increase our CLV from GBP0.05 million to GBP0.5 million. During 2022 we were active on site on a full-service basis with 12 large clients and 15 smaller clients.

Our focus on CLV affords the Group the opportunity to double EBITDA organically over the next five years and we believe this would require us to cycle through c.15% of the client base on a full-service basis to achieve that objective.

Assurance Services

Our Assurance Services division is at the front line of helping businesses manage their energy pricing, the importance of which has never been greater because of the energy crisis, helping them manage the risks of the energy markets whilst taking advantage of opportunities to reduce costs as they occur.

To do this effectively, thousands of pieces of data need to be processed every month, which is made possible by our technology enabled service. Once this data is collected and audited, it provides the detail required to identify and deliver effective carbon action programmes and Optimisation Services.

The Assurance Services division performed resiliently through a challenging year, with a small reduction in margin driven by increased operating costs as the energy crisis increased the amount of re-work needed to place energy supply contracts and the intensity of client interactions required to meet their needs.

As expected, the division endured higher client churn than previously experienced during the period. Despite this being largely offset by record new business wins in the period, the time lag between a new business win contracting and the contract commencing, with the Group only starting to recognise revenue at the point a contract goes live, led to a reduction in organic growth rates in the year, and we expect this to continue into 2023.

Impact of Macro Environment

The energy crisis saw some businesses facing up to 500% increases in energy costs during 2022. Whilst energy prices are significantly lower as we come to the end of Q1 2023, we observe the elevation of energy costs on board agendas becoming a 'new normal', as businesses look to professionalise their approach to managing energy costs and reducing carbon emissions.

Key Developments and Outlook

As the player of scale in the market the Group enjoyed a record year of new client wins with companies including Aldi, Naked Wines plc, Arnold Clark LTD, Signature Pubs, Hello Fresh, Moto, Extra MSA, and Saint-Gobain all becoming clients during the period.

Increasing operating costs in the division have been a function of increased service needs of clients during the energy crisis and challenges in supporting business place contracts with energy suppliers.

As we look at 2023 and beyond, the Group will focus on increasing the CLV where we can add material value to the client across all divisions.

ESG Services

The ESG Services division supports businesses with the production of their ESG disclosures to meet their regulatory obligations and determining strategies to deliver the ESG impacts they wish to make.

Once a business has a robust process for making consistent disclosures, its board has the information it needs to make more effective decisions and the data required to formulate a carbon action programme and deliver Optimisation Services.

Following the Group's organic entry into the ESG market during 2021, the division delivered revenue growth of 167% compared to FY21 and delivered Adjusted EBITDA in line with the upgraded expectations post interim results.

This exceptional organic growth is testament to the Group creating a market leading product at a market leading price point in a market which is still forming in terms of its needs and requirements.

Whilst there are a range of consultative solutions in the marketplace, they are often delivered by inexperienced resources and ultimately do not lead to a functioning deliverable being produced that meet the client's needs. There are also several businesses aiming to provide Software-as-a-Service (SaaS) solutions which purport to meet the client's needs. However, typically these only solve c.70% of the client's problem and the client doesn't generally have resources available internally to use such software.

The Group is increasingly confident it has the most effective technology enabled data driven solution in the market which is resonating well with clients and is delighted to be a recipient of the LSE Green Economy mark.

Impact of Macro Environment

ESG has evolved from a reluctant compliance obligation to a revenue critical item for many businesses. Even if a business does not currently have a mandatory compliance obligation, if they want to win new business from their clients, they invariably need to have an ESG disclosure and a carbon action programme.

This macro environment makes a robust ESG disclosure service a non-discretionary requirement for almost any business wishing to defend or grow its revenue line and is likely to become increasingly mandatory as most larger organisations are compelled to make TCFD disclosures by 2025.

Key Developments and Outlook

The ESG division is growing quickly within a new and exciting market that has become non-discretionary for investors and businesses alike. The Group now provides full ESG Disclosure Services for several substantive organisations such as Lookers plc, Videndum plc, Naked Wines plc, QA Limited, City Electrical Factors (CEF) and John Wiley & Sons.

The original mandatory ESG disclosures facing businesses in the UK market were SECR and ESOS where the Group currently has approximately 282 clients with an average 10-year CLV of GBP0.1 million, of which 16 have been converted to TCFD and ESG disclosure services with an CLV of GBP0.4 million.

For 2023, the focus of the ESG Services division is increasing the lifetime value of existing clients and adding new clients to the Group.

Optimisation Services

Once clients have benefitted from the Group's Assurance Services to manage the price of their energy and are reporting their ESG disclosures effectively, their attention quickly turns to how they can reduce energy and carbon emissions.

The cornerstone of Assurance and ESG Services is data management, and this data allows the Group to help clients identify opportunities to reduce carbon emissions and energy consumption, delivering their response to climate change and further reducing their energy costs. As a Group, we focus on providing Optimisation Services to existing clients as a cross-sell service, which dramatically improves the cost effectiveness and relevance of the solution as we already understand the client's business intimately. This is where we can significantly move the dial with respect to CLV where we expect that the Group would only need to cycle c.15% of the client base to organically double EBITDA over the next five years.

We process the data to identify projects that meet the clients return on capital requirements, or support in identifying financing solutions and then operate as a 'turn-key' solution provider, designing the project, procuring the equipment, project managing the install and quality assuring the outcome for the client.

Optimisation Services has performed ahead of expectations, with a strong step up in demand as clients focus on the economics of investments of energy reductions and delivering net-zero. We have observed this acceleration in performance not only in the number of active projects on client premises but also in the pipeline of prospective opportunities that are available, which has surged 500% since the start of 2021.

As we address the strong macro themes of net-zero and ESG, we expect Optimisation Services to be a key driver for revenue and EBITDA growth not only into the near term but for the foreseeable future as the world strives to meet 2050 targets.

One of the most pleasing things about this achievement is that it represents the validation of an investment thesis initiated in 2018 and represents only a fraction of the opportunity that is available to the Group. These results have been achieved by active on-premise intervention, with only 27 clients from a potential pool of over 3,500.

Impact of Macro Environment

Businesses have a need to manage their response to climate change and deliver net-zero, which has been accelerated by the energy crisis and started the transition to a 'new normal'. Optimisation Services are a board level agenda item and there is a desire to work with technology agnostic service providers who understand the client's business and can deliver in a timely manner with cost certainty.

The 'learned experience' of the energy crisis means that businesses are unlikely to ever want to experience the costs shocks seen during 2022 again and the emergence of ESG as a revenue generating hygiene factor leads us to believe the demand for Optimisation Services is likely to continue to accelerate into the future.

Key Developments and Outlook

Strong data management from our Assurance and ESG Services has allowed us to help clients identify and evaluate opportunities for energy and carbon reduction, delivering ever increasing numbers of on-premise solutions for clients.

During the period, we have been delighted to deliver solutions for clients including WH Smiths, SSP, IVC, Interfloor, M.I. Dickson, Ann Summers and Informa.

We have been particularly pleased by the repeatable nature of this demand, noting that the need we satisfy for clients is not the one-off implementation of a particular technology, but rather one of supporting them to deploy marginal units of capital to deliver incremental carbon or energy reduction. It is iterative in nature with continued refinement and improvement over time using the information generated each period which is reported against under a client's ESG disclosure requirements.

Software Services

Assurance, Optimisation and ESG Services require significant management and processing of unstructured data which underpins our service delivery. The technology enablement of these solutions is provided by our proprietary software which has been significantly developed over recent years.

Our technology platform is increasingly becoming a market standard with more than .60 TPIs (where our technology underpins the services of competing companies) and 200 direct clients utilising our platform.

Within the TPI market, the energy crisis has led to a reduced investment in technology which has inhibited the organic growth of Software Services. However, the division delivered growth in 2022 whilst retaining attractive margins, adding a number of flagship clients to its user base including NHS Property Services, Peabody, Laser and SMS plc .

Impact of Macro Environment

The reduction in technology investment caused by the energy crisis in 2022 appears to have been an issue pertaining to timing and availability of cash, as opposed to a change in underlying demand. Whilst this has acted as a dampener for growth, we expect it to have diminishing impact in 2023 as the world adjusts to the 'new normal' and TPIs require software to meet evolving client needs.

Key Developments and Outlook

During 2022, additional security features were added to the software, allowing the division to normalise the prices of the base software across the client base which we expect to deliver a full year effect in 2023.

In addition, we expect the release of the software modules during 2023 to further stimulate the growth potential of this division during 2023.

Acquisitions

During 2022, the Group acquired Digital Energy Limited and Information Prophets Compliance Limited, providing software which has been integrated into our Software Services division, a portfolio of energy account clients which has been integrated into Assurance Services, and a selection of building certification clients that have been integrated into the Optimisation Services division.

The Group continues to see M&A as a significant route to creating value for shareholders and we have built a strong track record of earning enhancing acquisitions and an ability to successfully integrate those acquisitions. This strategy has materially contributed to the growth and development of the Group over the years, both through scaling up the business and expanding the breadth of services we now provide to our clients, the acquisition of Ignite Energy LTD to enable the entry into Optimisation Services being a case in point.

In FY22 the Group paid GBP10.8 million of performance related payments for past acquisitions. This payment was funded from our cash generated from operations and existing facilities. In FY23 and FY24 we fully expect to make further significant cash payments as past acquisitions perform and deliver against the stringent growth metrics we set at the time of acquisition, further reducing the contingent liabilities on our balance sheet.

Our approach to transaction structuring does focus on using performance payments (in the form of contingent consideration), this enables us to pay for actual realised EBITDA rather than on the basis of forecast EBITDA as well other benefits. Our approach has meant that the 'see through' multiples for the businesses acquired by the Group has averaged less than four times EBITDA as the performance-based structures complete, and most importantly it has been proven to protect our shareholders during periods of volatility such as in 2020 and 2021 .

We maintain an active pipeline of M&A opportunities which can enhance our products and services and the value we can deliver to clients. Together with our focus on organic growth, acquisitions will form a key part of our overall strategy to create long term sustainable value for our shareholders.

Strategic priorities and outlook

The 'new normal' created by the energy crisis and ESG becoming a revenue centric item for most businesses has accelerated demand for the Group's products and services.

For 2023, we will be focusing on refining our operating model in Assurance Services, normalising margins and adapting service levels to the new environment.

Specific focus will be given to increasing the 'lifetime value' of clients by increasing the number of clients utilising the Group's Optimisation and ESG Services.

Trading during Q1 2023 has started in line with management expectations to deliver double digit percentage EBITDA growth in FY23 as the Group carried positive momentum into the year.

Mark Dickinson

Chief Executive Officer

28 March 2023

Chief Financial Officer's Statement

We are pleased to report strong financial results for the year ended 31 December 2022, where we have remained agile and alert to the environment in which we operate. Positive momentum in the second half enabled the Group to deliver a strong overall trading performance for FY22, whilst also making clear strategic progress and navigating unprecedented volatility in the UK energy markets.

2022 was a year in which we achieved a 31% increase in revenue, with total revenues of GBP88.8 million compared to GBP67.9m in 2021. The Group's organic revenue increased by 30% (2021: 37%). Group Adjusted EBITDA increased by 6%, to GBP21.0 million (2021: GBP19.8 million). In percentage terms the Adjusted EBITDA margin was 24% (2021: 29%). The reduction was a combination of a greater contribution from Optimisation services which has a lower underlying Adjusted EBITDA percentage margin than our other operating units and a slight reduction of margins within Assurance Services and increased PLC costs.

Divisional Performance

Assurance Services

The Group anticipated more volatility in Assurance Services because of the unprecedented conditions in UK energy markets and whilst client churn has increased, as expected, we have also seen a record year for new business. Assurance Services delivered revenues in line with expectations, with increased overheads to deliver our service as a result of market conditions leading to a reduction in margin in the period.

Assurance Services generated 41% of total Group revenues in 2022 (2021: 52%) being GBP36.0 million (2021: GBP35.5 million) a 1% increase.

Assurance Services continues to be the main contributor to the Group representing 59% of Group EBITDA prior to accounting for PLC costs and contributed adjusted EBITDA of GBP16.2 million (2021: GBP17.0 million), a reduction of 5%. The adjusted EBITDA percentage margin was 45% (2021: 48%). The Board anticipates that margins will remain impacted in the near term as market volatility remains and we retain our objective to provide a first-class level of service to our Assurance clients, which we believe is essential to continue to be the market leaders in Assurance Services.

ESG Services

ESG Services generated revenues GBP2.6 million (2021: GBP1.0 million), delivering 167% growth organically, reflective of the growing market for these services. The ESG Services division delivered an Adjusted EBITDA loss of GBP0.7 million (2021: GBP0.0 million) in line with the upgraded market expectations post our interim results as we continue to invest in resources in this division.

The increasing focus of investors and businesses on net-zero targets, combined with mandatory requirements for businesses to make ESG disclosures from 2022, provides a favourable backdrop to continue to invest in the strategy for the ESG Services division.

Optimisation Services

The ongoing energy crisis has significantly sharpened clients' focus on the economics of investment in energy reductions, combined with the drive for delivering net-zero, and this has translated into a significant step up in demand and activity for the Optimisation Services division during H2 2022.

Optimisation Services generated 54% of total Group revenues in 2022 (2020: 43%), amounting to GBP47.7 million (2021: GBP29.1 million), an increase of 64%, all of which was organic. Optimisation services contributed adjusted EBITDA of GBP10.0 million (2021: GBP5.0 million), an increase of 100% and a resulting improvement in Adjusted EBITDA margin to 21% (2021: 17%) in part as a result of the adverse impact of COVID-19 restrictions on the trading performance and resulting reduction in adjusted EBITDA percentage margins of the division in H1 2021. Subject to product mix, management's expectation is that the division will consistently generate Adjusted EBITDA margins of c.20%.

Demand for Optimisation Services continues to increase, with strong underlying drivers, including the drive to net-zero, and also further accelerated by the high commodity prices. As the division continues to represent a greater proportion of Group revenues, Group margins will reflect the change in business mix.

Software Services

The Group's Software Services division continues to develop well, with revenues growing by 5% to GBP2.5 million (2021: GBP2.4 million) and Adjusted EBITDA of GBP1.8 million (2021: GBP1.8 million), with the division producing a strong sustainable adjusted EBITDA margin of 70% (2021: 74%).

Group results

PLC costs were GBP6.3 million (2021: GBP4.0 million), reflecting the increased investment in management bandwidth including the appointment of a Chief Commercial Officer, plus investment into central functions including Marketing, Finance and HR, to support the acceleration in growth.

Overall, the Group generated Adjusted EBITDA for the year of GBP21.0 million (2021: GBP19.8 million) in percentage terms the Adjusted EBITDA margin was 24% (2021: 29%) and the reduction is due to underlying sales mix with Optimisation Services generating a greater proportion of Group revenue, a reduction in the Adjusted EBITDA margin from Assurance Services, and an increase in PLC costs. After deducting charges for depreciation, amortisation of internally generated intangible assets and finance expenditure, the adjusted profit before tax for the year was GBP14.0 million (2021: GBP13.4 million). The increase in Adjusted EBITDA was offset in part by an increase in finance costs. Finance costs were higher than in 2021 due to a combination of the company carrying a higher level of debt over the year and increased interest rates.

Under IFRS measures, the Group reported a loss before tax for the year of GBP4.0 million (2021: profit of GBP1.1 million), with reported loss before tax in the year impacted significantly by substantial charges for changes in the fair value of contingent consideration, the amortisation of intangible assets as a result of acquisitions, share-based payment charges and restructuring costs.

A reconciliation of reported (loss)/profit before tax to adjusted profit before tax is calculated as follows:

 
                                                        2022    2021 
                                                      GBP000  GBP000 
---------------------------------------------------  -------  ------ 
(Loss)/profit before income tax                      (3,957)   1,114 
Share-based payment cost                               1,732   1,030 
Amortisation of acquired intangible assets             2,687   4,415 
Foreign exchange variance                                508   (339) 
Exceptional costs: 
- fees associated with acquisition                       523   1,038 
- restructuring cost                                   1,574   1,280 
- Impairment of right of use assets                        -     113 
- change in fair value of contingent consideration    10,936   4,735 
---------------------------------------------------  -------  ------ 
 Adjusted profit before tax                           14,003  13,386 
---------------------------------------------------  -------  ------ 
 

Alternative performance measures

Acquisition activity can significantly distort underlying financial performance from IFRS measures. The Board therefore considers it appropriate to report adjusted metrics, as well as IFRS measures, for the benefit of primary users of the Group's financial statements. Reconciliations to Adjusted Profit Before Tax and Adjusted Fully Diluted EPS can be found in note 5.

Exceptional costs

Exceptional costs of GBP2.1 million (2021: GBP2.3 million) incurred in the year predominantly related to restructuring costs, which related to restructuring programmes associated with the integration of businesses acquired prior to 2022.

Change in fair value of contingent consideration

The fair value of contingent consideration at the balance sheet date is a judgement of the contingent consideration which will become payable based on a weighted average range of performance outcomes of the acquired business during an earn out period, which is subsequently discounted for the time value of money and risk.

The Group recognised a GBP10.9 million loss (2021: loss of GBP4.7 million) in the period as a result of changes in the fair value of contingent consideration which was treated as exceptional. Of the GBP10.9 million loss (2021: GBP4.7 million), GBP7.7 million (2021: GBP3.0 million) relates to the increase in the liability for contingent consideration payable, of which GBP0.6 million (2021: GBP1.9 million) relates to the unwinding of discount rate, with GBP8.5 million in respect of Ignite Energy LTD and Businesswise Solutions Limited performing at the higher end of the range of possible performance outcomes, in particular, Ignite Energy LTD benefitted from an increase in demand for Optimisation Services as a result of the energy crisis in both 2022 which is expected to continue into the next financial year. In addition, the greater visibility of Businesswise Solutions Limited performance as a result of the resolution of the uncertainty relating to the future trading of Gazprom Marketing and Trading Retail Limited contributed to the increase in contingent consideration payable.

Of the GBP10.9 million loss, GBP3.2 million relates to the reduction in the expected recovery of the deferred contingent consideration from the SME disposal completed in December 2020. The reduction in expected recovery is reflective of the impact of prolonged under consumption and site closures within the SME portfolio due to firstly COVID-19, and then subsequently the energy crisis.

Exceptional costs, amortisation and impairment of internally generated intangible assets, share based payment charges and changes in fair value of contingent consideration are considered by the Directors to be material in nature and non-recurring; they, therefore, merit separate identification to give a true and fair view of the Group's result for the period.

Cash and Working Capital

Group cash generated from operations during the period was GBP19.7 million (2021: GBP7.9 million), a 149% increase in line with management expectations and driven by strong working capital management within the Optimisation Services division. Excluding non-recurring fees associated with restructuring costs and deal fees, cash generated from operations was GBP21.7 million (2021: GBP10.1 million).

Underlying operating cash conversion ratios remain a key focus for management, acknowledging the need to facilitate the acceleration of growth within the Optimisation Services division.

Trade and other receivables increased 12% in the period to GBP37.5 million (2021: 33.4 million), with invoiced trade receivables reducing 25% to GBP12.3 million (2021: GBP16.5 million) as a result of strong cash collection within the Optimisation Services division in H2 2022. Conversely, accrued income increased in the period 59% to GBP18.6 million (2021: GBP11.7 million) primarily as a result of increased activity levels and product mix within the Optimisation Services division in H2 2022, and the balance is unwinding in 2023 as expected. Working capital management remains a key focus for the Group in sustaining strong cash conversion.

Trade and other payables increased 39% to GBP17.1 million (2021: GBP12.3 million), driven by a 46% increase in deferred income, primarily within the Optimisation Services division, and a 43% increase in trade payables to GBP6.0 million (2021: GBP4.2 million) and accruals increased to GBP3.1 million (2021: GBP1.5 million) reflecting the increased activity levels.

As detailed in the 2021 CFO statement, during H2 2021, the Group made an accelerated investment in solutions architecture and CRM, to ensure our platforms can continue to scale and are interoperable with other systems. This wasn't repeatable expenditure and led to the reduction in payments to acquire intangible assets to GBP4.7 million in 2022 (2021: GBP5.9 million).

The Group's net debt (defined as bank borrowings less cash and cash equivalents) increased by GBP4.3 million (13%) in the year to GBP37.2 million (2021: GBP32.9 million), equating to 1.77x FY2022 Adjusted EBITDA. This level of net debt is in line with the Board's objective to maintain net debt to less than 2.00x Adjusted EBITDA, subject to the short-term impact of acquisition payments.

The increase in Group net debt reflects a year in which the cash generation of GBP19.7 million was offset by the payment of GBP10.8 million of contingent cash consideration to the vendors of Ignite, BWS, ECM, LSI and GEM. together with GBP0.7 million of initial cash consideration payable for Digital Energy Limited and Information Prophets Compliance Limited. A further GBP13.0 million performance payments, in the form of contingent cash consideration for acquisitions expected to be paid in FY23, GBP2.6 million of which would be payable in ordinary shares of the Group.

Financial position and liquidity

At 31 December 2022, the Group's net debt was GBP37.2 million (2021: GBP32.9 million). Cash and cash equivalents were GBP12.3 million (2021: GBP12.9 million) on hand. Approximately GBP10.5 million of the Group's GBP60.0 million Revolving Credit Facility was undrawn, with an additional GBP25.0 million accordion option available to the Group, subject to covenant compliance.

On entering the current facility agreement with Santander and Bank of Ireland in October 2019, the Group had an option to extend the term of the facility from October 2023 to October 2024. The Group exercised that option in September 2021, taking the term of the existing facility to October 2024. Subsequently, the Group has agreed with the lenders to defer by 12 months the tapering, from 2.50:1.00 to 2.00:1.00, of the Adjusted Net Leverage covenant; this was due to apply in the quarter ending 31 December 2022, but its application has now been extended to 31 December 2023, to align with the extension of the facility.

Subsequent to the year end, the Group agreed with its banking partners in March 2023 a resetting of the adjusted leverage covenant for quarters ending 31 March 2023 through to 30 June 2024, increasing the headroom available to the Group from a covenant perspective through a period in which the Group expects to make material contingent consideration payments, while facilitating the acceleration of growth within the optimisation division.

In summary

The strategic and financial initiatives delivered in the year have ensured the Group is well placed to deliver the effective implementation of our strategic growth plan, whilst managing the additional risks created by market volatility. The strong growth of the Group's revenues, and adjusted EBITDA in the year, in a challenging environment coupled with a strengthened platform capable of generating long-term growth position leaves Inspired well placed to achieve its long-term financial goals.

Paul Connor

Chief Financial Officer

28 March 2023

Group statement of comprehensive income

For the year ended 31 December 2022

 
                                                                 2022      2021 
                                                       Note    GBP000    GBP000 
 ----------------------------------------------------  ----  --------  -------- 
 
 Revenue                                                       88,776    67,941 
 Cost of sales                                               (31,070)  (17,249) 
 ----------------------------------------------------  ----  --------  -------- 
 Gross profit                                                  57,706    50,692 
 Administrative expenses                                     (58,524)  (47,823) 
 ----------------------------------------------------  ----  --------  -------- 
 
 Analysed as: 
 Adjusted EBITDA                                               21,000    19,791 
 Exceptional costs                                            (2,097)   (2,318) 
 Change in fair value of contingent consideration            (10,936)   (4,735) 
 Depreciation, impairment and loss on disposal          6/7   (1,827)   (1,870) 
 Amortisation of acquired intangible assets               8   (2,687)   (4,415) 
 Amortisation and impairment of internally generated 
  intangible assets                                       8   (2,539)   (2,554) 
 Share-based payment cost                                     (1,732)   (1,030) 
 ----------------------------------------------------  ----  --------  -------- 
 Operating (loss)/profit                                        (818)     2,869 
 Finance expenditure                                      3   (3,148)   (1,860) 
 Other financial items                                              9       105 
 ----------------------------------------------------  ----  --------  -------- 
 (Loss)/profit before income tax                              (3,957)     1,114 
 Income tax charge                                        4       329       524 
 ----------------------------------------------------  ----  --------  -------- 
 (Loss)/profit for the year                                   (3,628)     1,638 
 ----------------------------------------------------  ----  --------  -------- 
 Attributable to: 
 Equity owners of the company                                 (3,628)     1,638 
 ----------------------------------------------------  ----  --------  -------- 
 Other comprehensive income: 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Movement in deferred tax asset as a result of 
  change in fair value of share options                   4   (1,323)         - 
 Exchange differences on translation of foreign 
  operations                                                      119     (753) 
 ----------------------------------------------------  ----  --------  -------- 
 Total other comprehensive income/(expense) 
  for the year                                                (1,204)     (753) 
 ----------------------------------------------------  ----  --------  -------- 
 Total comprehensive (expense)/income for the 
  year                                                        (4,832)       885 
 ----------------------------------------------------  ----  --------  -------- 
 Attributable to: 
 Equity owners of the company                                 (4,832)       885 
 ----------------------------------------------------  ----  --------  -------- 
 
 Basic earnings per share attributable to the 
  equity holders of the company (pence)                   5    (0.37)      0.17 
 Diluted earnings per share attributable to the 
  equity holders of the company (pence)                   5    (0.37)      0.16 
 ----------------------------------------------------  ----  --------  -------- 
 

Group statement of financial position

At 31 December 2022

 
                                              2022      2021 
                                    Note    GBP000    GBP000 
----------------------------------  ----  --------  -------- 
ASSETS 
Non-current assets 
Investments                                  1,737     1,461 
Goodwill                               8    76,960    76,111 
Other intangible assets                8    17,716    18,291 
Property, plant and equipment          6     3,216     2,452 
Right of use assets                    7     1,428     2,180 
 
Non-current assets                         101,057   100,495 
----------------------------------  ----  --------  -------- 
Current assets 
Trade and other receivables            9    37,520    33,448 
Deferred contingent consideration            1,077     4,529 
Inventories                                    211       300 
Cash and cash equivalents                   12,270    12,944 
----------------------------------  ----  --------  -------- 
Current assets                              51,078    51,221 
----------------------------------  ----  --------  -------- 
Total assets                               152,135   151,716 
----------------------------------  ----  --------  -------- 
LIABILITIES 
Current liabilities 
Trade and other payables              10    17,079    12,315 
Lease liabilities                              869       860 
Contingent consideration                    13,056    14,586 
Current tax liability                        3,091     1,823 
----------------------------------  ----  --------  -------- 
Current liabilities                         34,095    29,584 
----------------------------------  ----  --------  -------- 
Non-current liabilities 
Bank borrowings                             49,462    45,847 
Lease liabilities                              552       993 
Contingent consideration                     5,699     7,165 
Interest rate swap                              17        25 
Deferred tax liability                       1,282     1,522 
----------------------------------  ----  --------  -------- 
Non-current liabilities                     57,012    55,552 
----------------------------------  ----  --------  -------- 
Total liabilities                           91,107    85,136 
----------------------------------  ----  --------  -------- 
Net assets                                  61,028    66,580 
----------------------------------  ----  --------  -------- 
EQUITY 
Share capital                                1,220     1,219 
Share premium account                       60,930    60,923 
Merger relief reserve                       20,995    20,995 
Share-based payment reserve                  8,111     6,379 
Retained earnings                         (18,447)  (11,036) 
Investment in own shares                      (36)      (36) 
Translation reserve                          (362)     (481) 
Reverse acquisition reserve               (11,383)  (11,383) 
----------------------------------  ----  --------  -------- 
Total equity                                61,028    66,580 
----------------------------------  ----  --------  -------- 
 

Group statement of changes in equity

For the year ended 31 December 2022

 
 
 
                              Share   Merger  Share-based            Investment                   Reserve          Total 
                     Share  premium   relief      payment  Retained      in own  Translation  acquisition  shareholders' 
                   capital  account  reserve      reserve  earnings      shares      reserve      reserve         equity 
                    GBP000   GBP000   GBP000       GBP000    GBP000      GBP000       GBP000       GBP000         GBP000 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Balance at 1 
 January 
 2021                1,202   67,000   20,995        5,349  (10,418)     (6,742)          272     (11,383)         66,275 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Profit for the 
 year                    -        -        -            -     1,638           -            -            -          1,638 

-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Other 
 comprehensive 
 expense for the 
 year                    -        -        -            -         -           -        (753)            -          (753) 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Total 
 comprehensive 
 income/(expense) 
 for 
 the year                -        -        -            -     1,638           -        (753)            -            885 
Share-based 
 payment 
 cost                    -        -        -        1,030         -           -            -            -          1,030 
Shares issued (8 
 April 
 2021)                  13      376        -            -         -           -            -            -            389 
Shares issued (22 
 June 
 2021)                   1      114        -            -         -           -            -            -            115 
Shares issued (28 
 July 
 2021)                   1       62        -            -         -           -            -            -             63 
Shares issued (15 
 September 
 2021)                   1       53        -            -         -           -            -            -             54 
Shares issued (21 
 December 
 2021)                   1       12        -            -         -           -            -            -             13 
Shares issued to 
 EBT*                    -  (6,694)        -            -         -       6,706            -            -             12 
Dividends paid           -        -        -            -   (2,256)           -            -            -        (2,256) 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Total 
 transactions 
 with owners            17  (6,077)        -        1,030     (618)       6,706        (753)            -            305 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Balance at 31 
 December 
 2021                1,219   60,923   20,995        6,379  (11,036)        (36)        (481)     (11,383)         66,580 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Loss for the year        -        -        -            -   (3,628)           -            -            -        (3,628) 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Other 
 comprehensive 
 income for the 
 year                    -        -        -            -   (1,323)           -          119            -        (1,204) 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Total 
 comprehensive 
 income/(expense) 
 for 
 the year                -        -        -            -   (4,951)           -          119            -        (4,832) 
Share-based 
 payment 
 cost                    -        -        -        1,732         -           -            -            -          1,732 
Shares issued (12 
 April 
 2022)                   -        7        -            -         -           -            -            -              7 
Shares issued (7 
 December 
 2022)                   1        -        -            -         -           -            -            -              1 
Dividends paid           -        -        -            -   (2,460)           -            -            -        (2,460) 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Total 
 transactions 
 with owners             1        7        -        1,732   (7,411)           -          119            -        (5,552) 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
Balance at 31 
 December 
 2022                1,220   60,930   20,995        8,111  (18,447)        (36)        (362)     (11,383)         61,028 
-----------------  -------  -------  -------  -----------  --------  ----------  -----------  -----------  ------------- 
 

Merger relief reserve

The 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 PLC on 28 November 2011 and arises on consolidation.

Translation reserve

The translation reserve comprises translation differences arising from the translation of the financial statements of the Group's foreign entities into GBP (GBP).

Share-based payment reserve

The share-based payment reserve is a reserve to recognise those amounts in equity in respect of share-based payments.

Investment in own shares equates to 29,115,000 (2021: 29,115,000) shares.

* During 2021, the valuation of the investments in own shares was reassessed and revised to the nominal value of the shares held. This resulted in a transfer of GBP6,694,000 from share premium to investment in own shares. There is no impact upon total equity as a result of this transfer between reserves.

Group statement of cash flows

For the year ended 31 December 2022

 
                                                          2022      2021 
                                                        GBP000    GBP000 
----------------------------------------------------  --------  -------- 
Cash flows from operating activities 
(Loss)/profit before income tax                        (3,957)     1,114 
Adjustments 
Depreciation and impairment                              1,827     1,870 
Amortisation and impairment                              5,226     6,969 
Share-based payment cost                                 1,732     1,030 
Finance expenditure                                      3,139     1,755 
Exchange rate variances                                    151       266 
Change in fair value of contingent consideration        10,936     4,735 
----------------------------------------------------  --------  -------- 
Cash flows before changes in working capital            19,054    17,739 
Movement in working capital 
Decrease/(increase) in inventories                          88     (180) 
Increase in trade and other receivables                (3,995)   (9,841) 
Decrease in trade and other payables                     4,602       185 
----------------------------------------------------  --------  -------- 
Cash generated from operations                          19,749     7,903 
Income taxes paid                                        (421)     (869) 
----------------------------------------------------  --------  -------- 
Net cash flows from operating activities                19,328     7,034 
----------------------------------------------------  --------  -------- 
Cash flows from investing activities 
Contingent consideration paid                         (10,790)   (1,086) 
Acquisition of subsidiaries and investments, net of 
 cash acquired                                         (1,233)   (7,268) 
Disposal of investments                                    324         - 
Repayment/(provision) of working capital facility 
 to discontinued operation                                 375     (500) 
Payments to acquire property, plant and equipment      (1,137)     (998) 
Payments to acquire intangible assets                  (4,651)   (5,866) 
----------------------------------------------------  --------  -------- 
Net cash outflows from investing activities           (17,112)  (15,718) 
----------------------------------------------------  --------  -------- 
Cash flows from financing activities 
New bank loans                                           3,500         - 
Proceeds from issue of new shares                            8       645 
Interest paid on financing activities                  (3,032)   (2,069) 
Repayment of lease liabilities                         (1,048)   (1,443) 
Dividends paid                                         (2,460)   (2,256) 
----------------------------------------------------  --------  -------- 
Net cash outflows from financing activities            (3,032)   (5,123) 
----------------------------------------------------  --------  -------- 
Net decrease in cash and cash equivalents                (816)  (13,807) 
Cash and cash equivalents brought forward               12,994    26,884 
Exchange differences on cash and cash equivalents           92      (83) 
----------------------------------------------------  --------  -------- 
Cash and cash equivalents carried forward               12,270    12,994 
----------------------------------------------------  --------  -------- 
 

Notes to Final Results

Statement of compliance

These Condensed Consolidated Financial Statements do not constitute statutory financial statements within the meaning of Section 434 of the Companies Act 2006 for the financial year ended 31 December 2022 but has been extracted from those financial statements. The annual financial statements for the year ended 31 December 2022 have been prepared in accordance with UK adopted International Accounting Standards. These Condensed Consolidated Financial Statements do not include all the disclosures required in financial statements prepared in accordance with UK adopted International Accounting Standards and accordingly do not themselves comply with UK adopted International Accounting Standards.

The financial information for the period ended 31 December 2021 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2022 will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have reported on the financial statements for the years ended 31 December 2021 and 2022; their reports were unqualified, did not include any matters to which the auditor drew attention by way of emphasis and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

The Board of directors approved the Condensed Consolidated Financial Statements on 28 March 2023.

The Consolidated Financial Statements of the Group as at and for the year ended 31 December 2022 (2022 Annual Report) are available upon request from the Company Secretary, Inspired PLC, 29 Progress Park, Orders Lane, Kirkham, Lancashire, PR4 2TZ.

The principal accounting policies applied in the preparation of the Group financial statements are set out below.

   1.   Basis of preparation 

The Group financial statements have been prepared in accordance with the Companies Act 2006 and UK adopted International accounting standards. They have been prepared on an accrual basis and under the historical cost convention except for certain financial instruments measured at fair value.

The Group has taken advantage of the audit exemption for 18 of its subsidiaries, Independent Utilities Limited (company number 05658810), LSI Independent Utility Brokers Limited (04072919), Energy Team (UK) Limited (06285279), Energy Team (Midlands) Ltd (02913371), Waterwatch UK Limited (08854844), Inspired Energy EBT Limited (10807501), Energy Broker Solutions Limited (07355726), Flexible Energy Management Limited (10264309), Inspired 4U Limited (08895906), Squareone Enterprises Limited (05261796), Energy Cost Management Limited (03377082), STC Energy Management Limited (03094427), Professional Cost Management Group Limited (06511368), Energy and Carbon Management Limited (05498141), Inprova Energy Limited (04729586), General Energy Management Limited (07236859), I-Prophets Compliance Limited (04194486) and Digital Energy Limited (07369818) by virtue of s479A of the Companies Act 2006. The Group has provided parent guarantees to these 18 subsidiaries which have taken advantage of the exemption from audit.

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 Group's base case financial forecast through to 31 December 2024, 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. Furthermore, on entering the current facility agreement with Santander and Bank of Ireland in October 2019, the Group had an option to extend the term of the facility from October 2023 to October 2024. The Group exercised that option in September 2021, taking the term of the existing facility to October 2024. Whilst a refinancing is not required in order to conclude on the going concern basis being appropriate given existing facilities the Group expects to refinance its current facility during the financial year ending 31 December 2023.

At 31 December 2022, the Group's net debt was GBP37.2 million, increasing from GBP32.9 million at 31 December 2021. In addition to cash and cash equivalents of GBP12.3 million on hand as at 31 December 2022, approximately GBP10.5 million of the Group's GBP60.0 million revolving credit facility is undrawn with an additional GBP25.0 million 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.

In March 2022, the Group agreed with the lenders to defer the tapering of the adjusted net leverage covenant from 2.50:1.00 to 2.00:1.00, which was due to commence in the quarter ending 31 December 2022 for twelve months to 31 December 2023 to align with the extension of the facility completed in September 2021.

Furthermore, subsequent to the year end, the Group agreed with its banking partners in March 2023 a resetting of the adjusted leverage covenant for quarters ending 31 March 2023 through to 30 June 2024, significantly increasing the headroom available to the Group from a covenant perspective through a period in which the Group expects to make material contingent consideration payments, while facilitating the acceleration of growth within the Optimisation Services division.

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 reasonably possible changes in trading performances in the next twelve months and considering the available liquidity, including banking facilities, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next twelve months following the date of approval of these financial statements. 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 2022 were determined on the basis of the reporting presented at regular Board meetings of the Group. The segments comprise:

Assurance Services

Key services provided are the review, analysis and negotiation of gas and electricity contracts on behalf of clients in the UK and ROI. To access this market, we have a professional bid response team, direct field sales team, and partnership channel.

Optimisation Services

This division focuses on the optimisation of a client's energy consumption. Services provided include forensic audits, energy efficiency projects and water solutions.

Software Services

This division comprises the provision of energy management software to third parties.

ESG Services

Within this division, the Group manages the data collection and validation of consumption data to provide the resources for the creation of mandatory ESG disclosures, such as Streamlined Energy and Carbon Reporting (SECR) and Taskforce on Climate-related Financial Disclosure (TCFD) reporting.

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.

Any charges between segments are made in line with the Group's transfer pricing policy. These amounts have been removed, via consolidation, for the purposes of the information shown below.

 
                                              2022                                                           2021 
                 --------------------------------------------------------------  ------------------------------------------------------------- 
                 Assurance  Optimisation  Software      ESG       PLC     Total  Assurance  Optimisation  Software     ESG       PLC     Total 
                    GBP000        GBP000    GBP000   GBP000    GBP000    GBP000     GBP000        GBP000    GBP000  GBP000    GBP000    GBP000 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
Revenue             35,972        47,710     2,514    2,580         -    88,776     35,521        29,059     2,395     966         -    67,941 
Cost of sales      (3,231)      (27,427)     (157)    (255)         -  (31,070)    (2,856)      (14,328)      (65)       -         -  (17,249) 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
Gross profit        32,741        20,283     2,357    2,325         -    57,706     32,665        14,731     2,330     966         -    50,692 
Administrative 
 expenses         (17,410)      (10,373)     (596)  (2,935)  (20,157)  (51,471)   (16,407)       (9,852)     (608)   (935)  (11,182)  (38,984) 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
EBITDA              15,331         9,910     1,761    (610)  (20,157)     6,235     16,258         4,879     1,722      31  (11,182)    11,708 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
Analysed as: 
Adjusted EBITDA     16,177         9,979     1,768    (572)   (6,352)    21,000     17,015         4,961     1,770      31   (3,986)    19,791 
Share-based 
 payment 
 cost                    -             -         -        -   (1,732)   (1,732)          -             -         -       -   (1,030)   (1,030) 
Exceptional 
 costs               (846)          (69)       (7)     (38)   (1,137)   (2,097)      (757)          (82)      (48)       -   (1,431)   (2,318) 
Change in fair 
 value of 
 contingent 
 consideration           -             -         -        -  (10,936)  (10,936)          -             -         -       -   (4,735)   (4,735) 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
                    15,331         9,910     1,761    (610)  (20,157)     6,235     16,258         4,879     1,722      31  (11,182)    11,708 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
Depreciation 
 and impairment 
 and loss on 

 disposal                                                               (1,827)                                                        (1,870) 
Amortisation 
 and impairment                                                         (5,226)                                                        (6,969) 
Finance 
 expenditure                                                            (3,148)                                                        (1,860) 
Other financial 
 items                                                                        9                                                            105 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
(Loss)/profit 
 before income 
 tax                                                                    (3,957)                                                          1,114 
---------------  ---------  ------------  --------  -------  --------  --------  ---------  ------------  --------  ------  --------  -------- 
 

Segmental assets and liabilities are not reviewed separately by operating segment.

3. Finance expenditure

 
                                          2022    2021 
                                        GBP000  GBP000 
--------------------------------------  ------  ------ 
Interest payable on bank borrowings      2,268   1,485 
Interest payable on lease liabilities       83     177 
Foreign exchange variance                  508   (325) 
Other interest                              20      46 
Loan facility fees                         153     361 
Amortisation of debt issue costs           116     116 
--------------------------------------  ------  ------ 
                                         3,148   1,860 
--------------------------------------  ------  ------ 
 

4. Income tax credit

The income tax credit is based on the (loss)/profit for the year and comprises:

 
                                                               2022     2021 
                                                             GBP000   GBP000 
----------------------------------------------------------  -------  ------- 
Current tax 
Current tax expense                                           2,379    1,757 
Adjustments in respect of prior years                       (1,145)  (1,739) 
----------------------------------------------------------  -------  ------- 
                                                              1,234       18 
----------------------------------------------------------  -------  ------- 
Deferred tax 
Origination and reversal of temporary differences           (1,563)    (542) 
----------------------------------------------------------  -------  ------- 
                                                            (1,563)    (542) 
----------------------------------------------------------  -------  ------- 
Total income tax credit                                       (329)    (524) 
----------------------------------------------------------  -------  ------- 
Reconciliation of tax credit to accounting (loss)/profit: 
(Loss)/profit on ordinary activities before taxation        (3,957)    1,114 
----------------------------------------------------------  -------  ------- 
Tax at UK income tax rate of 19% (2021: 19%)                  (752)      212 
Disallowable expenses                                         2,490    1,142 
Exchange rate difference                                       (99)    (112) 
Share options                                                 (628)    (820) 
Effects of current year events on prior year balances       (1,145)  (1,739) 
Movement in deferred tax asset not recognised                  (59)    (201) 
Adjust closing deferred tax to reflect change in tax rate         -      645 
Excess of taxation allowances over depreciation on all 
 non-current assets                                           (320)        - 
Non-eligible intangible assets                                  184      349 
----------------------------------------------------------  -------  ------- 
Total income tax credit                                       (329)    (524) 
----------------------------------------------------------  -------  ------- 
 

In the prior year the deferred tax asset pertaining to unexercised share options was valued at the share price as at 31 December 2021. As the share price decreased substantially in 2022 the deferred tax asset also decreased. As the recognition was not in the current year, the movement on the deferred tax asset was reversed through other comprehensive income.

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.

 
                                                                 2022       2021 
                                                               GBP000     GBP000 
----------------------------------------------------------  ---------  --------- 
(Loss)/profit attributable to equity holders of the Group     (3,628)      1,638 
Fees associated with acquisition                                  523      1,038 
Restructuring costs                                             1,574      1,280 
Changes in fair value of contingent consideration              10,936      4,735 
Amortisation of acquired intangible assets                      2,687      4,415 
Impairment of right of use assets                                   -        113 
Foreign exchange variance                                         508      (339) 
Deferred tax in respect of amortisation of intangible 
 assets                                                         (673)      (783) 
Share-based payment cost                                        1,732      1,030 
----------------------------------------------------------  ---------  --------- 
Adjusted profit attributable to owners of the Group            13,659     13,127 
----------------------------------------------------------  ---------  --------- 
Weighted average number of ordinary shares in issue (000)     975,071    970,589 
Dilutive effect of share options (000)                         70,999     40,870 
----------------------------------------------------------  ---------  --------- 
Diluted weighted average number of ordinary shares in 
 issue (000)                                                1,046,070  1,011,459 
----------------------------------------------------------  ---------  --------- 
Basic (loss)/earnings per share (pence)                        (0.37)       0.17 
Diluted (loss)/earnings per share (pence)                      (0.37)       0.16 
Adjusted basic earnings per share (pence)                        1.40       1.35 
Adjusted diluted earnings per share (pence)                      1.31       1.30 
----------------------------------------------------------  ---------  --------- 
 

The weighted average number of shares in issue for the adjusted diluted earnings per share includes 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 (excluding internally generated amortisation related to computer software and customer databases), deferred tax in respect of amortisation of intangible assets, exceptional items and share-based payment costs which have been expensed to the Group statement of comprehensive income in the year, the unwinding of contingent consideration and foreign exchange variances. The adjustments to earnings per share have been disclosed to give a clear understanding of the Group's underlying trading performance.

Adjusted profit before tax on continuing operations is calculated as follows:

 
                                                          2022    2021 
                                                        GBP000  GBP000 
-----------------------------------------------------  -------  ------ 
(Loss)/profit before income tax                        (3,957)   1,114 
Share-based payment cost                                 1,732   1,030 
Amortisation of acquired intangible assets               2,687   4,415 
Impairment of right of use assets                            -     113 
Foreign exchange variance                                  508   (339) 
Exceptional costs: 
- fees associated with acquisition                         523   1,038 
- restructuring cost                                     1,574   1,280 
- change in fair value of contingent consideration      10,936   4,735 
-----------------------------------------------------  -------  ------ 
 Adjusted profit before tax on continuing operations    14,003  13,386 
-----------------------------------------------------  -------  ------ 
 

Acquisitional activity can significantly distort underlying financial performance from IFRS measures and therefore the Board deems it appropriate to report adjusted metrics as well as IFRS measures for the benefit of primary users of the Group financial statements.

6. Property, plant and equipment

 
                                Fixtures                                        Office 
                                     and     Motor   Computer     Leasehold 
                                fittings  vehicles  equipment  improvements  equipment   Total 
                                  GBP000    GBP000     GBP000        GBP000     GBP000  GBP000 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
Cost 
At 1 January 2021                    937       158      2,412           592          -   4,099 
Acquisitions through business 
 combinations                          -         -          -           222          -     222 
Foreign exchange variances           (4)       (5)       (11)           (5)          -    (25) 
Additions                             15         -        981             2          -     998 
Disposals                          (228)      (46)      (378)           (5)          -   (657) 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
At 31 December 2021                  720       107      3,004           806          -   4,637 
Transfer between classes           (368)        42         92           386        415     567 
Foreign exchange variances             5         -          4             -          -       9 
Additions                              8        32      1,094             -          3   1,137 
Disposals                           (30)      (66)       (60)             -          -   (156) 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
At 31 December 2022                  335       115      4,134         1,192        418   6,194 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
Depreciation 
At 1 January 2021                    743        70        638           326          -   1,777 
Charge for the year                   88         4        604           120          -     816 
Disposals                          (167)      (36)      (200)           (5)          -   (408) 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
At 31 December 2021                  664        38      1,042           441          -   2,185 
Transfer between classes           (450)        38        281            70        293     232 
Charge for the year                   27        22        496           123         56     734 
Foreign exchange variances             3         -          4             -       (33)    (26) 
Disposals                           (30)       (3)       (60)          (29)       (25)   (147) 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
At 31 December 2022                  224        95      1,763           605        291   2,978 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
Net book value 
At 31 December 2022                  111        20      2,371           587        127   3,216 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
At 31 December 2021                   56        69      1,962           365          -   2,452 
------------------------------  --------  --------  ---------  ------------  ---------  ------ 
 

7. Right of use assets

 
                                                  Fixtures     Motor 
                                              and fittings  vehicles  Property  Intangibles   Total 
                                                    GBP000    GBP000    GBP000       GBP000  GBP000 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 Cost 
 At 1 January 2021                                     490       314     3,326            -   4,130 
 Acquisitions through business combinations              -         4        44            -      48 
 Remeasurement of finance lease                          -         -      (17)            -    (17) 
 Additions                                             133       106       386            -     625 
 Disposals                                               -      (71)      (50)            -   (121) 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 At 31 December 2021                                   623       353     3,689            -   4,665 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
Transfer between classes                                 -      (14)     (277)            -   (291) 
Foreign exchange variances                               -         1       (5)            -     (4) 
Additions                                                -        86       360          301     747 
Disposals                                            (368)       (5)     (433)            -   (806) 
--------------------------------------------  ------------  --------  --------  -----------  ------ 
 At 31 December 2022                                   255       421     3,334          301   4,311 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 Depreciation 
 At 1 January 2021                                     138        86     1,313            -   1,537 
 Charge for the year                                   144       116       681            -     941 
 Disposals                                               -      (56)      (50)            -   (106) 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 At 31 December 2021                                   282       146     1,944            -   2,372 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 Transfer between classes                                -        19        25            -      44 
 Charge for the year                                    87       169       742           50   1,048 
 Foreign exchange variances                              -       (2)        14            -      12 
 Disposals                                           (211)      (22)     (473)            -   (706) 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 At 31 December 2022                                   158       310     2,252           50   2,770 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 Impairment 
 At 1 January 2022                                       -         -       113            -     113 
 Charge for the year                                     -         -         -            -       - 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 At 31 December 2022                                     -         -       113            -     113 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 Net book value 
 At 31 December 2022                                    97       111       969          251   1,428 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 At 31 December 2021                                   341       207     1,632            -   2,180 
 -------------------------------------------  ------------  --------  --------  -----------  ------ 
 
 

8. Intangible assets and goodwill

 
                             Computer           Customer       Customer   Total other 
                                        Trade 
                             software    name  contracts  relationships   intangibles  Goodwill    Total 
                               GBP000  GBP000     GBP000         GBP000        GBP000    GBP000   GBP000 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
Cost 
At 1 January 2021              16,315     115     18,076          7,511        42,017    63,776  105,793 
Additions                       5,821      45          -              -         5,866         -    5,866 
Acquisitions through 
 business combinations              -       -      3,491              -         3,491    12,494   15,985 
Adjustments to previous 
 business combinations              -       -          8              -             8         -        8 
Disposals                       (819)       -          -              -         (819)         -    (819) 
Foreign exchange variances          -       -          -              -             -     (159)    (159) 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
At 31 December 2021            21,317     160     21,575          7,511        50,563    76,111  126,674 
Additions                       4,651       -          -              -         4,651         -    4,651 
Acquisitions through 
 business combinations              -       -          -              -             -       730      730 
Foreign exchange variances          -       -          -              -             -       119      119 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
At 31 December 2022            25,968     160     21,575          7,511        55,214    76,960  132,174 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
Amortisation 
At 1 January 2021               8,829      30     13,582          3,225        25,666         -   25,666 
Charge for the year             2,933       7      3,214            815         6,969         -    6,969 
Disposals                       (363)       -          -              -         (363)         -    (363) 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 

At 31 December 2021            11,399      37     16,796          4,040        32,272         -   32,272 
Charge for the year             2,920       8      1,531            767         5,226         -    5,226 
Foreign exchange variances          -       -          -              -             -         -        - 
At 31 December 2022            14,319      45     18,327          4,807        37,498         -   37,498 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
Net book value 
At 31 December 2022            11,649     115      3,248          2,704        17,716    76,960   94,676 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
At 31 December 2021             9,918     123      4,779          3,471        18,291    76,111   94,402 
---------------------------  --------  ------  ---------  -------------  ------------  --------  ------- 
 

Computer software is a combination of assets internally generated, and assets acquired through business combinations. The amortisation charge in the period to 31 December 2022 associated with computer software acquired through business combinations is GBP381,000 (2021: GBP381,000). The additional GBP2,539,000 (2021: GBP2,552,000) charged in the period relates to the amortisation of internally generated computer software. The total amortisation charged in the period to 31 December 2022 associated with intangible assets acquired through business combinations is GBP2,687,000 (2021: GBP4,415,000). Amortisation is charged to administrative expenses for both financial years.

9. Trade and other receivables

 
                                        Group 
                                    -------------- 
                                      2022    2021 
                                    GBP000  GBP000 
----------------------------------  ------  ------ 
Trade receivables                   12,298  16,492 
Other receivables                    1,078   1,472 
Deferred contingent consideration    1,077   4,529 
Prepayments                          5,524   3,802 
Accrued income                      18,620  11,682 
----------------------------------  ------  ------ 
                                    38,597  37,997 
----------------------------------  ------  ------ 
 

Deferred contingent consideration relates to the collection and run off of the SME division's accrued income balance at disposal.

The Group does not hold any collateral as security (2021: none). Group debtor days were 42 days (31 December 2021: 74 days).

10. Trade and other payables

 
                                      Group 
                                  -------------- 
                                    2022    2021 
                                  GBP000  GBP000 
--------------------------------  ------  ------ 
Current 
Trade payables                     5,952   4,154 
Social security and other taxes    5,117   3,504 
Accruals                           3,141   1,502 
Deferred income                    1,861   1,268 
Other payables                     1,008   1,887 
--------------------------------  ------  ------ 
                                  17,079  12,315 
--------------------------------  ------  ------ 
 

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(END) Dow Jones Newswires

March 29, 2023 02:00 ET (06:00 GMT)