Inspired Share Discussion Threads

[rivaldo] 27/12/2018 07:23

INSE are this fund manager's tip of the year for 2019:



"Ken Wotton, manager of the LF Gresham House Multi Cap Income fund, notes that Brexit is likely to cause further volatility in the UK market. Nevertheless, investors must remember that this will create selective opportunities.

“While large-cap businesses are generally impacted by macro factors, the agility and niche positioning of smaller companies may allow them to react positively to broader economic headwinds,” he said.

He believes Inspired Energy, which provides energy advisory services, is poised for strong performance in 2019.

“While it advises mid-sized corporations, Inspired Energy is paid in commission from contracts with large energy suppliers, with payments based on the energy usage companies incur. This guarantees multi-year revenue and high earnings visibility for the business,” Wotton said."

[rivaldo] 24/12/2018 09:31

For the record, consensus forecasts now appear to be as follows after the acquisition and placing (I assume a combination of Shore Capital and Peel Hunt):

year to 31/12/18: 1.64p EPS, 0.58p dividend
year to 31/12/19: 1.72p EPS, 0.65p dividend

So the year about to start sees a P/E of 9.7 and a 3.9% dividend yield.

[rivaldo] 13/12/2018 12:14

Shore Capital have upgraded their forecasts....



"Business energy services company Inspired Energy (INSE:AIM) improves 2.1% to 16.9p as house broker Shore Capital upgrades its forecasts to account for the acquisition of peer and competitor Inprova Finance for £19.5m in cash."

[buoycat] 09/12/2018 00:11

Clearly news of the placing leaked to cause the dramatic share price fall prior to the announcement. It was clear something was afoot. Thankfully not bad news.

[yump] 07/12/2018 17:25

I took my figures directly from the RNS 22/3/2018, year to end 2017, which would make this year's forecast flat.

I'm still interested in anyone's comments on the adjusted vs. basic eps and the use of EBITDA, amortised intangibles etc.

[rivaldo] 07/12/2018 16:16

Last year's adjusted basic EPS was 1.43p:



Forecast for this year is 1.59p, and I'd now expect next year's previous 1.7p EPS forecast to rise somewhat as above, though hopefully conservatively to leave room for upside.

[owenski] 07/12/2018 16:08

The share price has certainly been 'adjusted'.

[yump] 07/12/2018 15:51

So which one are you seeing then ?

Adjusted EPS 1.57p 1.27p 24%
====================================== ========== ========== =========
Basic EPS 0.48p 0.71p (32%)

and what about the basic vs. adjusted ?

[rivaldo] 07/12/2018 15:49

Last year INSE made 1.43p EPS.

If forecasts - actuals - now go to 2p EPS next year that will be a 40% rise over 2 years.

I'd suggest that that's pretty exciting. And would give rise to a much higher rating than the soon-to-be current year P/E of 8.4 (based on that 2p EPS).

[yump] 07/12/2018 15:30

1.7p was a 10% rise on previous year, which is not exactly exciting, which is perhaps why the issue was at 16p.

Also I'm not sure quoting adjusted eps is a real reflection of the business:

"Adjusted Profit Before Tax is earnings before amortisation, excluding exceptional items, share based payments, the unwinding of deferred consideration and foreign exchange variances."

So where do you stop. What happens if you also take off all the admin. expenses ?!

Maybe there's an argument for treating exceptionals as a one-off, if they actually are and will be. Amortisation is a cost because whatever assets are being amortised are being used up. Otherwise they wouldn't be allowed in the accounts against profits.

[rivaldo] 07/12/2018 14:29

:o)) That explains a lot about the share price performance since April or so....

I wonder if INSE had pressed the button a touch earlier, would they have been able to raise at 20p or more? Did this week's market falls, with exaggerated declines given no buyers around, cause the share price fall and the discounted price? Or did the tail of the "known-about" placing wag the share price dog? Pure guesswork.

Anyway, the acquisition is a good one at a decent price. Interesting to see the effect on forecasts.

The forecast for the coming year was already 1.7p EPS. I haven't done the calculations, but hopefully this could now increase to say 1.9p-2p EPS or even more.

Which leaves a 16.85p share price looking pretty cheap.

[bigbigdave] 07/12/2018 12:40

My Niece is senior accountant at Inprova Finance, she's just told me she has known about this for 8 months!

[yump] 07/12/2018 10:29

I don't think people will be in a hurry to get the share price back to 20p now that there's been a 16p issue. I was thinking of buying back once the dust had settled after the drop, but with an issue at this level and the prospect of more amortisation of intangibles appearing, I have no idea how to view the financials.

Has anyone else a take on how to view the big reduction in statutory profits as a result of the intangibles ? Seems to me the intangibles are very high, but I can't see how that benefits the company, other than making acquired assets seem more significant.

As I understand it, amortised intangibles are a proper expense as assets (goodwill and other assets from acquisitions in this case) are being used up. They ultimately have a replacement cost just like a machine. So the statutory accounts are a proper representation of what is happening with the business. EBIDTA is not.

[owenski] 07/12/2018 10:22

Disgraceful shafting of PI's, this wasn't mentioned being raised at at discount to 20p, it was referred when the price collapsed over the course of two days, then they crow about it being raised at a 1% discount as if it's now a good deal for mug PI's. Do they take PI's for idiots. This is dishonest spin in my opinion.

At least Janet Thornton came across as a straight player, cant say the same about these guys, probably a good deal but they'll do this again.

[winnings1] 07/12/2018 08:09

Dust should settle soon, share price to move up to normal level I.e. 20p plus.IMO.

[pictureframe] 07/12/2018 07:55

Hope they are doing very strigent DD on all these purchaes. Dont want to find they have purchased another UTW.

[1gw] 07/12/2018 07:54

Puts an interesting light on that response melody9999 posted 2 days ago from Gable Communications.

[melody9999] 07/12/2018 07:51

maybe a combination of selling caused by naughty insiders combined with a weak market meaning MMs induced additional sellers by dropping the share price

[winnings1] 07/12/2018 07:50

Management wide awake. Earning enhancing, excellent value, IMHO.

[yump] 07/12/2018 07:46

That is a shocking and blatent leak. Not too many sellers to investigate either.

Mind you the placing price is a heck of a discount, given that 20p was supposed to be cheap.

[1gw] 07/12/2018 07:31

It does beg the question of why they couldn't use paper and a contingent consideration structure this time? I can't see any explicit reason in the document, although perhaps cash is of more interest to the vendors since they are only selling part of their business - so might have ideas for how to spend the cash to build the remaining business.

[rivaldo] 07/12/2018 07:20

Everything is hunky dory with INSE then - except for some shareholder insiders who knew what was being negotiated. Find them and fine them!

This is an excellent earnings-enhancing acquisition for a good price - and note that trading remains good:

"Momentum within the Corporate division from a strong H1 has carried into the second half with continuing organic growth. In addition, the benefits of streamlined focus within the SME division have continued into the second half, reflected in robust margins and cash generation."

"The acquisitions from H1 are now fully integrated into the Group and performing in line with management's expectations.....The Board remains confident in meeting full year market expectations."

Paying £19.5m for £2.9m EBITDA (and £2.4m PBT) looks good value, especially with the potential for cross-selling, margin improvement, synergies post-acquisition etc.

[melody9999] 07/12/2018 07:15

Acquisition and placing at 16.5p. That explains recent share price action. Leaked 3 days ago it seems.

Revenue and margins up c 25%
Financed by share dilution of 115M on top of existing 600M c 19%
Economies of scale should result + cross selling?

[1gw] 07/12/2018 07:05

So the placing is the reason for the drop presumably. What chance an investigation into use of insider information would find enough to prosecute?