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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Inspired Plc | LSE:INSE | London | Ordinary Share | GB00BR2Q0V58 | ORD 1.25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
9.00 | 12.95% | 78.50 | 77.00 | 80.00 | 79.00 | 70.00 | 70.00 | 182,754 | 15:58:04 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Business Services, Nec | 88.78M | -3.63M | -0.0360 | -21.81 | 79.1M |
TIDMINSE
RNS Number : 5937O
Inspired Energy PLC
22 August 2017
22 August 2017
Inspired Energy plc
("Inspired" or the "Group")
Results for the six months ended 30 June 2017
Continued strong performance
Inspired Energy plc (AIM: INSE), a leading UK energy procurement consultant to UK and Irish corporates and SMEs, announces its consolidated, unaudited half year results for the six month period ended 30 June 2017.
Financial Highlights
2017 H1 2017 H1 2016 % increase ----------------------- --------- --------- ----------- Revenue GBP12.24m GBP10.16m 20% Gross profit GBP9.83m GBP7.95m 24% Adjusted EBITDA* GBP4.71m GBP3.75m 26% Adjusted profit before tax** GBP4.17m GBP3.31m 26% Profit before tax GBP2.18m GBP1.93m 13% Cash generated from operations GBP3.47m GBP2.55m 36% Interim dividend per share 0.16p 0.13p 23% Adjusted EPS 0.78p 0.62p 26% Basic EPS 0.37p 0.33p 12% Procurement Corporate Order Book GBP41.2m GBP25.7m 60% Net Debt GBP12.60m GBP8.08m 56% ----------------------- --------- --------- -----------
* Earnings before interest, taxation, depreciation, amortisation, exceptional costs and share based payments
**Adjusted profit before tax is earnings before amortisation, excluding exceptional items and share based payments
-- Results for the six months ended 30 June 2017 in line with management's expectations
-- Strong cash generation from operations representing 74% of adjusted EBITDA (H1 2016: 68%; FY16; 60%)
-- Interim dividend increased by 23% to 0.16p per share (H1 2016: 0.13p)
-- The Procurement Corporate Order Book, which provides strong visibility of revenues and is a consistent guide to the future performance of the Corporate Division, has increased by 60% to GBP41.2m (H1 2016: GBP25.7m)
-- Corporate division EBITDA reaches 91% of Group EBITDA for the period (2016: 86%)
Operational Highlights
-- Mark Dickinson appointed Chief Operating Officer ("COO") of the Group, having joined Inspired as a non-executive Director in September 2016. Mark was previously CEO of M&C Energy Group where he led the buy and build strategy completing four acquisitions before selling the company to Schneider Electric in 2013
-- Richard Logan appointed as a non-executive Director in March 2017
-- Successful relocation and integration of Informed Business Solutions Limited ("Informed"), a corporate-focused acquisition completed in H2 2016
-- Integration of Flexible Energy Management Limited ("FEML") and Churchcom Limited ("Churchcom") progressing well and in line with plans
Acquisitions and Finance
-- Completed the acquisitions of FEML and Churchcom, with both businesses performing well and in line with expectations
-- Completed the acquisition of Horizon Energy Group Limited ("Horizon") in July 2017 for a consideration of up to EUR15.0m, of which EUR9.0m was paid on completion
-- The Group entered into new banking facilities with Santander for GBP29.6m and EUR7.0m, of which GBP14.6m and EUR7.0m, was drawn, to refinance the existing indebtedness of Group and to further support the Group's acquisition strategy. The new facilities include a GBP12.5m acquisition facility and a GBP2.5m revolving credit facility. Both remain undrawn. As at 30 June 2017, Group net indebtedness was GBP12.6m (2016: GBP8.08m)
-- The Group raised GBP9.0m via the placing of 62,068,966 new ordinary shares in the Company in July 2017, which was significantly oversubscribed, to fund the initial cash consideration in the acquisition of Horizon
Commenting on the results, Janet Thornton, CEO of Inspired, said: "I am delighted to report on a fantastic period of growth for the Group: financially, operationally and strategically. The work undertaken over the last 18 months, which culminated in the three Corporate acquisitions completed in the first half, the debt refinancing and the GBP9.0m placing, has provided an excellent platform for the business to continue its organic growth complemented by these significant further acquisitions.
"Inspired has delivered another period of strong growth on all fronts and the record results and performance once again demonstrate the commitment, drive and expertise of the whole team, which has now grown to 270 staff across the UK and Ireland. Our sector leading Corporate Division offers a breadth of innovative and cost effective solutions to a wide range of clients and sectors, backed-up by proactive advice and assurance throughout the life of a contract.
"The announcement of the strategic acquisition of Horizon after the period end will provide a platform to leverage the capabilities of the Group with the aim of becoming a market-leader in Ireland, and the net contribution from this and the two acquisitions in H1 enable us to look ahead into FY 2018 with even greater confidence.
"As demonstrated by the half year results and our key performance metrics including the Corporate Order Book, which continues to grow significantly both organically and through acquisitions, the Group is in an extremely strong position to continue to deliver a robust performance throughout the remainder of 2017 and beyond. On behalf of the Board, I would like to thank all of the Inspired team for the hard work over the past six months, as we look forward to completing another exciting year of growth and development of the business."
For further information, please contact:
Inspired Energy plc www.inspiredplc.co.uk Janet Thornton, Chief Executive +44 (0) 1772 689 Officer 250 Paul Connor, Finance Director Shore Capital (Nomad and +44 (0) 20 7408 Joint Broker) 4090 Bidhi Bhoma Edward Mansfield Panmure Gordon (Joint Broker) Ben Thorne +44 (0) 20 7886 James Stearns 2500 +44 (0) 20 7193 Gable Communications 7463 Justine James +44 (0) 7872 061007 John Bick inspired@gablecommunications.com
Chairman's Statement
I am pleased to present the Group's unaudited interim results for the six months ended 30 June 2017, a period in which Inspired performed very strongly from a financial and operational perspective, delivering results in line with management's expectations.
The Group is delivering on all strategic fronts in the first half. We have strengthened the Board with the appointment of Mark Dickinson as COO and Richard Logan as an independent non-executive Director; implemented a new Long Term Incentive Plan ("LTIP"); announced three corporate-focused acquisitions; entered into new c.GBP35m banking facilities with Santander; and further strengthened the Group's institutional shareholder register through an over-subscribed GBP9.0m placing.
The strong performance and the strategic initiatives delivered during the period by the Group's team provides an excellent platform for future organic and acquisitive growth, further establishing the Group as a market leading energy consultant to UK and Irish Corporates and SMEs.
The Board is delighted with the appointment of Mark Dickinson as COO. Since joining the Board as a non-executive director in September 2016, Mark's expertise as an energy consultancy specialist, with over 20 years' experience of leading and advising companies in the sector has been invaluable, and we look forward to Mark contributing more broadly to the Company's continued development.
As noted above, the period also saw the implementation of a new LTIP for the benefit of Mark Dickinson and Paul Connor, Finance Director. Mark and Paul are key executives who are both important to the long-term success and value of the Company. By aligning the interests of Mark and Paul to our shareholders and by incentivising them over the long term, the Board believes that the Company will benefit significantly from their drive, energy and experience over the next six years.
The financial results highlight excellent growth, achieved whilst successfully integrating the corporate-focused acquisitions completed in the second half of 2016 and first half of 2017.
The core Corporate Division delivered a record set of results in the first half, underpinned by Procurement Order Book Sales of GBP8.4m (H1 2016: GBP7.2m), representing an increase of 17% for the period. As a result of this continued strong growth the Procurement Corporate Order Book has increased to GBP41.2m as at 30 June 2017 (H1 2016: GBP25.7m) representing a year on year increase of 60%. The Procurement Order Book remains a consistent guide to the future performance of the Group, providing strong visibility of revenues for FY 2017 and the next three years, enabling the Board to look forward with confidence over the short to medium term.
The acquisition of Informed in September 2016, in conjunction with excellent organic growth from the existing Corporate Division, increased revenue to GBP9.2m (H1 2016: GBP7.5m) which represents an increase of 23% and is over 75% of Group revenue. Adjusted EBITDA for the Corporate Division for the period is GBP4.3m (H1 2016: GBP3.2m) representing 91% of the Group's combined adjusted EBITDA (H1 2016: 86%). This continues to reinforce the Board's stated strategy to focus on growing the Corporate Division both through further acquisitions and organically.
The SME Division has continued to deliver strong revenue growth, profits and cash during H1 of 2017, with a minimal increase in headcount. Revenue for the SME Division in the six-month period was GBP3.0m (H1 2016: GBP2.6m) which represents an increase of 15% from the prior year. Adjusted EBITDA generated by the Division was GBP1.0m (H1 2016: GBP0.9m) and the SME Division contributed materially to cash generation in the period.
The acquisition of Horizon was a significant milestone in the development of the Group both strategically and financially and the Board is pleased to report that integration is progressing well, with both UK and Irish operations benefiting from the sharing of regional knowledge and expertise. The three acquisitions announced during the period have all enhanced Inspired's service offering, further broadened the client base and boosted the geographical spread within the Corporate Division. Further, we are pleased to report that all three acquired businesses are trading in line with expectations and we look forward to their contribution in the second half of 2017 and beyond.
Accordingly, the Board is pleased to propose an interim dividend of 0.16 pence per share (H1 2016: 0.13 pence per share).
We are delighted with the performance in the first half of 2017 and we enter the second half of 2017 and beyond with confidence.
Michael Fletcher
Chairman
22 August 2017
CEO's Statement
The Board is delighted with the excellent performance of the Group in the period to 30 June 2017, providing a very strong platform from which to continue the organic and acquisitive growth of the business, adding new service lines, sector specialisms and geographical spread through acquisitions as clearly demonstrated with FEML, Churchcom and Horizon. We look forward to the second half of 2017 and the opportunities for further growth.
Corporate Division
Overview
With three acquisitions announced in H1, the Group's Corporate Division now comprises:
-- Inspired Energy Solutions (founder business); -- DEP (acquired in 2012); -- WPUK (acquired in H2 2015); -- STC (acquired in H2 2015); -- Informed (acquired in H2 2016) -- FEML (acquired in H1 2017) -- Churchcom (acquired in H1 2017) -- Horizon (acquired in H2 2017)
The Division's core services include the review, analysis and negotiation of gas and electricity contracts on behalf of clients ("Energy Procurement Services"). Once contracts are signed and a client is on-board, the Division provides in-contract, real time, bureau, bill checking and cost dispute resolution services to clients ("Bureau Services").
Following the successful relocation of WPUK, the Procurement Division of STC and Informed, all UK Energy Procurement Services are performed from the Group's Head Office in Kirkham. The Bureau Services are provided from a core team in Kirkham and by STC, which is located in Bromley. All the Group's Irish Energy Procurement Services are performed from the Horizon office in Cork, Ireland.
Highlights
Highlights in the first half of the year include:
-- Revenue increased 23% to GBP9.2m (H1 2016: GBP7.5m)
-- The Corporate Division generated adjusted EBITDA of GBP4.3m (H1 2016: GBP3.2m), a 34% year on year increase
-- Procurement Corporate Order Book Sales, increased by 17% to GBP8.4m in the period to 30 June 2017 (H1 2016: GBP7.2 million)
Procurement Corporate Order Book increased by 60% to GBP41.2 million as at 30 June 2017 (H1 2016: GBP25.7 million)
Procurement Corporate Order Book GBP'm Analysis Procurement Corporate Order Book b/f at 31 December 2016 28.0 Add: Procurement Corporate Order Book Sales in period 8.4 Add: Acquired Corporate Order Books (including FEML, Churchcom and Horizon) 12.6 Less: Revenue recognised from Procurement Corporate Order Book in period (7.8) Procurement Corporate Order Book c/f at 30 June 2017 41.2
The Procurement Corporate Order Book is defined as the aggregate revenue expected by the Group in respect of signed contracts between an Inspired client and an energy supplier for the remainder of such contracts (where the contract is live) or for the duration of such contracts (where the contract has yet to commence). No value is ascribed to expected retentions of contracts.
The Procurement Corporate Order Book only relates to the Corporate Division, and does not include any SME revenue or contracts within it. The growth of the Procurement Corporate Order Book provides an indicator of the latent growth of the business which has yet to be recognised as revenue of the Group. This is due to no revenue being recognised by Inspired's Corporate Division until the energy is physically consumed by the client.
Procurement Corporate Order Book Sales
Procurement Corporate Order Book Sales values represent the aggregated expected revenue due to the Group from contracts secured within a defined period. Expected revenue is calculated as the expected commission due to the Group from signed contracts between a client and energy supplier for an agreed consumption value at an agreed commission rate.
Procurement Corporate Order Book Sales which are in excess of revenue recognised, within a defined period, will increase the Procurement Corporate Order Book of the Group, providing an indicator of expected future growth already secured by the Group.
SME Division
The Group's SME Division includes: EnergiSave Online ("EnergiSave"), KWH Consulting ("KWH") and Simply Business Energy ("SBE"). Within the SME Division, the Group's energy consultants contact prospective SME clients to offer reduced tariffs and contracts based on the unique situation of the customer.
The SME Division has achieved strong growth in the six months to 30 June 2017, with revenue increasing 15% to GBP3.0 million (H1 2016: GBP2.6m). The SME Division increased adjusted EBITDA to GBP1.0 million from GBP0.9 million in the six months ending 30 June 2016, representing organic growth of 16%. Again, during the period, staff numbers remaining broadly stable.
Acquisition Strategy
The Board continues to investigate opportunities for the Group to participate in industry consolidation. To create an enlarged and improved business, as demonstrated by the acquisitions made year to date in 2017, we believe that potential targets should offer one or more of the following criteria:
-- Additional technical and/or service capability; -- Sector specialism and diversification; -- Increased geographic footprint; and -- Significant opportunities for sales or cost synergies
The Board continues to seek acquisition opportunities, which fit with the Group's strategy in order to augment the Group's services, products or markets.
Dividends
The Board is delighted to propose interim dividend of 0.16 pence per share. This represents an increase of 23% over the interim dividend paid in 2016, being 0.13 pence per share.
The ex-dividend date is 7 September 2017 with a record date of 8 September 2016. The dividend will be paid to shareholders on 14 November 2017.
Outlook
The strong performance in the first half of 2017 underpins the robust operational and financial platform for the full year, in which the Group is well placed to deliver another set of record results. We continue to benefit from further organic growth and the net contribution from the three recent acquisitions, enabling us to look ahead into FY 2018 with even greater confidence.
The Group's established acquisition strategy has delivered great results as demonstrated by the success achieved by the acquisition of FEML, Churchcom and Horizon, whilst organic growth momentum has continued.
The Corporate Division continues to go from strength to strength and we are excited by the opportunities which can now be maximised from the enhanced breadth and depth of skills and expertise that the team can provide to our expanding customer base.
On behalf of the Board, I would like to thank all of the Inspired team for the hard work over the past six months, as we look forward to completing another exciting year of growth and development of the business.
Janet Thornton
Chief Executive Officer
22 August 2017
Group Statement of Comprehensive Income
For the six months ended 30 June 2017
Six months Year Six months ended ended ended 30 30 June 31 December June 2017 2016 2016 (unaudited) (unaudited) (audited) Note GBP GBP GBP ------------------------- ----- ------------- ------------- ------------- Revenue 12,237,457 10,163,398 21,514,911 Cost of sales (2,409,720) (2,212,327) (4,205,931) ------------- ------------- ------------- Gross profit 9,827,737 7,951,071 17,308,980 Administrative expenses (7,320,060) (5,774,307) (12,470,995) ------------- ------------- ------------- Operating profit 2,507,677 2,176,764 4,837,985 ------------- ------------- ------------- Analysed as: Earnings before exceptional costs, depreciation, amortisation and share-based payment costs 4,714,967 3,746,742 8,257,775 Fees associated with Acquisition (332,407) (52,993) (530,285) Restructuring Costs (228,724) (97,892) -
Depreciation (216,424) (197,390) (422,279) Amortisation of intangible assets (1,269,966) (1,065,243) (2,149,198) Share-based payment costs (159,014) (156,460) (318,028) ------------- ------------- ------------- 2,507,677 2,176,764 4,837,985 ------------------------- ----- ------------- ------------- ------------- Finance expenditure (328,725) (244,210) (742,085) Other financial items - - (77,315) ------------- ------------- ------------- Profit before income tax 2,178,952 1,932,554 4,018,585 Income tax expense (370,422) (360,202) (616,430) ------------- ------------- ------------- Profit for the period and total comprehensive income 1,808,530 1,572,352 3,402,155 ============= ============= ============= Attributable Note to: Equity owners of the Company 1,808,530 1,572,352 3,402,155 Basic earnings per share attributable to the equity holders of the Company (pence) 3 0.37 0.33 0.71 Adjusted basic earnings per share attributable to the equity holders of the Company (pence) 3 0.78 0.62 0.68 ------------------------- ----- ------------- ------------- -------------
Group Statement of Financial Position
At 30 June 2017
Six months Six months Year ended ended ended 30 June 30 June 31 December 2017 2016 2016 (unaudited) (unaudited) (audited) Note GBP GBP GBP --------------------------- ----- ------------- ------------- ------------- ASSETS Non-current assets Intangible assets 5 23,675,715 16,099,356 20,378,633 Property, plant and equipment 4 1,301,113 1,350,481 1,331,603 24,976,828 17,449,837 21,710,236 Current assets Trade and other receivables 13,406,013 10,573,511 12,408,789 Cash and cash equivalents 2,296,415 1,775,304 984,403 ------------- ------------- ------------- 15,702,428 12,348,815 13,393,192 Total assets 40,679,256 29,798,652 35,103,428 ------------- ------------- ------------- LIABILITIES Current liabilities Trade and other payables 2,116,264 1,446,904 1,712,175 Bank borrowings 3,037,500 1,512,500 3,337,500 Current tax liability 1,677,137 920,315 2,413,464 Contingent consideration 3,064,403 456,602 2,460,354 9,895,304 4,336,321 9,923,493 Non-current liabilities Bank borrowings 11,896,365 8,339,727 8,286,462 Trade and other payables - 53,624 61,866 Contingent consideration 193,384 1,486,505 797,433 Deferred tax liability 1,130,601 1,538,173 1,010,869 Interest rate swap - - 149,120 13,220,350 11,418,029 10,305,750 Total liabilities 23,115,654 15,754,350 20,229,243 ------------- ------------- ------------- Net assets 17,563,602 14,044,302 14,874,185 ============= ============= ============= EQUITY Share capital 613,291 600,270 606,987 Share premium account 2,537,931 2,156,171 2,318,619 Merger relief reserve 15,410,169 14,418,343 14,913,911 Retained earnings 9,509,316 7,464,808 7,623,321 Share based payments reserves 875,670 787,483 794,120 Reverse acquisition reserve (11,382,773) (11,382,773) (11,382,773) Total equity 17,563,603 14,044,302 14,874,185 ============= ============= =============
Group Statement of Cash Flows
For the six months ended 30 June 2017
Six months Six months ended ended 30 June 30 June Year ended 2017 2016 31 December (unaudited) (unaudited) 2016 (audited) Note GBP GBP GBP ------------------------------ ----- ------------ ------------ --------------- Cash flows from operating activities Profit before income tax 2,178,952 1,932,554 4,018,585 Adjustments Depreciation 216,424 197,390 422,279 Amortisation 1,269,966 1,065,243 2,149,198 Share based payment costs 159,014 156,460 318,028 Contingent Consideration - - - Finance expenditure 328,725 244,210 742,085 Other financial items - - 77,315 Cash flows before changes in working capital 4,153,081 3,595,857 7,727,490 Movement in working capital Decrease/(Increase) in trade and other receivables (970,005) (1,113,337) (2,948,615) (Decrease)/increase in trade and other payables 285,063 70,073 199,551 ------------ ------------ --------------- Cash generated from operations 3,468,139 2,552,593 4,978,426 ------------ ------------ --------------- Income taxes paid (1,183,627) (532,786) (532,786) Net cash flows from operating activities 2,284,512 2,019,807 4,445,640 Cash flows from investing activities Purchase of property, plant and equipment (176,873) (187,568) (368,873) Payments to acquire intangible assets (307,780) (225,859) (1071,274) Deferred consideration paid - (750,000) - Contingent consideration paid - - (1,250,000) Disposal of property, - plant and equipment Acquisition of subsidiary, net of cash (3,503,122) - (1,374,189) ------------ ------------ --------------- (3,987,775) (1,163,427) (4,064,336) Cash flows from financing activities New bank loans 3,581,500, - 2,623,750 Repayment of bank loans (459,375) (700,000) (1,509,375) Finance expenses (328,725) (244,210) (712,921) Repayment of hire - - - purchase agreements Net proceeds of equity 221,875 258,283 423,015 Dividends paid - - (1,826,221) ------------ ------------ --------------- 3,015,275 (685,927) 1,001,752 Net increase/(decrease) in cash and cash equivalents 1,312,012 170,453 620,448 Cash and cash equivalents brought forward 874,403 1,604,851 1,604,851 ------------ ------------ --------------- Cash and cash equivalents carried forward 2,296,414 1,775,304 984,403 ============ ============ ===============
Group Statement of Changes in Equity
For the six months ended 30 June 2017
Share Merger Share-based Reverse Total Share premium relief payment Retained acquisition shareholders' capital account reserve reserve earnings reserve equity GBP GBP GBP GBP GBP GBP GBP Balance at 1 January 2016 589,505 1,901,747 13,675,249 631,023 5,892,456 (11,382,773) 11,307,207 ------- --------- ---------- ----------- ----------- ------------ ------------- Profit and total comprehensive income for the period 3,402,155 3,402,155 Shares issued (19 January 2016) 2,188 131,565 133,753 Shares issued (3 May 2016) 1,672 122,859 750,000 Shares issued (23 May 2016) 6,906 743,094 99,107 Shares issued (2 September 2016) 1,347 97,760 500,000 Shares issued (28 September 2016) 4,432 495,568 65,625 Shares issued (3 November 2016) 937 64,688 Share-based payment cost 318,208 318,028 Share options lapsed/exercised (154,931) 154,931 Dividends paid (1,826,221) (1,826,221) Total transactions with owners 17,482 416,872 1,238,662 163,097 1,730,865 3,566,978 ------- --------- ---------- ----------- ----------- ------------ ------------- Balance at 31 December 2016 606,987 2,318,619 14,913,911 794,120 7,623,321 (11,382,773) 14,874,185 ------- Profit and total comprehensive income for the period - - - - 1,808,530 - 1,808,530 Shares issued (30 March 2017) 2,000 169,250 - - - - 171,250 Shares issued (20 April 2017) 3,742 - 496,258 - - - 500,000 Shares issued (24 April 2017) 563 50,063 - - - - 50,625 Share options lapsed/exercised - - - (77,466) 77,466 - - Share-based payment costs - - - 159,014 - - 159,014 Dividend - - - - - - - ------- --------- ---------- ----------- ----------- ------------ ------------- Balance at 30 June 2017 613,291 2,537,931 15,410,169 875,670 9,509,316 (11,382,773) 17,563,603 ------- --------- ---------- ----------- ----------- ------------ ------------- 1. Accounting Policies
Basis of Preparation
These consolidated, unaudited, interim financial statements are for the six months ended 30 June 2017. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), this announcement in itself does not contain sufficient information to comply with IFRS. Details of the accounting policies are those set out in the annual report for the year ended 31 December 2016. These accounting policies have remained unchanged for the six months ended 30 June 2017.
Going Concern
The Group's forecasts, which have been prepared for the period to 31 December 2018 after taking into account the contracted orders book, future sales performance, expected overheads, capital expenditure and debt service costs, show that the Group should be able to operate profitably and within the current financial resources available to the Group.
After making enquiries, the Directors have a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the consolidated interim financial statements.
The preparation of financial statements, in conformity with generally accepted accounting principles under IFRS, requirements management to make estimates and assumptions that affect the reporting amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates.
1.1 Revenue Recognition
Corporate Division
Commissions received from the energy suppliers are based upon the energy usage of the Corporate customer at agreed commission rates with the energy suppliers. Commission income is recognised in line with the energy usage of the Corporate customer over the term of the contract which is considered to be the point at which commission income can be reliably measured. This is due to the impact of the observed variability of actual to estimated energy usage on Corporate customer contracts on the substantial Procurement Corporate Order Book of the Corporate Division.
The majority of contracts are entered into as 'direct billing' contracts, whereby commissions are received in cash terms in line with the billing profile of the ultimate customer, which can be on a monthly or quarterly basis. For a minority of suppliers, 'up-front payment' contracts are entered into, whereby the supplier pays a percentage of the commission on the contract commencement date, with the remaining percentage on contract reconciliation at a future specified date.
Accrued income for the Corporate Division represents commission income recognised at the year-end in respect of customer energy usage prior to the year-end which has not been settled by the energy supplier at that point.
For risk managed contracts, where a number of services are provided to the Corporate customer over the term of the contract, commission income is similarly recognised in line with the energy usage of the customer which approximates to recognition on a straight line basis over the contract period.
In respect of contracts for on-going services billed directly to the Corporate customer including bureau services, which have increased since the acquisition of STC Energy and Carbon Holdings Limited, revenue represents the value of work done in the year. Revenue in respect of contracts for on-going consultancy services is recognised as it becomes unconditionally due to the group as services are delivered and is measured by reference to stage of completion as determined by cost profile.
SME Division
The SME Division provides services through procuring contracts with energy suppliers on behalf of SME customers and generates revenues by way of commissions received directly from the energy suppliers. No further services regarding procurement are performed once the contract is authorised by the supplier. Commissions earned by the SME Division fall into two broad categories:
Change of Tenancy Agreements ('COTS')
COTS agreements are largely entered into by customers on moving into new premises. Revenue relates to an upfront fixed commission received from the energy supplier, on setting up a new supply agreement. The commission received has no linkage to future energy usage and hence revenue can be reliably measured at the point the contract has been authorised by the energy supplier. Revenue is recognised at the point the contract has been authorised by the energy supplier.
Other SME Agreements
For other SME agreements, commissions are based upon the energy usage of the SME customer at agreed commission rates with the energy suppliers. The expected commission over the full term of the contract is recognised at the point the contract is authorised by the supplier. Where actual energy use by the business differs to that calculated at the date the contract goes live, an adjustment is made to revenue once the actual data is known.
The cash received profile relating to these revenues varies according to the contract terms in place with the energy supplier engaged and can be received before the date the contract goes live or spread over the terms of the contract between the energy supplier and the end customer which can be for a period of up to three years. Accrued revenue relates to commission earned, not yet received or paid and are discounted at an appropriate rate.
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 six month period to 30 June 2017 were determined on the basis of the reporting presented at regular Board meetings of the Group which is by nature of customer and level of procurement advice provided. The segments comprise:
The Corporate Division ("Corporate")
This sector comprises the operations of Inspired Energy Solutions Limited, Direct Energy Purchasing Limited, Wholesale Power UK Limited, STC Energy Management Limited, Informed Business Solutions Limited, Flexible Energy Management Limited and Churchcom Limited. The Corporate's core services are primarily in the review, analysis and negotiation of gas and electricity contracts on behalf of corporate clients. Additional services provided include Energy Review and Benchmarking, Negotiation and Bill Validation. The Group's Corporate Division benefits from a market leading trading team, who actively focus on high volume customers, providing more complex, long-term energy frameworks based on agreed risk management strategies.
The SME Division (SME)
This sector comprises the operations of the Energisave Online Limited, KWH Consulting Limited and Simply Business Energy Limited. Within the SME Division, the Group's energy consultants contact prospective SME clients to offer reduced tariffs and contracts based on the unique situation of the customer. Leads are generated and managed by the Group's internally generated, bespoke CRM and case management IT system. Tariffs are offered from a range of suppliers and the Group is actively working with new suppliers to increase the range of products available to SME clients.
PLC Costs
This comprises the costs of running the PLC, incorporating the cost of the Board, listing costs and other professional service costs such as audit, tax, legal and Group insurance.
Six months ended 30 June 2017 Six months ended 30 June 2016 Corporate SME PLC costs Total Corporate SME PLC costs Total GBP GBP GBP GBP GBP GBP GBP GBP Revenue 9,187,645 3,049,813 - 12,237,457 7,497,760 2,605,533 60,105 10,163,398 Cost of sales (1,021,524) (1,388,196) - (2,409,720) (907,040) (1,305,287) - (2,212,327) --------------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Gross profit 8,166,121 1,661,616 - 9,827,737 6,590,720 1,300,246 60,105 7,951,071 --------------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Administration expenses (4,459,543) (853,571) (2,006,946) (7,320,060) (3,621,167) (646,309) (1,506,831) (5,774,307) --------------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Operating profit 3,706,578 808,045 (2,006,946) 2,507,677 2,969,553 653,937 (1,446,726) 2,176,764 --------------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Analysed as: EBITDA 4,284,937 1,007,051 (577,777) 4,714,212 3,234,045 867,678 (354,981) 3,746,742 Depreciation (198,587) (17,846) - (216,424) (182,540) (14,850) - (197,390) Amortisation (151,058) (181,160) (937,748) (1,269,966) (81,952) (198,891) (784,400) (1,065,243) Share-based payments - - (159,014) (159,014) - - (156,460) (156,460) Exceptional costs (228,724) - (332,407) (561,131) - - (150,885) (150,885) ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- 3,706,578 808,045 (2,006,946) 2,507,677 2,969,553 653,937 (1,446,726) 2,176,764 --------------- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- 3. Earnings Per Share
The earnings per share is based on the net profit for the period attributable to ordinary equity holders divided by the weighted average number of ordinary shares outstanding during the period.
Year ended 31December 2016 Six months Six months ended ended 30 June 30 June 2017 2016 (unaudited) (unaudited) (audited) GBP GBP GBP ------------------------------ -------------- -------------- -------------------- Profit attributable to equity holders of the Group 1,808,530 1,572,352 3,402,155 Amortisation of internally generated computer software and customer databases 332,218 280,843 574,485 Amortisation of other intangible assets acquired 937,748 784,400 1,574,713 Deferred tax in respect of amortisation - - (299,195) Fees associated with acquisition/listing 332,407 52,993 407,750 Share based payments costs 159,014 156,460 318,028 Exceptional items 228,724 97,892 122,536 Adjusted profit attributable to equity holders of the Group 3,798,641 2,944,940 6,100,472 -------------- -------------- -------------------- Weighted average number of ordinary shares in issue 486,549,629 474,850,659 478,910,478 Diluted weighted average number of ordinary shares in issue 504,396,648 501,835,399 499,127,390 Basic earnings per share (pence) 0.37 0.33 0.71 Diluted earnings per share (pence) 0.36 0.31 0.68 Adjusted basic earnings per share (pence) 0.78 0.62 1.27 Adjusted diluted earnings per share (pence) 0.75 0.59 1.22 Alternate adjusted basic earnings per share (pence) 0.71 0.56 1.15 Alternate adjusted diluted earnings per share (pence) 0.69 0.53 1.11
The weighted average number of shares in issue for the adjusted diluted earnings per share include the dilutive effect of the 17,847,019 share options in issue to senior staff of Inspired.
Adjusted earnings per share represents the earnings per share, as adjusted to remove the effect of the fees associated with acquisition/listing, amortisation of intangible assets, share based payments and exceptional items which have been expensed to the income statement in the period.
Alternate adjusted earnings per share represents the earnings per share, as adjusted to remove the effect of the fees associated with acquisition/listing, amortisation of intangible assets (excluding amortisation related to computer software and customer databases), share based payments and exceptional items which have been expensed to the income statement in the period.
4. Property, Plant and Equipment Motor Leasehold Fixtures and fittings vehicles Computer equipment improvements Total GBP GBP GBP GBP GBP Cost As at 1 January 2016 448,443 13,100 1,096,880 218,659 1,777,082 Acquisitions through business combinations 15,929 - 8,777 - 24,706 Additions 150,930 - 123,733 94,210 368,873 At 31 December 2016 615,302 13,100 1,229,390 312,869 2,170,661 Acquisitions through business combinations - - 8,305 - 8,305 Additions 93,487 - 32,243 51,899 177,628 At 30 June 2017 708,789 13,100 1,269,938 364,768 2,356,595 --------------------- --------- ------------------ --------------------- --------- Depreciation As at 1 January 2016 166,962 2,276 208,623 38,918 416,779 Charge for the year 98,035 1,456 297,902 24,886 422,279 At 31 December 2016 264,997 3,732 506,525 63,804 839,058 Charge for the period 54,936 546 147,846 13,096 216,424 At 30 June 2017 319,933 4,278 654,371 76,900 1,055,482
--------------------- --------- ------------------ --------------------- --------- Net Book Value At 30 June 2017 388,856 8,822 615,567 287,869 1,301,113 --------------------- --------- ------------------ --------------------- --------- At 31 December 2016 350,305 9,368 722,865 249,065 1,331,603 --------------------- --------- ------------------ --------------------- --------- 5. Intangible assets and goodwill Computer Trade name Customer Customer Customer software GBP databases contracts relationships Goodwill Total GBP GBP GBP GBP GBP GBP Cost At 1 January 2016 4,065,390 115,000 944,300 3,473,850 1,989,000 9,400,834 19,988,374 Additions 696,084 - 375,190 - - - 1,071,274 Alteration to initial recognition - - - - - 605,726 605,726 Acquisitions through business combinations - - - 931,000 - 2,981,091 3,912,091 At 31 December 2016 4,761,474 115,000 1,319,490 4,404,850 1,989,000 12,987,651 25,577,465 Acquisitions through business combinations 704,300 3,554,968 4,259,268 Additions 293,808 - 13,972 - - - 307,780 At 30 June 2017 5,055,282 115,000 1,333,462 5,109,150 1,989,000 16,542,619 30,144,513 ------------ ------------ ----------- ----------- ------------- ---------- ---------- Amortisation As at 1 January 2016 469,605 677 556,062 1,964,710 58,580 - 3,049,634 Charge for the period 771,259 5,750 405,026 469,913 497,250 - 2,149,198 At 31 December 2016 1,240,864 6,427 961,088 2,434,623 555,830 - 5,198,832 Charge for the year 479,208 2,875 181,160 358,098 248,625 - 1,269,966 ------------ ------------ ----------- ----------- ------------- ---------- ---------- At 30 June 2017 1,720,072 9,302 1,142,248 2,792,721 804,455 - 6,468,798 ------------ ------------ ----------- ----------- ------------- ---------- ---------- Net Book Value At 30 June 2017 3,335,210 105,698 191,214 2,316,429 1,184,545 16,542,619 23,675,715 ------------ ------------ ----------- ----------- ------------- ---------- ---------- At 31 December 2016 3,520,610 108,573 358,402 1,970,227 1,433,170 12,987,651 20,378,633 ------------ ------------ ----------- ----------- ------------- ---------- ----------
Computer software is a combination of assets internally generated and assets acquired through business combinations. Amortisation charged in the period to 30 June 2017 associated with computer software acquired through business combinations is GBP328,150. The additional GBP151,058 charged in the period relates to the amortisation of internally generated computer software. Amortisation of customer databases of GBP181,160 is also in relation to internally generated intangible assets.
6. Availability of this announcement
This announcement together with the financial statements herein and a presentation in respect of the interim financial results are available on the Group's website, www.inspiredplc.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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August 22, 2017 02:00 ET (06:00 GMT)
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