Inspired Energy (INSE), the leading consultant for energy procurement, utility cost optimisation and legislative compliance in the UK and Ireland , provides a trading update for the financial year ended 31 December 2020 and confirms it expects to announce its full year results for the year ended 31 December 2020 on 31 March 2021.
- Performance through the end of Q4 remained resilient, despite the ongoing disruption from COVID-19, and the Board expects the Corporate Division, and consequently the Group's continuing operations, to report FY2020 underlying EBITDA in line with market consensus.
- Underlying cash generated from continuing operations (excluding restructuring costs and the impact of deal fees) is expected to be approximately £10.0m (2019: £13.7m), with net debt expected to be approximately £18.0m at the year-end (2019: £33.4m).
- Corporate Order Book increased to £63.00m (31 Dec 2019: £57.50m), with strong customer retention and robust performance from significant new customer wins.
- The Group exited 2020 having made significant strategic progress and with a strengthened platform, capable of generating long term growth and significant stakeholder returns as its markets continue to recover.
- Successful exit from the SME business has created a pure play technology enabled service provision for energy advisory and sustainability services to Corporate Consumers in UK and Ireland.
- Acquisition of the remaining 60 per cent. interest of Ignite Energy LTD ("Ignite") and subsequent acquisition of LSI Energy Holdings Limited ("LSI"), in Q3, strengthened the Energy Optimisation Services offering, positioning the Group to be a leader in the delivery of Net Zero Carbon and ESG objectives for its clients.
- Sustainability credentials underpinned by award of the London Stock Exchange Green Economy Mark, with additional service offerings, including in ESG disclosure support, being successfully launched.
- Further developed our technology capability through 2020, with roll out of new customer digital offerings to being in 2021
- Balance sheet strengthened through decisive action in 2020, with the capacity to execute against an active pipeline of identified acquisition opportunities in 2021.
Group Trading Performance
As set out in the trading update announced on 11 December 2020, within the Group's continuing operations of the Corporate Division, trading in the core Energy Assurance Service business remains robust despite further disruption in Q4 as a result of the ongoing pandemic. The average energy consumption reduction by customers for the April to December period is expected to be c.18% better than the 25% reduction modelled in the Board's COVID downside case.
The Group's Energy Optimisation Services businesses, which are project based and typically require access to customer sites, was disrupted from April to September as a result of pandemic restrictions resulting in some project deferrals. Whilst October saw the start of a recovery for the Optimisation Services business, the lockdowns during November again restricted site access and caused the deferral of some projects into FY2021.
As reported, further lockdowns in Q4 continued to impact the performance of the SME Division, which had been loss making since Q2 as a result of the significant reduction in SME customer energy switching activity and consumption. Following its disposal in December 2020, the SME Division will be reported as a discontinued operation in the Group's full year results.
The Board expects the Group's Energy Assurance Service business to perform robustly against management's expectations for FY2021. The Group's Energy Optimisation Services continue to experience further deferrals to projects related to the latest lockdown. To date the overall impact of Assurance and Optimisation Services is expected to be neutral against FY2021 Group expectations. The Board is keeping the matter under review, given the ongoing fluid nature of the situation, as the year develops and will provide further guidance with the publication of its full year results.
Placing and acquisition pipeline
In July 2020, the Group completed a fundraising of £31.3m (before expenses) through an oversubscribed placing of £30.0m, with a further £1.3m raised via an open offer (the "Fundraise").
Part of the proceeds from the Fundraise financed the £11.0m initial cash consideration for the acquisition of the balancing interest of Ignite. The balance of the net proceeds of the Fundraise have provided the Group with the financial strength and flexibility to execute on a pipeline of targeted opportunities (the "Accelerated Pipeline"), accelerating its successful acquisition strategy whilst deleveraging its balance sheet.
The Board remains committed to executing the acquisition strategy outlined at the time of the Fundraise, noting that the Group will only complete transactions following extensive and satisfactory diligence, consistent with the Group's strict criteria since IPO. As such, the Board took the decision to abort a significant transaction in Q4 2020. The Accelerated Pipeline remains strong and active to support delivery of the strategy, albeit in a longer time frame than originally intended.
Acquisitions and disposals
Inspired Energy acquired the balancing interest of 60 per cent. of Ignite on 17 July 2020 for an initial consideration of £11.0m, on a cash free: debt free basis. Further contingent consideration of up to a maximum of £19.0m may be payable subject to the achievement of challenging financial targets through to FY 2023.
The acquisition of Ignite was swiftly followed by the completion of the bolt-on acquisition of LSI in August which further expands the Group's "Units of Opportunity".
In December, Inspired Energy completed the disposal of the Group's SME Division, by way of a management buyout, for a total consideration of up to £10.5 million. The disposal of the SME Division represents an important milestone in the strategic direction of Inspired Energy, allowing the Group to focus solely on its core service offering to Corporate Energy Consumers with a business that is more resilient to the COVID-19 pandemic in FY2021.
Mark Dickinson, CEO of Inspired Energy , commented: "The impact on the financial performance of the Group for FY2020 is a consequence of the challenges caused by the pandemic, which are outside our control. The Board is pleased with the continued outperformance of the Group's Corporate Energy Assurance Service lines and is confident that Energy Optimisation Services will regain strong momentum once restrictions on movement are lifted. The Group remained cash generative and has a strong balance sheet as we look to continue to execute on our successful acquisition strategy. The Board remains confident there is a strong and growing demand for optimisation services as ESG becomes a higher priority for Corporates."
Following the disposal of the SME Division in December 2020, the Group now represents a pure play technology enabled service provision for energy advisory and sustainability services to Corporate Consumers in UK and Ireland with the goal of assisting its clients to deliver their Net Zero Carbon and ESG objectives
In November 2020, Inspired Energy was delighted to receive the London Stock Exchange Green Economy Mark, recognising the Group's environmental and strategic advice, service and support to customers and the impact the business has on the green economy.
The Group has evolved from solely providing assurance services to help Corporate Consumers manage their energy procurement, energy accounting and statutory reporting processes (Energy Assurance Services) into a leading designer of solutions that allow Corporate Consumers to reduce their energy consumption through the provision of optimisation services (Energy Optimisation Services). The cheapest unit of energy is the one you don't consume; it also happens to be the cleanest.
Today, Inspired Energy is emerging as a leading provider of ESG disclosure services which takes our understanding of managing large data sets relating to environmental and social issues and supporting clients in making disclosures under a number of reporting taxonomies.
Notice of Final Results
Inspired Energy expects to announce its full year results for the year ended 31 December 2020 on 31 March 2021.