Inspired Regulatory News (INSE)

19 August 2015

Inspired Energy plc

("Inspired" or the "Group")

Half Year Results for the six months ended 30 June 2015

Continued strong performance across both Corporate and SME divisions 

Inspired Energy plc (AIM: INSE), a leading energy procurement consultant to UK corporates and SMEs, announces its consolidated unaudited half year results for the six month period ended 30 June 2015.

Financial highlights

· Revenue increased 32% to £6.5m (H1 2014: £5m)

· Adjusted EBITDA* increased 28% to £2.5m (H1 2014: £1.9m)

· Profit before tax increased 50% to £1.8m (H1 2014: £1.2m)

· Adjusted EPS increase of 29% to 0.45 pence per share (H1 2014: 0.35 pence)

· Cashflow from operations increased 111% to £1.9m (H1 2014: £0.9m)

· Cash conversion ratio of 78% (H1 2014: 45%), highlighting the strong cash generation throughout the Group, including the maturing SME division

· Net Debt reduced to £2.3m (31 December 2014: £3.1m)

· Record six months of Corporate order book sales of £5.5m (H1 2014: £4.8m), an increase of 15%

· Corporate order book increased by 21.6% to £15.2m (H1 2014: £12.5m)

· SME revenue increased 31% to £2.1m (H1 2014: £1.6m), achieved with no staff increases during the period

· Interim dividend of 0.10 pence declared (H1 2014: 0.07 pence), an increase of 43%

* Earnings before interest, taxation, depreciation, amortisation, exceptional costs and share based payments

Operational highlights

· Continued strengthening of existing Corporate team, adding key employees to broaden market knowledge and sector specialism

· SME division has grown strongly in the first half, realising the value of a maturing team, following the investment in staff in FY14 in addition to further system development and refinement

· Post half year end completed earnings enhancing acquisition of Wholesale Power UK Limited ("WPUK") on 31 July 2015, taking the Corporate order book at completion to in excess of £20.0m. The acquisition consolidates the Corporate division as a market leader to UK Corporates in the energy sector, enhances its service offering and offers an entry point into new industry sectors including leisure and logistics

Commenting on the results, Janet Thornton, CEO of Inspired, said: "I am delighted with the Group's achievements in the first half of the year which enable us to deliver another set of record results. The results are a testament to the commitment of the Inspired team. The Group continues to deliver strong organic growth and the acquisition of WPUK in July broadens our service capability for our Corporate customers and provides entry into new industry sectors, further underpinning the Corporate division's position as a market leader. Following the acquisition, the Corporate Order Book exceeds £20.0 million, which provides great visibility of earnings going forward and allows us to look forward with confidence.

"The strong cash generation of the Group in the first half of 2015 is particularly pleasing as it demonstrates both the continuing cash generative nature of the Corporate business model and also that the increase in cash generation of the SME division has been delivered as forecast following the investment made by the Group in 2014.

"We have started the second half well and are in a strong position to deliver further growth for the full year and look forward to the future with confidence."

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Chairman's Statement

I am pleased to present the Group's unaudited interim results for the six months ended 30 June 2015, in which the Group continues to make excellent progress, both financially and operationally, delivering results in line with management expectations. The core Corporate division delivered another record set of results in the six months to 30 June 2015. Order Book Sales were £5.5m (2014: £4.8m) which represents an increase of 14.6 per cent for the period. Accordingly, the Corporate Order Book increased to £15.2m as at 30 June 2015 from £14.0m as at 31 December 2014. The growth has been achieved through strong new client wins and continued high client retention rates.

The Board is also delighted to have completed the acquisition of Wholesale Power UK Limited ("WPUK") in July, which we expect to be earnings enhancing in the first year. The team look forward to working closely with the highly experienced WPUK team and welcoming them into our Corporate division. The acquisition takes our Corporate Order Book to in excess of £20.0m (pre-acquisition: £15.6m) and we believe the continued growth of the Order Book demonstrates Inspired's position as a market leader to UK corporates in the energy consultancy market.

The SME division has continued to deliver revenue and profitability growth, while contributing material operating cash for the Group with an EBITDA to operating cash conversion rate of 67%. The growth in the division has been achieved through the maturing of our team and the enhancement of our systems. The division has seen no additional headcount in H1 2015.

The strong cash performance of the Group in the period highlights the benefits of the investments made throughout the Group in 2014 and the cash generative nature of our business model. We expect cash conversion to remain strong throughout 2015.

As demonstrated by the acquisition of WPUK, we remain committed to our stated strategy of organic growth complemented by earnings enhancing acquisitions. We believe the Group has an excellent platform onto which we can add additional complementary acquisitions, which when integrated will benefit the Group with an enhanced service capability, sector specialism and geographical spread.

We are delighted with our performance in the first half of 2015 and we enter H2 2015 with confidence.

Bob Holt

Chairman

19 August 2015

CEO Statement

Inspired Corporate

Inspired Energy's Corporate division, comprising Inspired Energy Solutions ("IES"), Direct Energy Purchasing ("DEP") and newly acquired Wholesale Power UK ("WPUK"), delivers core services which are the review, analysis and negotiation of gas and electricity contracts. The division now services a wide-range of UK Corporates across a range of sectors including manufacturing, healthcare, leisure, retail and logistics.

The division has delivered record performance during the first half of 2015, with record revenue, profits and order book sales. Significant wins in the period included Lhoist Northern Europe, Sheffield Forgemasters, United Learning and LF Europe. The Risk Management team continues to go from strength to strength and has maintained its 100% client retention rate from inception.

In the period:

· Revenue increased 29% to £4.3m (2014: 3.3m)

· Order Book increased 9% to £15.2m from £14.0 million at 31 December 2014

· Order book sales increased 15% to £5.5m (H1 2014: £4.8m)

· High customer retention rates maintained, 85% across the Corporate Division (100% in Risk Managed), whilst delivering strong new customer win performance.

Acquisitions

As we continue to grow the Corporate division we have evaluated several acquisition opportunities, focussing on businesses which would complement our existing Corporate division. We are delighted to have concluded the acquisition of WPUK, which increases the breadth of our target customer base, further enhances our sector specialism and expends our service offering for our Corporate customers. The Board continues to evaluate several interesting opportunities as part of the Group's ongoing acquisition strategy to add strategic growth and scale to the Corporate division.

Record Order Book Sales for the period

Order book sales increased by 15% to £5.5 m (H1 2014: £4.8m). The growth in Order Book Sales has, in turn, increased the Order Book to £15.2m as at 30 June 2015.

The 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 Order Book only relates to the Corporate division, and does not include any SME revenue or contracts within it. The growth of the 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 because no revenue is recognised by Inspired's Corporate division until the energy is physically consumed by the client.

Contracted revenues now extend into 2019 which provides good earnings visibility and an extremely strong platform from which to continue to grow organically.

SME division

The Group's SME division includes EnergiSave Online Limited, KWH Consulting Limited and Simply Business Energy Limited.

The SME division has delivered growth in revenue and profitability and contributed material operating cash, as forecast, for the Group during H1 2015. Having invested in staff and new infrastructure last year, I am delighted to report that the growth in the division has been achieved without any additional staff being added in H1 2015 and is a result of the maturing sales team and implementation of improved systems and reporting. We envisage staff numbers will not significantly increase in the short term in this division as they are working efficiently and effectively in this new and growing sector for Inspired.

In the period:

· Revenue increased 31% to £2.1m (2014: 1.6m)

· EBITDA increased to £0.6m from £0.3m

· Headcount remained static at 45 (2014: 45)

· Added several new SME energy suppliers, with attractive payment terms which better match revenue with cash

Financial Review

The Group delivered revenue in the six months to 30 June 2015 of £6.5m, representing a 32% increase (H1 2014: £5m). The operating profit for the period was £1.9m (H1 2014: £1.2m) and earnings before interest, taxation, depreciation, amortisation, exceptional costs and costs associated with share based payments for the period were £2.5m (H1 2014: £1.9m). Profit before income tax for the period was £1.8m (H1 2014: £1.2m).

The basic earnings per share for the period was 0.32 pence (H1 2014: 0.20 pence) and the adjusted basic earnings per share (excluding exceptional items, share based payments costs and amortisation of intangible assets acquired) was 0.45 pence (H1 2014: 0.35 pence).

Administrative expenses (excluding fees associated with acquisition/listing and amortisation of intangibles) in the financial period were £3.0m (H1 2014: 2.6m) and finance expenditure for the period was £0.1m (H1 2014: £0.1m).

Net cashflows from operating activities during the period was £1.3m (H1 2014: £0.7m) and cash generated from operations was £1.9m (H1 2014: £0.9m). Group cash balances as at 30 June 2015 amounted to £1.2m (30 June 2014: £1.3m) with a net debt position of £2.3m (H1 2014: £2.9m).

Dividend

The Group declared a final dividend of 0.18p per share in respect of the financial year to 31 December 2014 and is pleased to announce its intention to pay an interim dividend of 0.10p in respect of the 6 months ended 30 June 2015 (H1 2014: 0.07p). This represents an increase of 42.8%.

The ex-dividend date is 3 September 2015 with a record date of 4 September 2015. The dividend will be paid to shareholders on 6 November 2015.

Outlook

Inspired has always strived to deliver the best service for its clients. Since inception this has been a core principle of the business and one which remains a priority as we continue to grow. The strategic acquisitions made to date have complemented our strong organic growth and the Group has continually delivered strong growth in revenue and profit. In the Corporate division we have increased our geographic coverage and our sector expertise and we have developed a fast growing, profitable SME division in little more than two years.

Inspired continues to go from strength to strength and we look forward to continuing to deliver record results throughout the Group in 2015. We are focussed on maintaining our strong organic growth and integrating the WPUK acquisition into the Group, as well as continuing to evaluate complementary, earnings enhancing strategic acquisitions.

Janet Thornton

Chief Executive Officer

19 August 2015

Group Income Statement for the six months ended 30 June 2015

The profit for the period per the income statement is also the total comprehensive income for the period and consequently no separate statement of comprehensive income is presented. All revenue and costs originate from continuing activities.

Group Statement of Financial Position at 30 June 2015

Group Statement of Cash Flows for the six months ended

30 June 2015

Group Statement of Changes in Equity for the six months ended 30 June 2015

1. Accounting Policies

Nature of Operations and General Information

Inspired Energy plc ("the Company") and its subsidiaries (together "The Group") provide energy purchasing and energy consultancy services to Corporate and SME energy users. Through optimising energy procurement strategies, Inspired enables clients to achieve greater certainty of cost efficiency in respect of their energy costs.

Inspired Energy plc is incorporated in England and Wales. The address of the registered office is 29 Progress Park, Orders Lane, Kirkham, Lancashire, PR4 2TZ. Inspired Energy plc's shares are listed on the AIM market of the London Stock Exchange.

Inspired Energy plc's consolidated interim financial statements are presented in pounds sterling, which is also the functional currency of the parent company.

Basis of Preparation

These consolidated, unaudited, interim financial statements are for the six months ended 30 June 2015. They have not been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2014.

The financial information set out in these unaudited, consolidated, interim financial statements does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The consolidated statement of financial position as at 31 December 2014 and the consolidated income statement, consolidated statement of cash flows, consolidated statement of changes in equity and associated notes for the year then ended have been extracted from the Group's Financial Statements as at 31 December 2014. Those financial statements have received an unqualified report from the auditors and have been delivered to the Registrar of Companies. The 2014 statutory accounts contained no statement under section 498(2) or section 498(3) of the Companies Act 2006.

The consolidated interim financial statements for the period ended 30 June 2015 have not been audited or reviewed in accordance with International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

The Consolidated Interim Financial Statements have been approved by the Board of Directors on 19 August 2015.

Going Concern

The Group, together with its ultimate parent company, has sufficient financial resources to continue to operate for the foreseeable future. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Group's forecasts, which have been prepared for the period to 31 December 2015 after taking account of 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 Company and 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.

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 2015 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 and Direct Energy Purchasing 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, KWH and 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. 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.

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.

The weighted average number of shares in issue for the adjusted diluted earnings per share include the dilutive effect of the 23,284,301 share options in issue to senior staff of Inspired Energy plc.

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.

4. Post Balance Sheet Events

On 31 July 2015, the Group completed the acquisition of Wholesale Power UK Limited. The consideration for the Acquisition comprises an initial consideration of £2.0 million, to be satisfied by a cash payment of £1.5 million and the issue of 4,640,372 new ordinary shares in the capital of Inspired Energy (the "Consideration Shares"). The Consideration Shares will be subject to a 12 month lock-in and orderly market provisions for a further 12 months from the date of issue.

A further contingent consideration of up to £0.75 million ("Deferred Consideration") may be payable, in cash, subject to the achievement of certain financial performance criteria for the financial years ending 31 October 2016 and 31 October 2017. The Deferred Consideration will be payable in three tranches of up to £0.25 million each, on the condition that the performance criteria has been delivered.

To fund the initial consideration, the Group completed a re-financing of its existing lending facility with Santander. As part of the refinancing, the existing facility, made available in March 2013 was re-set, resulting in £3.5m term loan (repayable quarterly over 5 years) and re-instating the RCF facility of £1.5m, available to be drawn as required by the Group. Furthermore, the Group extended the existing term loan by £1.5m to a total £5.0m term loan (repayable quarterly over 5 years).

Following the re-financing, the total facility of the Group stood at £6.5m, of which the £5.0m term loan was drawn.

5. 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.