Inspired Regulatory News (INSE)

28 August 2012

Inspired Energy plc

("Inspired" or the "Group")

Consolidated Interim Financial Statements for the six months ended 30 June 2012

Inspired Energy plc (AIM: INSE), a leading UK energy procurement consultant to UK corporates, announces its consolidated, interim results for the six month period ended 30 June 2012.

Operational and Financial Highlights

§ Financial performance in line with management expectations

§ Revenue in the six months to 30 June 2012 was £2.1m (six months to 30 June 2011: £1.5m)

§ Earnings before fees associated with acquisition/listing, depreciation and amortisation for the period was £1.1m (six months to 30 June 2011: £0.9m)

§ Acquisition of Direct Energy Purchasing Limited ("DEP") performing in line with expectations

§ Record six months of order book sales of £2.9m (six months to 30 June 2011: £1.9m), an increase of 53%*

§ Inspired order book of £5.5m as at 30 June 2012 (30 June 2011: £4.0m) increasing 38% *

§ Total order book, including secured contract values of DEP clients, of £7.9m as at 30 June 2012

§ Accelerated and completed planned staff expansion with several high quality hires

§ Secured additional exclusive contracts with chosen energy suppliers through to 2015

§ Successful implementation of new IT systems across majority of business processes

* Inspired Energy Solutions only; stated prior to impact of DEP, following acquisition

Commenting on the results, Janet Thornton, Managing Director of Inspired said:

"The business has made extremely good progress this year and delivered record results in the first half year, notwithstanding the increased investment in key staff within the period.

"DEP, which we acquired in mid-April, is performing well and we have already completed the integration of the IT and financial reporting onto a single Group-wide platform with further synergies to be achieved.

"We have continued to build on the strong sales performance into the second half with a record forward order book and are well placed for the current year and into 2013 to continue to build revenue streams from existing clients and new service lines. In line with our strategy we will continue to invest in our systems and our people to improve efficiency and our broader service offering to our customers."

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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 2012. This period represents an exciting period of development for the Group and the results show a robust, profitable business, well positioned for continued growth in H2 2012 and beyond.

The Group has performed well, delivering results in line with management expectations. The team delivered a record six months of order book sales of £2.9m (2011: £1.9m), increasing the order book by 38% to £5.5m as at 30 June 2012 (2011: £4.0m). In this period we won a number of high profile clients, including Morning Foods, Associated British Ports, Emcor, Halcrow Group, Northern Rock and Bradford and Bingley in addition to continuing the high level of client retention in excess of 70%.

In addition to our unique relationship with certain energy providers, we have secured additional exclusive contracts with chosen energy suppliers through to 2015, allowing us to continue to offer unique, innovative products with increased flexibility or price certainty to our customer base. We have also recently secured additional, ring-fenced flexible trading products for our multi-site, non half-hourly metered clients. The introduction of such products, bringing flexibility to the non-half-hourly market is unique to the Group and will bring particular benefit to the customers of DEP, further emphasising the benefits of the integration of Inspired and DEP.

The team has worked hard and the number of live contracts managed by Inspired, excluding the additional contracts managed by DEP, has increased by 13% to 890 as at 30 June 2012 (30 June 2011: 785). In addition, we have seen an increase in the average client value as we continue to attract larger, higher value clients to our flexible and risk-managed products. As a result of the growth in the business, we accelerated and completed the planned staff expansion with several high calibre hires with a proven track record and significant industry experience, building on our technical expertise and enhancing our organic growth prospects.

Looking at our infrastructure, we completed the implementation of new IT systems across the majority of our business processes, which has enabled us to efficiently integrate the recently acquired DEP, a UK energy procurement adviser to predominantly multi-site corporates, which is performing well and in line with management expectations.

We are delighted with our performance in the first half of 2012, one which we could not have achieved without the hard work of our team and of course without the continued support of our loyal customers who we strive to deliver the best advice and results for. We are well set to enter H2 of 2012 with confidence.

Bob Holt

Chairman

28 August 2012

Managing Director's Statement

Inspired Energy Solutions Limited ("IES") Trading Review

The positive trading of the core business and the opportunities presented following Inspired's admission to AIM, has enabled IES to accelerate our planned growth through the recruitment of several high calibre individuals who bring with them exceptional market knowledge and experience, complementing the exceptional skill set of the core team already in place. We have strengthened the trading team, introduced a field sales team and expanded our ability to offer additional services to both new and existing customers.

The performance of the new recruits, allied to the continued excellence of the existing team, has led to exceptional growth of order book sales of 53% against the same period in 2011 and the development of several new revenue streams such as Power Purchase Agreements, Climate Change Agreements and through Project 'Open Market' (all of which are described below). However, due to the delay between sales and contract commencement, which is on average in excess of 3 months, the full benefit of the increased sales levels has not yet been recognised in Inspired's revenue.

Despite the timing difference described above in terms of revenue recognition and the investment in the business through the expansion of our trading and analyst teams, which has seen salaries and commissions in the six months to June 2012 increase to c.£0.9m (six months to 30 June 2011: c.£0.4m), the contribution for the six months ended 30 June 2012 for IES is in line with management expectations and represents a strong performance in the period.

DEP Acquisition and Trading Review

On 16 April 2012, the Group acquired DEP, an energy procurement consultant with a niche focus on healthcare and multi-site corporates, and the interim results reflect the contribution of DEP from that date.

We are pleased to report that DEP has performed in line with management expectations and has won several new, high value corporate clients while maintaining a high level of retentions. The integration of the business is progressing as planned and the two businesses are working positively alongside each other on a number of high profile clients, with IES providing trading expertise and DEP providing bureau and account management services.

As at 31 December 2011, the secured order book of DEP was £1.7m; this had grown to c. £2.4m as at 30 June 2012. In addition, the IES telesales team are beginning to provide new sales leads to DEP, which should result in further growth in DEP's client base. A full six month's contribution to the Group from DEP will be seen in H2 of 2012.

Group Operational Review

The first half of 2012 has been a very positive period for the business, one in which management have accelerated the planned growth of the key trading, analyst and field sales teams within IES; added several new products and revenue streams to our Group portfolio; invested further in our Group IT platform with demonstrable results; and acquired DEP.

New product lines/revenue streams

Following the recruitment of Nick Campbell and Andrew Stubbs, the Group has been increasingly focused on new product development and excellent progress has been made to date. We have commenced the development of several new capabilities in-house and also begun to engage with a number of strategic partners. Examples of our new or enhanced service lines include:

·; Climate Change Agreements: Inspired are now able to assist clients with their legislative compliance burdens and in maintaining their discounts from the climate change levy and mitigating costs of the Carbon Reduction Commitment energy efficiency scheme;

·; Power Purchase Agreements (PPAs): Inspired has placed its first PPA for a 500 kW wind turbine and registration for subsidies is ongoing. Inspired also has the ability to trade green energy certificates on behalf of generators to create additional value to generators of renewable energy;

·; Historical Audits: Inspired has enhanced its historical audit capacity through investment in people and systems. This has led to a number of our larger customers taking up the offer of an historical audit and the results to date have been positive; and

·; Project 'Open Market': Inspired is piloting a scheme to take advantage of an opportunity it has identified to procure energy for clients at market leading prices based on the relatively illiquid UK wholesale energy market. The scheme is being trialled with some of the Group's larger risk managed clients and in partnership with a supportive supplier on a share of savings basis. The product and trading does not expose either the client or Inspired to additional risk and Group believes that it will greatly enhance its exposure to end-user markets in the UK.

In addition to the above, Inspired is progressing with a proposal for the risk management part of the business to become FSA registered. This will enhance Inspired's offering to very high volume clients, who, in some cases, see this as a pre-requisite to contracting with a third party intermediary.

IT Investment

In order to continue to operate a lean, efficient service for Inspired's clients and streamline its processes, the Group has continued to invest in bespoke IT platforms to drive increased productivity from our telesales and analyst teams and to increase reporting accuracy and flexibility for our clients. During the first half of 2012, we have brought on-line an updated telesales CRM and call monitoring system. On a monthly basis this has, nearly doubled the number of live, qualified, new business opportunities compared to the corresponding period in 2011 and we are now beginning to see results from the expansion of the telesales operation into DEP.

In addition, we have introduced a Group-wide bill validation and bureau system which will have a significant impact on the efficiency of client reporting and bureau service we offer to our clients. Significant progress has also been made on the specification and build of the next phase of the Group's IT strategy which will create a fully integrated, end to end platform for the entire life cycle of our client's procurement and trading strategies. Whilst the core of our business is the skills and knowledge of our excellent teams, the planned phase 2 of the IT project will reduce, where possible, human repetition and should provide a more robust, operationally efficient platform on which to continue our rapid growth.

Financial Review

Revenue in the six months to 30 June 2012 was £2.1m (six months to 30 June 2011: £1.5m). Operating profit for the period was £0.7m (six months to 30 June 2011: £0.9m). Earnings before fees associated with acquisition/listing, deemed cost of listing, depreciation and amortisation for the period were £1.1m (six months to 30 June 2011: £0.9m). Basic earnings per share for the period were 0.09 pence (2011: 0.22 pence). Adjusted basic earnings per share (excluding the fees associated with acquisition and amortisation of intangible assets acquired) was 0.19 pence (six months to 30 June 2011: 0.22 pence).

Administrative expenses (excluding fees associated with acquisition/listing and amortisation of intangibles) in the financial period were £1.0m (six months to 30 June 2011: £0.5m). Finance expenditure for the period was £0.1m (six months to 30 June 2011: income £0.0m).

Profit before income tax for the period was £0.5m (six months to 30 June 2011: £0.9m).

Cash used by operations during the period was £0.1m (cash generated from operations in six months to 30 June 2011: £0.9m). Cash generated from operations before exceptional items was £0.5m (six months to 30 June 2011: £1.0m)

Group cash balances as at 30 June 2012 amounted to £0.9m, with a net debt position of £2.2m (30 June 2011: net funds £1.03m).

Effect of Acquisition Accounting Treatment in respect of DEP

The acquisition of DEP was completed for a total consideration of up to £4.35 million. The initial £2.35 million payment which was satisfied by cash of £1.60 million and the issue of 21,428,572 ordinary shares in the capital of Inspired, which included an excess cash payment of £0.35m. In addition, two deferred payments of up to £1.0 million each contingent on the financial performance of DEP in the years to 31 March 2013 and 31 March 2014 are also payable. The acquisition was part financed by a £1.0 million equity placing, completed 5 April 2012, by the Group and partly from cash on the Group's balance sheet.

A provisional fair value exercise to determine the fair value of assets and liabilities acquired in relation to DEP has been carried out and is detailed in note 4.

The fair value of the customer contracts includes only values ascribed to valid energy supply contracts and letters of authority granting DEP exclusivity to negotiate future energy supply contracts. No value was ascribed to the customer relationships themselves, or any likely renewals of contracts outside of a period of exclusivity.

As at 30 June 2012, the Board have amortised the customer contracts in line with the expected value to the Group, charging amortisation of £0.2m to the Group income statement in the period. Goodwill has not been impaired as at 30 June 2012 as the Board believe that the value is fairly stated.

Outlook

Considerable progress has been achieved in the period, as demonstrated by our order book and record levels of order book sales. The acquisition of DEP is performing to plan and we continue to invest in our systems and processes to further improve efficiency. We start the second half of the year with confidence and with the financial benefit of our strong sales performance in H1 2012 beginning to flow. We look forward to building on this success in the second half of 2012 and into 2013 with confidence.

Janet Thornton

Managing Director

28 August 2012

Group Income Statement for the six months ended 30 June 2012

The profit/(loss) 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 2012

Group Statement of Cash Flows for the six months ended 30 June 2012

Group Statement of Changes in Equity for the six months ended 30 June 2012

1. Accounting Policies

Nature of Operations and General Information

Inspired Energy plc ("the Company") and its subsidiaries (together "The Group") provide consultancy and brokerage energy services to UK SMEs and corporates, in order that clients purchase energy efficiently and ensure that their energy bills are accurate.

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 2012. 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 six months ended 31 December 2011.

The financial information set out in these 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 2011 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 2011. Those financial statements have received an unqualified report from the auditors and have been delivered to the Registrar of Companies. The 2011 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 2012 have not been audited or reviewed in accordance with International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

The financial information for the six months ended 30 June 2011 has been prepared from the monthly management accounts supporting the audited financial statements for the year ended 30 June 2011.

The Consolidated Interim Financial Statements have been approved by the Board of Directors on 28 August 2012.

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 2014 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

The Group's Board of Directors is considered to be the Chief Operating Decision Maker (CODM) and the Board of Directors review the business based on the nature of the service provided. There is only one service sold being the supply of energy procurement advice, within the United Kingdom. The financial information provided to the CODM is under the same measurement basis as the group financial statements. Consequently, management have identified one segment, energy procurement advice, and so no further segmental information is required.

3. Earnings/(loss) Per Share

The earnings/(loss) per share is based on the net profit/(loss) 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 ordinary shares for the period ended 30 June 2012 assumes that the 50,000,000 ordinary shares issued, cumulatively, in relation to the £1.0m placing completed on 5 April 2012 and the consideration shares issued on 16 April 2012 have been included since their respective issue dates.

The weighted average number of shares in issue for the adjusted diluted earnings per share include the dilutive effect of the 18,592,970 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 and amortisation of intangible assets which have been expensed to the income statement in the period.

 Business Combination

On 16 April 2012, the Group acquired 100% of the issued share capital and voting rights of Direct Energy Purchasing Limited, a company based in the United Kingdom. The details of the business combination are as follows:

Consideration Transferred

Acquisition related costs amounting to £187,504 are not included as part of consideration transferred and have been recognised as an expense in the consolidated income statement, as part of administrative expenses.

Identifiable Net Assets

The fair values of the identifiable intangible assets has been determined provisionally at 30 June 2012, because the acquisition was completed late in the period. The Group is currently obtaining the information necessary to finalise its valuation.

The fair value of the customer contracts includes only values ascribed to valid energy supply contracts and letters of authority granting DEP exclusivity to negotiate future energy supply contracts. No value was ascribed to the customer relationships themselves, or any likely renewals of contracts outside of a period of exclusivity.

4. Post Balance Sheet Events

There are no significant events occurring post the balance sheet date of 30 June 2012.

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