Inspired Regulatory News (INSE)

28 August 2014

Inspired Energy plc

("Inspired" or the "Group")

Half Year Results for the six months ended 30 June 2014

Inspired Energy plc (AIM: INSE), a leading UK energy procurement consultant to UK corporates, announces its consolidated, unaudited, half year results for the six month period ended 30 June 2014.

Financial highlights

§ Revenue in the six months to 30 June 2014 increased 41% to £5.0m (H1 2013: £3.5m)

§ Adjusted EBITDA* for the period increased 20% to £1.9m (H1 2013: £1.6m)

§ Adjusted EPS increase of 35% to 0.35 pence per share (H1 2013: 0.26)

§ Record six months of Corporate order book sales of £4.8m (H1 2013: £4.0m), an increase of 20%

§ Corporate order book of £12.5m as at 30 June 2014 (H1 2013: £9.9m), an increase of £2.6m

§ SME revenue of £1.6m for the six months to 30 June 2014 (H1 2013: £0.4m)

§ Interim dividend of 0.07 pence declared (H1 2013: £0.05 pence)

§ Cashflow from operations of £0.9m (H1 2013: £1.9m), due to investment in the SME division and uptake of the Multi-Customer Management product which operates on differing payment terms

Operational highlights

§ Corporate division continued to perform strongly as the Group consolidates its position as a market leader

§ SME division has continued to grow rapidly with further investment in the team undertaken in the period to drive ongoing growth. The team now in place is sufficient to achieve short and medium term growth targets without significant additional headcount

§ Successful relocation of the DEP business to the Kirkham office

§ Successful integration of small SME acquisitions, Simply Business Energy and KWH Consulting

§ Central functions have been rationalised to allow for further growth without the requirement for additional recruitment at Group level

Commenting on the results, Janet Thornton, Managing Director of Inspired, said: "I am pleased by the strong performance the Group has delivered in the period. The Corporate division continues to go from strength to strength and has performed exceptionally well, as demonstrated by the continued growth of its profitability, Order Book and reputation within the market. The SME division has performed in line with our expectations, allowing us to further invest in the team and the infrastructure of the business. The benefit of this investment will be seen in the second half of this year and beyond.

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."

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

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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 2014. The Group has made strong progress, both financially and operationally, delivering results in line with management expectations.

The Corporate team delivered a record six months of Order Book Sales of £4.8m (2013: £4.0m), increasing the Corporate order book to £12.5m as at 30 June 2014 from £11.0m as at 31 December 2013. In addition to winning significant levels of new business, the team has maintained the high level of client retention across the division in excess of 80 per cent. and maintaining a 100 per cent. client retention rate in our more complex Risk Management division.

The SME division has performed strongly, and as a result, we have been able to accelerate our planned investment in staffing. We have grown the telesales numbers from 30 to 47 people and have installed a compliance and admin team of ten to manage the growth of the business. The benefit of the increased cost base will be seen in the second half of 2014 and into 2015.

In the period we have committed cash resources to future growth including: expansion and investment in the SME division; the addition of new suppliers to the SME division who work on different payment terms; expansion of office facilities in Kirkham; and an increased uptake of the Multi-Customer Management ("MCM") product. In 2013 the Group introduced the innovative MCM product and this has experienced strong growth sales since inception and a large number of contracts, sold previously, have commenced in the period. The underlying supplier to the product operates on a quarterly in arrears basis, resulting in a one-off working capital outflow within the Corporate division. In relation to the new suppliers in the SME division, we are working hard with them to ensure that we are able to closer match our cashflow with revenue going forward.

We remain committed to our stated strategy of organic growth complemented by earnings enhancing acquisitions. We believe that the Group has an excellent platform onto which we can bolt complementary acquisitions benefiting from a greater depth of products or a wider range of potential customers.

We are pleased with our performance in the first half of 2014, 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 2014 with confidence.

Bob Holt

Chairman

28 August 2014

Managing Director's Statement

Inspired Corporate

Inspired Energy's corporate division, comprising Inspired Energy Solutions ("IES") and Direct Energy Purchasing ("DEP"), has performed strongly during the first half of 2014, consolidating our position as one of the larger players in the corporate energy consultancy market.

Significant achievements during the period include:

Record Order Book Sales for the period

Order book sales increased by 20 per cent to £4.8m (H1 2013: £4.0m). This is despite the period to 30 June 2013 being, itself, a record period for the division. The growth in Order Book Sales has, in turn, increased the Order Book to £12.5m as at 30 June 2014.

This strong performance represents a continuation of the strong growth in the Corporate division over the last 24 months and is expected to continue into the second half of the year. The IT systems, implemented in FY13, continue to allow for operational efficiencies and the products introduced by the Group have been well received by customers.

Contracted revenues now extend into 2017 which provides good earnings visibility and an extremely strong platform from which to continue to grow organically.

Multi-Customer Management ("MCM")

During 2013, the Risk Management team launched the MCM product to corporate clients. This has been exceptionally well received by the market and the business now has over 40 clients signed up to the product, with a contracted volume of 1.3 tWh being managed by the trading team.

The product's framework has been secured out to 2020 and provides customers with complete purchasing strategy flexibility, within a large group buying framework and benefits from considerable economies of scale for the underlying customer through reduced supplier charges and costs. Clients include:

· Muller Wiseman Dairies

· Brenntag

· Pittards Plc

· Newcastle United FC

· Oxford Instruments Plc

· Freemans Grattan

Within the product, all clients have their own individual trading strategy but benefit from significantly reduced supplier administration fees and an annual rebate gained from portfolio efficiencies. It is estimated that, in aggregate, clients of Inspired have achieved annualised benefits of approximately £500,000 on their energy spend from these items alone. Further to supplier savings the Risk Management team, including several FCA accredited traders, has successfully managed the procurement strategy to achieve further benefits from actively trading the portfolio demand in the wholesale market. The strategy includes both buying and selling the commodity to improve the weighted average for each client. To date, the team has a 100% record of selling and rebuying at an improved rate for each client.

Inspired SME - EnergiSave

The Group launched EnergiSave, which is focused solely on SME and micro-businesses, in late 2012 in order to provide energy consultancy services to SMEs in the UK. The service offering is less complex than that provided to the larger corporate customers within the Corporate division and is driven mainly by price, duration of contract and the accompanying terms and conditions, which are better suited to this type of customer. Customers benefit as the Group is able to make significant cost savings for customers as a result of the significant buying power and negotiation of terms with energy suppliers and through advising customers on penal terms and conditions included within several standard tariffs.

The division has grown rapidly since its launch and it has, during the period, introduced an expanded product range from a wider range of suppliers. The cashflow dynamics of a number of the new products provided by new energy suppliers are currently not as closely matched to revenue as the original suppliers to the division. As a consequence, this has caused the cashflow of the business to be reduced within the period. Management is working hard with the suppliers to ensure that we are able to closer match our cashflow with revenue going forward, based on the growing scale and presence of the division in the SME market.

The Group has also invested heavily in staffing, increasing the telesales headcount from 30 at the start of the year to 47 as at 30 June 2014. Furthermore, as the level of sales continued to grow strongly, the business has required significant additional admin and compliance staff to support the ongoing rapid growth. This has resulted in the number of admin and compliance staff increasing from 2 to 10 during the period. Whilst the time from sales staff commencement to profitability is shorter within the SME division in comparison to the Corporate division, the rapid growth in sales and administrative staff has reduced profitability in the period and also caused an element of cash outflow. It is anticipated that this will reverse in future periods as the headcount stabilizes and the new staff mature into profitability.

In the period, the Group also acquired two formative businesses in the SME space. Both Simply Business Energy and KWH Consulting have performed in line with expectations and the management team acquired has proven invaluable in the management of rapid growth within the division. Simply Business Energy's online platform and KWH's bespoke CRM system and product set have been rolled out throughout the division, adding to the scalability and efficiency of the division.

Following the period of investment, the SME division now has sufficient staff to be able to deliver continued strong short and medium term revenue growth without the need for significant additional investment in headcount. Notwithstanding this investment in people, the business is performing in line with management expectations and it is anticipated that the division will deliver stronger cashflow in the second half of the year and into 2015.

In addition to the investment in the SME division, the Group has also made one-off investment into capital expenditure items to allow for the ongoing growth and development of the business. Investments include the expansion and refurbishment of the head office facilities in Kirkham and an investment in the Group's websites and branding.

Financial Review

· Revenue in the six months to 30 June 2014 was £5.0m (H1 2013: £3.5m).

· Operating profit for the period was £1.2m (H1 2013: £0.7m)

· Earnings before interest, taxation, depreciation, amortisation, exceptional costs and costs associated with share based payments for the period were £1.9m (H1 2013: £1.6m)

· Basic earnings per share for the period was 0.20 pence (H1 2012: 0.12 pence)

· Adjusted basic earnings per share (excluding exceptional items, share based payments costs and amortisation of intangible assets acquired) was 0.35 pence (H1 2012: 0.26 pence)

· Administrative expenses (excluding fees associated with acquisition/listing and amortisation of intangibles) in the financial period were £2.1m (H1 2013: £1.5m)

· Finance expenditure for the period was £0.1m (H1 2013: £0.1m)

· Profit before income tax for the period was £1.2m (H1 2013: £0.8m)

· Net cashflows from operating activities during the period was £0.7m (H1 2013: £1.5m)

· Cash generated from operations was £0.9m (H1 2013: £1.9m)

· Group cash balances as at 30 June 2014 amounted to £1.3m (30 June 2013: £2.9m) with a net debt position of £2.9m (H1 2012: £0.5m).

· The Group declared an final dividend of 0.12p per share in respect of the financial year to 31 December 2013 and is pleased to announce its intention to pay an interim dividend of 0.07p in respect of the 6 months ended 30 June 2014 (H1 2013: 0.05p).

· The ex-dividend date is 3 September 2014 with a record date of 5 September 2014. The dividend will be paid to shareholders on 3 November 2014.

Outlook

The Group continues to perform very strongly across both divisions which is particularly pleasing during a period of expansion in which we have consolidated the operational base of the business and considerably expanded headcount.

The Corporate division continues to go from strength to strength, with growing profitability and order book sales providing excellent momentum for the Group into the second half and into 2015 as we continue to deliver innovation to our growing customer base.

We have been delighted with the progress made by our SME business which we believe will continue to grow rapidly and benefit from the investment made to date which has provided an operational base for the business to move on to its next stage of profitable growth.

We have started the second half well and are in a strong position to deliver further growth for the full year. The Corporate Order Book has increased by a further £0.5m in the period from 30 June 2014 to 27 August 2014, taking the Order Book to £13.0m. The SME division has also continued to perform strongly. We look forward to the future with confidence.

Janet Thornton

Managing Director

28 August 2014

Group Income Statement for the six months ended 30 June 2014

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 2014

Group Statement of Cash Flows for the six months ended 30 June 2014

Group Statement of Changes in Equity for the six months ended 30 June 2014

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 2013. 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 2012.

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 2012 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 2012. Those financial statements have received an unqualified report from the auditors and have been delivered to the Registrar of Companies. The 2012 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 2013 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 2013.

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

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 6 months to 30 June 2014 were determined on the basis of the reporting presented at regular board meetings of the group. The segments comprise:

The corporate division ("corporate")

The sector comprises the operations of Inspired Energy Solutions Limited and Direct Energy Purchasing. The corporate's core services are primarily in the review, analysis and negotiation of gas and electricity contracts on behalf of corporate clients. 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

The sector comprises the operations of the Energisave Online Limited operating subsidiary. Within the SME division, the group's energy consultants contact perspective 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 ordinary shares for the period ended 30 June 2013 assumes that the 1,859,297 ordinary shares issued in respect of the exercise of share options on 26 March 2013 have been included since the issue date.

The weighted average number of shares in issue for the adjusted diluted earnings per share include the dilutive effect of the 19,897,367 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

There were no significant post balance sheet events to report.

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.inspiredenergy.co.uk.

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