Inspired Regulatory News (INSE)

31 January 2022

Inspired PLC

("Inspired" or the "Group")

Full Year Trading Update

Strong revenue growth driven by momentum in Energy Optimisation Services

Inspired (AIM: INSE), a leading technology enabled service provider supporting businesses in their drive to net zero, controlling energy costs and managing their response to climate change, is pleased to provide a trading update for the financial year ended 31 December 2021.

Robust Group trading performance

The Board is pleased to report that Inspired expects to announce revenue growth ahead of market consensus. This was driven by the Energy Optimisation division gaining momentum through the second half of the year, delivering a record revenue quarter for the division in Q4 2021. Adjusted EBITDA is expected to be in line with market consensus, with improvement in margin from H1 to H2 as the Energy Optimisation division activity levels increased.

· Group revenues are expected to be c.48% higher than 2020, achieving organic growth of c.38% (FY 2020: £46.1 million).

· Group Adjusted EBITDA* is expected to be c.55% ahead of 2020 (FY 2020: £12.8 million).

· Underlying cash generated from operations increased significantly in H2 2021 to c.£7.0m. Net debt at the year end is expected to be c.£32.7 million (H1 2021: £30.2 million).

· The acceleration in Energy Optimisation project delivery, in particular in Q4 2021, drove an increase in trade receivables into the year end. Management expects cash conversion ratios from FY2022 onwards to further improve, consistent with FY2020 levels, as the Energy Optimisation division's trading profile stabilises.

· Year-end Corporate Order Book stood at £67.5 million (2020: £63.0 million).

 * Adjusted EBITDA is earnings before interest, taxation, depreciation and amortisation, excluding exceptional non-recurring items and share-based payments.

Operational and acquisition highlights

· Name change to Inspired PLC, reflecting the transition of the business to a technology enabled, ESG service provider, supporting clients to manage their response to climate change and deliver net zero carbon.

· The Group is now structured across three divisions and four reporting segments, all underpinned by long term structural growth drivers:

- Inspired Energy - Energy Solutions (comprising two reporting segments, Energy Assurance Services and Energy Optimisation Services)

- Inspired Software - Software Solutions

- Inspired ESG - ESG Solutions

· Integration of the acquisitions of Businesswise Solutions Limited ("Businesswise") and General Energy Management Limited ("GEM") in March 2021 is progressing to plan, and both businesses are performing in line with management expectations further increasing Inspired's market share in Energy Assurance Services.

Current trading and positive outlook

2021 was a year of significant progress across the Group, with a strengthened platform capable of generating long term growth as the business' end markets continue to recover from the pandemic.

The global energy crisis has highlighted energy as a high priority board level topic. The Group continues to proactively respond to this, working tirelessly to support clients manage energy prices and reduce their energy consumption and carbon emissions during these unprecedented times.

Energy Assurance Services trading in the year remained in line with expectations as the Group continued to deliver on its strategy to broaden its customer base and significantly increase its units of opportunity with energy consumption levels increasingly recovering to pre pandemic levels.

Although Group revenues and profits are not directly impacted by changes in energy commodity prices, record high commodity prices are influencing the timing at which the Group's customers renew their contracts, including the duration of contract renewals; clearly this impacts the size of the Group's Order Book. Despite an absolute increase in the order book due to the contribution of the acquired order books, the impact of high energy prices has led to the underlying orderbook contracting during the year. Management observe this is a point of timing as to when customers will renew and the duration of those renewals, with customer retention remaining strong during the year.

The Group's Energy Optimisation Services division gained momentum throughout 2021, which further accelerated in H2 2021, following the lifting of Covid related restrictions which had impeded access to sites. The period delivered profits in line with expectations, with revenues generated above expectations. Lower margins during the first half of 2021 reflected the impact of restrictions on the trading performance of the division, with the benefits of the investment made into the division reaped during the second half of the year as activity levels increased, with the Group benefitting from the higher utilisation rates. Demand for energy optimisation services continues to increase, with strong underlying drivers, including high commodity prices and the drive to net zero.

The acceleration of Energy Optimisation project delivery into the latter part of the year drove an increase in trade receivables at the period end. At the time of the half-year results, the Group referenced an increase of £5.3m in trade receivables in that period, the majority of which related to delayed payments from a small number of significant optimisation customers, predominantly in the public sector. 70% of this balance has been received so far, and measures are in place to recover the remaining 30% during H1 2022.

Software Solutions and the recently launched ESG Solutions divisions continue to develop well. ESG Solutions generated revenues of c.£1.0 million in its first full year of operation, reflecting the growing market for these services. The increasing focus of investors and businesses on net zero carbon targets, combined with mandatory requirements for businesses to make ESG disclosures from 2022, provides a favourable backdrop to continue to invest in the strategy for the Inspired ESG division.

The strong growth of the Group's revenues, and adjusted EBITDA in the year, coupled with a strengthened platform capable of generating long-term growth, underpins the Board's confidence in achieving its financial goals, strengthened by the secular trend towards greater ESG focus and sustainable energy usage.

Commenting on the results, Mark Dickinson, CEO of Inspired, said: "With the changing landscape, we are delighted to report on a period of strong growth at Inspired, both financially and operationally. The performance in 2021 reflects the continuing recovery in energy consumption, alongside a return to on site access to client premises, accelerating the delivery and implementation of energy optimisation services.

"We are encouraged by the current execution of the business plan within the ESG Solutions division, which is gaining good traction and we expect further progress during 2022.

"The transition to Inspired PLC has enabled us to strengthen our market position as we help our clients respond to the Climate Emergency whilst controlling their costs. Looking ahead, the Board remains confident in achieving its objective of evolving into the leading provider of services to help businesses respond to climate change and meet their net zero targets."

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Notes to editors

Inspired PLC is a leading technology enabled service provider of energy advisory and sustainability services, supporting businesses in their drive to net zero, controlling energy costs and managing their response to climate change.

Founded in 2000, Inspired operates three divisions: Energy Solutions (Assurance and Optimisation), Software Solutions and ESG Solutions, providing expert energy advisory and sustainability services to over 3,400 businesses in the UK and Ireland who typically spend more than £100,000 on energy and water per year.

Inspired has been recognised with the London Stock Exchange's Green Economy market since 2020 for its environmental and strategic advice, service, and support to customers and is also ranked as the UK's leading advisor by the independent energy market intelligence consultancy, Cornwall Insight.