AI Terminal
Inspired PLC
Earnings Release • Sep 6, 2022
7712_ir_2022-09-06_65c84dfe-5121-420e-be79-e33b6f049af2.html
Earnings Release
Open in ViewerOpens in native device viewer
National Storage Mechanism | Additional information 
RNS Number : 3479Y
Inspired PLC
06 September 2022
6 September 2022
Inspired PLC
("Inspired" or the "Group")
Results for the six months ended 30 June 2022
Inspired (AIM: INSE), a leading technology enabled service provider supporting businesses in their drive to reduce energy consumption, deliver net-zero, control energy costs and manage their response to climate change, announces its consolidated, unaudited half year results for the six-month period ended 30 June 2022.
Financial Results
| H1 2022 | H1 2021 | % change | |
| Revenue | £40.45m | £32.62m | 24% |
| Gross profit | £26.81m | £24.09m | 11% |
| Adjusted EBITDA** | £9.67m | £8.82m | 10% |
| Adjusted profit before tax*** | £6.47m | £6.00m | 8% |
| Underlying cash generated from operations*** | £5.77m | £1.08m | 434% |
| Profit before tax | £2.43m | £0.94m | 159% |
| Adjusted Diluted EPS**** | 0.55p | 0.53p | 4% |
| Diluted Basic EPS | 0.18p | 0.07p | 157% |
| Net Debt | £42.94m | £30.17m | -42% |
| Interim dividend per share | 0.13p | 0.12p | 8% |
Highlights
· H1 performance was in line with Board expectations against an unprecedented backdrop in UK energy markets
· The Group delivered revenue growth on prior year of 24% in H1, with 3% growth organically in Energy Assurance and 49% organic growth in Energy Optimisation
· Adjusted EBITDA grew by £0.9m (10%) in H1, with Energy Assurance margins maintained; the mix of Energy Optimisation revenues resulted in Group EBITDA margin reducing to 24% (H1 2021: 27%)
· The Group order book remained consistent with levels seen at the end of 2021 being £67.5m at 30 June 2022. The order book is measured in terms of total contract value which, when energy prices are high can be reduced by the timing and duration of renewals of Energy Assurance services
· Underlying cash generation from operations of £5.8m represented a significant improvement over the prior year as operating cash generation moved back towards expected levels
· The increase in net debt in the period reflects the expected payment of £10.2m of contingent consideration in H1. The Group also paid £0.6m in initial consideration for the small bolt-on acquisitions completed in the period
· The interim dividend has been increased to 0.13p (H1 2021: 0.12p) reflecting the Board's continued confidence in the Group's prospects
Current trading and outlook
· The Group anticipates that current conditions will lead to increased volatility in the Energy Assurance market in the short term, albeit this is not expected to have a material net impact on H2 performance
· The over-arching necessity for energy efficiency initiatives should support continued strong demand for the value added by Energy Optimisation services in H2
· ESG services are expected to make further favourable progress in H2
· The Board remains confident in achieving its full year expectations noting it is also mindful of the unprecedented conditions in UK energy markets which are very challenging for the Group's customers
· The long-term opportunities in the Group's markets have been made even more apparent by the current energy crisis and the Board believes that Inspired's proven strategy will enable it to capitalise on these opportunities as market conditions stabilise
Commenting on the results, Mark Dickinson, CEO of Inspired, said: "We are pleased to have delivered solid financial and operational progress during H1. The elevated volatility in the energy market has made energy procurement challenging for customers, and our staff have gone above and beyond during this time to support them. We have been delighted by the momentum achieved in the Optimisation and ESG divisions, as these offerings become ever more relevant to our customers in the current climate.
"Whilst the economic backdrop continues to present risks, our solid first half performance, strong market position and unique ability to support customers across a wide offering, provide us with confidence for H2 and beyond."
Note
*Adjusted EBITDA is earnings before interest, taxation, depreciation, and amortisation, excluding exceptional items and share-based payments.
**Adjusted profit before tax is earnings before tax, amortisation of intangible assets (excluding internally generated amortisation related to computer software and customer databases), exceptional items, share-based payments, the change in fair value of contingent consideration and foreign exchange gains/(losses) (A reconciliation of Adjusted profit before tax to reported profit before tax can be found in note 3)
***Underlying cash generated from operations is cash generated from operations, as adjusted to remove the impact of restructuring costs and fees associated with acquisitions.
****Adjusted diluted earnings per share represents the diluted earnings per share, as adjusted to remove amortisation of intangible assets (excluding internally generated amortisation related to computer software and customer databases), exceptional items, share-based payments, the change in fair value of contingent consideration and foreign exchange gains/(losses).
For further information, please contact:
| Inspired PLC | www.inspiredplc.co.uk |
| Mark Dickinson, Chief Executive Officer | +44 (0) 1772 689 250 |
| Paul Connor, Chief Financial Officer | |
| David Cockshott, Chief Commercial Officer | |
| Shore Capital (Nomad and Joint Broker) | +44 (0) 20 7408 4090 |
| Patrick Castle James Thomas |
|
| Peel Hunt LLP (Joint Broker) Mike Bell Ed Allsopp |
+44 (0) 20 7418 8900 |
| Alma PR | +44 (0) 20 3405 0205 |
| Justine James Hannah Campbell Will Ellis Hancock |
+44 (0) 7525 324431 [email protected] |
Chairman's Statement
The continued progress made during the period is, of course, placed into context with the on-going global energy crisis, which has seen significant uncertainty across commodity and energy markets, driving record energy price inflation. Whilst this has created market volatility, it has further highlighted the importance of energy management as an essential Board level priority. The Group continues to take every opportunity to help customers mitigate the cost of energy and manage their energy consumption and carbon emissions during these extraordinary times.
The Board is pleased to report a period in which the Group has continued to deliver solid organic growth, in line with its expectations.
Acquisitions
During H1, the Group acquired two trading subsidiaries of Information Prophets Limited, in whom the Group previously held a strategic investment position. The businesses will enable Inspired to continue to strengthen its market leading position in software-enabled services.
Dividend
Since IPO in 2011, Inspired has established a track record of delivering profitable and cash-generative growth, which has facilitated a consistent and progressive dividend policy.
Accordingly, the Board is pleased to announce an interim dividend of 0.13 pence (H1 2021: 0.12 pence). The dividend aligns with the Board's stated policy of a dividend cover of at least 3x earnings, with the objective of delivering progressive dividend growth over time.
The interim dividend will be paid on 8 December 2022 to all shareholders on the register at close of business on 14 October 2022. The shares will be marked ex-dividend on 13 October 2022.
Staff
On behalf of the Board, I would like to thank our colleagues, who continue to work tirelessly to support our customers through the challenges of these unprecedented times. We continue to invest in our valued team and the business. The Group's priority remains to help customers mitigate the rising cost of energy, manage their energy consumption and continue to reduce carbon emissions.
Richard Logan
Chairman
5 September 2022
Chief Executive Officer's Statement
I am pleased to report on the Group's results for H1 2022, which are in line with the Board's expectations, despite the most challenging energy market conditions that anyone in the industry has experienced.
Volatility in the energy markets increased significantly during 2022. It has been a fast moving and difficult environment in which to operate, and we would, first and foremost, like to pay testament to our teams who have gone above and beyond to support their customers and the business.
Energy markets
As has been well documented in the press, the current energy markets are at unprecedented levels and the energy crisis continues to place pressure on energy suppliers.
We observe energy suppliers struggling to provide proposals to consumers, as they contend with exceptional market price volatility and declining access to credit insurance for the businesses they supply. We are cognisant that these challenges create both risks and opportunities: they have the potential to fundamentally change the operation of the Energy Assurance marketplace and further accelerate the demand for Energy Optimisation Services.
During this period of uncertainty, the Group has continued to work tirelessly to support customers in the face of such challenges. We are of course keeping market developments closely under review, to ensure that the business remains correctly structured to manage any change in market dynamics.
We are pleased to update that further to the Group's announcement of 21 March 2022, relating to the potential financial risks associated with its business relationship with Gazprom Marketing and Trading Retail Limited ("Gazprom"), the parent company of the Gazprom entities in the UK, Gazprom Germania, was taken into public ownership in the immediate term by the German government. As a result, the former UK Gazprom entity under the name SEFE Energy Limited is now operating independently from the Russian state, meaning that the potential risks highlighted in March have now diminished significantly.
Energy Assurance Division
As a result of current energy market conditions, we anticipate changes in customer procurement behaviour in the short term: both increased customer churn and increased new business opportunity. From our experience to date, we do not expect an adverse impact on overall trading of the Energy Assurance Division during FY22.
The primary risk posed by the current environment is that continued energy cost inflation could create a financial viability risk for some of the Group's corporate customers. Our prudent planning assumption is that this may impact organic growth rates in the next 18 months. We are keen to learn of the Government's plans to support our customers in meeting the severe challenges of utility inflation.
Energy Optimisation Services
The benefits of being able to serve a consumer's entire energy cost equation has been highlighted during these unprecedented times and further underlines the strength of the Group's strategy.
Current market prices have transformed the economics of investments in energy reduction for our customers. Combined with the drive for delivering net zero, the Energy Optimisation Services division represents a key opportunity to help UK corporate businesses navigate through the current energy market crisis: we are seeing record interest in optimisation opportunities.
Through the strengthening of the growth drivers, we expect a continuation in the change of Group's revenue mix, through outperformance in Energy Optimisation Services in FY23.
ESG Services
We continue to be delighted by the performance of the ESG Services division, which has developed cost effective market leading solutions for our customers. Whilst still early in its evolution, it continues to perform at the higher end of management's expectations.
The full set of TCFD and ESG disclosures for Inspired PLC can be found on our website:
https://inspiredplc.co.uk/wp-content/uploads/2022/08/Inspired-2021-TCFD-Report.pdf
https://inspiredplc.co.uk/wp-content/uploads/2022/08/Inspired_2021-ESG-Report-1.pdf
These were produced using the same processes we provide to our customers; these processes are increasingly recognised as market leading. Full ESG disclosures have been provided to 33 customers to date, ranging from FTSE 100 to smaller publicly listed and private companies. A range of further ESG services have been provided to 453 customers to date.
Software Solutions
The Software Solutions division continues to deliver on developing its suite of solutions that underpin the delivery of the Group's technology enabled services.
The Unify platform is used to provide valuable data-led services to a growing number of energy advisors, or Third-Party Intermediaries ("TPIs"). In the first half of 2022, the number of TPIs that subscribed to the Unify platform increased from 58 to 64, generating healthy recurring SaaS revenue.
M&A strategy
Our current focus is on continuing to integrate and grow the acquisitions made in earlier years. We do not plan to engage in significant M&A activity in the short term but anticipate further good M&A opportunities in the medium to longer term.
Outlook
We have seen unprecedented conditions in UK energy markets during the first half of 2022, which are anticipated to persist through H2 at the very least. These conditions will continue to present a very challenging backdrop for the Group's customers.
We anticipate this will lead to more volatile conditions in the Energy Assurance market in the short term, which we expect will limit the growth opportunities in the near future, albeit this is not expected to have a material net impact on H2 performance. Conversely, these conditions and the increasingly compelling value represented by energy efficiency initiatives should support continued strong demand for Energy Optimisation services in H2. Although smaller in scale, ESG Services should also see continued progress over the remainder of FY22.
Whilst mindful of the current backdrop, and in particular the risk posed by prolonged inflation in energy costs to our customers, we have entered the second half in a solid position. Our divisions are well aligned with market demands and requirements, and we have a dedicated and hard-working team as well as a strong balance sheet, all of which provides the Board with confidence in achieving its full year expectations.
Market conditions beyond the current year are difficult to predict at this point, including the impact of cost base inflation, but the long-term opportunities for the Group have been made even more apparent by the current energy crisis and the Board believes that Inspired's proven strategy will enable it to capitalise on these as market conditions normalise.
On behalf of the Board, I would like to thank our colleagues, customers and suppliers for their continued support and collaboration during these unprecedented times.
Mark Dickinson
Chief Executive Officer
5 September 2022
Chief Financial Officer's Statement
We have delivered a 24% increase in revenue and a 10% increase in Adjusted EBITDA in H1 2022, as the Group continues to navigate the macro-economic challenges and the global energy crisis.
Divisional performance
Energy Solutions Division
The Energy Solutions Division comprises Energy Assurance Services and Energy Optimisation Services.
Energy Assurance Services
Energy Assurance Services trading in the period remained in line with expectations. Energy Assurance Services generated 45% of total Group revenues in H1 2022 (H1 2021: 55%) being £18.4 million (H1 2021: £17.9 million) an increase of 3% organically.
Energy Assurance Services contributed adjusted EBITDA of £8.3 million (H1 2021: £8.3 million). The adjusted EBITDA percentage margin was 45% (H1 2021: 47%).
Energy Optimisation Services
The Group's Energy Optimisation Services division continued to gain momentum throughout H1 2022 with revenues increasing 49% organically, amounting to £19.6 million (H1 2021: £13.2 million) contributing 49% of total Group revenues in the period (H1 2021: 40%). Energy Optimisation Services contributed adjusted EBITDA of £3.1 million, (H1 2021: £1.5 million) an increase of 107%. The optimisation services division in H2 2022 delivered Adjusted EBITDA margins of 16% (FY2021: 17%) reflecting the impact of product mix during the period.
Demand for energy optimisation services continues to increase, with strong underlying drivers, including high commodity prices and the drive to net-zero. As a result, the Board expects to see a continued shift in revenue mix towards Energy Optimisation Services.
ESG Solutions Division
The ESG Solutions Division comprises ESG Disclosure Services and ESG Impact Services.
ESG Solutions generated revenues of £1.2 million (H1 2021: £0.4 million), delivering 215% growth organically, reflective of the growing market for these services. ESG Solutions contributed modestly to Adjusted EBITDA during the period, at £0.1 million (H1 2021: £nil). 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 continued investment in the Inspired ESG division.
Software Solutions Division
The Group's Software Solutions Division delivered revenue of £1.2 million (H1 2021: £1.2 million), an increase of 5% and generated Adjusted EBITDA of £0.9 million (H1 2021: £0.9 million), with the division producing a strong sustainable Adjusted EBITDA margin of 74% (FY 2021: 74%).
Group results
PLC costs were £2.7 million (6.7% of revenue) (H1 2021: £2.0 million; 6.1% of revenue), reflecting the increased investment in central functions, including Marketing and Finance, to support the growth opportunities within the Optimisation and ESG Services Division.
Overall, the Group generated Adjusted EBITDA for the period of £9.7 million (H1 2021: £8.8 million) an increase of 10%. After deducting charges for depreciation, amortisation of internally generated intangible assets and finance expenditure, the adjusted profit before tax for the period was £6.5 million (H1 2021: £6.0 million), an increase of 8%.
Under IFRS measures the Group reported a profit before tax for the half-year of £2.4 million (H1 2021: £0.9 million), with reported profit before tax in the period impacted significantly by charges of £3.6 million (2021 H1: £1.5 million) for the amortisation of intangible assets as a result of acquisitions, share-based payment charges, fees associated with acquisitions, restructuring costs and the changes in the fair value of contingent consideration.
A full reconciliation of the Group's adjusted profit before tax to its reported profit before tax is included at note 3.
Alternative performance measures
Acquisition activity can significantly distort underlying financial performance from IFRS measures. The Board therefore also reports adjusted metrics, as well as IFRS measures, for the benefit of primary users of the Group's financial statements. Segmental reporting can be found in the Accounting Policies section below. Reconciliations to Adjusted Profit Before Tax and Adjusted Fully Diluted EPS can be found in note 3.
Cash generation
Group cash generated from operations during H1 was £5.0 million (H1 2021: cash outflow of £0.5 million). Excluding non-recurring fees associated with restructuring costs and deal fees, cash generated from operations was £5.8 million (H1 2021: £1.1 million). The improved comparative cash generation position reflects in part the abnormal profile of Optimisation Services trading during H1 2021, impacted by COVID restrictions at that time.
Within trade receivables within the Energy Optimisation Services division is an aged balance of £2.2 million due from a major public sector Optimisation customer. As noted in the 2021 final results, sustained focus is being applied to ensuring the debt is collected in the most efficient way, noting the Board had expected to make further collections during H1 2022 which have not materialised. The Board believes the commercial view taken to support the client, will further strengthen the relationship with a material customer into the future.
Excluding this exceptional aged debt not collected during the period, cash generated from operations in the period was in line with management expectations, and cash generation is expected to continue to improve during H2 and beyond.
The increase in net debt reflects a period in which the cash generation of the Group was offset by the payment of £0.6 million initial cash consideration for I-Prophets Compliance Limited and Digital Energy Limited, and £10.2 million of contingent cash consideration to the vendors of Ignite Energy LTD, Businesswise Solutions Ltd and LSI Independent Utilities Brokers Limited.
Exceptional costs
Exceptional costs of £0.76 million (H1 2021: £1.04 million) were incurred in the period, which includes £0.14 million (H1 2021: £0.80 million) of deal fees associated with acquisitions completed in the period.
Restructuring costs were £0.62 million (H1 2021: £0.24 million), related to restructuring programmes associated with the integration of acquisitions.
Change in fair value of contingent consideration
The fair value of contingent consideration at the balance sheet date is a judgement of the contingent consideration which will become payable based on a weighted average range of performance outcomes of the acquired business during the earn out period, which is subsequently discounted for the time value of money and risk.
The Group recognised a £0.9 million loss (H1 2021: £0.9 million) in the period as a result of changes in the fair value of contingent consideration which was treated as exceptional, which purely related to the unwinding of discount rate.
At 30 June 2022 the Group has deferred contingent consideration of £4.2 million from the sale of its SME division in 2020. The primary risk of recovery of this balance is the ability of SME entities to withstand the risks posed by continued energy cost inflation as a result of the energy crisis, along with the possibility of prolonged reduction in energy consumption by SME customers in an effort to reduce costs. We continue to assess the recoverability of this balance as we get greater visibility.
Exceptional costs and changes in fair value of contingent consideration are considered by the Directors to be material in nature and non-recurring; they, therefore, merit separate identification to give a true and fair view of the Group's result for the period.
Financial position and liquidity
At 30 June 2022, the Group's net debt was £42.9 million (H1 2021: £30.17 million - FY 2021: £32.3 million). In addition to cash and cash equivalents of £6.4 million on hand, as at 30 June 2022, approximately £10.5 million of the Group's £60.0 million Revolving Credit Facility is undrawn with an additional £25.0 million accordion option available, subject to covenant compliance.
Dividend
The Board is pleased to confirm an interim dividend of 0.13 pence per share (H1 2021: 0.12 pence) in line with the Group's revised policy of paying dividends covered by at least 3.0x earnings.
The interim dividend will be paid on 8 December 2022 to all shareholders on the register at close of business on 14 October 2022. The shares will be marked ex-dividend on 13 October 2022.
Summary
The strategic and financial initiatives delivered in the period have ensured the Group is well placed to deliver our strategic growth plan, whilst managing the additional risks created by the volatility and uncertainty within commodity and energy markets.
Paul Connor
Chief Financial Officer
5 September 2022
Group Statement of Comprehensive Income
For the six months ended 30 June 2022
| Six months ended 30 June 2022 (unaudited) £000 |
Six months ended 30 June 2021 (unaudited) £000 |
Year ended 31 December 2021 (audited) £000 |
|||||
| Revenue | 40,448 | 32,616 | 67,941 | ||||
| Cost of sales | (13,635) | (8,525) | (17,249) | ||||
| Gross profit | 26,813 | 24,091 | 50,692 | ||||
| Administrative expenses | (23,184) | (22,562) | (47,823) | ||||
| Operating profit | 3,629 | 1,529 | 2,869 | ||||
| Analysed as: | |||||||
| Earnings before exceptional costs, depreciation, amortisation and share-based payment costs | 9,672 | 8,819 | 19,791 | ||||
| Fees associated with acquisition | (144) | (803) | (1,038) | ||||
| Restructuring costs | (615) | (238) | (1,393) | ||||
| Change in fair value of contingent consideration | (943) | (938) | (4,735) | ||||
| Depreciation | (936) | (937) | (1,870) | ||||
| Amortisation of acquired intangible assets | (1,359) | (2,741) | (4,415) | ||||
| Amortisation of internally generated intangible assets | (1,331) | (1,069) | (2,554) | ||||
| Share-based payment costs | (715) | (564) | (1,030) | ||||
| 3,629 | 1,529 | 2,869 | |||||
| Finance expenditure | (1,211) | (644) | (1,860) | ||||
| Other financial items | 11 | 50 | 105 | ||||
| Profit before income tax | 2,429 | 935 | 1,114 | ||||
| Income tax (expense)/credit | (510) | (178) | 524 | ||||
| Profit for the period | 1,919 | 757 | 1,638 | ||||
| Attributable to: | |||||||
| Equity owners of the company | 1,919 | 757 | 1,638 | ||||
| Other comprehensive income: | |||||||
| Exchange differences on translation of foreign operations | 354 | (760) | (753) | ||||
| Total other comprehensive income/ (expense) for the year | 354 | (760) | 885 | ||||
| Total comprehensive income/(expense) for the year | 2,273 | (3) | 885 | ||||
| Attributable to: | |||||||
| Equity owners of the company | 2,273 | (3) | 885 | ||||
| Note | |||||||
| Diluted earnings per share attributable to the equity holders of the Company (pence) | 3 | 0.18 | 0.07 | 0.16 | |||
| Adjusted diluted earnings per share attributable to the equity holders of the Company (pence) | 3 | 0.55 | 0.53 | 0.16 |
Group Statement of Financial Position
At 30 June 2022
| Note | Six months ended 30 June 2022 (unaudited) £000 |
Six months ended 30 June 2021 (unaudited) £000 |
Year ended 31 December 2021 (audited) £000 |
||||
| ASSETS | |||||||
| Non-current assets | |||||||
| Investments | 1,137 | 898 | 1,461 | ||||
| Goodwill | 6 | 76,895 | 73,730 | 76,111 | |||
| Other intangible assets | 6 | 18,247 | 18,027 | 18,291 | |||
| Property, plant and equipment | 4 | 2,743 | 2,357 | 2,452 | |||
| Right of use assets | 5 | 1,875 | 3,142 | 2,180 | |||
| 100,897 | 98,154 | 100,495 | |||||
| Current assets | |||||||
| Trade and other receivables | 7 | 36,424 | 26,608 | 33,448 | |||
| Deferred contingent consideration | 4,208 | 6,217 | 4,529 | ||||
| Inventories | 370 | 373 | 300 | ||||
| Cash and cash equivalents | 6,410 | 15,565 | 12,944 | ||||
| 47,412 | 48,763 | 51,221 | |||||
| Total assets | 148,309 | 146,917 | 151,716 | ||||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Trade and other payables | 8 | 10,888 | 7,948 | 12,315 | |||
| Lease liabilities | 834 | 527 | 860 | ||||
| Current tax liability | 2,560 | 2,497 | 1,823 | ||||
| Contingent consideration | 9,998 | 7,551 | 14.586 | ||||
| 24,280 | 18,523 | 29,584 | |||||
| Non-current liabilities | |||||||
| Bank borrowings | 49,346 | 45,730 | 45,847 | ||||
| Lease liabilities | 1,049 | 2,207 | 993 | ||||
| Contingent consideration | 2,523 | 11,005 | 7,165 | ||||
| Deferred tax liability | 1,522 | 2,032 | 1,522 | ||||
| Interest rate swap | 14 | 80 | 25 | ||||
| 54,454 | 61,054 | 55,552 | |||||
| Total liabilities | 78,734 | 79,577 | 85,136 | ||||
| Net assets | 69,575 | 67,340 | 66,580 | ||||
| EQUITY | |||||||
| Share capital | 1,219 | 1,216 | 1,219 | ||||
| Share premium account | 60,930 | 67,490 | 60,923 | ||||
| Merger relief reserve | 20,995 | 20,995 | 20,995 | ||||
| Retained earnings | (9,117) | (9,661) | (11,036) | ||||
| Share based payments reserves | 7,094 | 5,913 | 6,379 | ||||
| Investment on own shares | (36) | (6,742) | (36) | ||||
| Translation reserve | (127) | (488) | (481) | ||||
| Reverse acquisition reserve | (11,383) | (11,383) | (11,383) | ||||
| Total equity | 69,575 | 67,340 | 66,580 | ||||
Group Statement of Cash Flows
For the six months ended 30 June 2022
| Note | Six months ended 30 June 2022 (unaudited) £000 |
Six months ended 30 June 2021 (unaudited) £000 |
Year ended 31 December 2021 (audited) £000 |
||||
| Cash flows from operating activities | |||||||
| Profit before income tax | 2,429 | 935 | 1,114 | ||||
| Adjustments | |||||||
| Depreciation and impairment | 936 | 937 | 1,870 | ||||
| Amortisation and impairment | 2,690 | 3,810 | 6,969 | ||||
| Share based payment costs | 715 | 564 | 1,030 | ||||
| Finance expenditure | 1,200 | 594 | 1,755 | ||||
| Exchange rate variances | (449) | (377) | 266 | ||||
| Change in fair value of contingent consideration | 943 | 938 | 4,735 | ||||
| Cash flows before changes in working capital | 8,464 | 7,401 | 17,739 | ||||
| Movement in working capital Increase in inventories |
(71) | (254) | (180) | ||||
| Increase in trade and other receivables | (2,179) | (6,490) | (9,841) | ||||
| (Decrease)/increase in trade and other payables | (1,207) | (1,165) | 185 | ||||
| Cash generated from operations | 5,007 | (508) | 7,903 | ||||
| Income taxes paid | (215) | (313) | (869) | ||||
| Net cash flows from operating activities | 4,792 | (821) | 7,034 | ||||
| Cash flows from investing activities | |||||||
| Purchase of property, plant and equipment | (646) | (393) | (998) | ||||
| Payments to acquire intangible assets | (2,742) | (2,242) | (5,866) | ||||
| Contingent consideration paid | (10,174) | (600) | (1,086) | ||||
| Contingent consideration received | 320 | 708 | - | ||||
| Repayment/(provision) of working capital facility to discontinued operation | 125 | (300) | (500) | ||||
| Sale of investment | 324 | - | - | ||||
| Acquisition of subsidiary, net of cash | (633) | (6,530) | (7,268) | ||||
| Net cash flows from investing activities | (13,426) | (9,357) | (15,718) | ||||
| Cash flows from financing activities | |||||||
| New bank loans | 3,500 | - | - | ||||
| Finance expenses | (907) | (764) | (2,069) | ||||
| Repayment of lease liabilities | (546) | (825) | (1,443) | ||||
| Proceeds from issue of new shares | 7 | 504 | 645 | ||||
| Dividends paid | - | - | (2,256) | ||||
| Net cash flows from financing activities | 2,054 | (1,085) | (5,123) | ||||
| Net (decrease)/increase in cash and cash equivalents | (6,580) | (11,263) | (13,807) | ||||
| Cash and cash equivalents brought forward | 12,944 | 26,884 | 26,884 | ||||
| Exchange differences on cash and cash equivalents | 46 | (56) | (133) | ||||
| Cash and cash equivalents carried forward | 6,410 | 15,565 | 12,944 |
Group Statement of Changes in Equity
For the six months ended 30 June 2022
| Share capital £000 |
Share premium account £000 |
Merger relief reserve £000 |
Share-based payment reserve £000 |
Retained earnings £000 |
Investment in own shares £000 |
Translation reserve £000 |
Reverse acquisition reserve £000 |
Total shareholders' equity £000 |
|||||||||
| Balance at 1 January 2021 | 1,202 | 67,000 | 20,995 | 5,349 | (10,418 | (6,742) | 272 | (11,383) | 66,275 | ||||||||
| Profit for the year | - | - | - | - | 1,638 | - | - | - | 1,638 | ||||||||
| Other comprehensive income | - | - | - | - | - | - | (753) | - | (753) | ||||||||
| Total comprehensive income for the year | - | - | - | - | 1,638 | - | (753) | - | 885 | ||||||||
| Share-based payment cost | - | - | - | 1,030 | - | - | - | - | 1,030 | ||||||||
| Shares issued (8 April 2021) | 13 | 376 | - | - | - | - | - | - | 389 | ||||||||
| Shares issued (22 June 2021) | 1 | 114 | - | - | - | - | - | - | 115 | ||||||||
| Shares issued (28 July 2021) | 1 | 62 | - | - | - | - | - | - | 63 | ||||||||
| Shares issued (15 September 2021) | 1 | 53 | - | - | - | - | - | - | 54 | ||||||||
| Shares issued (21 December 2021) | 1 | 12 | - | - | - | - | - | - | 13 | ||||||||
| Shares issued to EBT | - | (6,694) | - | - | - | 6,706 | - | - | 12 | ||||||||
| Dividends paid | - | - | - | - | (2,256) | - | - | - | (2,256) | ||||||||
| Total transactions with owners | 17 | (6,077) | - | 1,030 | (618) | 6,706 | (753) | - | 305 | ||||||||
| Balance at 31 December 2021 | 1,219 | 60,923 | 20,995 | 6,379 | (11,036) | (36) | (481) | (11,383) | 66,580 | ||||||||
| Profit for the period | - | - | - | - | 1,919 | - | - | - | 1,919 | ||||||||
| Other comprehensive income | - | - | - | - | - | - | 354 | - | 354 | ||||||||
| Total comprehensive income for the period | - | - | - | - | 1,919 | - | 354 | - | 2,273 | ||||||||
| Share-based payment cost | - | - | - | 715 | - | - | - | - | 715 | ||||||||
| Shares issued (12 April 2022) | - | 7 | - | - | - | - | - | - | 7 | ||||||||
| Total transactions with owners | - | 7 | - | 715 | 1,919 | - | 354 | - | 2,995 | ||||||||
| Balance at 30 June 2022 | 1,219 | 60,930 | 20,995 | 7,094 | (9,117) | (36) | (127) | (11,383) | 69,575 |
1. Accounting Policies
Basis of preparation
The financial information set out in this announcement does not constitute the statutory accounts of the Group for the period ended 30 June 2022. Whilst the financial information included in this interim announcement has been computed in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). They have been prepared on an accrual basis and under the historical cost convention except for certain financial instruments measured at fair value. This announcement in itself does not contain sufficient information to comply with IFRS.
Details of the accounting policies are those set out in the annual report for the year ended 31 December 2021. The accounting policies in this announcement are consistent with those set out in the annual report for the year ended 31 December 2021.
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. The Group reports under four reporting segments, namely Assurance, Optimisation, Software and ESG.
| Six months ended 30 June 2022 | Six months ended 30 June 2021 | |||||||||||||||
| Assurance £000 |
Optimisation £000 |
Software £000 |
ESG £000 |
PLC £000 |
Total £000 |
Assurance £000 |
Optimisation £000 |
Software £000 |
ESG £000 |
PLC £000 |
Total £000 |
|||||
| Revenue | 18,378 | 19,619 | 1,233 | 1,218 | - | 40,448 | 17,877 | 13,174 | 1,179 | 386 | - | 32,616 | ||||
| Cost of sales | (1,555) | (11,964) | (51) | (65) | - | (13,635) | (1,298) | (7,195) | (32) | - | - | (8,525) | ||||
| Gross profit | 16,823 | 7,655 | 1,182 | 1,153 | - | 26,813 | 16,579 | 5,979 | 1,147 | 386 | - | 24,091 | ||||
| Overheads | (8,852) | (4,590) | (270) | (1,080) | (4,766) | (19,558) | (8,467) | (4,495) | (173) | (360) | (4,320) | (17,815) | ||||
| EBITDA | 7,971 | 3,065 | 912 | 73 | (4,766) | 7,255 | 8,112 | 1,484 | 974 | 26 | (4,320) | 6,276 | ||||
| Analysed as: | ||||||||||||||||
| Adjusted EBITDA | 8,337 | 3,069 | 912 | 73 | (2,719) | 9,672 | 8,321 | 1,484 | 974 | 26 | (1,986) | 8,819 | ||||
| Share-based payments | - | - | - | - | (715) | (715) | - | - | - | - | (564) | (564) | ||||
| Exceptional costs | (366) | (4) | - | - | (1,332) | (1,702) | (209) | - | - | - | (1,770) | (1,979) | ||||
| 7,971 | 3,065 | 912 | 73 | (4,766) | 7,255 | 8,112 | 1,484 | 974 | 26 | (4,320) | 6,276 | |||||
| Depreciation | (936) | (937) | ||||||||||||||
| Amortisation | (2,690) | (3,810) | ||||||||||||||
| Finance expenditure | (1,200) | (644) | ||||||||||||||
| Other financial items | - | 50 | ||||||||||||||
| Profit before income tax | 2,429 | 935 |
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.
| Six months ended 30 June 2022 (unaudited) £000 |
Six months ended 30 June 2021 (unaudited) £000 |
Year ended 31 December 2021 (audited) £000 |
||||
| Profit/ attributable to equity holders of the Group | 1,919 | 757 | 1,638 | |||
| Amortisation of acquired intangible assets | 1,359 | 2,741 | 4,415 | |||
| Deferred tax in respect of amortisation | (258) | (465) | (783) | |||
| Changes in fair value of contingent consideration | 943 | 938 | 4,735 | |||
| Foreign exchange variation | 263 | (224) | (339) | |||
| Fees associated with acquisition | 144 | 803 | 1,038 | |||
| Share-based payments costs | 715 | 564 | 1,030 | |||
| Restructuring costs | 615 | 238 | 1,280 | |||
| Impairment of right of use assets | - | - | 113 | |||
| Adjusted profit attributable to equity holders of the Group | 5,700 | 5,352 | 13,127 | |||
| Weighted average number of ordinary shares in issue (000) | 974,970 | 966,784 | 970,589 | |||
| Dilutive effect of share options (000) | 67,062 | 44,674 | 40,870 | |||
| Diluted weighted average number of ordinary shares in issue (000) | 1,042,032 | 1,011,458 | 1,011,459 | |||
| Basic earnings per share (pence) | 0.20 | 0.08 | 0.17 | |||
| Diluted earnings per share (pence) | 0.18 | 0.07 | 0.16 | |||
| Adjusted basic earnings per share (pence) | 0.58 | 0.55 | 1.35 | |||
| Adjusted diluted earnings per share (pence) | 0.55 | 0.53 | 1.30 |
The weighted average number of shares in issue for the adjusted diluted earnings per share include the dilutive effect of the share options in issue to senior staff of Inspired.
Adjusted earnings per share represents the earnings per share, as adjusted to remove the effect of the fees associated with acquisition, amortisation of intangible assets (excluding amortisation related to computer software and customer databases), share-based payments and exceptional items which have been expensed to the income statement in the period. Adjusted profit before tax is calculated as follows:
| Six months ended 30 June 2022 (unaudited) £000 |
Six months ended 30 June 2021 (unaudited) £000 |
Year ended 31 December 2021 (audited) £000 |
||||
| Profit before tax | 2,429 | 935 | 1,114 | |||
| Share-based payments costs | 715 | 564 | 1,030 | |||
| Amortisation of acquired intangible assets | 1,359 | 2,741 | 4,415 | |||
| Foreign exchange variation | 263 | (224) | (339) | |||
| Exceptional costs: | ||||||
| Fees associated with acquisition | 144 | 803 | 1,038 | |||
| Restructuring costs | 615 | 238 | 1,280 | |||
| Impairment of right of use assets | - | - | 113 | |||
| Change in fair value of contingent consideration | 943 | 938 | 4,735 | |||
| Adjusted profit before tax | 6,468 | 5,995 | 13,386 | |||
Acquisitional activity can significantly distort underlying financial performance from IFRS measures and therefore the Board deems it appropriate to report adjusted metrics as well as IFRS measures for the benefit of primary users of the Group financial statements.
4. Property, plant and equipment
| Fixtures and fittings £000 |
Motor vehicles £000 |
Computer equipment £000 |
Leasehold improvements £000 |
Office equipment £000 | Total £000 |
||||||
| Cost | |||||||||||
| As at 1 January 2021 | 937 | 158 | 2,412 | 592 | - | 4,099 | |||||
| Acquisitions through business combinations | - | - | - | 222 | - | 222 | |||||
| Foreign exchange variances | (4) | (5) | (11) | (5) | - | (25) | |||||
| Additions | 15 | - | 981 | 2 | - | 998 | |||||
| Disposals | (228) | (46) | (378) | (5) | - | (657) | |||||
| At 31 December 2021 | 720 | 107 | 3,004 | 806 | - | 4,637 | |||||
| Reclassification | (426) | 42 | - | 384 | - | - | |||||
| At 31 December 2021 (restated) | 294 | 149 | 3,004 | 1,190 | - | 4,637 | |||||
| Foreign exchange variances | 2 | 2 | - | 1 | (1) | 4 | |||||
| Additions | 8 | - | 357 | - | 281 | 646 | |||||
| Disposals | - | (38) | - | - | - | (38) | |||||
| At 30 June 2022 | 304 | 113 | 3,361 | 1,191 | 280 | 5,249 | |||||
| Depreciation | |||||||||||
| As at 1 January 2021 | 743 | 70 | 638 | 326 | 1,777 | ||||||
| Charge for the year | 88 | 4 | 604 | 120 | 816 | ||||||
| Disposals | (167) | (36) | (200) | (5) | (408) | ||||||
| At 31 December 2021 | 664 | 38 | 1,042 | 441 | 2,185 | ||||||
| Reclassification | (474) | 38 | 391 | 45 | - | - | |||||
| At 31 December 2021 (restated) | 190 | 76 | 1,433 | 486 | - | 2,185 | |||||
| Charge for the period | 19 | 36 | 110 | 60 | 124 | 349 | |||||
| Foreign exchange variance | 1 | 6 | 1 | - | - | 8 | |||||
| Disposals | - | (36) | - | - | - | (36) | |||||
| At 30 June 2022 | 210 | 82 | 1,544 | 546 | 124 | 2,506 | |||||
| Net Book Value | |||||||||||
| At 30 June 2022 | 94 | 31 | 1,817 | 645 | 156 | 2,743 | |||||
| At 31 December 2021 | 56 | 69 | 1,962 | 365 | 2,452 |
5. Right of use assets
| Fixtures and fittings £000 |
Motor vehicles £000 |
Property £000 |
Total £000 |
||||||
| Cost | |||||||||
| As at 1 January 2021 | 490 | 314 | 3,326 | 4,130 | |||||
| Acquisitions through business combinations | - | 4 | 44 | 48 | |||||
| Remeasurement of finance lease | - | - | (17) | (17) | |||||
| Additions | 133 | 106 | 386 | 625 | |||||
| Disposals | - | (71) | (50) | (121) | |||||
| At 31 December 2021 | 623 | 353 | 3,689 | 4,665 | |||||
| Additions | 301 | 54 | 245 | 600 | |||||
| Foreign exchange variances | - | - | (14) | (14) | |||||
| Disposals | (368) | (5) | (257) | (630) | |||||
| At 30 June 2022 | 556 | 402 | 3,663 | 4,621 | |||||
| Depreciation | |||||||||
| As at 1 January 2021 | 138 | 86 | 1,313 | 1,537 | |||||
| Charge for the year | 144 | 116 | 681 | 941 | |||||
| Disposals | - | (56) | (50) | (106) | |||||
| At 31 December 2021 | 282 | 146 | 1,944 | 2,372 | |||||
| Charge for the period | 63 | 104 | 420 | 587 | |||||
| Disposals | (211) | (5) | (110) | (326) | |||||
| At 30 June 2022 | 134 | 245 | 2,254 | 2,633 | |||||
| Impairment | |||||||||
| As at 1 January 2021 | - | - | - | - | |||||
| Impairment for the year | - | - | 113 | 113 | |||||
| At 31 December 2021 | - | - | 113 | 113 | |||||
| At 30 June 2022 | - | - | 113 | 113 | |||||
| Net Book Value | |||||||||
| At 30 June 2022 | 422 | 157 | 1,296 | 1,875 | |||||
| At 31 December 2021 | 341 | 207 | 1,632 | 2,180 |
6. Intangible assets and goodwill
| Computer software £000 |
Trade name £000 | Customer contracts £000 |
Customer relationships £000 | Total other intangibles £000 |
Goodwill £000 |
Total £000 |
|||||||
| Cost | |||||||||||||
| At 1 January 2021 | 16,315 | 115 | 18,076 | 7,511 | 42,017 | 63,776 | 105,793 | ||||||
| Additions | 5,821 | 45 | - | - | 5,866 | - | 5,866 | ||||||
| Acquisitions through business combinations | - | - | 3,491 | - | 3,491 | 12,494 | 15,985 | ||||||
| Adjustments to previous business combinations | - | - | 8 | - | 8 | - | 8 | ||||||
| Disposals | (819) | - | - | - | (819) | - | (819) | ||||||
| Foreign exchange variances | - | - | - | - | - | (159) | (159) | ||||||
| At 31 December 2021 | 21,317 | 160 | 21,575 | 7,511 | 50,563 | 76,111 | 126,674 | ||||||
| Additions | 2,742 | - | - | - | 2,742 | - | 2,742 | ||||||
| Acquisitions through business combinations | - | - | - | - | - | 730 | 730 | ||||||
| Disposals | (95) | - | - | - | (95) | - | (95) | ||||||
| Foreign exchange variance | (1) | - | - | - | (1) | 54 | 53 | ||||||
| At 30 June 2022 | 23,963 | 160 | 21,575 | 7,511 | 53,209 | 76,895 | 130,104 | ||||||
| Amortisation | |||||||||||||
| As at 1 January 2021 | 8,829 | 30 | 13,582 | 3,225 | 25,666 | - | 25,666 | ||||||
| Charge for the year | 2,933 | 7 | 3,214 | 815 | 6,969 | - | 6,969 | ||||||
| Disposals | (363) | - | - | - | (363) | - | (363) | ||||||
| At 31 December 2021 | 11,399 | 37 | 16,796 | 4,040 | 32,272 | - | 32,272 | ||||||
| Charge for the period | 1,520 | 4 | 775 | 391 | 2,690 | - | 2,690 | ||||||
| At 30 June 2022 | 12,919 | 41 | 17,571 | 4,431 | 34,962 | - | 34,962 | ||||||
| Net Book Value | |||||||||||||
| At 30 June 2022 | 11,044 | 119 | 4,004 | 3,080 | 18,247 | 76,895 | 95,142 | ||||||
| At 31 December 2021 | 9,918 | 123 | 4,779 | 3,471 | 18,291 | 76,111 | 94,402 |
Computer software is a combination of assets internally generated and assets acquired through business combinations. Amortisation charged in the period to 30 June 2022 associated with computer software acquired through business combinations is £190,000. The additional £1,330,000 charged in the period relates to the amortisation of internally generated computer software.
7. Trade and other receivables
| 30 June 2022 | 30 June 2021 | 31 December 2021 | ||
| £000 | £000 | £000 | ||
| Trade receivables | 16,351 | 12,282 | 16,492 | |
| Other receivables | 1,338 | 806 | 1,472 | |
| Deferred contingent consideration | 4,208 | 6,217 | 4,529 | |
| Prepayments | 4,265 | 3,620 | 3,802 | |
| Accrued income | 14,470 | 9,900 | 11,682 | |
| 40,632 | 32,825 | 37,997 |
8. Trade and other payables
| 30 June 2022 | 30 June 2021 | 31 December 2021 | |
| £000 | £000 | £000 | |
| Trade payables | 4,587 | 2,317 | 4,154 |
| Social security and other taxes | 2,918 | 2,626 | 3,504 |
| Accruals | 2,303 | 1,674 | 1,502 |
| Deferred income | 526 | 559 | 1,268 |
| Other payables | 554 | 772 | 1,887 |
| 10,888 | 7,948 | 12,315 |
9. 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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
IR EANNSESNAEFA