REG - Inspired PLC - Half Year Results
06/09/2022 07:00
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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) +44 (0) 20 7418 8900
Mike Bell
Ed Allsopp
Alma PR +44 (0) 20 3405 0205
Justine James +44 (0) 7525 324431
Hannah Campbell Inspired@almapr.co.uk
Will Ellis Hancock
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-TCFD-Report.pdf)
https://inspiredplc.co.uk/wp-content/uploads/2022/08/Inspired_2021-ESG-Report-1.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) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021
£000 £000 (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 9,672 8,819 19,791
payment costs
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 3 0.18 0.07 0.16
(pence)
Adjusted diluted earnings per share attributable to the equity holders of the 3 0.55 0.53 0.16
Company (pence)
Group Statement of Financial Position
At 30 June 2022
Note Six months ended 30 June 2022 (unaudited) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021 (audited)
£000 £000 £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) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021 (audited)
£000 £000 £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 4,735
943 938
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 Share premium account Merger relief reserve Share-based payment reserve Retained earnings Reverse acquisition reserve Total shareholders' equity
£000 £000 £000 £000 £000 Investment in own shares £000 £000
£000 Translation reserve
£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 Optimisation Software ESG PLC Total Assurance Optimisation Software ESG PLC Total
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £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) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021
£000 £000 (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) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021
£000 £000 (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 Motor Computer equipment Leasehold improvements Office equipment £000 Total
£000 vehicles £000 £000 £000
£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 Motor vehicles Property Total
£000 £000 £000 £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 Customer contracts Total other intangibles Goodwill Total
£000 Trade name £000 £000 Customer relationships £000 £000 £000 £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
31 December 2021
30 June 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
31 December 2021
30 June 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 (http://www.inspiredplc.co.uk)
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