REG - Inspired PLC - Trading update

InspiredAnnouncement

02/12/2024 07:00

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RNS Number : 3706O  Inspired PLC  02 December 2024

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No. 596/2014

 

 

2 December 2024

Inspired PLC

("Inspired", the "Company" or the "Group")

 

Trading Update

 

Inspired (AIM: INSE), a leading technology-enabled service provider delivering
solutions to enable businesses to transition to net-zero and manage their
response to climate change, provides an update on trading for the year ending
31 December 2024.

 

Summary

 

 ·             FY24 adjusted EBITDA revised down to c.£23m due to timing of optimisation
               projects commencement
 ·             Increased confidence in FY25 as project revenue moves into FY25
 ·             Group has made good progress on diversifying the risk of larger projects

 

Trading Update

 

Inspired reported in its interim results, announced on 12 September 2024, (the
"Interim Results"), that delivering full year results in line with market
consensus was dependent on delivering three significant optimisation services
projects (the "Optimisation Projects"), one of which had commenced and the two
others were expected to be contracted and commence on-site in Q4 2024. The
Interim Results also highlighted that if there were delays in the start time
of two of the three projects, the result could be a significant portion of
their profit contribution shifting into H1 2025. The Group stated that these
two projects had a total estimated gross margin of c.£5m, most of which would
fall through to adjusted EBITDA.

 

The Board now has further clarity on timing of these three significant
projects, all of which are now contracted and two commenced:

·     Project #1: Contracted and commenced at the time of the Interim
Results, the project  involves installations across the European portfolio of
the client. Work is ongoing, however, there have been unexpected delays due to
a client issue which Inspired is helping them to resolve. This is expected to
be solved imminently, enabling installations to complete and the remaining
gross profit contribution from this project will be recognised as the project
is delivered in H1 2025.

·    Project #2: Verbally awarded at the time of the Interim Results,
this has been contracted but now has a later than expected start date of
January 2025 and is expected to be delivered in H1 2025.

·     Project #3: Now contracted and commenced on site, this is the
fourth phase of a multi-phase roll out, with the majority of the
implementation and therefore gross profit contribution, being delivered in H1
2025.

 

The deferred gross profit contribution from the Optimisation Projects has to
date largely been offset by a better-than-expected performance in other
optimisation service lines. However, given the greater clarity on the timing
for the Optimisation Projects as outlined above, the Board now expects the
Group to report FY2024 Adjusted EBITDA of approximately £23m*.

 

The delay in the timing of delivery of the Optimisation Projects has resulted
in a movement in gross margin across financial years, and not a loss of
projects. Accordingly, the Board has increased confidence in delivering market
consensus for FY2025 Adjusted EBITDA*.  The current Optimisation Project
pipeline consists of projects to reduce energy consumption and carbon
emissions for c. 130 customers, with a revenue value of c.£165m and a
potential gross margin contribution of c.£58m.

 

The impact of the delay in the Optimisation Projects on net debt outturn is
limited as there is a reduced working capital requirement to fund the
Optimisation Projects in FY2024. As such, the Group expects market consensus
for Net Debt* to be broadly unchanged at c.£58.0m as at 31 December 2024.
Since 30 June 2024, the Company has paid the final £2.2m in contingent
consideration and now has no further contingent consideration payments due.

 

As previously stated, the Board is focused on de-leveraging the balance sheet
to reduce net debt with cash generated from operations being primarily
allocated towards reducing the Group's net debt position and the pursuit of
organic growth opportunities, to deliver the opportunity afforded by the
Optimisation Division during FY25. Accordingly, the Group's leverage ratio is
expected to reduce throughout FY2025.

 

Given the uncertainty around the timing of the Optimisation Projects, the
Group has prudently agreed with its banking partners to a resetting of the
adjusted leverage and interest cover covenant for the quarter ending 31
December 2024 to 3.00x and 3.50x respectively, increasing the headroom
available to the Group from a covenant perspective.

 

The Group expects to issue its year-end trading update in January 2025.

 

Mark Dickinson, CEO of Inspired said: "The team has worked tirelessly in
securing, and in part, commencing these significant optimisation projects.
Noting the inter-period uncertainty created by large Optimisation Projects,
the Group has made good progress on diversifying the risk of large projects,
through a significant increase in the number of clients which are actively at
the 'Pilot' phase of the project cycle which leads to a record level of
pipeline for the Optimisation division as we enter 2025."

 

* The Company considers that current market consensus for year ended 31
December 2024 referred to in this announcement is £27.5m of Adjusted EBITDA
and net debt of £57.9m and for the year ended 31 December 2025 consensus
Adjusted EBITDA is £30.1m.

 

 

Enquiries

 

For further information, please contact:

 Inspired PLC                               www.inspiredplc.co.uk
                                            (https://url.avanan.click/v2/___http:/www.inspiredplc.co.uk___.YXAxZTpzaG9yZWNhcDphOm86MTQ4MGU4MDI4YzUzNmI1MWEwYTExNTk0NWJkMzhlMGI6NjphNDdlOmQ5NTk3YTRjMDgxZDMyYWY5NzA2MzMwZGUxMzQ3OTQ0MTA5YTJkMDlkMzBjZGNlYjY5OTQxODM5NTkyZGUxMjc6cDpGOk4)
 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

 Rachel Goldstein

 Panmure Liberum (Joint Broker)             +44 (0) 20 3100 2000

 Edward Mansfield

 Satbir Kler

 Alma Strategic Communications              +44 (0) 20 3405 0205
 Justine James                              +44 (0) 7525 324431

 Hannah Campbell                            Inspired@almastrategic.com (mailto:Inspired@almastrategic.com)

 Will Ellis Hancock

 

 

 

 

 

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