ENERGY CONSULTANCY FOR THE COMMERCIAL WORLD Final Results Presentation Year to 31 December 2017
– 2017 FINANCIAL HIGHLIGHTS Revenue (£'000) Adjusted EBITDA (£'000) Adjusted profit before tax (£'000) 2016: £21,515 2016: £8,257 2016: £7,016 % 27,458 11,004 9,695 21,515 8,257 7,016 15,188 5,688 5,071 4,271 4,556 10,835 3,274 3,548 7,618 2,641 2,326 5,261 15 16 13 14 15 16 17 15 17 12 13 14 17 12 12 13 14 16 Adjusted earnings per share (p) Dividend (p) Average headcount 2016: 1.27p 2016: 0.45p 2016: 200 0.55 266 1.57 0.45 200 1.27 0.35 1.00 0.89 0.25 119 0.68 103 0.17 0.48 66 0.11 54 12 13 14 15 16 17 13 14 15 16 17 12 12 13 14 15 16 17 2 Results for the year ended 31 December 2017
OPERATIONAL HIGHLIGHTS – FY 2017 Operational Highlights • Record revenues delivered by the Corporate Division growing 32% to £21.5m (2016: £16.3m). • Procurement Corporate Order Book increased 39% to £39.0m, with strong customer retention at 85% and robust performance from strong new customer wins. • SME Division has matured, generating record EBITDA of £2.5m providing material cash generation. • Initiated process of restructuring the Corporate service offering by client category under a unified “Inspired” brand, which is due to complete in H1 2018. Acquisition Highlights • Integration of FEML and Churchcom, acquired in April 2017, progressing well and in line with expectations. • Acquired Horizon in July 2017, increasing geographical presence and strengthening position as a market leader in Ireland. • Horizon traded in line with Board expectations in H2 2017, and trading in 2018 has started strongly. • Final settlement, in cash, of the outstanding consideration due to the vendors of STC Energy and Carbon Holdings Limited, Wholesale Power UK and Informed Business Solutions. Board Transition • Mark Dickinson appointed Chief Executive Officer of the Group in October 2017. • Richard Logan appointed as an Independent Non-Executive Director in March 2017. • Gordon Oliver appointed as an Independent Non-Executive Director in January 2018. • Matthew Thornton steps down as Sales Director and moves to Non-Executive Director, completing the transition of the Board to two Executive Directors, supported by a Non-Executive Chairman and three Non-Executive Directors. 3 Inspired Energy PLC
FINANCIAL REVIEW
GROUP – KEY STATS AS AT FEBRUARY 2018 Board Shares(m) Holding (%) Floated in November 2011 at 3.0 pence 80 30 Matthew Thornton 38.6 7% 70 25 (Volume) Millions Praetura Ventures LLP 11.1 2% 60 Share price (p) Share price (p) 20 Mark Dickinson 0.7 0.1% 50 Richard Logan 0.3 0.1% 40 15 50.7 9.2% 30 10 20 Significant shareholders Shares (m) Holding (%) 5 (as at 14.02.2018) 10 Miton Asset Management 80.3 14% 0 0 - - Nov Nov Nov Nov Nov Nov Nov Living Bridge 67.1 12% 2011 2012 2013 2014 2015 2016 2017 Hargreave Hale 49.5 9% Volume price Price Ticker: INSE Janet Thornton 38.6 7% Progressive dividend policy Slater Investments 31.5 6% 0.55p 0.45p Regent Gas Holdings 30.7 5% 0.35p BGF Investment Management 17.1 3% 0.25p River and Mercantile Asset Mgt 16.5 3% 0.17p 0.11p Santander Asset Management 16.2 3% 12 13 16 17 14 15 5 Inspired Energy PLC
– 2017 OVERVIEW Headcount Corporate (£’000) 2016 Variance Revenue 16,320 +32% 210 Gross profit 14,568 +32% 160 Gross profit margin (%) 89% 131 7,596 +34% 52 54 51 47 47% 11 12 13 14 15 16 17 Secured procurement revenue profile (£’000) Procurement order book (£'000) (When procurement order book will convert to revenue and cash) Procurement Order Book (£'000) Sum = £39.0m 18,579 39,000 12,908 28,513 24,512 14,036 5,883 10,972 8,893 4,332 1,630 11 12 13 14 15 16 17 18 19 20 Thereafter 6 Results for the year ended 31 December 2017
SME DIVISION – 2017 OVERVIEW SME (£’000) 2017 2016 Variance Revenue by suppliers 2017 2016 Terms Revenue 5,998 5,195 15% Supplier A 38% 32% 80% on live date Gross Profit 3,583 2,741 31% Supplier B 26% 33% 80% on live date Gross Profit Margin (%) 60% 53% Supplier C 0% 1% 100% on live date Supplier D 12% 7% 80% on live date EBITDA 2,455 1,752 40% Supplier E 1% 7% Monthly in arrears EBITDA Margin % 41% 34% Supplier F 14% 10% 80% on live date Supplier G 2% 1% Monthly in arrears Supplier H 1% 4% Monthly in arrears Others 6% 5% Various Clients Headcount 10,500 9,000 15 15 15 7,250 15 39 5,600 34 34 30 2 150 2,375 7 12 13 14 15 16 17 13 14 15 16 17 Sales Back Office 7 Inspired Energy PLC Results for the year ended 31 December 2017
– INCOME STATEMENT > Growth in revenue primarily driven by growth Income statement (£’000) in Corporate Division revenue of £5.1m and a £0.8m increase in SME Division revenue 21,515 Cost of sales (4,206) > Increasing gross profit and EBITDA margin Gross profit 17,309 due to change in mix of revenue between Corporate and SME 80% > 78% of revenue contributed from Corporate Division (2016: 76%) Employment costs (6,345) Other administrative expenses (2,707) 8,257 > Increase as a result of the £607k unwinding of deferred consideration and £89k of foreign 38% exchange variance in the period. Depreciation (422) Finance expenditure (819) > Deal fees in FY17 relate to the 3 Corporate 7,016 acquisitions of FEML, Churchcom and Horizon. > Restructuring costs generated by the Stated before: integration of the Corporate Division under a unified “Inspired” brand. Deal-related costs (408) Restructuring costs (122) > Increase in the year driven by amoritsation Amortisation (2,149) generated from acquired intangibles > £2.56m FY17 vs £1.57m FY16 Share-based payment costs (318) Increase as a result of LTIP granted in the year 8 Results for the year ended 31 December 2017
– STATEMENT OF FINANCIAL POSITION Statement of financial position (£’000) 31 December 2016 > Increase in goodwill in the year driven by Goodwill 12,988 acquisition of FEML, Churchcom and HEG Intangible assets 7,391 Tangible assets 1,332 Trade and other debtors 12,409 > Accrued revenue – £11.4m (2016: £8.9m) with Cash 984 £1.2m relating to the acquisitions in the year > Trade Debtors – £3.3m (2016: £2.6m) 35,103 Trade and other payables 1,712 > Within FY17, £1.5m RCF shown as current Bank borrowings 3,338 borrowings Contingent consideration 2,460 Current tax liability 2,413 > Total of £4.4m relating to HEG and IBSL > £3.4m HEG > £1.0m IBSL Bank borrowings 8,286 Of which: > £3.0m current Trade and other payables 62 > £1.4m non-current Contingent consideration 797 Interest rate swap 149 > Increased to £14.9m (2016: £10.8m) as a Deferred tax liability 1,004 result of funding acquisitions of FEML and Churchcom 20,229 14,874 9 Results for the year ended 31 December 2017
– CASH FLOW STATEMENT Cash flow statement (£’000) 31 December 2016 4,019 Depreciation 422 Amortisation 2,149 Share-based payment costs 318 Finance expenditure 742 Other financial items 77 > 39% increase in cash generated from 7,727 operations in the year Increase in trade and other receivables (2,949) Increase in trade and other payables 200 4,978 > £1.3m for STC paid in October 2017 Income taxes paid (533) > £250k for WPUK paid in November 17 4,446 > £1.0m for IBSL paid in July/October 17 Contingent consideration paid (1,250) Acquisition of a subsidiary, net of cash acquired (1,374) Payments to acquire PPE (369) > Relates to the acquisitions of FEML, Payments to acquire intangible assets (1,071) Churchcom and HEG during 2017 New bank loans (net of debt issue costs) 2,624 Proceeds from equity fundraising 423 Repayment of bank loans (1,509) Interest on bank loans paid (713) Dividends paid (1,826) (621) Cash and cash equivalents brought forward 1,605 Exchange differences on cash and cash equivalents - Cash and cash equivalents carried forward 984 10 Results for the year ended 31 December 2017
BUSINESS PERFORMANCE & OUTLOOK
INSPIRED ENERGY – WHAT WE DO SOLUTION NEED I need an SIMPLIFY Procurement Energy Contract? Should I pay this VERIFY Energy Accounting Invoice? PROTECT Is my Supplier Supply Chain performing correctly? Management Am I compliant Audit and INFORM with the law? Compliance What am I wasting / OPTIMISE Monitoring / Targeting what can I do better? / Optimisation 12 Inspired Energy PLC
GROUP OUTLOOK – PLATFORM FOR GROWTH Platform for Organic Growth Servicing Evolving 1,000 + Client Needs Independent Energy Brokers AGGREGATION Technology Diversification SOFTWARE OPTIMISATION SERVICES SOLUTIONS SERVICES INSPIRED INCUBATOR Future Proofing the Group Utility Suppliers 13 Inspired Energy PLC
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