31 January 2024
Inspired PLC
("Inspired" or the "Group")
Full year trading update and notice of results
Strong Group trading performance and confident outlook
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 a trading update for the financial year ended 31 December 2023 ("FY23").
The Group delivered a strong trading performance, with adjusted EBITDA up 19%, in line with market expectations1. The Group achieved strong trading particularly in the second half with all trading divisions contributing revenue growth and each delivering solid strategic progress.
Financial highlights
| · | Group revenue is expected to be c.11% ahead of FY22, at c.£98.7m. The Group traded strongly in FY23 with a shift in product mix within the Optimisation Division driving a higher margin contribution from the revenue generated in that division. |
| · | Group Adjusted EBITDA* grew 19% to £25.0m (2022: £21.0m) in line with market expectations1. Adjusted EBITDA Margin increased to c.25% (2022: c.24%) as a result of the improved margin within the Optimisation Division. |
| · | Group Adjusted profit before tax**("PBT") is expected to be in line with market expectations1. The growth in Adjusted EBITDA was partially offset by increased finance costs, reflecting higher interest rates on borrowings. |
| · | As anticipated, the Group's Optimisation division saw very high levels of project activity in H2 2023, with the associated investment in working capital reducing Cash Conversion*** in FY23 to c.70%. In January the working capital investment unwound, and it is expected that Cash Conversion for the 12 months to 31 January 2024 will be in excess of 90%. |
| · | Net debt at 31 December 2023 was c.£48.7m (H1 2023: £49.1m). With strong cash generation in January 2024, net debt at 31 January 2024 is expected to be c.£45.0m. |
Divisional highlights
| · | Assurance Services continued to see momentum in new business generation, with improved churn rates, higher retention rates and margins broadly in line with H1 2023. |
| · | Optimisation Services experienced strong demand in H2 2023, delivering c.13% revenue growth in FY23. This was driven by increasing levels of repeatable demand from existing clients of the division alongside growing levels of cross selling from the Assurance Division. |
| · | ESG Services achieved c.100% revenue growth in FY23 and made an Adjusted EBITDA contribution to the Group. |
| · | Software Services revenue grew by c.15% in the year whilst maintaining Adjusted EBITDA margins in excess of 70%. |
Current trading and outlook
The secular demand from companies to reduce energy consumption, drive efficiencies and report against progress remains unchanged and underpins demand for the Group's services. This has been reflected in the continued progress of the ESG Division and the Optimisation Division, the latter of which experienced a strong Q4 2023.
The Group started Q1 2024 strongly with substantial cash generation as the working capital investment in Q4 2023 unwound and is confident in the outlook for FY24.
This momentum is expected to continue, giving the Board confidence in its previously stated aspiration to maintain double-digit organic growth and, by FY27, double Adjusted EBITDA organically from that achieved in FY22. The associated cash generation will also lead to a deleveraging of the Group in relative and absolute terms.
Commenting on the period, Mark Dickinson, CEO of Inspired, said: "The Group delivered a solid operational and financial performance during the year, with Adjusted EBITDA and PBT in line with market expectations, with a continued focus on cash generation.
"Managing energy costs and ESG have now become firmly embedded as operationally and commercially critical for most businesses. This is creating sustained and increasing demand for Inspired's differentiated products and services. We are better placed than ever as a full-service provider and are confident of future success and in our outlook for FY24 on the back of momentum in FY23."
Notice of Results
Inspired expects to announce its audited full year results to 31 December 2023 on 26 March 2024.
* Adjusted EBITDA is earnings before interest, taxation, depreciation and amortisation, excluding exceptional non-recurring 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).
***Cash Conversion is cash generated from operations, as adjusted to exclude exceptional non-recurring items, as a percentage of Adjusted EBITDA.
1 The Company considers that consensus market expectations for Adjusted EBITDA is £25.0m and Adjusted PBT £16.2m for FY23.
Enquiries please contact:
| Inspired PLC Mark Dickinson (Chief Executive Officer) Paul Connor (Chief Financial Officer) David Cockshott (Chief Commercial Officer)
| +44 (0) 1772 689250
|
| Shore Capital (Nominated Adviser and Joint Broker) Patrick Castle James Thomas Rachel Goldstein
| +44 (0) 20 7408 4090
|
| Liberum (Joint Broker) Edward Mansfield Satbir Kler
| +44 (0) 20 7418 8900 |
| Alma Strategic Communications Justine James Hannah Campbell Will Ellis Hancock
| +44 (0) 20 3405 0205 +44 (0) 7525 324431 inspired@almastrategic.com |
Notes to editors
Inspired PLC is a leading B2B technology enabled service provider delivering solutions that enable corporate businesses to transition to net-zero carbon and manage their response to climate change in the UK and Ireland.
Founded in 2000, Inspired operates four divisions: Assurance Services, Optimisation Services, ESG Services and Software Services, providing expert energy advisory and sustainability services to over 3,500 businesses who typically spend more than £100,000 on energy and water per year. The Group's four divisions work together to help corporate businesses manage all aspects of their energy and sustainability programme through the lens of what the Group refers to as the 4Cs of Cost, Consumption, Compliance and Carbon.
Inspired has been recognised with the London Stock Exchange's Green Economy market since 2020 for its environmental and strategic advice, service, and support to customers and is also ranked as the UK's leading advisor by the independent energy market intelligence consultancy, Cornwall Insight.
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