Inspired Energy restarts dividend payments as energy usage by companies recovers

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Inspired Energy PLC (LON:INSE) has resumed dividend payments and is looking for more acquisitions following an uptick in corporate energy usage in recent months after the end of the coronavirus (COVID-19) pandemic lockdown.

The consultant, which helps companies reduce their energy bills, said acquisitions helped revenue in the half-year to June 30, 2020, rise by 25% to GBP20.9mln.

But the impact of coronavirus restrictions meant corporate energy consumption fell 14% on average over the half-year, which affected margins, especially in the SME arm.

Profits for the half-year dropped 41% to GBP1.42mln, though cash inflows increased 51% to GBP10.3mln as VAT and PAYE payments tax were deferred.

Corporate orders also increased to GBP61.5mln following significant new customer wins .said Inspired.

Trading currently remains in line with the board’s expectations, said Inspired, which announced an interim dividend of 0.1p and in line with a policy of at least three times earnings cover.

Since the half-year, the group has raised GBP31mln through an oversubscribed share placing to help pay for the outstanding 60% of Ignite Energy and to give it the firepower for additional deals.

“Together, the funds raised in the July fundraising, and the benefits of the Ignite acquisition leave the Group in a strong financial position with the ability to make further progress in its organic and inorganic growth strategies,” Inspired Energy Mark Dickinson, chief executive said in the results statement.

“The pipeline of acquisition opportunities remains strong and the Board continues to review a number of potential transactions which could deliver strategic and financial benefits.”

Peel Hunt sees material upside from here

Peel Hunt maintained its ‘buy’ rating and 25p target price after the interims, which the broker said were in line with expectations with a confident outlook.

First-half underlying profits [EBITDA] of GBP8.1mln was just ahead of guidance in July and reflected a 7% year-on-year decline comprising a 29% first-quarter jump followed by a second-quarter drop of 49%.

The coronavirus impact hit the second quarter though Peel Hunt says it was still profitable and there was strong cashflow over the half.

Net debt at end-August was GBP12.5mln and management said second-half trading is in line with management expectations with an order book of GBP61.5mln (from GBP55.3mln).

Peel Hunt added it was reducing its earnings forecast for 2021 to 1.3p from 2.0p to reflect dilution from the recent (GBP31mln) equity raise and a prudent assessment of future Covid-19 impact.

The broker adds that its estimates do not reflect any upside potential use of the equity raise money.

At 14.5p, and on an earnings multiple of 12.7 times 2021 EPS, Peel Hunt said the shares offer material upside given the organic and acquisitive opportunities.

— adds broker comment, video–

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