Inspired boosted by strong demand for energy advice

Inspired (INSE) says the current crisis will likely accelerate demand further for its energy efficiency advice for businesses, even as its main business finds it harder to sign power agreements for clients. Inspired acts both as a middleman between big companies and energy suppliers and sells consulting services on cutting electricity use. 

UK businesses don’t have an energy cap – leading many to call for significant government intervention to protect jobs – but can sign longer agreements with suppliers. While new prime minister Liz Truss intends to freeze prices, it’s not clear yet how the plan will impact businesses such as Inspired.  

“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,” Inspired chief executive Mark Dickinson said. 

“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.” 

Inspired did not see major upticks in demand in the first half – its adjusted cash profit climbed 10 per cent in the period to £9.7mn, solely off the back of the optimisation division's higher cash profit of £3.1mn, double the year before. The sales uptick was also down to this unit, which saw 49 per cent organic growth. Forecasts had previously seen optimisation overtaking assurance in terms of sales in 2023, but this has come this year with the £6.4mn increase in the first half. The environmental, social and governance (ESG) reporting unit saw good growth as well, from a very small base last year. 

Of course, the energy crisis did bring on some difficulties. Inspired said it was still chasing £2.2mn from a “major public sector” customer, with the board going for a conciliatory approach to hold onto the client rather than chasing the money more aggressively. This aside, cash generation is expected to continue improving in the second half. 

The rest of the year is likely to see more drama that could shake up forecasts, but the consensus forecast for Inspired is for a 13 per cent uptick in cash profits, compared with last year. This increase is behind the sales growth, but given the conditions this is not a surprise. We stick with our buy call. 

Last IC View: Buy, 14p, 31 May 2022