The key indicator of Inspired Energy’s (INSE) future growth in recent years has been the strength of its order book, with management frequently pointing to it as “a consistent guide” to future revenues. If this is the case, investors should beware, as the procurement corporate order book grew just 3 per cent in the first half of the year, compared with a whopping 60 per cent in the same period last year.
Management’s strategy has shifted over time to incorporate an increasing number of acquisitions. The group completed two deals in the six months to June, and a third after the period ended. However, while the cost of the purchases fell well within the group’s £12.5m acquisition facility, the amortisation of related intangibles, combined with a broader restructuring programme, weighed heavily on profits and pushed diluted EPS down by a quarter.
The group has been restructured along client category lines, creating a unified Inspired Energy brand rather than a range of subsidiaries. Management said the changes would facilitate organic growth, which was already strong in the corporate division at 10 per cent.
Analyst Peel Hunt is forecasting adjusted pre-tax profit of £11.5m, giving EPS of 1.5p in 2018 (from £9m and 1.4p previously).
| INSPIRED ENERGY (INSE) | ||||
| ORD PRICE: | 21p | MARKET VALUE: | £125m | |
| TOUCH: | 20.7-21p | 12-MONTH HIGH: | 25p | LOW: 17p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 53 | |
| NET ASSET VALUE: | 5p* | NET DEBT: | 71% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 12.2 | 2.2 | 0.37 | 0.16 |
| 2018 | 16.2 | 2.1 | 0.28 | 0.19 |
| % change | +33 | -4 | -24 | +19 |
| Ex-div: | 18 Oct | |||
| Payment: | 06 Dec | |||
| *Includes intangible assets of £38.8m, or 6p a share | ||||
