Inspired Energy PLC announces complementary acquisitions

 () has completed the acquisitions of BWS Holdco (Businesswise) and General Energy Management (GEM).

The consultant for energy procurement, utility cost optimisation and legislative compliance in the UK and Ireland said its corporate order book has risen above £73mln as a result of the acquisitions, which are expected to enhance earnings in fiscal 2021.

Businesswise is an energy consultant based in Nelson, Lancashire. It primarily provides assurance services and incremental optimisation services to its diverse corporate customer base across a broad range of sectors complementary to Inspired Energy.

Businesswise has an order book of around £10mln and more than 340 customers, increasing the group’s customer base by roughly 10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}.

For the financial year ended March 31, 2020, Businesswise delivered revenues of £3.79 mln, underlying earnings (EBITDA) of £1.3mln and profit before tax of £1.15mln. Businesswise’s net assets at the end of March 2020 stood at £1.92mln.

Given the economic uncertainty caused by the coronavirus pandemic, the purchase price of Businesswise has been made heavily contingent on future performance.

Inspired Energy is paying £6mln in cash upfront, with up to £23.5mln in cash payments to follow subject to the achievement of growth targets for the years 2021 – 2023 inclusive.

To achieve the earn-out in full, Businesswise would be required to generate EBITDA of £5.0mln for the year ending 31 December 2023 and have a closing order book above £19.0mln.

GEM provides energy assurance services to corporate customers in a range of sectors, with a strong presence in the food manufacturing and distribution sector, which has proved resilient through the pandemic.

In the year to the end of March 2020, GEM made a profit before tax of £250,000 on revenues of £500,000. At the end of March, it had net assets of £400,000.

Inspired Energy is paying an initial cash consideration of £1.5mln, with a possible £250,000 to follow.

“We are delighted to conclude the acquisition of Businesswise and GEM, which are highly complementary additions to the group. Both acquisitions increase our market share for Energy Assurance services, broaden our customer base and significantly increase our units of opportunity,” said Mark Dickinson, the chief executive of Inspired Energy.

Inspired’s house broker Shore Capital estimated the transactions, based upon a 10-month contribution, will enhance Inspire’s adjusted profit before tax this year by about £1mln and increase earnings per share (EPS) by roughly 7{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}.

As a result, it has pencilled in 1.27p for its EPS forecast this year, up from 1.19p previously.

“As the economy recovers from the impact of the Covid pandemic, Inspired is trading on a revised FY2021F PER [price/earnings ratio] of 12.4x (EV [enterprise value]/EBITDA 9.0x), offering a progressive dividend yield of 2.3{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca}. With recovery out of the pandemic set to emerge, Inspired is poised to benefit, in our view, delivering essential services in energy assurance and optimisation as well through its emerging ESG based compliance platforms,” Shore said.

Shares in Inspired Energy were up 3.2{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} at 16.25p in mid-morning trading.

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