Inspired Energy Plc is a UK and Irish energy broker based in Kirkham, Lancashire in the north of England. It offers services to commercial, industrial and government organisations to handle their electricity and gas requirements. The services fall into two groups: energy procurement, concerned with negotiating electricity and gas contracts, and bureau services, involved with managing the contracts. The company is organised in two divisions, the Corporate Division handling larger clients and the SME (small and medium enterprises) division is for smaller clients.

We last wrote about Inspired a year ago, saying that the company is a rarity among small energy-related companies. Not only had it made a profit for the previous five years but it also was able to pay dividends that have steadily increased from 0.16p per share for 2013 to 0.38 for 2016. As a result, the share price grew steadily, albeit not spectacularly, from 4.38 pence at the end of 2012 to 19.25p on 29 November 2017.

Inspired has grown mainly by taking over smaller brokers in different geographical areas. In 2017 alone, the Corporate Division added three more groups: Flexible Energy Management Ltd, who are based in Manchester and are focused on NHS trusts and other public sector bodies; Churchcom, who are based in County Durham and procure energy for churches and others; and Horizon, who are based in Cork and claim to be the largest energy broker in Ireland. Both divisions also grew organically for the half-year to June 30 2017, the SME division by 15 per cent.

Inspired’s results for the six months ended 30 June 2018 were released on 4 September 2018 and they reported on a continued strong performance during the period. Revenues were 33 per cent to the good at £16.24million against £12.24m in the comparable period in 2017.Gross profit was 40 per cent better at £9.83m. Adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) were up 39 per cent at £4.71m. The interim dividend per share was raised to 0.19pence against 0.16p.

There were again acquisitions. Another three, in fact. Systems Link 2000 Limited and Energy Cost Management Ltd (ECM) were bought in March 218, within the period.  The acquisition of Squareone Enterprise in August 2018, post period, was a consideration of up to £1.38m, of which £0.75m was paid on completion. The management said the acquisitions were financed from the group’s existing £12.5m acquisition facility with Santander. The share price on 7 September 2018 was 21.2p against a 52-week high of 25p and a low of 17p.

So, everything remains hunky-dory at Inspired does it? Not exactly. A closer look at the financials caused concern in some quarters. The Investors Chronicle, for example, had its qualms about the results. It pointed out the difference between pre-EBITDA earnings per share (EPS) and post EBITDA earnings per share. The former EPS was 13 per cent higher than in 2017 at 0.69p. The latter EPS after EBITDA was 25 per cent lower at 0.27p than the 0.36p achieved in the previous year.This was because in the latter took into account the amortisation of intangibles associated with the acquisitions.

The Investors Chronicle commenting on this said: “In the light of the group’s recent acquisitions, some impact on the statutory earnings numbers is forgivable.” But the IC continued: “But what worries us in the drop off in order book growth. The management has frequently pointed  out that the order book is a consistent guide to future revenues. A decrease from 60 per cent growth to 3 per cent in a year suggests the group might have reached a ceiling, and with the shares at 14 times forecast earnings we no longer see value here”.