20 April 2017
Inspired Energy plc
("Inspired" or the "Group")
Purchase of the trade and assets of Flexible Energy Management Limited,
Acquisition of Churchcom Limited and Issue of Equity
Inspired (AIM: INSE), a leading energy procurement consultant to UK corporates, is delighted to announce that it has completed the purchase of the trade and assets of Flexible Energy Management Limited ("FEML") and the acquisition of Churchcom Limited ("Churchcom").
· FEML is a public sector energy procurement specialist, servicing a customer base comprising of NHS foundation trusts/hospitals and academic and sporting institutions, through two NHS sponsored OJEU frameworks*;
· The OJEU frameworks will allow Inspired to accelerate its growth into the public sector and significantly increases the strength of the Inspired Public Sector team which was created in 2016
· Consideration to be satisfied by a cash payment of £2.2 million and the issue of 2,993,653 new ordinary shares to the shareholders of FEML, who will remain with the enlarged Group.
· Churchcom is an energy procurement consultancy operating through two principal divisions, the Church Energy Purchasing Group, which specialises in serving the church sector, and Energy Partners, a growing commercial energy procurement business
· Churchcom benefits from a strong secured order book and strong retention rates and is a complementary addition to Inspired's core Corporate Division.
· Consideration to be satisfied by a cash payment of £1.4 million to the shareholders of Churchcom.
Highlights of the transactions
· Enlarged Group's 'Procurement Corporate Order Book' increases to £30.9 million as a result of the Acquisitions;
· Both acquisitions broaden the sector specialisms of Inspired's core Corporate Division;
· Acquisitions financed from the Group's existing financial resources, with funding provided by an extension to the Group's existing £3.5 million acquisition facility with Santander to £5.1 million; and
· Both acquisitions are expected to be earnings enhancing in FY17.
Information on FEML and rationale for the acquisition
FEML was founded in 2012 and is a public sector procurement and energy services specialist, based in Manchester. FEML has a strong presence in the Public Sector, having been spun out of the NHS at the time of its foundation, and the two Directors of FEML have over 20 years' experience in the NHS.
The business has a large portfolio of customers including NHS Trusts/hospitals, academic and sporting institutions. The acquisition of FEML enhances Inspired's presence in the public sector, further augmenting the organic growth and presence acquired as a result of the STC acquisition. The Board believes the NHS sponsored OJEU frameworks provide a vehicle to accelerate growth in the sector as the frameworks can be increased in size significantly from sales leads generated by the Inspired Public Sector team, access to which has historically been a barrier to growth in the sector.
The Board believes that the acquisition will complement Inspired's core Corporate Division and enhance the Group's sector specialism.
For the financial year ended 31 March 2016, FEML delivered revenues of £0.65 million, EBITDA of £0.47 million and generated operating cash of £0.47 million.
Terms of the FEML acquisition
The consideration for the trade and assets of FEML comprises consideration to be satisfied by a cash payment of £2.2 million and the issue of 2,993,653 new ordinary shares in the capital of Inspired Energy (the "Consideration Shares"). The Consideration Shares are being issued to the shareholders of FEML who are all directors of the business and will remain with the enlarged Group and be subject to a 12 month lock-in and orderly market provisions for a further 12 months from the date of admission of the Consideration Shares.
The Consideration Shares will rank pari passu in all respects with the existing ordinary shares. Application has been made to London Stock Exchange plc for the Consideration Shares to be admitted to trading on AIM. Admission of the Consideration Shares to trading on AIM is expected to take place on 26 April 2017. On admission of the Consideration Shares the enlarged issues share capital will be 490,182,608 ordinary shares of 0.125p each.
Information on Churchcom and rationale for the acquisition
Churchcom is an energy procurement consultant based in Peterlee, County Durham. Churchcom operates under two trading divisions, Church Energy Purchasing Group, which specialises in energy procurement for churches and Energy Partners, offering energy procurement services for commercial customers, complementing Inspired's core Corporate Division.
The business benefits from a strong order book and has a long history of retaining customers and growing revenues within both divisions. The Board believes that the Acquisition will add a new sector specialism and further complement Inspired's core Corporate Division.
For the financial year ended 31 January 2017, Churchcom delivered revenues of £0.64 million, EBITDA of £0.35 million and generating operating cash of £0.47 million. Net assets as at 31 December 2016 stood at £0.24 million.
The founder directors of Churchcom have sold the business in order to retire and will leave the enlarged Group following an orderly handover period.
Terms of the Churchcom acquisition
The consideration for the acquisition of the entire issued share capital of Churchcom is to be satisfied by a cash payment of £1.4 million to the shareholders of Churchcom.
Commenting on the acquisitions, Janet Thornton, CEO of Inspired Energy said: "We are delighted to conclude the acquisition of Flexible Energy Management and Churchcom, which are highly complementary additions to the Group's core corporate division. These acquisitions broaden our customer base, further enhance our sector specialisms and increase our geographical spread. Following the transactions, the enlarged Group's Procurement Corporate Order Book now exceeds £30 million, which represents another milestone for the Group and gives us great revenue certainty for the short and medium term.
"We look forward to working closely with the highly experienced and knowledgeable teams of both businesses and welcoming them into our core Corporate Division as we continue to further advance our position as a market leader."
* OJEU frameworks are framework agreements which govern the procurement process for Public Sector Bodies with the intention of improving the effectiveness of the tender process. The frameworks are subject to the rules of Regulation 33 of the Public Contracts Regulation 2015 which transposes Article 33 of Directive 2014/24/EU.
Inspired Energy plc
Janet Thornton, Chief Executive
Paul Connor, Finance Director
+44 (0) 1772 689250
Shore Capital (Nomad and Joint Broker)
Panmure Gordon (Joint Broker)
+44 (0) 20 7408 4090
+44 (0) 20 7886 2500
+44 (0) 20 7193 7463
+44 (0) 7525 324431