Inspired Energy plc (LON:INSE) has reiterated its January trading statement guidance for 2019 results, which it has delayed publication of reflecting FCA advice, but said it will not provide updated guidance for 2020 currently and will defer a decision on paying a final dividend for this year.
In a business update, the leading UK energy consultant to UK and Irish corporates said that in line with the existing guidance it provided in the trading update on 30 January 2020, the group expects to report revenues for the year ended 31 December 2019 of approximately £49.1m, an increase of around 50%, with adjusted underlying earnings (EBITDA) of approximately £19.0m, an increase of 38%.
It added that cash generated from operations - excluding restructuring costs and the impact of deal fees – were approximately £14.0mln, and its net debt was approximately £33.0mln at the year-end.
“The Group is in the fortunate position of having a robust balance sheet and a business underpinned by the strength of its Corporate Order Book, and the diversity of its 2,800 corporate customers that operate across all segments of the UK and Irish economies,” Inspired Energy said in its statement.
It pointed out that its year-end corporate order book stood at £57.5mln and had increased further as at 28 February 2020 to £58.5mln.
The company said there has been no material impact on the assurance and advisory services provided by its core Corporate Division to date, which represents around 90% of 2019 group revenues.
However, it added, the group’s smaller SME division, representing around 10% of 2019 group revenues, is currently seeing a reduction in demand for energy supplier switching services, and as such a number of staff in this division have been placed on furlough, with a core team remaining to service this sector, so the immediate financial impact to the group is being mitigated.
Balance sheet position strong
The group said its balance sheet position is strong, having recently refinanced its banking facilities to October 2023, with an option to extend to October 2024, and, in addition, cash and cash equivalents of £10.7mln were on hand as at 25 March 2020, with approximately £14.0mln of the Group's £60.0mln Revolving Credit Facility undrawn with an additional £25.0mln accordion option available, subject to continued covenant compliance.
The company pointed out: “The Board is actively focused on cash conservation and management, taking prudent and proactive measures to preserve cash.”
It added: “Following a successful 2019, and a strong start to 2020, ordinarily the Board would expect to propose a final dividend for the year in line with that approach.
“However, in light of the exceptional circumstances caused by the COVID-19 outbreak, the Board deems it prudent to defer declaration of the final dividend at this time, and will reassess the position on release of the 2020 interim results statement.”
Inspired Energy also said that, as a result of the recent uncertainty caused by COVID-19, it is is not able to provide updated guidance for the current financial year ended 31 December 2020 at this stage.
The group said it will provide further updates to the market as and when there is greater clarity on the impact of COVID-19 on the trading environment and the UK Government's public health policy measures.
Mark Dickinson, CEO of Inspired Energy commented: "Whilst we undoubtedly are in a period of economic uncertainty, the Board believes that the Group's profitable and cash generative nature coupled with a strong order book and substantial liquidity at its disposal will see it well placed as the economy emerges from the current period of uncertainty.”
"At times of significant trading pressures, companies like Inspired Energy tend to be part of the solution for corporate energy consumers looking to regain their competitiveness and restart their economic engines and as such demand for our service often increases at times of crisis. This was the experience of the energy advisory sector during the financial crisis of 2008,” he added.