Inspired (INSE), a technology-enabled sustainability service provider which advises over 2,900 UK businesses representing around 6.5% of the UK’s expenditure on electricity and 600 firms in Ireland, said in a first-half trading update that it was on track to meet 2023 market expectations.
The company operates via four divisions, which in combination help companies reduce their utility costs (Optimisation), meet Net Zero obligations (Assurance), and deliver ESG disclosures (ESG), all underpinned by technology solutions (Software).
The company said all four divisions had seen first quarter sales momentum carry into the second, with cross-selling helping to drive sales in its Optimisation division, and client retention rates recovering in its Assurance business, which is used by companies to manage utility and sustainability related data.
Alongside strong trading, net debt remains in line with management's expectations, even after accounting for the projected payment of performance-related cash contingent consideration in the first half of the year. The company expressed confidence in its ability to achieve a cash conversion ratio exceeding 80% for the full fiscal year 2023.
Analysts expect revenue of £110.5m and Adjusted EBITDA of £24.2m in the year to December 2023.
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As well as the cost savings companies are increasingly seeking in the wake of the energy crisis, many are subject to increasingly stringent environmental legislation and ESG reporting standards, particularly those trading on public markets.
That’s good news for Inspired, whose offering is increasingly in demand to help companies with the many challenges they face with the energy transition. It said that it had entered the second half with a strong sales pipeline and a growing order book.
Despite this, the shares trade on a forecast 2023 PE of less than 7x, which seems cheap for a business that occupies such a strong position in this fast-growing and no longer niche sub-sector.