Energy consultant confident of its markets post-pandemic
Preston-based energy procurement business Inspired Energy said it has been impacted by the UK lockdowns, but expects to trade to expectations, it said in a market update today.
It said its performance through the end of quarter four remained resilient, despite the ongoing disruption from COVID-19, and the board expects the corporate division, and consequently the group’s continuing operations, to report FY2020 underlying EBITDA in line with market consensus.
Underlying cash generated from continuing operations – excluding restructuring costs and the impact of deal fees – is expected to be approximately £10m, down from £13.7m the previous year, with net debt expected to be approximately £18m at the year-end compared with £33.4m in 2019: £33.4m.
The corporate order book increased to £63m (31 Dec 2019: £57.50m), with strong customer retention and robust performance from significant new customer wins.
The group exited 2020 having made significant strategic progress and with a strengthened platform, capable of generating long term growth and significant stakeholder returns as its markets continue to recover.
It said trading in the core Energy Assurance Service business remains robust despite further disruption in the fourth quarter as a result of the ongoing pandemic.
The average energy consumption reduction by customers for the April to December period is expected to be around 18%, better than the 25% reduction modelled in the board’s COVID downside case.
The Energy Optimisation Services businesses, which are project-based and typically require access to customer sites, was disrupted from April to September as a result of pandemic restrictions resulting in some project deferrals.
While October saw the start of a recovery for the optimisation Services business, the lockdowns during November again restricted site access and caused the deferral of some projects into FY2021.
As reported, further lockdowns in quarter four continued to impact the performance of the SME division, which had been loss making since quarter two as a result of the significant reduction in SME customer energy switching activity and consumption. Following its disposal in December 2020, the SME division will be reported as a discontinued operation in the Group’s full year results.
The board expects the Energy Assurance Service business to perform robustly against management’s expectations for 2021. Energy Optimisation Services continue to experience further deferrals to projects related to the latest lockdown.
To date, the overall impact of assurance and optimisation services is expected to be neutral against 2021 expectations. The board said it is keeping the matter under review, given the ongoing fluid nature of the situation, as the year develops and will provide further guidance with the publication of its full year results on March 31.
Chief executive, Mark Dickinson, said: “The impact on the financial performance of the group for FY2020 is a consequence of the challenges caused by the pandemic, which are outside our control.
“The board is pleased with the continued outperformance of the group’s corporate energy assurance service lines and is confident that energy optimisation services will regain strong momentum once restrictions on movement are lifted.
“The group remained cash generative and has a strong balance sheet as we look to continue to execute on our successful acquisition strategy.
“The board remains confident there is a strong and growing demand for optimisation services as ESG (environmental, social and corporate governance) becomes a higher priority for corporates.”
