Lancashire energy consultancy in £10.5m sell off of small business arm

Lancashire energy consultancy Inspired Energy has sold off its small business arm in a management buyout worth up to £10.5m.
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The Kirkham-based company, which has in recent years carried out a raft of takeovers of smaller related firms, says it will now concentrate on its more lucrative corporate customers.

The firm which acts as consultants for energy procurement, utility cost optimisation and legislative compliance to other firms, said the deal involves the group's SME division, consisting of subsidiary companies, Energisave Online Ltd, KwH Consulting Ltd and Simply Business Energy Ltd.

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The deal of up to £10.5m, calculated on a cash free debt free basis and support in the form of working capital facility will be made for six months worth up to £750,000. Andrew Nuttall is the managing director of the SME division.

Mark Dickinson CEO of Inspired Energy of KirkhamMark Dickinson CEO of Inspired Energy of Kirkham
Mark Dickinson CEO of Inspired Energy of Kirkham

Inspired, which is based at Progress Business Park in Kirkham, said that the SME division, which provides price comparison and contract arrangement services for small and medium sized companies, was regarded as a non-core activity, contributing seven per cent of the group's revenues in the first half 2020.

It said the smaller customers division had been significantly affected by the on-going pandemic, with it experiencing a reduction in demand for energy supplier switching services.

It added that for the six-month period ending 30 June 2020, the SME division generated revenues of £1.9m, compared to £2.88m for the same period in 2019, and adjusted EBITDA of £0.5m (H1 2019: £0.97).

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It said the downturn continued into the second half of the year with the division making a loss even though it had made use of the Government Coronavirus Job Retention Scheme extensively.

Inspired said the corporate division however, was trading robustly and was ahead of management expectations for the full year.

Inspired said the move was undertaken to enable the Group to focus exclusively on its strategy of providing expert assurance and utility cost optimisation services to Corporate Energy Consumers, helping them manage energy costs effectively and delivering their Net Zero Carbon and ESG objectives.

Mark Dickinson, chief executive of Inspired, said: "The disposal of the SME division represents an important milestone in the strategic direction of Inspired Energy.

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"Unlike the corporate division, where assurance services have performed better than our COVID Sensitised model, and optimisation services where FY2020 performance is impacted by deferrals to project delivery, but is expected to recover in FY2021, the SME Division has proved less resilient to the pandemic.

"Having taken the decision to divest the SME division we are delighted to have agreed the sale with Andrew Nuttall, who has driven the performance of the division since formation.

"The Board believes a sale of the SME division by MBO is the optimal route as it enables the Group to realise value, maintain continuity of service delivery to the customer base and enable Inspired Energy to maintain full market coverage. We wish the team every success for the future."

Energisave Online made a pre-tax profits of £1.23 in the year ending December 2018, Simply Business Energy made £393,457 and KwH Consulting made £58,154 in the same period.All three are registered at the Progress Business Park.

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