Inspired Energy plc Acquisition of Professional Cost Management Group Limited

Inspired Energy, a leading energy procurement consultant to UK and Irish corporates, is delighted to announce that it has today completed the acquisition of Professional Cost Management Group Limited ("PCMG"), a national cost recovery specialist, for an aggregate consideration of up to £700,000, payable in cash.

HIGHLIGHTS

• PCMG provides a forensic auditing service to identify and recover overpayments of utilities and telecoms bills on behalf of its clients and provides optimisation analysis to enable customers to improve their tariff and billing structure;
• The Company has recovered in excess of £100m for clients in the last 18 months;
• PCMG has market expertise in the energy, water, telecoms and accounts payable sectors;
• Whilst Inspired provides cost recovery services to its clients, the integration of PCMG to the Group creates a market leading capability, allowing the Group's existing customer base to further benefit from PCMG's specialisms, and conversely, providing PCMG customers with the opportunity to benefit from the broad service offering of the enlarged Group.
• The Acquisition is expected to be earnings enhancing in FY2020.

Information and rationale for the Acquisition

PCMG was founded in 1993 and was acquired by Alma Consulting Group SAS (a subsidiary of the French Ayming Group) in March 2008. PCMG is the UK's leading overpayment recovering specialist, helping clients improve cash and increase profit margins by recovering utilities and telecoms overpayments. PCMG identifies errors and over payments by analysing the complex tariff and billing structures that surround utility charges. Once errors have been identified, it prepares the relevant claims and manages the case with the various suppliers until an agreement is reached, providing a complete end to end solution. Overpayments can be recovered up to six years in arrears providing a substantial potential historical claim period.

In addition to cost recovery, the company provides optimisation and management services by providing broader market knowledge to identify the appropriate tariff for customers and on-going management of change, reporting and inventory. Its client base includes a significant number of FTSE 100 companies.

The Board believes that the Acquisition will significantly strengthen Inspired's cost recovery service. In parallel, the Board believes PCMG also provides the ability to leverage the opportunity presented by the deregulation of the water industry to review historic billing errors from incumbent providers.

The Managing Director of PCMG will remain with the enlarged Group after completion and the Board intends to incentivise the Managing Director and other key employees of PCMG by granting share options in the Group following completion. PCMG is based in Blackpool, and it is the Board's intention to relocate the business to Kirkham on expiry of the current lease that runs to November 2018.

For the financial year ended 31 December 2017, PCMG delivered revenues of £2.84 million, an EBITDA of £(0.17) million, and a net loss of £(0.19) million. Net assets as at 31 December 2017 stood at £0.7 million. The Board expects PCMG to contribute to the Group's profits within the first 12 months of ownership.

Terms of the Acquisition

The Acquisition has been made on a debt free / cash free basis with the consideration to be satisfied by an initial cash payment of £150,000 to the shareholders of PCMG, with a potential further contingent consideration of up to £550,000 in aggregate ("Earn out Consideration") to be satisfied in cash subject to the achievement by PCMG of certain financial performance criteria based on future EBITDA performance. The initial cash payment has been financed from the Group's existing cash reserves. The Earn out Consideration, if payable, is expected to be self-funding from future cash-flows generated by the enlarged Group.

Commenting on the acquisition, Mark Dickinson, CEO of Inspired said: "We are delighted to conclude the acquisition of PCMG, which is a highly complementary addition to Inspired's core Corporate Division. The PCMG team and brand are well respected within the sector.

"We look forward to working closely with the highly experienced and knowledgeable team of PCMG and welcome them into our core Corporate Division as we continue to advance our position as a market leader."