Inspired are paying an initial £5.0 million to acquire the 40 per cent on a debt free, cash free, normalised working capital basis. A further consideration of up to £3.0 million may become payable in cash, subject to the achievement of financial performance targets for the year ending 31 December 2019. The Initial Consideration has been financed from the Inspired’d existing resources, with funding provided by a drawdown of the Group’s £12.5 million acquisition facility with Santander.
Inspired has an option, until 31 July 2021, to acquire the remaining 60 per cent off Ignite Energy. Details of the option agreement are below. Inspired’s Mark Dickinson (CEO) and Paul Connor (FD) will join the board of Ignite, which will consist of five people.
Ignite provides energy management solutions to large multi-site commercial energy users. Services include energy procurement, energy efficiency and optimisation services The business began trading in 2009 and is led by David and Ben Higgins. Headquarted in Wantage, Oxfordshire, Ignite employs 51 people based across 3 locations in the UK.
For the financial year ended 31 December 2018, Ignite had revenues of £12.41 million, profit before tax of £3.08 million and generated operating cash of £1.50 million. Net assets as at 31 December 2018 stood at £4.08 million.
Mark Dickinson, CEO of Inspired said: “We are delighted to conclude our strategic investment in Ignite, a business which is highly complementary to Inspired’s core Corporate Division. The Strategic Investment significantly broadens and accelerates our optimisation service offering. Ignite has proven itself, over many years, to be capable of achieving material improvements to the energy efficiency of its clients. Inspired currently has over 500 clients within the estate and energy intensive segments who meet the Ignite customer profile, and could benefit from the services that Ignite provides.”
· Under the Option Agreement, from completion until 31 July 2021, Inspired has an exclusive one-way call option to acquire the outstanding balance of 60 per cent of the issued share capital of Ignite (“Remaining Ignite Shares”).
· Under the terms of the Option Agreement, Inspired will pay consideration for the Remaining Ignite Shares which equates to an enterprise value of 6.0x earnings before interest, tax, depreciation and amortisation (“EBITDA”) (“Option Consideration”).
· The Option Consideration shall be based off a minimum EBITDA of £3.0 million, and at the time of exercising the Option Agreement, an amount of £10.8 million will become payable by Inspired.
· Should the EBITDA be greater than £3.0 million in either of the scenarios shown below, then additional consideration will become payable by Inspired, being the higher of:
– 6.0x Ignite’s EBITDA for the last 12 months ending on the date of the exercise of the option under the Option Agreement, or;
– 6.0x Ignite’s EBITDA for the financial year ending the year in which the option is exercised under the Option Agreement;
– Less the £10.8 million already paid on exercise of the option, subject to a maximum EBITDA of £7.0 million.
· Any additional consideration due will be payable within 90 days following the end of the financial year in which the option agreement is exercised, Ignite’s financial year end is 31 December.
UK, Kirkham, Lancashire & Wantage, Oxfordshire
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