Prime Minister Gordon Brown’s commitment to build three million new homes by 2020 is great news for social and affordable housing services play Inspace, whose robust numbers for the six months to June reflected organic growth and the benefits of last year’s transforming Widacre acquisition.

Revenues rose 124% to £139.9m, boosted by Widacre, a deal bringing access to many of the UK’s largest and biggest spending registered social landlords (RSLs). ‘We’re well positioned whether its Brown or Cameron, with 72% of our business in social and affordable housing,’ explained finance director Andrew Telfer. ‘That compares with 48% a year ago and represents a dramatic acquisition-led shift.’

Inspace's operating profits sparked up 83% to £6.6m with a drop in operating margins reflecting the impact of the lower-margin Widacre business. Good cash management meant the debt racked up to part-fund the acquisition fell to £29.4m (£31.6m), while adjusted diluted earnings increased 35% to 5.05p, which was impressive given shares issued as consideration for the deal. Inspace, which has already secured 97% of its social housing turnover for 2007 and 85% of its social housing revenues for 2008, is now far less susceptible to local authority budget timing following its expansion into regeneration and new build work.

For December ’07, analysts are looking for increased pre-tax profits of £12.7m (£10.4m), 11.56p of earnings and a likely 3.7p dividend, placing the shares on a forward price to earnings ratio of 12.4 with a 2.6% yield. A year ago we urged investors to hold Inspace for long-term growth despite short-term challenges. Given the group’s terrific growth opportunity and its lowly rating, now is the time to add to holdings.

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