Final Results
Spice Holdings PLC
10 July 2006
Press Announcement
For immediate release 10 July 2006
Spice Holdings plc
Final results 30 April 2006
Spice Holdings plc ('Spice' or 'the Group'), the provider of outsourced support
services to the commercial and utility sectors, is pleased to announce its full
year results for the year ended 30 April 2006.
Financial highlights
Profit before tax of £7.4 million (2005: £5.2 million) - 42% increase
EBITA* of £9.8 million (2005: £6.2 million) - 58% increase
EBITA* converted into operating cash flow - 100% (2005: 65%)
Diluted earnings per share of 12.6 pence (2005: 10.8 pence) - 16% increase
Adjusted diluted earnings per share of 16.1 pence (2005: 12.1 pence) - 33%
increase
Total dividend of 2.6 pence per share (2005: 2.2 pence) - 18% increase
*EBITA comprises profit on ordinary activities before interest, tax,
amortisation of intangible fixed assets.
Operational highlights
July 2005 Launch of Freedom Data Services
September 2005 Placing of seven million shares raising net proceeds of
£14.5 million
September 2005 BAA letter of agreement
January 2006 Freedom Technical Services exceeds £2 million turnover
March 2006 Launch of water leakage repair service
Simon Rigby, Chief Executive Officer commented:
'As the biggest installer of water meters in the UK, environmental and economic
pressures thrown into sharp focus by water shortages in some parts of the
country have helped our Water Services division become the fastest growing
division in the Group producing a profit increase of 43%. Our new leakage repair
service has been launched at an opportune time.
We have started the financial year with high levels of earning visibility and we
continue to be pleased with the overall Group performance and trading remains in
line with expectations. There are considerable cross selling opportunities
within the Group and we are focused on converting those opportunities into
earnings. Consequently, Spice remains well placed to continue to grow
organically within its expanding markets, and continues to pursue complementary
acquisition opportunities. The Board continues to believe that the long term
prospects for the Group remain strong and continues to look to the future with
confidence.'
...Ends...
For further information, please contact:
Spice Holdings plc Tel: 0113 384 3838
Simon Rigby, Chief Executive Officer
Oliver Lightowlers, Group Finance Director
Carl Chambers, Corporate Development Director
Financial Dynamics Tel: 020 7831 3113
Sally Lewis
Billy Clegg
Chairman's statement
Introduction
I am delighted to present our full year results for 2006, in what has been
another record year for Spice. Turnover for the year was £132.9 million (2005:
£85.5 million) and profit before tax was £7.4 million (2005: £5.2 million),
increases of 55% and 42% respectively. At the same time our EBITA operating
margins improved to 7.4% (2005: 7.2%). Diluted earnings per share, adjusted for
the amortisation of intangible fixed assets, increased by 33% to 16.1 pence per
share (2005: 12.1 pence per share). I am also pleased to report that the Board
is recommending a final dividend of 1.9 pence per share, making a total dividend
of 2.6 pence per share for the year (2005: 2.2 pence), an increase of 18%.
Strategy
Our strategy remains to grow the business organically and to enhance the
business through complementary acquisitions. During the year, we have secured
significant contract wins and renewals across each of our operating divisions
which underpins our visibility of future revenues. At the same time, we have
taken advantage of favourable sector conditions to enhance our Utility Services
offering through the acquisitions of Lamva, Baineport, Maintech and Kemac. We
have also expanded our support services offering through the formation of our
Commercial Services Division following the acquisition of Circle Britannia and
Serviceline and strengthened this further in the new financial year through the
acquisitions of Breval and Inenco.
Our people
The success that we have achieved over the past year has been made possible by
the hard work of our staff. I would like to extend thanks to all of our
employees for their commitment and personal contribution to our achievements. We
have a strong team at all levels within the Group and it is pleasing to see over
700 employees of Spice participating in our latest Sharesave scheme, which began
in February of this year.
Outlook
We enter the new financial year with confidence and remain firmly focussed on
delivering shareholder value.
Sir Rodney Walker
Chairman
Chief Executive Officer's statement
Spice operates in two sectors, Commercial Services and Utility Services:
Commercial Services
Facilities
In September 2005, Spice acquired Circle Britannia and its sister company
Serviceline, which together established our Commercial Services Division.
Commercial Services has recorded a profit before interest and tax for the eight
months since acquisition of £1.1 million. Against a backdrop of a competitive
commercial market it is pleasing that we have been able to retain existing
clients as well as grow the business organically by winning new business in the
period including Debenhams, Claire's Accessories and The Body Shop.
Circle Britannia provides outsourced facilities services, which include reactive
and planned maintenance and technical services to the commercial sector, and
reinstatement services for major insurers. Clients include DSG International
(formerly Dixons) and Norwich Union. Serviceline provides comprehensive 'front
end' facilities management incorporating an intelligent, proactive helpdesk
service which can be delivered either as part of an integrated facilities
management service, incorporating Circle Britannia's facilities service
operation, or as a stand alone service managing clients' existing suppliers.
Clients include Starbucks and Waterstones. Recently, Serviceline was selected by
Kentucky Fried Chicken to provide integrated facilities management services
across 300 managed UK stores over the next three years.
The prospects for Commercial Services remain positive moving into the new
financial year, with a number of interesting opportunities being developed.
Further acquisition opportunities continue to be pursued to accelerate the
development of Commercial Services. Indeed, following the year end we have
completed the acquisition of Breval which specialises in the design,
installation and maintenance of heating, ventilation and air-conditioning (HVAC)
services. We have sought to gain a presence in this market for several years,
without getting involved in construction, and Breval brings a high level of
technical skills to our Commercial Services Division. We have also completed the
acquisition of Inenco, which is one of the leading energy management businesses
in the UK, specialising in cost control, consultancy and fuel cards. The drive
to manage energy consumption has both a cost and
compliance element - efficient use and procurement of energy will yield an
economic benefit but the legal and moral need to be compliant with various
regulations is equally strong. We see tremendous opportunities to sell Breval
and Inenco's services to our existing client base and also to sell our services
to Breval and Inenco's client base. We continue to seek bolt on acquisitions
that are complementary to our existing business including mechanical and
electrical maintenance.
Utility Services
Electricity
Electricity Services has had another successful year, recording a profit before
interest and tax of £3.9 million (2005: £2.8 million), an increase of 40%. The
business has achieved strong growth in all areas of activity and the results
include contributions for the first time of £0.9 million from acquisitions made
during the year. Freedom Projects (formerly Lamva) has been successfully
integrated into Electricity Services and the integration of Baineport and
Maintech is progressing to plan.
The combined Electricity Services business is now organised into five key
service offerings which are:
• Freedom Consultancy Services
• Freedom Power Projects
• Freedom Volume Asset Replacement
• Freedom Asset Care and Maintenance
• Freedom Network Solutions
Freedom Consultancy Services specialises in design and planning for the
electricity industry whilst also offering our customers the opportunity to
outsource activities of a technical nature. Consultancy Services comprises
Freedom Data Services, Freedom Professional Services which focuses on civil
design and Freedom Wayleave Consents which manages solutions with Landowners,
Planning Authorities and The Department of Trade and Industry for our clients to
enable utility networks to be built across private land. Our professionalism in
this area has been recognised by our appointment to work on the Olympic Village
for EDF Energy. Freedom Data Services, formed in July 2005 and which manages
utility drawings, plans and other databases, has achieved excellent results in
its first year. We now have over 100 staff working in this Division and have
secured significant framework contracts for customers including National Grid.
Freedom Power Projects brings together all the major construction elements of
Electricity Services including Freedom Technical Services. Freedom has been very
successful at winning major projects across the UK, including the recent award
of a three year framework contract with Scottish Power for substation design and
build services. This has resulted in the opening of a Scottish office to service
the Scottish Power contract at Bellshill near Glasgow.
Freedom Volume Asset Replacement contains Freedom Electrical Services and
Baineport. During the year, we have secured switchgear replacement contracts
with CE Electric, Central Networks and EDF Energy. Volume asset replacement is
anticipated to be a significant growth area within the UK due to ageing
networks.
Freedom Asset Care and Maintenance, which brings together Freedom Maintenance
and Maintech, is our largest division in terms of revenue. Following the
acquisition of Maintech we now have 750 private network customers where we
maintain and service their high/low voltage networks. This includes customers
like Chelsea Football Club and Anglian Water.
Freedom Network Solutions specialises in building and connecting electricity
networks focusing on wind farms and high industrial and commercial electricity
users. We have recently won several wind farm connections including Red Tile
Farm in Cambridgeshire which is worth £1.6 million to the Group. As the
renewable energy sector gathers pace due to political and environmental drivers,
we see this as a growth area for the business.
Using our Freedom brand, we are continuing to develop a 'cradle to grave'
approach to utility network projects. We also consider private networks to be a
significant potential growth area, with an estimated 95% of the market still
open to Freedom. With the opening of our office in Scotland we now have a '
springboard' to develop our brand and service offering in this important market
place. We will continue to invest in our people while at the same time
recruiting graduates and apprentices to ensure we have a workforce to enable us
to meet the demands of the significant opportunities created by utilities
investment strategies.
Telecoms
Telecoms Services reported a profit before interest and tax for the year of £2.1
million (2005: £2.4 million). Performance in the second half of the year was
significantly improved compared to the first half, with profit before interest
and tax 100% higher. With the improved second half, and project orders converted
at the end of the year, we look forward to further improvement in the new
financial year.
AirRadio continues to deliver improved performance and expand its customer and
product base. Revenues increased by 14% in the year. Additional radio network
capacity has been added to both the Heathrow and Gatwick networks in order that
we can take full advantage of the British Airports Authority (BAA) contract
agreed in September 2005. We continue to look for new opportunities at UK
airports to expand our operations with Southampton and Cardiff being added to
the network during the year. Work for our biggest client British Airways (BA)
continues to develop steadily as we provide consultancy services connected to
Heathrow Terminal 5, together with other projects. Our biggest area of growth
has been within non-BA revenues with cellular revenues rising at a very strong
rate.
Our Team Telecom business has benefited from an improvement in market conditions
in the wireless communications market in the second half of the year, which
together with strong relationships with its existing customers, has seen the
financial performance of the business improve significantly. In September we
acquired Hutchison, a specialised telecommunications maintenance business, which
provides first line maintenance and support to internet protocol (IP) and
telephony network operators. Hutchison operates on a pan European basis and is
well placed to tap into the growth in this market. This business has now been
integrated and merged with the business of Team Telecom in order to gain
economies of scale in management, operations and administration, and now
operates as Hutchison Team Telecom under one integrated management team. The
combined business is currently bidding for a number of exciting longer term
business opportunities and has already secured several next generation
technology pilot projects which, if successful, will extend to major framework
agreements for the forthcoming financial year and beyond.
Team Simoco, our professional mobile radio business (PMR), has focused its
energies this year on extending its product base and further developing its UK
and overseas distribution channels. A series of new radio and trunking products
have been developed including the Xfin infrastructure range. Xfin revolutionises
the way that PMR technology is both priced and used. This has in turn seen Team
Simoco win two sizeable project orders at the close of the year and has led to
several other opportunities. Together with its TETRA digital products range,
this has put Team Simoco at the forefront of the PMR industry and provides a
strong base that we believe can be exploited over the coming months and years
ahead. Standard product sales grew steadily and UK maintenance services continue
to build, in line with our objective to increase the recurring revenue
proportions of the business, and although the business did suffer from slower
than anticipated international sales in the first half of the year, the business
begins the new financial year with a significantly improved order book.
Water
I am pleased to report that Water Services has recorded profit before interest
and tax of £4.2 million for the year (2005: £2.9 million), an increase of 43%.
These results include a contribution for the first time of £0.1 million from
Kemac. Significant organic growth has been achieved by each of the other
businesses within the Division but particularly H2O Water Services (H2O) and
Meter U.
H20, which undertakes water meter installation and small works operations, made
a significant profit contribution to the Division following completion during
the year of the integration of Atlantic Water Services. Contract extensions with
United Utilities, Yorkshire Water and Scottish Water, together with re-securing
contracts with South East Water and contract awards with new clients including
Brey Utilities and Northumbrian Water, provide a firm platform for growth next
year. In the last quarter, work has been secured for our newly formed leakage
repair service and this is expected to grow further next year.
In November 2005, Water Services acquired Kemac which undertakes water meter
installation, water regulation audit and rectification and call out plumbing
services. The integration of Kemac into the wider Water Services business
continues to progress to plan. Kemac has enhanced both our geographical coverage
and client base, which now includes Thames Water and Three Valleys Water, and
firmly reinforces our national presence.
Metro Rod, which provides drain and environmental services, increased profits by
over 10% and the business is well positioned for the new financial year. Meter
U, our meter reading business, has performed strongly in the year with revenues
and profits growing by greater than 80%. Meter U now has in excess of 500 meter
readers and over the course of the year we have increased the number of reads
taken per month by 0.4 million. Our relationship with our key client, Siemens,
continues to develop and we are currently exploring a number of other
opportunities to enhance our service offering.
Cross selling
Management across the Group takes particular interest in fostering cross
selling. Each of our Divisions has activities that are complementary to those
offered by other Divisions in the Group especially following the various
acquisitions made during the course of the year. Opportunities completed so far
have included the replacing of external suppliers with internal suppliers.
However, the challenge during the next 12 months is to profit from the
opportunities that are now being created. Already, several cross divisional
introductions have been made resulting in joint working and bids. This is
expected to gain momentum over the next twelve months.
Head office
Head office costs are mainly comprised of salaries, including the Group's HR and
IT functions, and also professional costs. Head office costs for the year were
slightly less than expectations at £3.0 million (2005: £2.2 million).
After taking account of one off credits totalling £0.5 million to Head office
costs in 2005, relating principally to the settlement of certain historic
liabilities for amounts less than previously provided, the underlying increase
in Head office costs for the year was £0.3 million. This increase is caused by
the full year effect of costs related to maintaining Spice's public listing and
also investment in infrastructure to support the enlarged Spice group following
acquisitions made in the year.
Acquisitions
Six acquisitions have been made during the year, which are summarised below.
Maximum
Initial net potential
cash Initial share contingent
consideration consideration consideration
£'m £'m £'m
Lamva 5.2 0.5 -
Circle Britannia and 15.2 - 0.1
Serviceline
Hutchison 1.1 - 3.9 Contingent consideration
based on earnings for the
12 months to February 2007
Kemac 2.0 - 4.2 Contingent consideration
based on earnings for the
18 months to April 2007
Baineport 5.0 - 1.3 Contingent consideration
based on the renewal of
certain contracts
Maintech 2.1 - 0.8 Contingent consideration
based on earnings for the
period to April 2007
30.6 0.5 10.3
Initial net cash consideration paid in respect of these acquisitions totals
£30.6 million with £0.5 million also being paid as share consideration. Deferred
contingent consideration of up to £10.3 million might also become payable
depending on earnings and the renewal of certain contracts. Integration of these
acquired businesses has either been completed or is progressing according to
plan. During the year, the Group has also recognised within intangible fixed
assets £2 million of contingent consideration relating to the acquisition of Air
Radio, the likelihood of payment of which during the year ending April 2009 is
now considered probable.
Outlook
We continue to be pleased with the overall Group performance and trading remains
in line with expectations. Spice remains well placed to continue to grow
organically (including by cross selling across operating divisions) within its
expanding markets, and continues to pursue complementary acquisition
opportunities. The Board continues to believe that the long term prospects for
the Group remain strong and continues to look to the future with confidence.
W S Rigby
Chief Executive Officer
Financial review
The financial performance of the Group continues to be strong. The acquisitions
made during the year have contributed significantly to the increased profits
reported as has the performance of our Water business. Operating margins have
improved during the year and cash generation has been particularly pleasing.
Turnover
During 2006, turnover increased by 55% to £132.9 million (2005: £85.5 million),
of which acquisitions contributed £37.2 million. Organic turnover growth has
been recorded within each of our Divisions apart from Telecoms which was
impacted by slower than anticipated international sales in the first half of the
year.
Profit on ordinary activities before interest, tax and amortisation of
intangible fixed assets (EBITA)
EBITA increased by 58% to £9.8 million (2005: £6.2 million), of which
acquisitions contributed £3.1 million in the year. Our Water Services Division
has performed particularly strongly, with EBITA growth exceeding 41%.
EBITA operating margins for the Group improved to 7.4% (2005: 7.2%). This is a
pleasing result after taking account of the integration of acquisitions made
during the course of the year.
Interest
Interest payable for the year was £0.8 million (2005: £0.6 million). The Group
has benefited from cash raised at the placing in September 2005 together with
the cash generation of our operations but offset by the cost of acquisitions
made. We highlighted at the half year that the Group had also taken the
opportunity to re-negotiate its banking facilities with HSBC Bank which has
resulted in more favourable borrowing terms. Interest cover for the year was
10.3 times (2005: 10.2 times). Following the year end, the Group has extended
its banking facilities from £30 million to £60 million.
Profit on ordinary activities before tax
Profit on ordinary activities before tax increased by 42% to £7.4 million (2005:
£5.2 million). The charge relating to the amortisation of intangible fixed
assets has significantly increased in the year to £1.6 million (2005: £0.4
million) reflecting the amortisation of goodwill arising on acquisitions made in
the year.
Tax
The Group's effective rate of tax for the year was 23.5% (2005: 29.1%) which is
lower than the standard rate of tax principally as a result of tax relief
arising on the exercise of share options and the utilisation of prior year tax
losses.
Earnings per share
Diluted earnings per share at 12.6 pence (2005: 10.8 pence) increased by 16% and
adjusted diluted earnings per share (before amortisation of intangible fixed
assets and non-operating exceptional costs) at 16.1 pence (2005: 12.1 pence)
increased by 33%.
In prior years, the Group's ESOP had adequate shares to satisfy all options
vested and also options granted but not yet vested. As a result of options
granted in the year, this is no longer the case and new shares will either be
issued or bought on the market to make up this difference.
Dividend
The Board has recommended a final dividend of 1.9 pence (2005: 1.7 pence) per
share payable on 19 September 2006 to shareholders on the register at 8
September 2006. An interim dividend of 0.7 pence per share (2005: 0.5 pence) was
paid on 14 February 2006, making a total dividend of 2.6 pence per share (2005:
2.2 pence per share) for the year. The dividend is covered 4.9 times by earnings
(2005: 4.7 times).
Cash flow
The Group has significantly improved cash generated in the year. Net cash
inflows from operating activities increased by £5.8 million to £9.8 million
(2005: £4.0 million). The Group converted 100% of EBITA into operating cash flow
(2005: 65% conversion). During the year, working capital utilised increased by
£2.0 million connected principally to investment made within acquisitions during
the year. Capital expenditure was consistent with the prior year and the Group
disposed of one freehold property for cash proceeds of £0.3 million.
In September 2005, the Group placed 7,009,346 new shares at a price of 214 pence
with institutional and other investors to raise net proceeds of approximately
£14.5 million.
Balance Sheet
Net assets have increased to £39.6 million (2005 as restated: £18.1 million).
This increase reflects the impact of the net placing proceeds together with
retained profit for the year and cash generated from the exercise of employee
share options. The placing proceeds were used to repay bank debt. Net bank debt
at the year end was £13.4 million (2005: £4.5 million).
During the year, the Group's freehold land and buildings were revalued by a firm
of independent chartered surveyors, resulting in an uplift in the value of
tangible fixed assets by £0.6 million.
Changes in UK accounting standards
On 1 May 2005, the Group adopted FRS 21 Events after the balance sheet date.
The main impact of FRS 21, which is reflected within these financial statements,
is that dividends payable are now accounted for when paid. The Group also
adopted the presentational requirements of FRS 25 Financial Instruments:
Disclosure and Presentation, on 1 May 2005, and considered FRS 25 in determining
disclosures made within these financial statements.
On 1 May 2006, the Group adopted FRS 20 Share based payments. FRS 20 seeks to
reflect the cost of share based remuneration, including option schemes, within
the profit and loss account. The effect of FRS 20 has not been reflected within
these financial statements but will be within statements prepared for the year
ending April 2007.
International Financial Reporting Standards ('IFRS')
The Group continues to prepare for the conversion from UK accounting standards
to IFRS. The Group established a project team in 2005 to plan for and achieve a
smooth transition to IFRS. The project team is looking at all implementation
aspects of IFRS including accounting policies and system impacts. The Group has
not yet determined the full effect of adopting IFRS and expects to adopt IFRS
within its financial statements for the year ending April 2008.
O J Lightowlers
Group Finance Director
Consolidated profit and loss account for the year ended 30 April 2006
2006 2005
Note £'000 £'000
as restated
Turnover:
- Continuing operations 95,695 85,508
- Acquisitions 37,235 -
Group turnover 2,5 132,930 85,508
Cost of sales (93,360) (59,713)
Gross profit 39,570 25,795
Administrative expenses (31,376) (19,943)
EBITA 9,790 6,208
Amortisation of intangible fixed assets (1,596) (356)
Operating profit:
- Continuing operations 6,060 5,852
- Acquisitions 2,134 -
Group operating profit 8,194 5,852
Losses arising on disposal of fixed assets - (77)
Net interest payable (797) (567)
Profit on ordinary activities before tax 5 7,397 5,208
Tax on profit on ordinary activities (1,739) (1,515)
Profit on ordinary activities after tax 5,658 3,693
Equity minority interests - (5)
Profit for the year attributable to equity shareholders 5,658 3,688
Dividends 3 (943) (177)
Retained profit for the year 4,715 3,511
Earnings per share (pence per share)
Basic 4 13.6 11.6
Diluted 4 12.6 10.8
EBITA comprises profit on ordinary activities before interest, tax, amortisation
of intangible fixed assets and non-operating exceptional costs.
Consolidated balance sheet as at 30 April 2006
2006 2005
Note £'000 £'000
as restated
Fixed assets
Development expenditure 825 712
Purchased goodwill 41,458 6,950
Negative goodwill - (174)
Intangible fixed assets 42,283 7,488
Tangible fixed assets 13,623 11,876
Investments 212 212
56,118 19,576
Current assets
Stock 4,264 1,773
Debtors 32,607 16,609
36,871 18,382
Creditors - amounts falling due within
one year (33,294) (16,990)
Net current assets 3,577 1,392
Total assets less current liabilities 59,695 20,968
Creditors - amounts falling due after
more than one year (12,237) (1,437)
Provisions for liabilities and charges (7,820) (1,389)
Net assets 39,638 18,142
Capital and reserves
Called up equity share capital 4,947 4,213
Share premium account 27,462 13,104
Revaluation reserve 2,103 1,555
Capital redemption reserve 100 100
Profit and loss account 5,026 (830)
Equity shareholders' funds 6 39,638 18,142
Consolidated cash flow statement for the year ended 30 April 2006
2006 2005
Note £'000 £'000
Net cash inflow from operating activities 7a 9,780 4,024
Returns on investments and servicing of finance
Net interest paid (789) (560)
Interest element of finance lease payments (8) (7)
(797) (567)
Tax paid (785) (1,483)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,286) (2,308)
Development expenditure (335) (329)
Sale of tangible fixed assets 481 1,786
(2,140) (851)
Acquisitions
Purchase of trade and assets - (1,362)
Purchase of subsidiary undertakings (33,028) -
Net cash acquired with subsidiary undertakings 3,301 -
(29,727) (1,362)
Equity dividends paid (943) (177)
Net cash outflow before financing (24,612) (416)
Financing
Principal repayment due under finance leases (79) (133)
Sale of investments - own shares 1,102 1,141
Net proceeds from issue of shares 14,527 11,267
Bank loan repayments (16,516) (11,812)
Bank loan advances 28,277 1,750
Net cash inflow from financing 27,311 2,213
Increase in cash in the year 7b, 7c 2,699 1,797
Notes to the preliminary announcement for the year ended 30 April 2006
1 Basis of accounting
The audited consolidated financial information for the year ended 30 April 2006
has been prepared in accordance with applicable UK accounting standards and is
consistent with accounting policies applied in the financial statements for the
year ended 30 April 2005, with the exception of the adoption of FRS 21 Events
After The Balance Sheet Date and FRS 22 Earnings per Share which were adopted on
1 May 2005. Comparative numbers have been restated to reflect the impact of the
adoption of FRS 21. In addition, the parts of FRS 25 Financial Instruments:
Disclosure and Presentation relating to presentation were adopted on 1 May 2005
and considered in determining disclosures made within the financial information.
The financial information included in this announcement has been extracted from
the audited financial statements for the years ended 30 April 2006 and 2005. The
content of this announcement has been agreed with the Company's auditors.
This preliminary announcement does not constitute the Group's financial
statements. The Group's 2006 Annual report and financial statements, on which
the Company's auditors, PricewaterhouseCoopers LLP, have given an unqualified
opinion in accordance with Section 235 of the Companies Act 1985, are to be
delivered to the Registrar of Companies following the Company's Annual General
Meeting. The Group's 2005 accounts, which contain an unqualified audit report,
have been filed with the Registrar of Companies.
2 Turnover
Turnover, which excludes value added tax, arises from several activities.
Turnover is recognised in the profit and loss account at the point that a
service is provided or products supplied for each of the following activities:
• facilities management and maintenance services;
• consultancy, infrastructure design and asset maintenance services;
• private mobile radio products;
• drain care, maintenance, repair and cleaning services;
• services for the development and support of telecommunications networks;
• property maintenance; and
• information technology installation, commissioning and maintenance activities.
Where the Group operates as principal to the transaction, turnover is recognised
at gross values. Where the Group acts as agent in the transaction, with the
franchisee being the principal, the Group recognises within turnover the net
commission earned on the transaction.
3 Dividends
2006 2005
£'000 £'000
as restated
Amounts recognised as a distribution from shareholders' funds during
the year
Final dividend paid of 1.7 pence per share for the year ended 30
April 2005 (2005: nil) 633 -
Interim dividend paid of 0.7 pence per share for the year ended 30
April 2006 (2005: 0.5 pence) 310 177
943 177
Proposed final dividend of 1.9 pence for the year ended 30 April 2006
(2005: 1.7 pence) 847 614
Dividends amounting to £93,000 (2005: £136,000) have been waived by the ESOP and
therefore deducted in arriving at the aggregate of dividends proposed. It is
proposed that the final dividend per share amounting to £847,000 (2005:
£633,000) will be paid on 19 September 2006 to those shareholders on the
register at 8 September 2006.
The adoption of FRS 21 has given rise to an increase in shareholders' funds of
£614,000 at 30 April 2005. In accordance with FRS 21, the final dividend for the
year ended 30 April 2006 will be accounted for, following payment of that
dividend, in the first half of the year ending 30 April 2007.
4 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of shares in issue during
each period. The weighted average number of shares, after adjusting for shares
held by the ESOP, in issue during the year used in the calculation of basic
earnings per share was as follows:
2006 2005
'000 '000
Weighted average shares for basic earnings per share 41,667 31,900
Diluted earnings per share is the basic earnings per share adjusted for the
dilutive effect of the conversion into fully paid shares of the weighted average
number of share options outstanding during the year. The weighted average number
of shares in issue during the period used in the calculation of diluted earnings
per share was as follows:
2006 2005
'000 '000
Weighted average shares for diluted earnings per share 45,051 34,043
Adjusted earnings per share have been calculated so as to exclude the effect of
the amortisation of all intangible fixed assets and non-operating exceptional
costs. Adjusted earnings per share have been presented in order that the effects
on reported earnings of the amortisation of intangible fixed assets and
non-operating exceptional costs can be fully appreciated. Adjusted earnings used
in the calculation of basic and diluted earnings per share reconciles to basic
earnings as follows:
2006 2005
£'000 £'000
Basic earnings 5,658 3,688
Non-operating exceptional costs - 77
Amortisation of intangible fixed assets 1,596 356
Adjusted earnings 7,254 4,121
No adjustment has been made for tax since the amortisation of intangible fixed
assets is not expected to be allowable for tax purposes.
Earnings per share (pence per share)
Basic 13.6 11.6
Diluted 12.6 10.8
Adjusted earnings per share (pence per
share)
Basic 17.4 12.9
Diluted 16.1 12.1
5 Segmental analysis
The turnover for the year was derived from the Group's principal activities and
is attributable to the following markets:
2006 2005
By destination £'000 £'000
UK 130,439 83,830
Continental Europe 2,126 853
Rest of the World 365 825
132,930 85,508
All turnover originates in the United Kingdom. The Group's profit before tax
substantially arises from UK operations and consequently the following analyses
are presented by business segment only.
5. Segmental analysis (continued)
Turnover for the year is derived from the Group's principal activities as
follows:
2006 2005
£'000 £'000
Commercial Services
Facilities 17,332 -
Utility Services
Electricity 58,875 36,742
Telecoms 13,954 13,493
Water 42,237 35,045
Head office 532 228
132,930 85,508
The Group's profit before tax was derived from its principal activities as
follows:
2006 2005
£'000 £'000
Commercial Services
Facilities 1,071 -
Utility Services
Electricity 3,917 2,780
Telecoms 2,058 2,373
Water 4,193 2,937
Head office (3,045) (2,238)
8,194 5,852
Non-operating exceptional costs - (77)
Net interest payable (797) (567)
7,397 5,208
6 Reconciliation of movement in equity shareholders' funds
2006 2005
£'000 £'000
as restated
Profit for the year 5,658 3,688
Dividends (943) (177)
Retained profit for the year 4,715 3,511
Unrealised surplus on revaluation of properties 587 -
Proceeds from sale of own shares 1,102 1,141
Net proceeds from issue of shares 15,092 11,267
Net addition to equity shareholders' funds 21,496 15,919
Opening equity shareholders' funds 18,142 2,223
Closing equity shareholders' funds 39,638 18,142
Opening equity shareholders' funds were originally stated as £17,528,000 at 1
May 2005 prior to the adoption of FRS 21, as described in note 1.
7 Notes to the cash flow statement
7a) Reconciliation of operating profit to net cash inflow
2006 2005
£'000 £'000
Operating profit 8,194 5,852
Depreciation of tangible fixed assets 2,072 1,720
Amortisation of negative goodwill (174) (220)
Amortisation of intangible fixed assets 1,770 576
Profit on sale of fixed assets (41) -
(Increase)/decrease in stock (1,367) 742
Increase in debtors (5,637) (2,271)
Increase/(decrease) in creditors 4,963 (2,375)
Net cash inflow from operating activities 9,780 4,024
7b) Analysis of net debt
At At
1 May Non cash 30 April
2005 Cash flows movements 2006
£'000 £'000 £'000 £'000
Bank overdraft (2,713) 2,699 - (14)
Increase in cash during the year (2,713) 2,699 - (14)
Bank loans due within one year (243) (1,024) - (1,267)
Bank loans due after one year (1,429) (10,737) - (12,166)
Finance leases due within one year (55) 79 (83) (59)
Finance leases due after one year (8) - (63) (71)
Net debt (4,448) (8,983) (146) (13,577)
7c) Reconciliation of net cash inflow to movement in net debt
2006 2005
£'000 £'000
Increase in cash in the year 2,699 1,797
Net proceeds received from share issue 14,527 11,267
Sale of investments - own shares 1,102 1,141
Cash inflow from financing (27,311) (2,213)
Change in net debt resulting from cash flows (8,983) 11,992
New and acquired finance leases (146) (36)
Net debt at 1 May (4,448) (16,404)
Net debt at 30 April (13,577) (4,448)
8 Annual General Meeting
The Annual General Meeting of Spice Holdings plc will be held at Yorkshire
Sculpture Park, Bretton Hall, West Bretton, Wakefield, WF4 4LG on Wednesday 6
September 2006 at 2.00pm. The notice of the Annual General Meeting contains
items of special business, two of which are explained further below.
Resolution 9 will be proposed as a special resolution to change the name of the
Company to 'Spice plc'. The shorter name of 'Spice' is more striking and
memorable and was unavailable at Companies House until recently.
Resolution 10 will be proposed as an ordinary resolution to approve the Company
entering into a contract to purchase Wellfield House for £1,650,000. Part of
Wellfield House is currently leased by Spice and used as its head office. During
the year, Spice paid £82,500 to Tree Tots Limited in consideration for which an
option was granted by Tree Tots Limited to Spice which gives Spice the right to
purchase Wellfield House for £1,650,000 subject to shareholder approval of the
proposed contract. L Rigby, the wife of W S Rigby is a Director of Tree Tots
Limited. Under section 320 of the Companies Act 1985, shareholder approval is
required before Spice may enter into the contract to purchase Wellfield House
since W S Rigby and Tree Tots Limited are connected parties. The agreed purchase
price for Wellfield House was determined after obtaining two independent
valuations from chartered surveyors. The option fee of £82,500 will be deducted
from the agreed purchase price and is refundable in the event that shareholder
approval is not obtained. It is considered that acquiring the freehold to
Wellfield House would allow the Company maximum flexibility to adapt and use the
whole of the premises to meet head office and other Group accommodation
requirements
9 Availability of annual report
The annual report and financial statements will be sent to all shareholders on 1
August 2006. Copies may be obtained from the Company Secretary at PO Box 111,
Bradford Road, Morley, Leeds LS27 0YE for a period of one month from 1 August
2006.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 6 minutes ago Light Science Technologies Holdings
- 11 minutes ago Zotefoams
- 11 minutes ago Taseko Mines Limited NPV (DI)
- 11 minutes ago Zotefoams
- 11 minutes ago Panther Metals