Interim Management Statement

RNS Number : 5170H

Spice PLC

23 February 2010

 



23 February 2010

Spice plc

Interim Management Statement

The Board of Spice plc ('Spice' or 'the Group'), the provider of Outsourced Utility Support Services, sets out below an update on future strategy and current trading for the period from 1 November 2009 to 23 February 2010.

Current trading

The Supply Division, comprising the Group's Billing and Energy businesses, continues to trade well and in line with the Board's expectations. In particular, the Carbon Reduction Efficiency Scheme remains a significant driver of new opportunities and contract wins.

The Utilities facing Distribution business comprises the Group's Electricity and Water businesses. Volumes and activity levels have been less than anticipated since Christmas. In particular, consistent bad weather into February has hampered activities in the South and East of England and Scotland. General activity levels in both businesses are inevitably affected at this time prior to the commencement of the next five year AMP and DPR periods and therefore mobilisation on new contract wins has been slow. There is considerable bidding activity being undertaken as existing contracts expire for re-negotiation and new opportunities are explored, all in a competitive environment.

The Public facing Distribution business comprises the Group's Telecoms, Facilities and Gas businesses. The Telecoms business is performing steadily albeit new project opportunities are taking longer to be determined than originally anticipated. The Facilities business has been restored to modest profitability with improving month on month performance during the second half. The Gas business remains unprofitable as a result of a number of loss making contracts remaining in place and despite ongoing restructuring. The extreme weather has also adversely impacted the performance of the Gas business which is expected to report a sizeable loss this year.

Strategy

Martin Towers was appointed as Interim Chief Executive on 9 February 2010. Upon appointment he commenced a strategic review of the Public facing Distribution business, as a matter of priority with all options under consideration. The Gas business is under particularly close scrutiny.

The Board views the Group's Supply Division and the Utilities facing Distribution business as core and these activities will continue to be developed but with the emphasis upon organic growth. It is not expected that the Group will make any acquisitions in the foreseeable future. Beyond this, the Board expects that any acquisitions will be on a selective, strategic basis only and funded from the Group's available resources at that time.

As a consequence and in due course, the Board expects the Group's ratio of net debt to EBITDA to be managed down to, and thereafter not to exceed, two times.

The shift in emphasis to organic growth will result in renewed focus internally upon aggressively competing for new business whilst paying close attention to the Group's cost base. This will result in certain business restructuring and reorganisation costs being incurred prior to 30 April 2010.

These costs will be disclosed as an exceptional operating cost within the Group's income statement for the year ending 30 April 2010 including £2 million of exceptional operating costs incurred in the first half of the financial year. Adjusted EPS will be calculated by excluding exceptional operating costs as is established practice (2009: nil).

Summary

Spice is moving forward into a new era that will allow the positive features of its core businesses, in particular exposure to markets which have strong underlying regulatory and environmental drivers, to come to the fore.

Current trading within the Group's Distribution Division is affected by the factors identified above. Consequently, the Board now believes that the Group's profit before tax, amortisation and exceptional items will be at a level less than the Board's previous expectations but which is slightly higher than £32.3 million recorded in 2009. Adjusted EPS will be lower than that reported in 2009 after taking account of the full year effect of the number of shares in issue following the Group's share placing in September 2008.

The Group is being positioned to enter the next financial year with the objective of restoring shareholder value.

The Group expects to issue a pre-close trading statement shortly after the end of the financial year and to announce results for the year to 30 April 2010 on 13 July 2010.

Ends

Enquiries:

Spice plc

Martin Towers, Interim Chief Executive Officer                               Tel: [phone]

Oliver Lightowlers, Group Finance Director

Financial Dynamics                                                                 Tel: [phone]

Billy Clegg

Caroline Stewart

KBC Peel Hunt (Broker)                                                           Tel: [phone]

Julian Blunt (Corporate finance)

Matthew Tyler (Corporate broking)

NOTES TO EDITORS

Spice plc

Spice is a provider of infrastructure support services to the Utilities sector. The Group's operations were founded in 1996 and have their origins in the electricity industry, though the range of activities has since been expanded into the water and energy sectors. Spice's businesses have a common theme of delivering and co-ordinating infrastructure support services to customers, and the white collar element within the service mix has been built up significantly over recent years.

 

END

 

 

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