Interim Results
Spice PLC
14 December 2006
14 December 2006
Spice plc ("Spice" or "the Group"),
Interim results - period ended 29 October 2006
Spice plc ("Spice" or "the Group"), the provider of outsourced support services
to the Commercial, Public and Utility Sectors, is pleased to announce its
interim results for the period ended 29 October 2006.
Financial highlights
• Profit before tax of £4.7 million (2005 restated: £2.8 million)
- 68% increase
• EBITA* of £7.2 million (2005 restated: £3.6 million) - 98% increase
• Operating profit converted into operating cash - £5.3 million
(2005 restated: £3.1m) - 74% increase
• Diluted earnings per share of 6.5 pence (2005 restated: 4.8 pence)
- 35% increase
• Adjusted diluted earnings per share of 9.9 pence (2005 restated: 6.1 pence)
- 62% increase
• Interim dividend of 1.0 pence per share (2005: 0.7 pence) - 43% increase
*EBITA comprises profit on ordinary activities before interest, tax and
amortisation of intangible fixed assets 2005 comparative numbers have been
restated, where appropriate, to reflect the adoption of FRS 20 Share based
payments
Operational highlights
• September 2006 - Appointment of Michael Shallow as a non-executive Director
• October 2006 - Hutchison Team Telecom agrees five year framework agreement
with Huawei
• November 2006 - Creation of Public Services division
• December 2006 - Freedom agrees the renewal of EDF Energy maintenance contract
for a further five years
• December 2006 - Meter U agrees a new four year partnership agreement with
Siemens
• December 2006 - H20 agrees four year framework agreement with Anglian Water
Simon Rigby, Chief Executive Officer commented:
"We have delivered a strong performance with a 98% increase in profits (20% of
which is pure organic growth) in the first half of the year for our
shareholders. We believe that the first half marks a step change in the scale of
our business.
"All our markets are growing quickly driven by respective regulators. In
particular, our water services business has benefited from the environmental and
infrastructure context we have in the UK today. Our leakage repair business has
had a stellar start and our water meter installation and reading businesses have
had a record first half.
"We remain pleased with the overall performance since the half year end with
good underlying visibility of earnings. The Board is focused on converting cross
selling opportunities into earnings and remains confident of continued growth
over the remainder of this financial year. We continue to look to the future
with confidence."
- Ends -
For further information, please contact:
Spice 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
Billy Clegg
Caroline Stewart
Chief Executive Officer's statement
I am pleased to present our interim results for the six month period ended 29
October 2006 which again record strong financial performance from our growing
existing operations and also from acquisitions made in the period. Turnover for
the period ended 29 October 2006 was £102.6 million (2005: £55.6 million) and
profit on ordinary activities before interest, tax and amortisation of
intangible fixed assets (EBITA) was £7.2 million (2005 restated: £3.6 million),
increases of 85% and 98% respectively.
During the period, Spice operated in two sectors, Commercial Services and
Utility Services:
Commercial Services
Energy
The newly established Energy Services business was created in June 2006 when we
acquired Inenco, the UK's leading energy management business. I am pleased to
report that Inenco has performed ahead of our expectations for the four and half
months since acquisition and that the business contributed EBITA of £0.6 million
for the six month period ended 29 October 2006. New customers such as Bhs, The
Spirit Group and Kellogg's have been secured in the period as well as
maintaining excellent retention rates of existing customers such as Marks &
Spencer, J Sainsbury and John Lewis.
Inenco provides a comprehensive energy management service including strategic
procurement, invoice verification, accounting services, climate change
agreements, energy conservation project management, carbon neutral programmes
and renewable energy projects. Since 1968, Inenco has built a comprehensive,
blue-chip customer base across both the commercial and industrial sectors.
Inenco procures around £1 billion per annum of electricity and gas on behalf of
customers including Gala Group, J P Morgan, Interchange & Consort Hotels and
Sheffield Forgemasters. Energy conservation projects are also being delivered on
an on going basis to large industrial customers such as McVities, Coca Cola and
Imperial College.
We expect that there will be three significant drivers for customers to use
Inenco's services over the coming years as follows:
• high and volatile energy prices;
• increasing EU regulation; and
• climate change.
The requirement to reduce energy costs is a key driver but increasingly
customers are also concerned about corporate social responsibility. Inenco has
developed a range of services including the sourcing of renewable energy through
to the management of carbon neutral projects. The climate of volatile energy
prices and concern about climate change is set to continue for the foreseeable
future and Inenco is ideally placed to benefit from these trends.
Facilities
Facilities Services reported EBITA of £1.9 million (2005: £0.4 million) for the
six months ended 29 October 2006, an increase of 373%. These results include a
contribution for the first time of £0.5 million from Breval.
Serviceline, the one stop shop facilities management (FM) provider, has
continued to successfully grow its client base over the year to date adding TK
Maxx, The Body Shop, Swatch, Knight Frank and Paul the Bakers as new clients. In
addition, both Debenhams and British Waterways have become Serviceline clients,
taking the full integrated service on a regional basis, having previously only
taken maintenance services from Circle Britannia.
During the period, Circle Britannia has significantly increased volumes of
domestic insurance reinstatement work undertaken with Norwich Union. We have
also started to undertake commercial insurance reinstatement works as well. At
the same time, Circle Britannia has also been successful in growing its
maintenance business and small works operations with new and existing clients.
In June 2006, we acquired Breval which specialises in the design, installation
and maintenance of heating, ventilation, and air-conditioning (HVAC) systems and
also provides specialist asbestos removal services. Breval brings a high level
of technical skills to the business and already a number of joint projects have
been commissioned with clients such as Starbucks and Waterstones. We believe
that there is great potential for other such opportunities to be developed in
the future, and Breval also continues to develop existing relationships with the
likes of Lloyds TSB and Scottish Water.
The facilities outsourcing market remains very competitive, however, the
opportunities for the business remain substantial and we believe that the
business is well placed to take advantage of these opportunities.
Utility Services
Electricity
During the first half of the year, Electricity Services increased EBITA by 71%
to £3.0 million (2005: £1.7 million). The integration of Lamva, Baineport and
Maintech into the Freedom brand has now been completed. This enables Freedom to
tackle any electrical network issue, project or programme of works with
expertise across all elements. We now truly deliver a "cradle to grave" service
both to utilities and private network owners. The potential for growth in the
utilities sector has never been better and the key to our success will be to
attract, retain and develop our own people. We now have over 15% of our staff as
trainees, apprentices or graduates and this will enable us to meet the demands
placed on us by our customers.
During the period, we have slightly modified our service offerings from five
service islands to six to take into account the significant anticipated growth
opportunities ahead in overhead line wood pole work and have therefore split
Freedom Power Projects and Freedom Power Lines into separate focused businesses.
This also aligns our service offerings with the workstreams which our customers
are tendering. Freedom Power Lines has seen excellent organic growth across the
EDF Energy Networks' footprint and has won a number of 33KV projects across the
East whilst continuing to develop its business in the South of England.
Recently, we have also won two contracts with CE Electric (Yorkshire and
Northern Electricity).
Within Freedom Consultancy Services, our Wayleaves and Consents business has
doubled in size over the period and is now the largest supplier of these
services in the South East. We have key Wayleave resource working on the Olympic
Park project with EDF Energy. Freedom Data Services, who are also working on the
Olympic Park project, has seen its customer base grow with the additions of
Scotia Gas, Balfour Beatty and Three Valleys Water. Freedom Professional
Services has experienced significant growth in the mix of customers and volumes
over the period which has consolidated Freedom as a key nationwide resource in
civil design. Project wins have included Penwortham GIS Substation for United
Utilities and Inner Dowsing Wind Farm for Centrica.
We continue to anticipate significant growth over the next ten years within our
Freedom Volume Asset Replacement business. Most of the existing 11 KV switchgear
in the UK are 50 years old and need to be replaced to improve both the quality
and reliability of supply. During the year ended April 2006, we secured
switchgear replacement contracts with EDF Energy, CE Electric and Central
Networks.
Freedom Asset Care and Maintenance has performed strongly during the first half
of the year with revenues some 12% ahead of the comparative period for last
year. Traditional contracts for vegetation management are showing significant
growth due to the longer growing season and our experience of managing a large
number of assets has enabled us to innovate to improve the quality and delivery
of our service offering. Recently, Freedom was selected as preferred bidder to
provide management and maintenance services to all three licensed areas of EDF
Energy's Network Business in relation to the maintenance of their buildings and
civil assets. It is anticipated that the related contract will be signed by 31
December 2006. Freedom was incumbent in two out of three EDF Energy license
areas and therefore this contract represents a substantial expansion of works
and underpins our visibility of future revenues. We are also developing new
customer relationships and are tendering in several areas to win work from
non-utilities. Maintech, our private network maintenance and installation
business, has enjoyed a sound start to the year, having agreed an additional 80
maintenance contracts in the first half of the year. Following the award of a
contract to renew five substations at Birmingham University worth £1.4 million,
we believe that Maintech is now well positioned to win other larger network
enhancement projects.
Freedom Network Solutions has enjoyed an excellent start to the year with
several tendering opportunities having arisen for wind farm and other
contestable connections throughout the UK. During the period we have commenced
work on wind farm connections at Red Tile Farm and also North Pickenham. We
continue to view renewable energy as being a major growth area for the business.
Telecoms
Telecoms Services reported EBITA in the first half of the year of £1.8 million
(2005: £0.9 million). This represents a 100% improvement over the same period
last year. Each of the three businesses that together form Telecoms Services
have performed ahead of expectations. This bodes well for the full year as order
books within each of the businesses are ahead of the same period last year.
AirRadio won in open competition a new three year mobile data contract (D74) for
British Airways (BA) during the period. We have opened a new digital network at
Birmingham International Airport, the first of its kind in the UK. Growing
demand at other airports has meant that we have had to enhance capacity on our
networks. Cellular radio services and other new products have been introduced
into the portfolio to good effect which has accelerated growth in non BA
services. We continue to work closely with BA and British Airports Authority
(BAA) regarding the communications requirements of Heathrow Terminal 5 ahead of
the operational phases and hope to see additional work from this over the next
twelve months.
The integration of Team Telecom and Hutchison has been completed. The new
business Hutchison Team Telecom (HTT) has agreed long term framework contracts
with Alcatel and Huawei for the provision of engineering services. The Huawei
contract specifically supports BT's 21st century network (BT21CN) project which
is a large internet protocol (IP) deployment programme expected to run for the
next ten years. As well as carrying out an increasing number of ad-hoc projects,
several other maintenance contracts have also been signed in the period
increasing the proportion of recurring revenues generated by the business. We
believe that the BT21CN project will contribute to the business strongly going
forward however this will not now be seen until during the year ending April
2008. We are confident that the business is well positioned.
Team Simoco delivered better than expected performance in the first half of the
year. Sales and profits were both substantially better than the same period last
year and our order book is 30% higher. The launch of the XFin and TETRA G
technology has been very well received and are the main reason for the improving
performance of the business. Contracts for both technologies have already been
won in different parts of the world with a significant number of bids also
outstanding. These contracts are smaller in value but more numerous than the
large international system sales contracts that the business has historically
relied upon. Additionally the business secured a five year framework agreement
to supply refurbishment and maintenance services to London Underground as a part
of the much larger Connect project. Whilst little in the way of revenue has been
seen from this project in the first half we are hopeful that the benefit of this
contract will be seen in the second half of this year and thereafter.
Water
Water Services has reported EBITA of £2.8 million (2005: £2.3 million) for the
six months ended 29 October 2006. This represents a 20% increase against the
comparative six month period. Each of our businesses has contributed strongly to
this performance.
H20 has experienced an excellent start to the year with strong demand during the
period for water leakage repair services, which were launched in March 2006.
Leakage repair services are now being provided to five water companies within
the UK as well as to commercial clients including Punch Taverns and Newcastle
University. During the period, we secured the renewal of our meter installation
contract with Northumbrian Water. Water meter installation volumes continue to
be strong as economic and environmental pressures remain. We do not expect these
pressures to be lifted and, indeed, have commenced two new pilot meter
installation projects during the period which we hope will lead to longer term
framework arrangements. In addition, following the successful conclusion of our
pilot meter replacement project for Anglian Water, we have signed a four year
framework agreement to continue providing these services.
Metro Rod has again improved both sales and profits. A number of contract wins
have been secured in the period including the provision of drain and
environmental services to Argos, Homebase and DSG International via three year
framework agreements. During the period, a review of the franchise network
structure has been undertaken which has resulted in the creation of two
additional franchises. This on-going review is expected to lead to the creation
of further franchises during the next twelve months, stimulating further growth.
The sales and profits generated by Meter U have continued to increase in the
period. Resource levels are now in excess of 520 meter readers and we are
currently undertaking around 6.2 million customer visits per quarter for
Siemens. In December 2006, we concluded a new four year partnership agreement
with Siemens, with whom we are currently exploring a number of other future
opportunities.
Cross selling
Cross selling forms a growing part of Spice's future growth strategy. We believe
that the Group has a very strong starting position from which to translate
opportunities into earnings, as a result of the natural overlap that exists
between our operating divisions. Already our strategy of "little but often"
through our focus on delivering a large number of small value cross sells is
being rewarded.
In November 2005, we acquired Kemac which had historically provided technical
based water services to water companies in the South of England and complemented
our existing meter operation business focused on water companies in the North.
Part of the rationale for this acquisition was to sell technical services to
water companies in the North and meter operations to water companies in the
South. In 2007, Kemac expects to commence water regulation surveys, followed by
rectification works, in Yorkshire. As noted above, H20 has been awarded a
framework contract by Anglian Water for meter replacement services taking our
meter operations services to Kemac's Southern based customers.
The cross selling opportunities created by the acquisition of Inenco in June
2006 have already begun to be converted. Home Retail Group (owner of Argos and
Homebase) is a longstanding customer of Inenco and was recently introduced to
Metro Rod by Inenco, resulting in Metro Rod winning a three year contract to
provide drainage maintenance services across the whole of the UK estate of Argos
and Homebase. We believe that other such opportunities exist following the
acquisition of Inenco, not least created by the overlap of Inenco's energy
management service with the 700 private electricity networks across the UK
maintained by Freedom.
The formation of our Public Services division, following the acquisition of
Apollo Heating Limited and Pargas Heating Limited, gives us the opportunity to
sell gas maintenance to our Commercial customers as well as developing our gas
meter operations capabilities. We continue to be excited by the cross selling
opportunities that exist within the business and momentum continues to gather.
Head office
Head office costs include the Group's share based payments charge, following the
adoption of FRS 20 on 1 May 2006.
Acquisitions
Two acquisitions have been made during the period, both of which occurred in
June 2006.
Firstly, we acquired the issued share capital of Breval for net consideration of
£8.3 million in cash. Breval specialises in the design, installation and
maintenance of HVAC systems and also provides asbestos removal services.
Secondly, we acquired the issued share capital of Inenco for consideration of up
to £11.8 million. The consideration was in the form of bank guaranteed loan
notes. Inenco is the leading energy management business in the UK and operates
in three areas; cost control, consultancy and fuel cards.
In November 2006, the Group acquired the issued share capital of Apollo for net
cash consideration of £9.7 million. Apollo together with Pargas (issued share
capital acquired in December 2006 for net cash consideration of £9.6 million)
form the foundations of a new Public Services division of Spice. Apollo and
Pargas install, service and maintain gas appliances and heating systems in
domestic and commercial properties owned by social housing bodies and local
authorities. They currently have service and maintenance agreements covering
approximately 87,000 properties, such agreements typically being for periods of
between two and five years Pargas also provides gas meter replacement services
and emergency first response services to gas distribution businesses, which
involves identifying and making safe gas leaks.
The range of services provided also includes the annual review of appliances and
systems and the production of certificates for landlords confirming compliance
with safety regulations. These are non discretionary spends for social landlords
and local authorities and therefore, we believe, less likely to be affected by
any changes that might occur within Government spend connected to the Decent
Homes initiative.
Financial Review
Turnover
Turnover from existing operations at £95.6 million (2005: £46.7 million) is up
105% on the comparative six months. Acquisitions made during the period
contributed £7.0 million of turnover, giving rise to total Group turnover of
£102.6 million (2005: £55.6 million), an increase of 85%.
Profit on ordinary activities before interest, tax and amortisation of
intangible fixed assets (EBITA)
EBITA increased by 98% to £7.2 million (2005 restated: £3.6 million). Each of
our businesses has contributed to this result, with strong levels of organic
growth from existing operations recorded in each. Like for like performance is
illustrated below:
6 months to 6 months to
29 October 30 October
2006 2005
£'000 £'000
EBITA:
Existing operations 4,586 3,826
2006 acquisitions 1,098 -
Part year effect of 2005 acquisitions 2,425 -
FRS 20 Share based payment charge (900) (180)
7,209 3,646
The table shows that EBITA from existing operations was £4.6 million (2005: £3.8
million), representing organic growth of 20% for the period. Separately,
acquisitions made during 2006 contributed £1.1 million to EBITA.
Spice made various acquisitions during 2005, which contributed to EBITA for part
of that year but which have contributed to EBITA for the whole of the period
ended 29 October 2006. For example, Circle Britannia was acquired in September
2005. Its results for September and October 2006 are shown within existing
operations, as are the comparative numbers for the period from acquisition to
October 2005. The results of Circle Britannia for the period May to August 2006
are shown within the part year effect of 2005 acquisitions, which totals £2.4
million.
EBITA operating margins for the Group improved to 7.0% (2005 restated: 6.6%).
Underlying operating margins, excluding the effect of the adoption of FRS 20
were 7.9% (2005: 6.9%).
Interest
Interest payable for the period was £0.8 million (2005: £0.3 million). The Group
has extended its banking facilities from £30 million to £70 million. Interest
cover for the period is 6.5 times compared with 10.0 times (restated) last year.
Profit on ordinary activities before tax
Profit on ordinary activities before tax has increased to £4.7 million (2005
restated: £2.8 million). The Group's amortisation charge has increased
significantly from £0.6 million to £1.7 million during the period which is
attributable to acquisitions made in 2005 and 2006.
Earnings per share
Diluted earnings per share at 6.5 pence (2005 restated: 4.8 pence) increased by
35% and adjusted diluted earnings per share at 9.9 pence (2005 restated: 6.1
pence) by 62%.
Dividend
The Board has approved an interim dividend of 1.0 pence (2005: 0.7 pence) per
share payable on 13 February 2007 to shareholders on the register at 26 January
2007.
Cashflow
Net cash inflows from operating activities increased by £2.2 million to £5.3
million (2005: £3.1 million). The Group converted 97% of operating profit into
operating cash flow (2005 restated: 100%). During the period working capital
utilised increased by circa £4.1 million connected principally with investment
within our Facilities and Electricity businesses.
Balance Sheet
Net assets have increased to £43.6 million (2005 restated: £35.7 million),
reflecting the retained profit and cash generated from the exercise of employee
share options.
Net debt is £31.6 million (30 April 2006: £13.6 million). The increase is
attributable to consideration paid in respect of the acquisition of Breval,
certain earn outs connected to acquisitions made during the year ended April
2006, and loan notes issued in connection with the acquisition of Inenco. The
Inenco loans notes are expected to have a maturity of less than one year and
therefore have been recorded within creditors falling due within one year,
giving rise to the Group having net current liabilities at 29 October 2006 of
£5.7 million (2005 restated: net current assets of £2.3 million).
Changes in UK accounting standards
On 1 May 2006, the Group adopted FRS 20 Share based payments. FRS 20 reflects
the cost of share based remuneration, including option schemes, within the
profit and loss account. Comparative numbers have been restated to reflect the
impact of the adoption of FRS 20 where appropriate.
International Financial Reporting Standards (IFRS)
The Group continues to prepare for the conversion from UK accounting standards
to IFRS. During the period the Group's IFRS project team has continued to
evaluate the expected impact of the adoption of IFRS. The Group expects to adopt
IFRS within its financial statements for the year ending April 2008.
Outlook
We remain pleased with the overall Group performance since the half year end and
trading continues to be in line with our expectations with good underlying
visibility of earnings. The Board is focused on converting cross selling
opportunities into earnings and remains confident of continued growth over the
remainder of this financial year. We continue to look to the future with
confidence.
W S Rigby
Chief Executive Officer
14 December 2006
Consolidated profit and loss account
for the six months ended 29 October 2006
Note Unaudited Unaudited Audited
6 months to 6 months to Year ended
29 October 2006 30 October 2005 30 April 2006
£'000 £'000 £'000
as restated as restated
Turnover:
- Continuing operations 95,566 55,580 132,930
- Acquisitions 7,067 - -
Group turnover 2, 6 102,633 55,580 132,930
Cost of sales (73,044) (39,028) (93,360)
Gross profit 29,589 16,552 39,570
Administrative expenses (24,062) (13,473) (31,951)
EBITA 7,209 3,646 9,215
Amortisation of intangible fixed assets (1,682) (567) (1,596)
Operating profit:
- Continuing operations 4,816 3,079 7,619
- Acquisitions 711 - -
Group operating profit 5,527 3,079 7,619
Profit arising on disposal of fixed assets - 31 -
Net interest payable (847) (311) (797)
Profit on ordinary activities before tax 4,680 2,799 6,822
Tax on profit on ordinary activities 3 (1,404) (813) (1,566)
Profit on ordinary activities after tax 3,276 1,986 5,256
Dividends 4 (854) (633) (943)
Retained profit for the period 2,422 1,353 4,313
Earnings per share (pence per share)
Basic 5 7.3 5.1 12.6
Diluted 5 6.5 4.8 12.0
Consolidated balance sheet
as at 29 October 2006
Note Unaudited Unaudited Audited
29 October 30 October 30 April
2006 2005 2006
£'000 £'000 £'000
as restated as restated
Fixed assets
Development expenditure 782 815 825
Purchased goodwill 59,675 29,678 41,458
Negative goodwill - (174) -
Intangible fixed assets 60,457 30,319 42,283
Tangible fixed assets 14,799 12,702 13,623
Investments 212 212 212
75,468 43,233 56,118
Current assets
Stock 6,649 3,480 4,264
Debtors 43,294 26,787 32,672
49,943 30,267 36,936
Creditors - amounts falling due within one (55,658) (28,007) (33,294)
year
Net current (liabilities)/assets (5,715) 2,260 3,642
Total assets less current liabilities 69,753 45,493 59,760
Creditors - amounts falling due after more (17,576) (8,739) (12,237)
than one year
Provisions for liabilities and charges (8,571) (1,073) (7,677)
Net assets 43,606 35,681 39,846
Capital and reserves
Called up share capital 4,947 4,946 4,947
Share premium account 27,462 27,462 27,462
Revaluation reserve 2,103 1,513 2,103
Capital redemption reserve 100 100 100
Profit and loss account 8,994 1,660 5,234
Equity shareholders' funds 7 43,606 35,681 39,846
Consolidated cash flow statement
for the six month ended 29 October 2006
Note Unaudited Unaudited 6 Audited
6 months to months to Year ended 30
29 October 30 October April
2006 2005 2006
£'000 £'000 £'000
Net cash inflow from operating activities 8a) 5,335 3,069 9,780
Returns on investments and servicing of finance
Net interest paid (842) (310) (789)
Interest element of finance lease payments (5) (1) (8)
(847) (311) (797)
Taxation (1,235) (94) (785)
Capital expenditure and financial investment
Purchase of tangible owned fixed assets (1,536) (1,008) (2,286)
Development expenditure (86) (206) (335)
Sale of tangible fixed assets 149 348 481
(1,473) (866) (2,140)
Acquisitions and disposals
Purchase of subsidiary undertakings (12,511) (23,422) (33,028)
Net cash acquired with subsidiary undertakings 3,860 2,015 3,301
(8,651) (21,407) (29,727)
Equity dividends paid (854) (633) (943)
Net cash outflow before financing (7,725) (20,242) (24,612)
Financing
Principal repayment due under finance leases (52) (36) (79)
Sale of investments - own shares 438 880 1,102
Net proceeds from issue of shares - 14,526 14,527
Bank loan repayments (634) (1,672) (16,516)
Bank loan advances 5,962 9,000 28,277
5,714 22,698 27,311
(Decrease)/increase in cash 8c) (2,011) 2,456 2,699
Notes to the Interim report
for the six months ended 29 October 2006
1 Basis of accounting
The interim financial statements have been prepared using the same accounting
policies as were used in the Group's statutory financial statements for the year
ended 30 April 2006 except for the adoption of FRS 20 Share based payments.
Comparative numbers have been restated to reflect the impact of the adoption of
FRS 20 where appropriate.
The interim financial statements for the six months ended 29 October 2006 and
for the six months ended 30 October 2005 contained within the interim report do
not constitute statutory financial statements and are unaudited. The figures for
the year ended 30 April 2006 have been extracted from the financial statements
for 2006 except for adjustments made for the adoption of FRS 20 described above.
These financial statements received an unqualified auditors' report and have
been delivered to 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;
• water meter installation and meter reading;
• information technology installation, commissioning and maintenance
activities; and
• energy, water and telecommunications cost control.
3 Taxation
The taxation charge on the profit on ordinary activities has been based upon the
estimated effective tax rate of 30.0% (2005 restated: 29.0%) for the current
year.
4 Dividends
Unaudited Unaudited Audited
6 months to 29 6 months to 30 Year ended
October October 30 April
2006 2005 2006
£'000 £'000 £'000
Amounts recognised as a distribution from shareholders'
funds during the year
Final dividend paid of 1.9 pence per share for the year 854 633 633
ended 30 April 2006 (2005: 1.7 pence)
Interim dividend paid of 0.7 pence per share for the - - 310
year ended 30 April 2006 (2005: 0.5 pence)
854 633 943
Proposed interim dividend of 1.0 pence for the period 449 310 310
ended 29 October 2006 (2005: 0.7 pence)
In accordance with FRS 21, the interim dividend for the period ended 29 October
2006 will be accounted for, following payment of that dividend, in the second
half of the financial year. It is proposed that the interim dividend amounting
to £449,000 (2005: £310,000) will be paid on 13 February 2007 to those
shareholders on the register at 26 January 2007.
5 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 period used in the calculation of basic
earnings per share was as follows:
Unaudited Unaudited Audited
6 months to 29 6 months to Year ended
October 30 October 2005 30 April
2006 2006
'000 '000 '000
Weighted average shares for basic earnings per share 44,871 38,845 41,667
Diluted earnings per share is the basic earnings per share adjusted for the
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:
Unaudited Unaudited Audited
6 months to 29 6 months to 30 Year ended
October October 30 April
2006 2005 2006
'000 '000 '000
Weighted average shares for diluted earnings per share 50,202 41,246 45,051
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
items. 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 items can be fully appreciated. Adjusted earnings used in
the calculation of basic and diluted earnings per share reconciles to basic
earnings as follows:
Unaudited Unaudited Audited
6 months to 6 months to Year ended
29 October 30 October 30 April
2006 2005 2006
£'000 £'000 £'000
as restated as restated
Basic earnings 3,276 1,986 5,256
Non operating exceptional items - (31) -
Amortisation of intangible fixed assets 1,682 567 1,596
Adjusted earnings 4,958 2,522 6,852
Earnings per share (pence per share)
Basic 7.3 5.1 12.6
Diluted 6.5 4.8 12.0
Adjusted earnings per share (pence per share)
Basic 11.0 6.5 16.4
Diluted 9.9 6.1 15.7
6 Segmental analysis
The turnover for the period was derived from the Group's principal activities
and is attributable to the following markets:
Unaudited Unaudited Audited
6 months to 29 6 months to 30 Year ended
October October 30 April
2006 2005 2006
£'000 £'000 £'000
By destination
UK 100,776 54,570 130,439
Continental Europe 1,501 667 2,126
Rest of the World 356 343 365
102,633 55,580 132,930
Turnover for the period is derived from the Group's principal activities as
follows:
Unaudited Unaudited Audited
6 months to 6 months to Year ended
29 October 30 October 30 April
2006 2005 2006
£'000 £'000 £'000
Commercial Services
Energy 5,057 - -
Facilities 18,824 3,865 17,332
Utility Services
Electricity 43,088 25,352 58,875
Telecoms 8,524 6,396 13,954
Water 27,135 19,837 42,237
Head office 5 130 532
102,633 55,580 132,930
Profit before tax is derived from the Group's principal activities as follows:
Unaudited Unaudited Audited
6 months to 29 6 months to 30 Year ended
October October 30 April
2006 2005 2006
£'000 £'000 £'000
as restated as restated
Commercial Services
Energy 621 - -
Facilities 1,943 411 1,547
Utility Services
Electricity 2,990 1,747 4,380
Telecoms 1,757 932 2,424
Water 2,805 2,337 4,522
Head office (2,907) (1,781) (3,658)
EBITA 7,209 3,646 9,215
Non-operating exceptional items - 31 -
Amortisation of intangible fixed assets (1,682) (567) (1,596)
Net interest payable (847) (311) (797)
Profit before tax 4,680 2,799 6,822
Head office costs have been restated from £1,601,000 to £1,781,000 for the
period ended October 2005 and from £3,083,000 to £3,658,000 for the year ended
April 2006 to reflect the adoption of FRS 20 Share based payments. The Group's
FRS 20 charge has been recorded within Head office for the purposes of this
segmental analysis.
7 Reconciliation of movement in equity shareholders' funds
Unaudited Unaudited Audited
6 months to 29 6 months to Year ended
October 30 October 30 April
2006 2005 2006
£'000 £'000 £'000
as restated as restated
Profit for the period 3,276 1,986 5,256
Dividends (854) (633) (943)
Retained profit for the period 2,422 1,353 4,313
Unrealised surplus on revaluation of freehold land and - - 587
buildings
FRS 20 Share based payments charge 900 180 575
Proceeds from sale of own shares 438 880 1,102
Issue of shares - 15,565 15,565
Costs of share issue - (474) (473)
Net addition to equity shareholders' funds 3,760 17,504 21,669
Opening equity shareholders' funds 39,846 18,177 18,177
Closing equity shareholders' funds 43,606 35,681 39,846
Opening shareholders' funds at 1 May 2005 have been restated from £18,142,000 to
£18,177,000 to reflect the adoption of FRS 20 Share based payments.
8 Notes to the cash flow statement
8a) Reconciliation of operating profit to net cash inflow
Unaudited Unaudited Audited
6 months to 6 months to 30 Year ended
29 October October 30 April
2006 2005 2006
£'000 £'000 £'000
as restated as restated
Operating profit 5,527 3,079 7,619
Depreciation of tangible fixed assets 1,312 925 2,072
Amortisation of negative goodwill - - (174)
Amortisation of intangible fixed assets 1,682 567 1,770
FRS 20 Share based payments charge 900 180 575
Profit on sale of fixed assets - - (41)
Increase in stocks (1,112) (749) (1,367)
Increase in debtors (8,793) (3,479) (5,637)
Increase in creditors 5,819 2,546 4,963
Net cash inflow from operating activities 5,335 3,069 9,780
8b) Analysis of net debt
At 1 May 2006 Cash flows Non cash At
movements 29 October 2006
£'000 £'000 £'000 £'000
Bank overdraft (14) (2,011) - (2,025)
Decrease in cash during the period (14) (2,011) - (2,025)
Bank loans due within one year (1,267) 634 (634) (1,267)
Bank loans due after one year (12,166) (5,962) 634 (17,494)
Finance leases due within one year (59) 52 (28) (35)
Finance leases due after one year (71) - (11) (82)
Loan notes due within one year - - (10,704) (10,704)
Net debt (13,577) (7,287) (10,743) (31,607)
8c) Reconciliation of net cash inflow to movement in net debt
Unaudited Unaudited Audited
6 months to 6 months to 30 Year ended 30
29 October 2006 October April
2005 2006
£'000 £'000 £'000
(Decrease)/increase in cash in the period (2,011) 2,456 2,699
Net proceeds received from share issue - 14,526 14,527
Sale of investments - own shares 438 880 1,102
Cash inflow from financing (5,714) (22,698) (27,311)
Change in net debt resulting from cash flows (7,287) (4,836) (8,983)
Loan notes issued (10,704) - -
New and acquired finance leases (39) (1) (146)
Net debt at 1 May (13,577) (4,448) (4,448)
Net debt at 29 October 2006 (31,607) (9,285) (13,577)
9 Availability of Interim report
The interim report will be sent to all shareholders on 3 January 2007. Copies
may be obtained from the Company Secretary at Wellfield House, Victoria Road,
Morley, Leeds, LS27 7PA for a period of one month from today's date.
This information is provided by RNS
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