Trading Statement & Appointme
17 May 2010
Spice plc ("Spice" or "the Group")
Trading Statement and Appointment of Chief Executive
The Board of Spice, the provider of Outsourced Utilities Support Services, is pleased to confirm that the Group's trading for the year to 30 April 2010 was in line with the Board's expectations. As announced at the time of the Group's Interim Management Statement on 23 February 2010, the Group's profit before tax, amortisation and exceptional items will be slightly better than the £32.3 million reported in 2009. The Group's conversion of profits into cash has remained strong in the second half of the year, culminating in net debt of approximately £118.5 million at 30 April 2010. The Board is also pleased to announce that Martin Towers has been appointed to the position of Chief Executive on a permanent basis.
During the period since February, a detailed and vigorous review of the Group's cost base has been undertaken. The level of restructuring and reorganisation costs arising from this review, which will be shown as an exceptional cost in the Group's income statement for 2010, is expected to total between £8 million and £9 million of which approximately £6 million will be a cash cost incurred during the year ending April 2011. The Board believes that the actions taken leave the Group well positioned for the new financial year and beyond.
The Supply Division is trading in line with the Board's expectations with Energy recording a number of new customer additions in the year. The Carbon Reduction Efficiency Scheme has accounted for around 20% of these customer wins and is likely to remain a significant driver of new opportunities. Approximately 2% of Group revenues are derived from the public sector, principally within Energy, and in recent months, there has unsurprisingly been some deferral of project spend for public sector energy projects. Accordingly, the Group has sought to redeploy engineers to the private sector. Within Billing, it has been pleasing to see the prominence of electricity imbalance revenues as a proportion of total revenues. The roll out of the common accounting platform into the Supply Division has now been completed.
The Utilities facing Distribution business is trading in line with the Board's expectations. Contracts with Scottish Power (overhead lines), AT&T (asset records) and Yorkshire Water (meter installations) have all recently been extended. New contracts have also been secured with Cambridge Water together with significant windfarm projects. The Group remains in active discussions with EDF Energy in relation to the extension of its existing contracts. In line with the Board's expectations, general activity levels have been impacted by the start of the new AMP and DPCR periods, however, the Group's progress with both new and existing contracts is pleasing. A number of opportunities are being actively pursued although their overall impact in this first year is expected to be limited.
The Public facing Distribution business has performed marginally better than the Board expected in the final quarter of the financial year. The Gas business has recently benefited from the retender of a significant loss making contract at better rates but the underlying business still remains loss making. The Facilities business is trading in line with expectations at a level of modest profitability.
Spice is today holding a General Meeting in connection with the proposed disposal of its Telecoms Business. Subject to receiving shareholder approval, the Group will have achieved its first major milestone in refocusing the Group on its core activities and reducing borrowings. The strategic review in relation to the remaining parts of the Public facing Distribution business is ongoing. The outcome of this review is expected to result in the Group's core operations being focused on markets which have strong underlying regulatory and environmental drivers.
Peter Cawdron, Chairman of Spice, commented:
"Martin took over as Interim Chief Executive in February and has impressed us all with the approach he has taken and leadership he has provided. We have asked Martin to prioritise this year the creation of a strategic plan for the Group's core businesses as well as continuing to work closely with his team to deliver the quality of service that our clients demand. The Board's priority remains restoring shareholder value."
Martin Towers, Chief Executive of Spice, commented:
"During the past three months, Spice has taken a number of positive steps forward. I look forward to building on the progress made to the benefit of our clients, staff and shareholders alike."
The Group expects to announce its results for the year to April 2010 on 6 July 2010. A telephone conference call for analysts has been scheduled for 08:00 today, on 17 May 2010. Dial in details may be obtained from Financial Dynamics.
Ends
Enquiries:
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Spice plc Martin Towers, Chief Executive Oliver Lightowlers, Group Finance Director
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Tel: 0113 201 2120 |
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Financial Dynamics Billy Clegg Caroline Stewart
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Tel: 020 7831 3113 |
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KBC Peel Hunt Broker Julian Blunt Andrew Chapman David Anderson
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Tel: 020 7418 8900 |
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Hawkpoint Partners Financial Adviser Christopher Kemball Chris Robinson Serge Rissi |
Tel: 020 7665 4500 |
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.
This information is provided by RNS
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