Annual Financial Results

RNS Number : 8586O

Spice PLC

06 July 2010

 



6 July 2010

Spice plc ("Spice" or "the Group")

Annual Financial Results - year ended 30 April 2010

Spice, the leading provider of Outsourced Utility Support Services, is pleased to announce its results for the year ended 30 April 2010.

Financial highlights - continuing activities

·      Revenue of £310.7 million (2009: £279.6 million) - 11% increase

·      PBTA* of £31.5 million (2008: £31.7 million) - unchanged

·      EBITA** converted into operating cash flow - 91% (2009: 92%)

·      Adjusted diluted earnings per share of 6.05 pence (2009: 6.37 pence)

·      Total dividend of 1.62 pence per share (2009: 1.5 pence) - 8% increase

·      Pro-forma net debt (post Telecoms) - £91.0 million

Reconciliation of continuing and discontinued activities

	Continuing	Discontinued	Total
	£'m	£'m	£'m
Revenue	310.7	99.1	409.8
EBITA**	36.1	1.2	37.3
Finance expenses	(4.6)	-	(4.6)
PBTA*	31.5	1.2	32.7

*PBTA comprises profit on ordinary activities before tax, exceptional costs and amortisation of intangible fixed assets.

**EBITA comprises profit on ordinary activities before interest, tax, exceptional costs and amortisation of intangible fixed assets.

Discontinued activities comprise the Group's Gas, Telecoms and Facilities businesses.

Statutory results

Loss after tax for the year of £56.2 million (2009: profit of £17.2 million)

Operational highlights

·    May 2009	H20 extends United Utilities contract for water meter installation
·    October 2009	Climate change agreement for plastics sector concluded
·      December 2009	H20 begins provision of data collection services to Scottish Power
·      December 2009	Freedom awarded contract for the provision of network and overhead line engineering and maintenance services to United Utilities
·      December 2009	Corby Training Centre opened
·      April 2010	Carbon Reduction Commitment has provided a strong stimulus for record number of new customer wins for Inenco
·      May 2010	Freedom contract for the provision of overhead line services to Scottish Power extended
·      May 2010	Disposal of Telecoms business for £32.8 million
·      June 2010	Disposal of loss making Gas business

Martin Towers, Chief Executive, commented:

"We have made significant progress in recent months and the Group is well positioned for the new financial year and beyond.

"Our continuing businesses have strong underlying regulatory and environmental drivers, whilst the Telecoms and Gas businesses have been sold. The Group is now streamlined, and its cost base and net debt levels have been reduced. The management team is focused on exploiting the platform that has been created.

"Trading in the new financial year has been in line with the Board's expectations and I feel very confident about the future of Spice. Our priority remains enhancing shareholder value and I believe that the plans that are being developed for the Group's continuing businesses will enhance value for shareholders over the medium term."

-     Ends -

Enquiries:

Spice plc Martin Towers, Chief Executive Oliver Lightowlers, Group Finance Director	Tel: [phone]
Financial Dynamics Billy Clegg Caroline Stewart	Tel: [phone]
KBC Peel Hunt (Broker) Julian Blunt Andrew Chapman	Tel: [phone]
Hawkpoint (Financial Adviser) Christopher Kemball Chris Robinson Serge Rissi	Tel: [phone]

Chairman's statement

Introduction

Spice is well placed to play a leading role in the Utilities Outsourcing marketplace and we have taken decisive action during the year to ensure value can be created for shareholders over the medium term. Our focus is now on Spice's Supply Division and Utilities facing Distribution businesses as these have strong underlying regulatory and environmental drivers, whilst the Telecoms and Gas businesses have been sold. The Group is now streamlined, its cost base has been reduced and net debt levels have been lowered. The Board believes that the Group is well positioned for the new financial year and beyond.

Results

Revenue for the year, from continuing activities, increased by 11% to £310.7 million (2009: £279.6 million). Profit before tax, exceptional costs and the amortisation of intangible fixed assets from continuing activities was £31.5 million (2009: £31.7 million), in line with the Board's expectations.

It is again a testimony to the financial systems and disciplines operated by the Group that 91% of EBITA from continuing operations (2009: 92%) was converted into operating cash flow. This high level of cash conversion continues to be a very positive feature of our businesses. The shift in emphasis towards organic growth resulted in a detailed and vigorous review of the Group's underlying cost base to combat margin pressure moving into the new AMP and DPCR periods from 1 April 2010. Operating expenses, including business restructuring and reorganisation costs, of £9.8 million (2009: £0.6 million) have been disclosed as exceptional in these financial statements, of which £2.1 million related to discontinued activities.

Net debt at 30 April 2010 was £117.5 million (2009: £95.8 million). The proceeds received from the disposal of the Telecoms business in May resulted in pro-forma net debt of £91.0 million at that date and the Group will also benefit from much reduced earn out payments. The Group has significant headroom on its committed banking facilities which remain in place until March 2012.

Diluted earnings per share for continuing activities, adjusted for exceptional costs and amortisation of intangible fixed assets, was 6.05 pence (2009: 6.37 pence). The Group's enhanced financial position following the disposals enables the Board to recommend a final dividend of 1.22 pence per share (2009: 1.14 pence), making a total dividend for the year of 1.62 pence per share (2009: 1.5 pence), an 8% increase and covered 3.7 times by adjusted diluted earnings per share (2009: 4.2 times). In future, it is the Board's intention to adopt a progressive dividend policy.

The results of the Public facing Distribution businesses are presented in aggregate as discontinued and as a one line item on the face of the consolidated income statement. The aggregate loss after tax of £65.6 million (2009: profit of £0.5 million) reflects the post-tax trading performance, redundancy and reorganisation costs of £2.1 million and impairment charges of £67.6 million associated with the Group's discontinued activities. The Business and financial review includes a reconciliation of Group profits by comparison to the Board's earlier statement to the market that this figure would be slightly higher than £32.3 million recorded in 2009.

Group Board

In February 2010, Simon Rigby stood down as Chief Executive as he considered that the Group had achieved a size and position where it was appropriate for a new style of Chief Executive to take over the leadership of the business. Simon deserves enormous credit for developing the Spice business from a single contract with Yorkshire Electricity in 1996.  Martin Towers who had served as a Non-Executive Director since June 2009 succeeded Simon and was appointed Interim Chief Executive in February and accepted this position on a permanent basis in May 2010.

Strategy

In February 2010, and following Martin Towers' initial appointment, we announced that a strategic review of the Public facing Distribution business would be conducted and this has resulted in the sale of the Telecoms and Gas businesses.  As a consequence the Group is in a sound financial position, with lower debts, more focus, less management stretch, is strongly cash generative and operates from a lower cost base.

The Board has already turned its attention to considering the strategic position of the businesses within the Supply and Distribution Divisions, having re-committed to those markets which have strong underlying regulatory and environmental drivers. The Board will continue with the self-imposed discipline of managing the Group's ratio of net debt to EBITDA down to, and thereafter not to exceed, two times.

The Electricity and Water businesses within the Distribution Division sit well together. A year of consolidation is anticipated as the various recent operational initiatives are fully implemented and further cost reduction opportunities explored. Over the next twelve months tendering and contract renewal activity will be extensive, as expected at the start of the respective new Regulatory periods.

The Board is conscious of current moves towards consolidation in the energy management, sustainability and environmental services markets that we serve. This emerging trend is one in which our successful Energy business should participate. Our Energy business is a leading UK based player in a fragmented and increasingly global market and where the growth opportunity, which undoubtedly exists, comes increasingly from client demand for an international capability and local presence. The Board will be exploring ways to enable the Energy business to capitalise upon its leading market position.

The Billing business enjoys a strong market position in the well developed UK billing imbalance market which we will seek to maintain. Spice contributed to this growth in the business and profitability of RAS in the post acquisition period, with the compelling business proposition impacted only by the periodic internal decision making amongst its customers as to the extent to which its services are utilised. The equivalent business opportunity to expand organically in certain states of the USA, where UK style deregulation exists but a RAS equivalent does not, is now being actively explored.

Approach by Cinven

I wrote to shareholders on 16 June 2010 regarding Cinven's announcement of a possible offer for the Group of 56 pence per share. Since that time, and as announced this morning, Cinven have increased their conditional proposal to 62 - 65 pence per share. The proposal is subject to the same assumptions, pre-conditions and other terms set out in the original approach received on 24 May 2010, including bank financing. We continue to believe that this conditional proposal undervalues Spice, and the Board has not entered into discussions with Cinven, or any other party in relation to a potential offer for Spice. Spice has made excellent progress in executing a clear set of objectives to enhance value for shareholders, and these actions leave the Group well positioned for the new financial year and beyond.

Our people

First and foremost Spice is a people business and I would like to extend thanks on behalf of the Board to all employees for their commitment and contribution over the past year.

Health and Safety remains the highest priority for our people across the Group.  There is an increasing emphasis on developing white collar technical, design and consultancy skills within the business.  Our new Electricity business training centre at Corby is quickly earning an enviable industry-wide reputation for training new apprentices to mitigate the expected skills shortfall in the UK power sector.  This is increasingly a source of competitive advantage for Spice, with customers recognising our emphasis upon the quality of work as performed in a safe place, and our innovative approach to meeting their needs. We share joint offices with trading partners such as EDF Energy and United Utilities which enables an integrated team approach and efficient working practices.

Outlook

We have made significant progress in recent months, and the Group is well positioned for the new financial year and beyond. Key to this has been the appointment of a new Chief Executive, the disposal of non-core businesses, the lowering of the Group's cost base and a reduction in its indebtedness. Management stretch is no longer an issue. We are now committed to the strategic growth of our continuing businesses.

Our increased exposure to markets where regulatory and environmental drivers prevail is a shield from the difficult economic environment affecting both private and public sectors. These markets provide the Group with exposure to growing markets, which in the case of our market leading Energy business are fragmented and global. Distribution workflows are anticipated to increase following the first year of the new AMP and DPCR periods. We also operate in a price conscious and competitive environment but seek to maintain operating margins wherever possible. RAS expects a similar start to the new financial year from its mix of UK based clients as last year.

Trading in the new financial year has been in line with the Board's expectations and I feel very confident about the future of Spice. Our priority remains enhancing shareholder value and I believe that the plans that are being developed for the Group's continuing businesses will enhance value for shareholders over the medium term.

Peter Cawdron

Chairman

6 July 2010

Business and financial review

Supply Division

The Supply Division, which comprises the Group's Billing and Energy businesses, has reported 17% growth in revenues to £40.9 million (2009: £35.2 million) and EBITA increased by 6% to £18.1 million (2009: £17.0 million)

During the course of the year, the Supply Division secured a number of new client contracts and existing customer contracts were extended. The Billing business extended its relationship with Total Gas & Power from gas into electricity as well as increasing the scope of work with other high profile suppliers such as EDF Energy, Scottish and Southern Energy and British Gas. Recently we have signed our first contract to identify industry overcharges within the residential sector. Electricity imbalance revenues have increased in prominence and now account for approximately 25% of revenues. This trend is expected to continue throughout the new financial year.     

Within our Energy business, 2010 has proven to be a record year for new customer wins with the core services of procurement, bureau services and climate change performing well. Negotiations were concluded during the year, on behalf of the plastics sector, with the related climate change agreement taking effect from October 2009. In addition, we have established a strong pipeline of customers contracting the negotiation of power purchase agreements to support several renewable generation projects. This should provide a long term income stream extending over several years.  

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) has driven a larger than expected demand for our services.  This has presented us with the opportunity to build relationships with several large blue chip organisations for the first time. CRC accounted for over 20% of new customer wins during the last financial year and we expect to be able to cross sell other core services into these customers over the coming year. CRC is also likely to remain a significant driver of new opportunities in the future.

A number of operational changes have taken place across the Division in order to improve efficiency and maintain high standards of quality and service to customers. In Billing, investment within Delta Quest has continued to drive productivity gains and remains a key differentiator in the market when compared to the in house activities of our customers. Further enhancements are planned for the new financial year. Within Energy, we have created a team focused entirely on our small to medium sized clients whilst realising some synergy savings as duplicated costs have been removed. Similarly, the integration of engineering resource into NIFES is expected to achieve tighter management control together with superior technical input.

Generally the market for energy related services remains strong, however, the final quarter saw a significant downturn in business within the public sector. Pressure on public sector spending coupled with the political uncertainty created by the general election resulted in a number of deferred decisions on projects which adversely impacted NIFES. With an expectation that this trend will continue through the new financial year, an exercise is being conducted to match subcontract and employed staff to revenues and re-focus sales initiatives away from the public to the private sector. In this regard, existing relationships with industrial and commercial customers are proving to be a useful source of new business leads for NIFES.

During the year, Billing has made initial inroads into the USA market. It has been re-assuring to find that our business model and market opportunities are in line with earlier assumptions. Sales and marketing activities are now underway in the USA and we are hopeful that Billing will record its first contribution to revenues towards the end of the new financial year. In Energy, we recently relaunched our bill checking service aimed at larger organisations. We are able to conduct an audit of historical utility invoices received, focused on finding overcharges, particularly in relation to the non-commodity elements of invoices, such as transmission and distribution charges. Already, we have seen encouraging take up of this service.

One of the challenges facing our Energy business is the development of an international capability in a fragmented but global marketplace, where there is already evidence of consolidation taking place. Multi-national customers are increasingly seeking a cross border energy solution from a single supplier, and we are exploring options to capitalise on our market position.

Generally customer demand for our energy services remains high and is spurred on by the additional focus that CRC brings. We are well placed to exploit these opportunities over the coming year. 

Distribution Division

The Distribution Division, which comprises on a continuing basis the Group's Electricity and Water businesses, has reported 10% growth in revenues to £269.8 million (2009: £244.4 million) and EBITA of £26.7 million (2009: £30.3 million). Consistent bad weather in the winter months and lower activity levels towards the end of the five year AMP and DPCR periods inevitably affected revenue and profitability in the second half of the year although activity levels recovered in March and April.

The recent regulatory determination across the water and electricity sectors, along with a deepening focus on a low carbon economy, has now been completed. Investment is increasing to £22 billion and £6.6 billion respectively under the AMP 5 and DPCR 5 programmes. There are also additional work programmes extending over the new five year review period with £500 million set aside for the introduction of new technology to make electricity networks more dynamic. Some 47 million new gas and electricity smart meters will also need to be fitted by 2020.

Resourcing these new work programmes creates significant opportunities and, working closely with our clients, we will need to up-skill, train and recruit the resources to meet this significant new workload. The launch of our Training Centre at Corby, which was officially opened in December 2009, will play a significant role here. This unique facility provides theoretical and practical training experience across a range of activities. To date Corby has achieved accreditation to deliver 22 training courses covering competencies across the electricity supply chain.

Generally contract opportunities are against a backdrop of a competitive environment with customers seeking "more for less". This has been reflected in the significant levels of business restructuring and reorganisation costs that have been incurred over the course of 2010 as we have sought to ensure that the business is on an appropriate platform to deliver a more efficient service to customers over the next regulatory period whilst at the same time seeking to mitigate the effect of any reduction in operating margins.

During the year, our Electricity business has extended its relationship with Scottish Power across both the Scottish and Manweb regions encompassing major electrical infrastructure projects and wood pole overhead line refurbishment. The Electricity business has also secured a new long term contract with United Utilities for the provision of network and overhead line engineering and maintenance services which is currently mobilising. The acquisitions of Agrilek and NWP, which have extended our operations geographically, have also assisted in the award of these new contracts. Agrilek in particular has a growing order book for renewable wind farm projects, which provide the opportunity to utilise our core professional skills in the growing renewable energy markets. Contract negotiations with EDF Energy for the extension of our current contracts continue.

Similarly within our Water business, we have extended a number of key contracts over the course of the year with United Utilities, Yorkshire Water and South East Water. New contracts have also been secured with Cambridge Water and Scottish Water. The extension of existing contracts and securing of new contracts creates a solid platform for the business as we enter the new regulatory cycle. We have seen good growth from Morrel (our water imbalance business) and the business has secured a number of new customers as well as seeing existing projects extended in scope. The new AMP 5 period and the increased drive for water efficiency and reduction in leakage provide us with further growth opportunities. Our new three year contract with Siemens for the provision of data collection services for Scottish Power has commenced and we are now providing in excess of 20 million meter reads per year. Our national field force within this business together with our recent commencement of meter operations work positions us well to capitalise on the national smart metering programme.

Our professional consultancy, British Power International, has been awarded a two year framework contract with OFGEM on transmission and distribution services. We have also secured a major contract in Turkey to carry out loss evaluation on the distribution system. Work continues on our successful contracts in Saudi Arabia, Bahrain, Kuwait and Oman and new business opportunities are being explored in India and elsewhere in the Middle East. Our contract with AT&T has been further extended to December 2011. On the back of our existing presence in the USA, we have also launched a new engineering and drafting service for the completion of fibre network designs and we are currently providing this service in four South Eastern US states.

Over the course of the last regulatory period, our Electricity business was positioned to provide a "Cradle to Grave" service. Our Water business is being similarly positioned to provide a "Connection to Collection" service.

The Distribution Division has an unrivalled mix of white collar technical and consulting businesses which typically are project based to complement the traditional blue collar activities. The resultant "light blue" business is actively pursuing a number of organic growth opportunities in the UK and abroad, whilst always seeking to enhance our technical skills base.

Discontinued activities

Discontinued activities comprise the results of our Gas, Telecoms and Facilities businesses.

Over the past two years, the Gas business has performed well below expectations, has been a material distraction for the Group and a drain on resources. The disposal of the Gas business, on 1 June 2010, draws a line under these issues and enables the Group to move forwards with a higher degree of management focus on its core utilities and energy markets.

The Telecoms business performed steadily over the course of the financial year but towards the end of the calendar year was determined not to be core to the Group's operations. Accordingly, this business was disposed of, for gross consideration of £32.8 million, to Gresham on 17 May 2010.

Over the course of the second half of the financial year we have seen improved performance from the Facilities business with the benefits arising from cost reductions and the reorganisation of activities beginning to be realised. The strategic review of the Facilities business is ongoing.  

Head office

During the year, we have continued our investment in IT infrastructure and resources to support the Group. In particular, we have completed the roll out of a common accounting platform across the business. Other significant projects initiated in the year include the development of a common Group wide application for the maintenance of training and competency records. These investments will support the future growth of the Group. Head office costs comprise mainly salaries, including the Group's IT and HR functions, professional costs and the Group's share based payment (IFRS 2) charge.

Acquisitions

Four acquisitions were made by our Distribution Division during the first half of the year:

		Maximum
	Initial net cash	additional net cash
	consideration	consideration
	£'m	£'m
Com Group	6.9	1.9	Contingent cash consideration based on acquired working capital
Agrilek	4.8	1.3	Contingent cash consideration based on completion net assets and performance to June 2010
NWP	2.5	0.5	Contingent cash consideration based on acquired working capital
WSE	2.1	0.3	Contingent cash consideration based on acquired working capital and performance to October 2010
	16.3	4.0

As at 30 April 2010, the provision for contingent cash consideration was £3.2 million which includes an estimate of the contingent cash consideration arising on the acquisitions above, all of which falls due during the year ending April 2011.

Financial review

Continuing and discontinued activities

Continuing activities comprise the Group's Supply Division (Billing and Energy businesses) and its Distribution Division (Electricity and Water businesses).

During May and June 2010, the Group completed the sale of its Telecoms and Gas businesses. These activities, together with the Facilities business, have been presented as discontinued on the face of the income statement and are shown as a single line item comprising:

·      Trading results for the year;

·      Impairment of intangible fixed assets;

·      Exceptional costs relating to the restructure and reorganisation of these businesses; and

·      Write down of net assets to net realisable value.

Within the Group's balance sheet all assets and liabilities associated with these businesses are shown as held for sale. The table below illustrates what the Group's results would have been if no operations had been treated as discontinued.

	Continuing	Discontinued	Total
	£'m	£'m	£'m
Revenue	310.7	99.1	409.8
EBITA	36.1	1.2	37.3
Finance expenses	(4.6)	-	(4.6)
PBTA	31.5	1.2	32.7

An impairment charge of £67.6 million (2009: £nil) arising on the re-measurement of assets of discontinued operations has been recognised in the year. This relates to the impairment of assets of the Facilities and Gas businesses in order to record them at fair value less costs to sell in accordance with IFRS5. This includes the impairment charge of £42.9 million recorded at the half year in respect of the Gas business.

Revenue

Revenue for the year arising from continuing activities was £310.7 million (2009: £279.6 million), of which acquisitions made in the year contributed £11.7 million.

Profit on ordinary activities before interest, tax, exceptional costs and amortisation of intangible fixed assets (EBITA)

EBITA for the continuing Group reduced by 8% to £36.1 million (2009: £39.2 million). This is illustrated in the table:

		2010	2009
EBITA		£'m	£'m
Existing		34.5	37.0
Foreign exchange (loss)/gain - unrealised		(0.2)	0.7
Foreign exchange gain - realised		-	1.5
2010 acquisitions		1.0	-
Part year effect of 2009 acquisitions		0.8	-
		36.1	39.2

Acquisitions made during 2010 contributed £1.0 million to EBITA. Spice made various acquisitions during 2009 which contributed to EBITA for part of that year but which have contributed to EBITA for the whole of the year ended 30 April 2010. For example, BPI was acquired on 18 July 2008. Its results for the period between 18 July 2009 and 30 April 2010 are shown within existing operations, as are the comparative numbers for the year from acquisition to 30 April 2009. The results of BPI for the period from 1 May 2009 to 18 July 2009 (for which there are no comparative numbers) are shown within the part year effect of 2009 acquisitions. Other 2009 acquisitions, part of whose performance contributes to this line, are NIFES, Morrel, Treewise and Stowland.

EBITA operating margins for the Group from continuing activities (excluding foreign currency) reduced to 11.7% (2009: 13.2%). Margins within the Supply and Distribution Divisions have been consistent in the second half of the year with those in the first half. The reduction in margins compared to 2009 reflects the impact of acquisitions made in 2010, central costs not yet having reduced to reflect the reduced size of the Group and the competitive environment referred to in the Chairman's statement.

Exceptional costs

The continuing Group has incurred costs of approximately £7.7 million during the year relating to redundancies, property reorganisation costs and customer/supplier related issues. These costs have been separately identified on the face of the income statement. Exceptional costs relating to the discontinued business totalled £2.1 million.

Exceptional costs in 2009 principally relate to costs incurred in connection with the Group's move from AIM to the Official List which was completed in July 2008.

Foreign exchange gains and losses

Unrealised foreign exchange losses of £0.2 million (2009: gain of £0.7 million) arising on the re-translation of overseas revenues and costs have been recognised within EBITA. These movements principally arise within our Distribution Division and specifically in relation to the AT&T contract.

Realised foreign exchange gains of £nil (2009: £1.5 million) arising on the retranslation of cash remitted to the UK from USA have been recognised in EBITA.

Finance expenses

Finance expenses for the year were £4.6 million (2009: £7.5 million). The Group has benefited from a reduction in its cost of borrowing through the LIBOR interest rate swap put in place in March 2009. Finance expenses include a non cash interest charge on the Group's outstanding liability for contingent consideration. This non cash charge is excluded from the calculation for the purposes of determining compliance with the Group's banking covenants. The Group's main banking covenants are based around earnings before interest, tax, exceptional costs, depreciation, amortisation/impairment and share based payments (Adjusted EBITDA). Adjusted EBITDA interest cover for the year was 10.2 times (2009: 6.9 times) which compares against a covenant of three times.

The Group is also covenanted in relation to its ratio of net debt to Adjusted EBITDA such that net debt should not exceed 3.25 times Adjusted EBITDA. At 30 April 2010, this ratio was 2.6 times (2009: 2.1 times), excluding the sales proceeds received in May 2010 for the Telecoms business. On a pro-forma basis, taking account of the disposals of the Telecoms and Gas businesses, the ratio of net debt to Adjusted EBITDA would have been 2.2 times.

Profit on ordinary activities before tax, exceptional costs and amortisation of intangible fixed assets (PBTA)

PBTA from continuing activities reduced to £31.5 million (2009: £31.7 million).

Profit on ordinary activities before tax

Profit on ordinary and continuing activities before tax was £16.7 million (2009: 25.4 million). The Group's amortisation charge has increased from £5.7 million to £7.1 million which is attributable to the amortisation of separately identifiable intangible fixed assets arising on acquisitions made during the year.

Tax

The Group's effective rate of tax for the year on continuing activities was 43.7% (2009: 34.3%). The increase is caused by the expected tax treatment of certain elements of the exceptional costs borne in the year.

Earnings per share

Diluted earnings per share from continuing activities were 2.73 pence (2009: 5.01 pence). Adjusted diluted earnings per share (before exceptional costs and amortisation of intangible fixed assets) from continuing activities was 6.05 pence (2009: 6.37 pence). In prior years, the Group's ESOP has had adequate shares to satisfy all options vested and also options granted but not yet vested. As previously highlighted, this is no longer the case and new shares will either be issued or bought on the market to make up this difference. This has been taken account of in the calculation of diluted earnings per share.

Dividend

The Board is pleased to have recommended a final dividend of 1.22 pence (2009: 1.14 pence) per share payable on 14 September 2010 to shareholders on the register at 27 August 2010, subject to approval at the Annual General Meeting. An interim dividend of 0.4 pence per share (2009: 0.36 pence) was paid on 10 February 2010, making a total dividend for the year of 1.62 pence (2009: 1.5 pence).

The total dividend is covered 3.7 times (2009: 4.2 times) by adjusted earnings per share.

Cash flow

Net cash inflows from continuing operations were £32.8 million (2009: £36.0 million). The Group converted 91% of EBITA from continuing activities into operating cash flow (2009: 92%). The ongoing strength of the Group's conversion of profits into cash reflects our rigorous management of cash. During the year, net working capital utilised increased by £7.3 million (2009: £6.9 million). This utilisation relates to investment in support of the continuing growth of the business and in particular growth in the Group's white collar operations which are self delivered. The Group's generation of free cash flow from continuing operations has been especially pleasing in the year.

Balance sheet

Net assets have reduced to £127.8 million (2009: £187.5 million), reflecting losses incurred from discontinued activities.

Net debt at 30 April 2010 was £117.5 million (2009: £95.8 million). The increase is mainly attributable to consideration paid in respect of acquisitions (£17.0 million) and also payments made to settle contingent cash consideration (£14.3 million) connected with acquisitions offset by cash generation. Consideration arising in respect of the sale of the Telecoms business was received on 17 May 2010 and pro-forma net debt was £91 million after adjusting for receipt of these proceeds.

At 30 April 2010, the Group's committed syndicated revolving credit facility was £170 million. This was reduced to £145 million following the completion of the sale of the Telecoms business. Proforma headroom under the revised revolving credit facility, and also taking account of the Telecoms proceeds was £54 million. The facility is not due for renewal until March 2012.

The Group has in place interest rate swaps, extending to March 2012, which fixes the LIBOR rate payable on around £80 million of the Group's net debt at approximately 2.03%.

Accounting policies

The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards.

Principal risks and uncertainties

The Group's businesses maintain detailed risk registers which are regularly updated and include strategies to mitigate identified risks. These registers are compiled using a common model but with enough built in flexibility to take account of specific business risk. Broadly risks are categorised into six types being: strategic and planning; financial; operational and quality; people; reputation; and regulatory risks. For each risk identified, the processes and procedures in place to mitigate and manage that risk are also recorded. Significant risks facing the Group include:

·      Regulatory (regulatory risks) - the Group operates within markets which are subject to extensive laws and regulations. These laws and regulations continue to change and evolve, as must Spice's processes, procedures and systems.

·      Health and safety (operational and quality risks) - many of our markets are extensively regulated due to the dangerous nature of activities undertaken by the Group. The Group may suffer injuries and fatalities even if all processes, procedures and regulations are complied with.

·      People (people risks) - Spice provides support services to its customers. These services are principally delivered by employees but also using subcontractors. In some of Spice's markets, severe skill shortages exist. In order to continue to grow and prosper, the Group needs to be able to retain existing employees whilst also continuing to access new pools of talented and skilled resources.

·      Competitive (operational and quality risks) - Spice seeks to maintain long term relationships with its customers and typically operates via contracts whose duration is for between one and five years. At any point in time, some of the Group's contracts will be in the process of retender and renewal.  The Group has a good track record of renewing key customer contracts, however, the markets within which Spice operates are competitive.

·      Innovation (operational and quality risks) - on a number of contracts, Spice has been incumbent for many years. Over this time, the Group has been able to successfully innovate in order to improve the effectiveness and efficiency of its service delivery. Our customers continue to demand innovative solutions and therefore we must continue to innovate to maintain our position.

·      Financial, operational and management information systems (financial risks and operational risks) - the efficient operation and management of the Group depends on the proper operation and performance of financial, operational and management information systems. Any failure in such systems may result in a loss of control and adversely impact Spice's ability to operate effectively and to fulfil its contractual obligations.

·      Economic and financial (financial risks) - The Group's committed revolving credit facility is due for renewal in March 2012. As a result of the turmoil in the banking sector during 2008 and 2009, at the point of renewal of the revolving credit facility, it is expected that the margins payable, covenant structures and general terms and conditions will become more onerous and, as a result, will impact upon the Continuing Group's earnings.

·      Key personnel (people risks) - Spice has in place an experienced and motivated senior management team and considers that its management team has strength in depth. However, the loss of one or more key personnel could have an adverse impact on the Group's operations, reputation, customer relationships and future prospects.

·      Acquisitions (financial risks) - Spice has made a number of acquisitions over the course of its history. Acquisitions always carry an element of risk, may perform otherwise than expected, and the process of integrating acquisitions may be prolonged due to unforeseen difficulties. Any of these events may harm the Group's business, financial condition or operating results.

Cautionary statement

The Business and financial review has been prepared for the shareholders of the Group, as a body, and no other persons. Its purpose is to assist shareholders of the Company to assess the strategies adopted by the Group and the potential for those strategies to succeed and for no other purpose. This Business and financial review contains forward-looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the sectors and markets in which the Group operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. No assurances can be given that the forward-looking statements in this Business and financial review will be realised. The forward-looking statements reflect the knowledge and information available at the date of preparation.

Martin Towers              Oliver Lightowlers

Chief Executive              Group Finance Director

6 July 2010

 Consolidated income statement for the year ended 30 April 2010

		2010	2009
	Note	£'m	£'m
Continuing operations
Revenue	5	310.7	279.6
Operating expenses		(289.4)	(246.7)
EBITA	5	36.1	39.2
Exceptional operating expenses		(7.7)	(0.6)
Amortisation of intangible fixed assets		(7.1)	(5.7)
Operating profit		21.3	32.9
Finance expenses		(4.6)	(7.5)
PBTA		31.5	31.7
Exceptional operating expenses		(7.7)	(0.6)
Amortisation of intangible fixed assets		(7.1)	(5.7)
Profit on ordinary activities before tax	5	16.7	25.4
Tax on profit on ordinary activities		(7.3)	(8.7)
Profit after tax from continuing operations		9.4	16.7
(Loss)/profit after tax from discontinued operations	6	(65.6)	0.5
(Loss)/profit for the year attributable to equity shareholders		(56.2)	17.2
Earnings per share (pence per share) from continuing operations
Basic	4	2.73	5.31
Diluted	4	2.70	5.01

EBITA comprises profit on ordinary activities before interest, tax, exceptional costs and amortisation of intangible fixed assets.

PBTA comprises profit on ordinary activities before tax, exceptional costs and amortisation of intangible fixed assets.

Consolidated statement of comprehensive income for the year ended 30 April 2010

	2010	2009
	£'m	£'m
Other comprehensive income
Cash flow hedges	(1.4)	0.2
Currency translation differences	1.8	-
Other comprehensive income	0.4	0.2
(Loss)/income attributable to equity shareholders	(56.2)	17.2
Total comprehensive (loss)/income for the year	(55.8)	17.4

Consolidated statement of changes in shareholders' equity for the year ended 30 April 2010

	Called up	Share	Capital
	share	premium	redemption	Merger	Retained
	capital	account	reserve	reserve	earnings	Total
	£'m	£'m	£'m	£'m	£'m	£'m
At 1 May 2008	6.0	46.5	0.1	37.9	35.9	126.4
Income attributable to equity shareholders	-	-	-	-	17.2	17.2
Dividends paid in the year	-	-	-	-	(3.8)	(3.8)
IFRS 2 share based payments charge	-	-	-	-	2.1	2.1
Decrease in IFRS deferred tax asset	-	-	-	-	(4.9)	(4.9)
S23 tax relief on the exercise of share options	-	-	-	-	1.3	1.3
Payment to acquire own shares (ESOP)	-	-	-	-	(1.1)	(1.1)
Proceeds from exercise of share options	-	-	-	-	1.8	1.8
Utilisation of ESOP shares	-	-	-	-	(0.7)	(0.7)
Interest rate hedge	-	-	-	-	0.2	0.2
Issue of shares	1.0	49.0	-	-	-	50.0
Costs of share issue	-	(1.0)	-	-	-	(1.0)
1 May 2009	7.0	94.5	0.1	37.9	48.0	187.5
Loss attributable to equity shareholders	-	-	-	-	(56.2)	(56.2)
Dividends paid in the year	-	-	-	-	(5.4)	(5.4)
IFRS 2 share based payments charge	-	-	-	-	1.4	1.4
Decrease in IFRS deferred tax asset	-	-	-	-	(2.1)	(2.1)
S23 tax relief on the exercise of share options	-	-	-	-	2.2	2.2
Payment to acquire own shares (ESOP)	-	-	-	-	(3.0)	(3.0)
Proceeds from exercise of share options	-	-	-	-	5.4	5.4
Utilisation of ESOP shares	-	-	-	-	(3.3)	(3.3)
Interest rate hedge	-	-	-	-	(1.4)	(1.4)
Currency translation differences	-	-	-	-	1.8	1.8
Issue of shares	-	0.9	-	-	-	0.9
30 April 2010	7.0	95.4	0.1	37.9	(12.6)	127.8

                       Consolidated balance sheet as at 30 April 2010

		2010	2009
	Note	£'m	£'m
Assets
Non-current assets
Intangible fixed assets - Purchased goodwill		170.8	228.6
Intangible fixed assets - Other		32.6	45.9
Property, plant and equipment		19.4	23.9
Investment in associates		-	0.2
Trade and other receivables		0.3	0.3
		223.1	298.9
Current assets
Inventories		10.9	12.6
Trade and other receivables		68.3	70.0
Derivative financial instruments		-	0.2
Cash - client monies		0.7	0.2
Assets of disposal Group classified as held for sale	6	59.2	-
		139.1	83.0
Liabilities
Current liabilities
Trade and other payables		(65.9)	(60.4)
Current tax payable		(12.4)	(9.0)
Deferred tax liabilities		(1.9)	(2.1)
Derivative financial instruments		(1.8)	(0.8)
Financial liabilities		(1.4)	(4.6)
Liabilities of disposal Group classified as held for sale	6	(24.1)	-
		(107.5)	(76.9)
Non-current liabilities
Financial liabilities		(116.1)	(91.2)
Provisions for other liabilities and charges		(3.2)	(17.8)
Deferred tax liabilities		(7.6)	(8.5)
		(126.9)	(117.5)
Net assets		127.8	187.5
Shareholders' equity
Called up share capital		7.0	7.0
Share premium account		95.4	94.5
Capital redemption reserve		0.1	0.1
Merger reserve		37.9	37.9
Retained earnings		(12.6)	48.0
Equity shareholders' funds		127.8	187.5

 Consolidated cash flow statement for the year ended 30 April 2010

		2010	2009
	Note	£'m	£'m
Operating activities
Net cash generated from operations	7a	34.7	38.4
Interest paid		(4.6)	(6.9)
Tax paid		(7.3)	(7.5)
Net cash generated from operating activities		22.8	24.0
Investing activities
Purchase of property, plant and equipment		(6.6)	(8.4)
Proceeds from sale of property, plant and equipment		0.4	0.2
Purchase of intangible fixed assets		(2.3)	(2.0)
Acquisition of subsidiary undertakings		(31.3)	(33.1)
Cash acquired with subsidiary undertakings		0.5	3.4
Net cash used in investing activities		(39.3)	(39.9)
Financing activities
Repayments of obligations under finance leases		(0.3)	(0.2)
Dividends paid		(5.4)	(3.8)
Proceeds from exercise of share options		2.1	1.8
Payment to acquire own shares (ESOP)		(3.0)	(1.1)
Net proceeds from issue of ordinary shares		0.9	49.0
Net proceeds/(repayment) from borrowings		25.0	(26.0)
Net cash generated from financing activities		19.3	19.7
Net increase in cash, cash equivalents and bank overdrafts	7c	2.8	3.8
Cash, cash equivalents and bank overdrafts at 2 May 2009		(4.4)	(8.6)
Exchange gains on cash, cash equivalents and bank overdrafts		0.3	0.4
Cash, cash equivalents and bank overdrafts at 30 April 2010		(1.3)	(4.4)

Notes to the annual financial results for the year ended 30 April 2010

1 Basis of accounting

The audited consolidated financial information for the year ended 30 April 2010 has been prepared in accordance with the historical cost convention, as modified by financial assets and liabilities at fair value through the income statement and share based payments at fair value, in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, IFRIC interpretations and the Companies Act 2006.

The financial information included in this announcement has been extracted from the audited financial statements for the year ended 30 April 2010. The content of this announcement has been agreed with the Company's auditors. This announcement of financial results does not constitute the Group's financial statements. The Group's 2010 Annual report and financial statements, on which the Company's auditors, PricewaterhouseCoopers LLP, have given an unqualified opinion in accordance with the Companies Act 2006, are to be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The consolidated financial information was approved by the Board of Directors on 6 July 2010.

2 Directors' responsibility statement

The Directors confirm that, to the best of their knowledge:

·      the Group financial information in this report, which has been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU), International Financial Reporting Interpretations Committee interpretations and those parts of the Companies Act 2006 applicable to companies under IFRS, give a true and fair view of the assets, liabilities, financial position and profit of the Group taken as a whole; and

·      the management report contained in this report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as whole, together with a description of the principal risks and uncertainties that they face.

3 Dividends

	2010	2009
	£'m	£'m
Amounts recognised as a distribution from shareholders' funds during the year
Final dividend paid of 1.14 pence per share for the year ended 1 May 2009 (2008: 0.9 pence)	4.0	2.6
Interim dividend paid of 0.40 pence per share for the year ended 30 April 2010 (2009: 0.36 pence)	1.4	1.2
	5.4	3.8
Proposed final dividend of 1.22 pence per share for the year ended 30 April 2010 (2009: 1.14 pence)	4.2	4.0

Dividends amounting to £0.1 million (2009: £0.2 million) have been waived by the ESOP and therefore deducted in arriving at the aggregate of dividends proposed. It is proposed that the final dividend amounting to £4.2 million (2009: £4.0 million) will be paid on 14 September 2010 to those shareholders on the register at 27 August 2010.

The proposed final dividend for the year ended 30 April 2010 will be accounted for, following approval of that dividend, in the first half of the year to April 2011.

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 year. 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:

	2010	2009
	'm	'm
Weighted average shares for basic earnings per share	347.3	314.3

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 year used in the calculation of diluted earnings per share was as follows:

	2010	2009
	'm	'm
Weighted average shares for diluted earnings per share	350.9	333.4

Adjusted earnings per share have been calculated so as to exclude the effect of the amortisation of all intangible fixed assets and exceptional costs including related tax charges and credits. Adjusted earnings used in the calculation of basic and diluted earnings per share reconciles to basic earnings as follows:

	2010	2009
	£'m	£'m
Basic earnings	9.4	16.7
Adjustments for taxation	(3.0)	(1.8)
Exceptional costs	7.7	0.6
Amortisation of intangible fixed assets	7.1	5.7
Adjusted earnings	21.2	21.2

	2010	2009
Earnings per share (pence per share) from continuing activities
Basic	2.73	5.31
Diluted	2.70	5.01
Adjusted earnings per share (pence per share) from continuing activities
Basic	6.11	6.75
Diluted	6.05	6.37

Basic and diluted earnings per share for the year ended 1 May 2009 have been restated from 5.48 pence and 5.17 pence per share respectively, and adjusted basic and diluted earnings per share have been restated from 7.54 pence and 7.11 pence per share respectively, to reflect discontinued activities.

Earnings per share (pence per share) from discontinued activities is set out below together with total earnings per share arising from continuing and discontinued activities:

	2010	2009
Earnings per share (pence per share) from continuing and discontinued  activities
Basic	(15.99)	5.46
Diluted	(16.16)	5.17
Earnings per share (pence per share) from discontinued  activities
Basic	(18.72)	0.15
Diluted	(18.86)	0.16

5 Segmental Information

 

The Group's two operating Divisions operate in four main geographical areas. The home country of the Company, which is also the main operating country, is the UK. The Group's revenue is generated mainly within the UK.

	2010	2009
	£'m	£'m
United Kingdom	302.1	262.9
USA	7.9	14.9
Continental Europe	0.7	0.5
Rest of the World	-	1.3
	310.7	279.6

The Group has two principal operating and reportable segments, which are its Supply Division and its Distribution Division. These operating segments were determined based on the nature of the services provided by the Group and manner in which the Group is organised and managed. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance. The Group's Chief Executive has been identified as the CODM. The Head office category includes the Group's IT and HR functions and other professional costs. Finance expenses have been borne centrally in Head office and are not allocated into the Group's two Divisions.

The segment results, from continuing operations, for the year ended 30 April 2010 are as follows:

				2010				2009
	Supply	Distribution	Head office	Total	Supply	Distribution	Head office	Total
	£'m	£'m	£'m	£'m	£'m	£'m	£'m	£'m
Total revenue	41.1	270.4	0.8	312.3	35.2	245.2	0.4	280.8
Inter divisional revenue	(0.2)	(0.6)	(0.8)	(1.6)	-	(0.8)	(0.4)	(1.2)
Revenue	40.9	269.8	-	310.7	35.2	244.4	-	279.6
EBITA	18.1	26.7	(8.7)	36.1	17.0	30.3	(8.1)	39.2
Exceptional operating income/(expenses)	(0.4)	(5.3)	(2.0)	(7.7)	0.4	-	(1.0)	(0.6)
Amortisation of intangible fixed assets	(3.6)	(3.5)	-	(7.1)	(3.5)	(2.2)	-	(5.7)
Finance expenses	-	-	(4.6)	(4.6)	-	-	(7.5)	(7.5)
Profit before tax	14.1	17.9	(15.3)	16.7	13.9	28.1	(16.6)	25.4
Tax	-	-	(7.3)	(7.3)	-	-	(8.7)	(8.7)
Profit for the year	14.1	17.9	(22.6)	9.4	13.9	28.1	(25.3)	16.7

Profit before tax is stated after exceptional costs of £7.7 million and discontinued operations are stated after charging exceptional costs of £2.1 million which comprise:

·      Redundancy and restructuring costs of £3.7 million;

·      Property and reorganisation costs of £3.6 million; and

·      Non-recurring costs connected to customer and supplier related matters of £2.5 million

Exceptional costs in 2009 principally relate to costs incurred in connection with the Group's move from AIM to the Official List which was completed in July 2008.

6 Discontinued activities

During May 2010, the Group completed the sale of its Telecoms and Gas businesses. These activities, together with the Facilities business, have been presented as discontinued since these activities collectively meet the definition of discontinued as defined by IFRS 5. Results attributable to discontinued activities are as follows:

		2010	2009
		£'m	£'m
Revenue		99.1	106.4
Operating expenses		(100.0)	(108.5)
Loss before tax from discontinued operations		(0.9)	(2.1)
Tax on profit on discontinued operations		4.8	2.6
Profit after tax from discontinued operations		3.9	0.5
Loss recognised on the re-measurement of assets of the discontinued operations		(69.5)	-
(Loss)/profit after tax for the year from discontinued operations		(65.6)	0.5
Cash flows from discontinued operations
Net cash (used in)/from operating activities		(0.1)	0.5
Net cash used in investing activities		(13.3)	(8.4)
Net cash generated from financing activities		-	-

The loss recognised on the re-measurement of assets of discontinued operations relates to the impairment of assets of the Facilities and Gas businesses in order to record them at fair value less costs to sell in accordance with IFRS5.  This includes the impairment charge of £42.9 million recorded at the half year in respect of the Gas business.

The assets and liabilities attributable to discontinued activities are as follows:

			£'m
Assets
Non-current assets
Intangible fixed assets - Purchased goodwill			13.6
Intangible fixed assets - other			7.7
Property, plant and equipment			9.4
			30.7
Current assets
Inventories			5.8
Trade and other receivables			22.7
			28.5
Liabilities
Current liabilities
Trade and other payables			(23.3)
			(23.3)
Non-current liabilities
Deferred tax liabilities			(0.8)
			(0.8)
Net assets			35.1

7 Notes to the cash flow statement

7a) Net cash generated from operations

	2010	2009
	£'m	£'m
Continuing operations
Operating profit	21.3	32.9
Depreciation of property, plant and equipment	2.4	2.2
Amortisation of intangible fixed assets	7.1	5.7
Exceptional operating expenses	7.7	0.6
IFRS 2 share based payments charge	1.4	2.1
Loss on sale of property, plant and equipment	-	0.1
Foreign exchange loss/(gain) on operating activities	0.2	(0.7)
(Increase)/decrease in inventories	(2.1)	1.7
Increase in receivables	(13.8)	(9.3)
Increase in payables	8.6	0.7
Net cash generated from continuing operations	32.8	36.0
Discontinued operations	1.9	2.4
Net cash generated from operations	34.7	38.4

The net cash generated from operations attributable to acquisitions made during the year was £1.2 million (2009: £1.9 million). Acquisitions did not have a material impact on any other items within the consolidated cash flow statement.

 

7b) Analysis of net debt

	At				At
	2 May	Cash	Non cash		30 April
	2009	flows	movements	Acquisitions	2010
	£'m	£'m	£'m	£'m	£'m
Bank overdraft	(4.4)	2.8	0.3	-	(1.3)
Bank loans due after one year	(91.0)	(25.0)	-	-	(116.0)
Finance leases due within one year	(0.2)	0.3	(0.1)	(0.1)	(0.1)
Finance leases due after one year	(0.2)	-	0.1	-	(0.1)
Net debt	(95.8)	(21.9)	0.3	(0.1)	(117.5)

Net debt excludes any monies which are held on behalf of the Group's customers. Such monies are disclosed separately on the face of the balance sheet.

7c) Reconciliation of net cash inflow to movement in net debt

	2010	2009
	£'m	£'m
Increase in cash in the year	2.8	3.8
Dividends paid	(5.4)	(3.8)
Net proceeds received from share issue	0.9	49.0
Proceeds from exercise of share options	2.1	1.8
Payment to acquire own shares (ESOP)	(3.0)	(1.1)
Cash inflow from financing	(19.3)	(19.7)
Change in net debt resulting from cash flows	(21.9)	30.0
Exchange gains	0.3	0.4
New and acquired finance leases	(0.1)	(0.3)
Net debt at 2 May 2009	(95.8)	(125.9)
Net debt at 30 April 2010	(117.5)	(95.8)

 

8 Related party transactions

Transactions between the Spice and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Remuneration of key management personnel

The remuneration of the Directors and members of the operational board, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures:

	2010	2009
	£'m	£'m
Short term employee benefits (excluding bonuses)	1.5	1.7
Termination benefits	0.4	-
IFRS 2 share based payments charge	0.3	0.4
	2.2	2.1

Other transactions

During the year, bonus payments totalling £1.0 million were declared in favour of various directors of subsidiary undertakings that formed part of Telecoms business disposed of on 17 May 2010.  The recipients of these payments included P Burridge, M Norfield, B Nicholson, M Orchart and I Carr who are related parties by virtue of being directors and senior managers of the businesses disposed of.

9 Business combinations

 a) Acquisition of Com Group Australia Pty Limited

On 13 July 2009, Spice acquired the entire issued share capital of Com Group for initial cash consideration of £6.9 million. The fair values attributed by the Directors to the net assets acquired are as follows:

	IFRS book
	value	Adjustments	Fair value
	£'m	£'m	£'m
Property, plant and equipment	1.3	-	1.3
Inventories	2.7	(0.7)	2.0
Trade and other receivables	3.0	-	3.0
Cash and cash equivalents	1.3	-	1.3
Trade and other payables	(3.2)	-	(3.2)
Current tax payable	(0.2)	(0.4)	(0.6)
	4.9	(1.1)	3.8
Net assets recognised on acquisition
Intangible assets			3.9
Deferred taxation on intangible assets			(1.1)
Purchased goodwill			0.4
Fair value of assets acquired			7.0
Cash consideration paid			6.9
Costs of acquisition			0.1
Total cost of acquisition			7.0

The book values of assets and liabilities were extracted from the underlying accounting records of Com Group at the date of acquisition. The fair value adjustment made to inventories was to restate the carrying value of assets acquired to estimated realisable value. Fair value adjustments to current tax payable principally relate to the recognition of liabilities, not recorded in the underlying records at the date of acquisition. Fair values are based upon management's initial assessment of the acquired entity, and are subject to reassessment during the initial twelve months following acquisition.

Com Group was subsequently disposed of on 17 May 2010.

b) Other acquisitions

During the year, the Group also acquired the entire issued share capital of Agrilek, NWP Power Systems and Wayleave Servicing Engineering. None of these acquisitions is considered material to the financial statements. Had each of these acquisitions occurred on 2 May 2009, Group revenue would have been £315.6 million and EBITA would have been £36.8 million.

During the year cash payments of £17.0 million have been paid in respect of acquisitions and £14.3 million to settle contingent consideration obligations.

10 Post balance sheet events

On 17 May 2010, the Group completed the disposal of the entire issued share capital of Spice Telecoms Limited and subsidiary undertakings for gross consideration of approximately £32.8 million.

On 1 June 2010, the Group completed the disposal of the entire issued share capital of Liberty Gas Services Limited and subsidiary undertakings for £nil consideration.

11 Availability of annual report

The Annual report will be sent to all shareholders on 28 July 2010. Copies may be obtained from the Company Secretary at the Registered Office of the Company at Wellfield House, Victoria Road, Morley, Leeds LS27 7PA.

12 Annual General Meeting

The 2010 Annual General Meeting is to be held at the Corby Training Centre, Bangrave Road, Corby NN17 1NN on Wednesday 1 September 2010 at 2.00pm.

 

END

 

 

FR SSMESIFSSEIW