Interim Management Statement

RNS Number : 4152N

Spice PLC

17 February 2009

 



17 February 2009

Spice plc ("Spice" or "the Group")

Interim Management Statement

The Board of Spice plc, the provider of Total Utility Support Services, releases its Interim Management Statement for the period from 1 November 2008. 

The Board remains confident of the Group's prospects. The core markets in which the Group operates are strong and Spice is well positioned in those markets with the strength in our billing, energy and electricity businesses mitigating the weaker performance in the softer markets of facilities and gas. The Board expects Group trading for the year to April 2009 to be in line with its expectations.

Divisional structure

The Group has previously announced that it is organising itself in the same way as its utility customers, in order to better serve those customers. In line with this strategy, the Group has appointed Andy Catchpole as head of the Group's Distribution Division and Chris Lee as head of the Group's Supply Division. The Board believes that this structure will also help the Group realise further benefits from cross selling across the business.

Trading update

Our Supply Division has continued the delivery of its pilot project for imbalance services with Eon Electricity. Eon recently received their first electricity cash recoveries from the pilot and we remain optimistic that this will, in due course, be converted into a longer term contract. Trading within our Supply Division has been strong during the period.

Within our Distribution Division we have recently agreed the following contract extensions:

• AT&T - extension of contract for the provision of data management services to December 2010; and

• National Grid - extension of contract for the provision of emergency response services to March 2010.

We have also agreed terms with Thames Water to provide water imbalance services.

At the time of the announcement of our interim results, we reported softening in our facilities marketplace as well as tougher trading conditions in our gas business. The facilities marketplace has softened further in the period since December. We have taken, and continue to take, steps to reduce costs in our facilities business to match activity levels, whilst focusing on gaining market share. Although we cannot foresee any upturn in high street spend and have continued to see an increased trend towards cash settlement of insurance claims, the cross selling of energy efficiency services is progressing well. 

Trading in our gas business has continued to soften since the interim results and has also moved into our core areas of activity in the North. Again, we have taken, and are continuing to take, steps to reduce the cost base in line with activity levels, as we seek to maximise performance. The migration to common IT systems in November 2008 has provided enhanced management information to the Group and has created greater visibility, but in so doing has led to a downwards assessment of anticipated contract margins and we expect the performance of the gas business to fall short of the Board's expectations. In part, this is also a consequence of the migration of IT systems where we have recorded a change in accounting policy for work in progress within our gas business. The strength in our core markets of billing, energy and electricity is expected to compensate for reduced performance in the softer markets.

Acquisitions

In December 2008, we acquired National Industry Fuel Efficiency Service Limited ("Nifes"), which forms part of the Group's Supply Division. The market focus and skill base of Nifes is highly complementary to those of our existing business, which makes our service offering to all of our customers much stronger at a time when the regulatory and cost drivers associated with energy and the environment are intensifying. Nifes' public sector heritage will greatly enhance Spice's ability to benefit from the Energy Efficiency objectives imposed on public sector organisations by the Climate Change Act 2008. Integration of Nifes is progressing according to plan.

During February 2009, our Distribution Division made two small acquisitions, Treewise Limited ("Treewise") and Stow Land Control Limited ("Stow Land"), for combined consideration totalling £1.6 million, of which £0.4 million is contingent upon the performance of the businesses for the period to January 2010. Treewise provides tree clearance services on electricity networks and Stow Land provides specialist vegetation control services in electricity substations. Together these businesses enhance our "cradle to grave" service offering to our electricity customers. The last unaudited financial statements for these two businesses show a combined operating profit of £0.3 million.

Bank facilities

The Group continues to have in place a £170 million committed revolving credit facility bank facility which is not due for renewal until March 2012.  

Outlook

The Board remains confident of the Group's prospects. The core markets in which the Group operates are strong and Spice is well positioned in those markets, with the strength in our billing, energy and electricity businesses mitigating the weaker performance in the softer markets of facilities and gas. The Board expects Group trading for the year to April 2009 to be in line with its expectations.

Spice expects to announce its results for the year to April 2009 on 6 July 2009.

A telephone conference call for analysts has been scheduled for 08:15am today on 17 February 2009. Dial in details are set out below:

Telephone number:	[phone]
Conference ID:	Spice Interim Management Statement

Ends

Enquiries:

Spice plc

Simon Rigby, Chief Executive Officer                             Tel: [phone]

Oliver Lightowlers, Group Finance Director

Andy Catchpole, Group Strategy and Development Director

Financial Dynamics                                                     Tel: [phone]

Billy Clegg  

Caroline Stewart

KBC Peel Hunt (Broker)                                            Tel: [phone]

Julian Blunt

NOTES TO EDITORS

Spice plc

Spice is a total utility infrastructure support services business. 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 sector, niche telecommunications services, statutory gas inspections, energy management and facilities management. Spice's businesses have a common theme of delivering and co-ordinating infrastructure services to customers, and the technological element within the product mix has been built up significantly over the course of the last three years.

 

END

 

 

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