16th Jun 2006 07:00
Spice Holdings PLC16 June 2006 16 June 2006 ACQUISITION OF INENCO HOLDINGS LIMITED AND ADDITION OF NEW BANKING FACILITIES Spice Holdings plc ("Spice" or the "Group") is pleased to announce theacquisition of Inenco Holdings Limited ("Inenco") for a total consideration ofup to £11.8 million. Inenco is one of the leading energy management businesses in the United Kingdom,is based in Lancashire and operates in three key business areas; cost control;consultancy; and fuel cards. Through its cost control operation, Inencoprovides a range of services including the procurement (acting as agent for itsclients) of gas, electricity, and telecoms services and the validation ofutility bills on behalf of blue-chip commercial and industrial clients. Inencoacquires gas and electricity worth approximately £600 million each year onbehalf of its clients. Inenco's consultancy arm assists clients with reviewingenergy usage and efficiency to achieve cost savings and on their compliance withrelevant legislation (for example the Climate Change Levy). The Consultancyoperation also provides environmental consultancy services and the design andmanagement of environmental control systems. Inenco also acquires diesel forclients and arranges diesel fuel card and other services for a range ofbusinesses. Of the total consideration, £9.0 million (the "Initial Consideration") will bepaid at completion with up to £2.8 million payable (the "AdditionalConsideration") on an earn out basis subject to the performance of Inenco in theperiod up to 31 March 2008. The Initial Consideration is subject to adjustmentbased on the working capital at completion and payment will be made for cashbalances, though there will be a total cap on the maximum total consideration(including the Initial Consideration, the Additional Consideration, the workingcapital adjustment and the payment for cash balances) of £13.7 million. All ofthe consideration will be settled by the issue of bank guaranteed loan notes.The guarantee is provided by HSBC through an addition to existing bankingfacilities, which are now increased from £30 million to £60 million. The loannotes in respect of the Initial Consideration, working capital adjustments andcash balances will be redeemable from 16 December 2006 at the option of thevendors. Inenco will form part of Spice's Commercial Services Division alongside CircleBritannia, ServiceLine and Breval. Inenco has been established for over 30 years and is wholly owned by itsdirectors and employees. All five of the directors of the business will beremaining with the business following the acquisition. Inenco employsapproximately 130 people and has strong relationships with all of the energysupply businesses in the United Kingdom The consolidated audited accounts of Inenco for the year ended 31 March 2006show turnover of £12.9 million and operating profits (after adjusting fornon-recurring employment costs and negative goodwill credited to the profit andloss account) of £1.3 million. Net assets of Inenco at 31 March 2006 were £2.1million (including cash balances). The Initial Consideration of £9.0 millionpayable at completion represents a multiple of 2006 adjusted operating profitsof 6.9 times; the aggregate of the Initial Consideration and the AdditionalConsideration represents a multiple of 9 times 2006 adjusted operating profit. Simon Rigby, Chief Executive of Spice Holdings, said: "It has been a key part of our strategy to develop an energy managementoperation. The drive to manage energy consumption has both a cost andcompliance element - efficient use and procurement of energy will yield aneconomic benefit but the legal and moral need to be compliant with variousregulations is equally strong. We believe Inenco is one of the few businessesin the United Kingdom able to provide all those aspects of energy management.We have supplied some 20 per cent of Inenco's specialist meter installations formany years and, since the establishment of our Commercial Services Division,have been working in partnership with Inenco on several joint projects. This is an earnings enhancing acquisition in its own right in the currentfinancial year and, as part of our Commercial Services Division, there areconsiderable opportunities for us to cross sell Inenco's services to ourexisting clients where we see real demand for energy management as part of ouroverall service (for example, we currently look after 500 private electricitynetworks in our Utilities Services Division. In renewable energy for instance,we are already a leading connector of windfarms to the electricity network -Inenco brings additional skills in feasibility studies for identifying suitablesites for those windfarms. Inenco's clients include leading commercial andindustrial businesses and there is little overlap with our existing client base" Nigel Withey, Managing Director of Inenco, said: "As part of the Spice group we see great opportunity to develop Inenco's clientbase and to be able to offer to our own client base the ability now not only toadvise on energy management but also to deliver a range of services to implementthat advice, from specialist heating, ventilation and air conditioning andelectrical maintenance skills through to water and electric meter installation.We are delighted to be joining Spice and look forward to the future." ...Ends... For further information, please contact: Spice Holdings plc Tel: 0113 384 3838 Simon Rigby, Chief Executive Officer Oliver Lightowlers, Group Finance Director Carl Chambers, Corporate Development Director Financial Dynamics Limited Tel: 020 7831 3113 Billy Clegg Sally Lewis www.spiceplc.com www.inenco.co.uk NOTES TO EDITORS Spice Holdings plc Spice is a support services business operating in the utilities and facilitiesmanagement sector. The Group's operations were founded in 1996 and have theirorigins in the electricity industry, though the range of activities has sincebeen expanded into the water sector, niche telecommunications services, thepublic sector and commercial facilities management. Spice's businesses have acommon theme of delivering and co-ordinating infrastructure services tocustomers, and the technological element within the product mix has been builtup significantly over the course of the last three years. Circle Britannia and Serviceline Circle Britannia is a provider of outsourced facilities services to corporateclients and reinstatement services for major insurers. ServiceLine provides outsourced maintenance helpdesk services delivered eitheras part of an integrated facilities management service, incorporating CircleBritannia's facilities service operation, or as a stand alone service managingclient's existing suppliers. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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