13th Dec 2006 07:02
Spice PLC13 December 2006 13 December 2006 SPICE plc ACQUISITION OF PARGAS LIMITED Spice plc ("Spice" or the "Group") is pleased to announce the acquisition ofParGas Limited ("ParGas"), the public sector gas and heating services business,for a total initial consideration of £9.5 million, representing a multiple of7.1x anticipated adjusted operating profit for the year to 31 December 2006 and8.0 times 2005 operating profit for the year ended 31 December 2005. ParGas willform part of the Public Services Division of Spice plc. ParGas has two main business streams. It installs, services and maintains gasappliances and heating systems in domestic and commercial properties owned bysocial housing bodies and local authorities in London and the South East ofEngland. It currently has service and maintenance agreements coveringapproximately 17,000 properties, such agreements typically being for periods ofbetween two and five years. The range of services provided includes the annualreview of appliances and systems and the production of certificates forlandlords confirming compliance with safety regulations. Additionally, itprovides emergency first response services to gas distribution businesses inNorth London and East Anglia, identifying and making safe gas leaks and gasmeter replacement services. These services are provided under frameworkagreements of between two and three years The initial consideration is subject to adjustment based on the working capitalat completion, though there will be a total cap on the maximum totalconsideration of £10.5 million. The initial consideration will be payable incash at completion with the adjustment for working capital being paid followingthe production and agreement of completion accounts. ParGas has been established since 1997 and is wholly owned by its directors.One of the three current directors of the business will be remaining with thebusiness following the acquisition and Phil Rockliffe, the founder, will beretained as a Consultant. ParGas employs approximately 150 people, includingapproximately 80 CORGI registered gas engineers. Its client base ispredominantly based in London and the South East of England. The audited accounts of ParGas for the year ended 31 December 2005 show turnoverof £7.1 million and operating profits of £1.18 million. Net assets of ParGas at31 December 2005 were £1.0 million (including cash balances). The InitialConsideration of £9.5 million payable at completion represents a multiple of2005 operating profits of 8.0 times. The unaudited management accounts for the10 months to 31st October 2006 show turnover of £7.0 million and operatingprofits of £1.17 million. It is anticipated that operating profit for the 12months to 31 December 2006 will be £1.34 million; the Initial Considerationwould represent a multiple of 7.1 times 2006 operating profits. Simon Rigby, Chief Executive of Spice, said: "The acquisition of ParGas is another step in the development of our PublicServices division and also moves us into gas meter operations. ParGas has anexcellent reputation and its acquisition means that we now have operations intwo key areas, the North West of England and South East. We believe ParGas is an excellent complement to Apollo (which we acquired inNovember) and, as with Apollo, we intend to grow the business further and offeradditional services such as electrical installation and maintenance to ParGas'sclient base. Between Apollo and ParGas, we now have access to nearly 300 CORGIregistered gas engineers which provides us with an excellent platform to provideour clients with a responsive, effective service." Peter Tzortzi, Managing Director of ParGas, said: "We are delighted that ParGas will be part of the Spice group. Its presence inthe social housing sector and also in the utility sector means we can enhancethe services we provide to our clients, maintaining the flexibility to respondquickly to their requirements with the back up that being part of a larger groupprovides." - Ends - For further information, please contact: Spice plc Tel: 0113 384 3838Simon Rigby, Chief Executive Officer Oliver Lightowlers, Group Finance DirectorCarl Chambers, Corporate Development Director Financial Dynamics Limited Tel: 020 7831 3113Billy CleggCaroline Stewart www.spiceplc.com www.pargas.co.uk NOTES TO EDITORS Spice plc Spice is a support services business operating in the Commercial Services,Public Services and Utility Services sectors. The Group's operations werefounded in 1996 and have their origins in the electricity industry, though therange of activities has since been expanded into the water sector, nichetelecommunications services, the public sector energy management and commercialfacilities management. Spice's businesses have a common theme of delivering andco-ordinating infrastructure services to customers, and the technologicalelement within the product mix has been built up significantly over the courseof the last three years. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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