14th Nov 2005 07:02
Spice Holdings PLC14 November 2005 SPICE EXPANDS WATER SERVICES WITH ACQUISITION OF KEMAC Spice Holdings plc ("Spice") is pleased to announce the acquisition of KemacServices Limited ("Kemac"), a water services business, for a total considerationup to £6.25 million. Initial consideration of £2.0 million is payable in cash at completion. Thisinitial consideration is subject to adjustment on a pound for pound basis wherenet assets are more or less than £0.45 million, subject to a maximum upwardadjustment of £0.25 million. Additional consideration up to a maximum of £4.0million will be payable based on the earnings of the business for the 18 monthsto 30 April 2007. Of this additional consideration, £0.75million will be paid on31 August 2006 subject to achievement of certain targets. Loan Notes amountingto £4.0 million will be issued on completion in relation to the additionalconsideration and will be redeemed or cancelled based on the amount payable asadditional consideration. The total consideration payable for Kemac will notexceed £6.25 million. Kemac provides meter survey and installation, meter reading, leakage detection,water regulations inspection and rectification and emergency plumbing servicesto the water utility market in the United Kingdom. Its customers include anumber of major water utilities, whose geographic territories are complementaryto those in which Spice's Water Services Division currently operates. The waterutility market is still expanding year on year and this growth is being drivenby operating and capital efficiency/savings targets set by the Regulator, aspart of the AMP4 price determinations. As a result of these targets, waterutilities will increasingly use third party outsourced support services to workwithin the new price determinations. In the audited financial statements for the year to 31 December 2004, Kemacreported turnover of £4.2 million, operating profit of £0.3 million and pre-taxprofit of £0.3 million. Net Assets at 31 December 2004 were £0.24 million. It isestimated that the business will have net cash balances at completion of £0.2mand the initial consideration (after adjusting for this net cash balance)represents a multiple of 6 times operating profits for the year to 31 December2004. Since that date, the business has experienced growth based on newcontracts and enhancement of existing contracts. Kemac will form part of Spice's Water Services Division and the previous jointowners of Kemac, Sean Kelly and Mark McTighe, will remain with the business. Simon Rigby, Chief Executive Officer of Spice, said: "The acquisition of Kemacgives us a great opportunity to broaden our customer base, as there is virtuallyno overlap with the existing Spice customers, and to increase the range ofservices that our Water Services Division is able to offer. Furthermore, webelieve that the acquisition will be earnings enhancing in our first year ofownership. Kemac will strengthen the Division and, as part of a larger groupwith greater resources and skills, enable the business to expand its activitieswith existing clients and to attract new clients. We are delighted to welcomeSean Kelly and Mark McTighe to the Group." PRE-CLOSE TRADING STATEMENT Spice's interim results for the period ended 30 October 2005 will be announced on Monday 16 January 2006. A results briefing for analysts will be held on that morning. Further details of this briefing will be announced nearer the time. The Board of Spice is pleased to advise that the trading of the Group continuesto be in line with the Directors' expectations. For further information, please contact: Spice Holdings plc Tel: 0113 384 3838Simon Rigby, Chief Executive OfficerCarl Chambers, Corporate Development DirectorOliver Lightowlers, Group Finance Director Rawlings Financial PR Limited Tel: 01756 770 376Catriona Valentine 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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