10th Jul 2006 07:00
Spice Holdings PLC10 July 2006 Press Announcement For immediate release 10 July 2006 Spice Holdings plc Final results 30 April 2006 Spice Holdings plc ("Spice" or "the Group"), the provider of outsourced supportservices to the commercial and utility sectors, is pleased to announce its fullyear results for the year ended 30 April 2006. Financial highlights Profit before tax of £7.4 million (2005: £5.2 million) - 42% increase EBITA* of £9.8 million (2005: £6.2 million) - 58% increase EBITA* converted into operating cash flow - 100% (2005: 65%) Diluted earnings per share of 12.6 pence (2005: 10.8 pence) - 16% increase Adjusted diluted earnings per share of 16.1 pence (2005: 12.1 pence) - 33%increase Total dividend of 2.6 pence per share (2005: 2.2 pence) - 18% increase *EBITA comprises profit on ordinary activities before interest, tax,amortisation of intangible fixed assets. Operational highlights July 2005 Launch of Freedom Data Services September 2005 Placing of seven million shares raising net proceeds of £14.5 million September 2005 BAA letter of agreement January 2006 Freedom Technical Services exceeds £2 million turnover March 2006 Launch of water leakage repair service Simon Rigby, Chief Executive Officer commented: "As the biggest installer of water meters in the UK, environmental and economicpressures thrown into sharp focus by water shortages in some parts of thecountry have helped our Water Services division become the fastest growingdivision in the Group producing a profit increase of 43%. Our new leakage repairservice has been launched at an opportune time. We have started the financial year with high levels of earning visibility and wecontinue to be pleased with the overall Group performance and trading remains inline with expectations. There are considerable cross selling opportunitieswithin the Group and we are focused on converting those opportunities intoearnings. Consequently, Spice remains well placed to continue to groworganically within its expanding markets, and continues to pursue complementaryacquisition opportunities. The Board continues to believe that the long termprospects for the Group remain strong and continues to look to the future withconfidence." ...Ends... For further information, please contact: Spice Holdings plc Tel: 0113 384 3838Simon Rigby, Chief Executive OfficerOliver Lightowlers, Group Finance DirectorCarl Chambers, Corporate Development Director Financial Dynamics Tel: 020 7831 3113Sally LewisBilly Clegg Chairman's statement Introduction I am delighted to present our full year results for 2006, in what has beenanother record year for Spice. Turnover for the year was £132.9 million (2005:£85.5 million) and profit before tax was £7.4 million (2005: £5.2 million),increases of 55% and 42% respectively. At the same time our EBITA operatingmargins improved to 7.4% (2005: 7.2%). Diluted earnings per share, adjusted forthe amortisation of intangible fixed assets, increased by 33% to 16.1 pence pershare (2005: 12.1 pence per share). I am also pleased to report that the Boardis recommending a final dividend of 1.9 pence per share, making a total dividendof 2.6 pence per share for the year (2005: 2.2 pence), an increase of 18%. Strategy Our strategy remains to grow the business organically and to enhance thebusiness through complementary acquisitions. During the year, we have securedsignificant contract wins and renewals across each of our operating divisionswhich underpins our visibility of future revenues. At the same time, we havetaken advantage of favourable sector conditions to enhance our Utility Servicesoffering through the acquisitions of Lamva, Baineport, Maintech and Kemac. Wehave also expanded our support services offering through the formation of ourCommercial Services Division following the acquisition of Circle Britannia andServiceline and strengthened this further in the new financial year through theacquisitions of Breval and Inenco. Our people The success that we have achieved over the past year has been made possible bythe hard work of our staff. I would like to extend thanks to all of ouremployees for their commitment and personal contribution to our achievements. Wehave a strong team at all levels within the Group and it is pleasing to see over700 employees of Spice participating in our latest Sharesave scheme, which beganin February of this year. Outlook We enter the new financial year with confidence and remain firmly focussed ondelivering shareholder value. Sir Rodney WalkerChairman Chief Executive Officer's statement Spice operates in two sectors, Commercial Services and Utility Services: Commercial Services Facilities In September 2005, Spice acquired Circle Britannia and its sister companyServiceline, which together established our Commercial Services Division.Commercial Services has recorded a profit before interest and tax for the eightmonths since acquisition of £1.1 million. Against a backdrop of a competitivecommercial market it is pleasing that we have been able to retain existingclients as well as grow the business organically by winning new business in theperiod including Debenhams, Claire's Accessories and The Body Shop. Circle Britannia provides outsourced facilities services, which include reactiveand planned maintenance and technical services to the commercial sector, andreinstatement services for major insurers. Clients include DSG International(formerly Dixons) and Norwich Union. Serviceline provides comprehensive "frontend" facilities management incorporating an intelligent, proactive helpdeskservice which can be delivered either as part of an integrated facilitiesmanagement service, incorporating Circle Britannia's facilities serviceoperation, or as a stand alone service managing clients' existing suppliers.Clients include Starbucks and Waterstones. Recently, Serviceline was selected byKentucky Fried Chicken to provide integrated facilities management servicesacross 300 managed UK stores over the next three years. The prospects for Commercial Services remain positive moving into the newfinancial year, with a number of interesting opportunities being developed.Further acquisition opportunities continue to be pursued to accelerate thedevelopment of Commercial Services. Indeed, following the year end we havecompleted the acquisition of Breval which specialises in the design,installation and maintenance of heating, ventilation and air-conditioning (HVAC)services. We have sought to gain a presence in this market for several years,without getting involved in construction, and Breval brings a high level oftechnical skills to our Commercial Services Division. We have also completed theacquisition of Inenco, which is one of the leading energy management businessesin the UK, specialising in cost control, consultancy and fuel cards. The driveto manage energy consumption has both a cost and compliance 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 see tremendous opportunities to sell Brevaland Inenco's services to our existing client base and also to sell our servicesto Breval and Inenco's client base. We continue to seek bolt on acquisitionsthat are complementary to our existing business including mechanical andelectrical maintenance. Utility Services Electricity Electricity Services has had another successful year, recording a profit beforeinterest and tax of £3.9 million (2005: £2.8 million), an increase of 40%. Thebusiness has achieved strong growth in all areas of activity and the resultsinclude contributions for the first time of £0.9 million from acquisitions madeduring the year. Freedom Projects (formerly Lamva) has been successfullyintegrated into Electricity Services and the integration of Baineport andMaintech is progressing to plan. The combined Electricity Services business is now organised into five keyservice offerings which are: • Freedom Consultancy Services • Freedom Power Projects • Freedom Volume Asset Replacement • Freedom Asset Care and Maintenance • Freedom Network Solutions Freedom Consultancy Services specialises in design and planning for theelectricity industry whilst also offering our customers the opportunity tooutsource activities of a technical nature. Consultancy Services comprisesFreedom Data Services, Freedom Professional Services which focuses on civildesign and Freedom Wayleave Consents which manages solutions with Landowners,Planning Authorities and The Department of Trade and Industry for our clients toenable utility networks to be built across private land. Our professionalism inthis area has been recognised by our appointment to work on the Olympic Villagefor EDF Energy. Freedom Data Services, formed in July 2005 and which managesutility drawings, plans and other databases, has achieved excellent results inits first year. We now have over 100 staff working in this Division and havesecured significant framework contracts for customers including National Grid. Freedom Power Projects brings together all the major construction elements ofElectricity Services including Freedom Technical Services. Freedom has been verysuccessful at winning major projects across the UK, including the recent awardof a three year framework contract with Scottish Power for substation design andbuild services. This has resulted in the opening of a Scottish office to servicethe Scottish Power contract at Bellshill near Glasgow. Freedom Volume Asset Replacement contains Freedom Electrical Services andBaineport. During the year, we have secured switchgear replacement contractswith CE Electric, Central Networks and EDF Energy. Volume asset replacement isanticipated to be a significant growth area within the UK due to ageingnetworks. Freedom Asset Care and Maintenance, which brings together Freedom Maintenanceand Maintech, is our largest division in terms of revenue. Following theacquisition of Maintech we now have 750 private network customers where wemaintain and service their high/low voltage networks. This includes customerslike Chelsea Football Club and Anglian Water. Freedom Network Solutions specialises in building and connecting electricitynetworks focusing on wind farms and high industrial and commercial electricityusers. We have recently won several wind farm connections including Red TileFarm in Cambridgeshire which is worth £1.6 million to the Group. As therenewable energy sector gathers pace due to political and environmental drivers,we see this as a growth area for the business. Using our Freedom brand, we are continuing to develop a 'cradle to grave'approach to utility network projects. We also consider private networks to be asignificant potential growth area, with an estimated 95% of the market stillopen to Freedom. With the opening of our office in Scotland we now have a 'springboard' to develop our brand and service offering in this important marketplace. We will continue to invest in our people while at the same timerecruiting graduates and apprentices to ensure we have a workforce to enable usto meet the demands of the significant opportunities created by utilitiesinvestment strategies. Telecoms Telecoms Services reported a profit before interest and tax for the year of £2.1million (2005: £2.4 million). Performance in the second half of the year wassignificantly improved compared to the first half, with profit before interestand tax 100% higher. With the improved second half, and project orders convertedat the end of the year, we look forward to further improvement in the newfinancial year. AirRadio continues to deliver improved performance and expand its customer andproduct base. Revenues increased by 14% in the year. Additional radio networkcapacity has been added to both the Heathrow and Gatwick networks in order thatwe can take full advantage of the British Airports Authority (BAA) contractagreed in September 2005. We continue to look for new opportunities at UKairports to expand our operations with Southampton and Cardiff being added tothe network during the year. Work for our biggest client British Airways (BA)continues to develop steadily as we provide consultancy services connected toHeathrow Terminal 5, together with other projects. Our biggest area of growthhas been within non-BA revenues with cellular revenues rising at a very strongrate. Our Team Telecom business has benefited from an improvement in market conditionsin the wireless communications market in the second half of the year, whichtogether with strong relationships with its existing customers, has seen thefinancial performance of the business improve significantly. In September weacquired Hutchison, a specialised telecommunications maintenance business, whichprovides first line maintenance and support to internet protocol (IP) andtelephony network operators. Hutchison operates on a pan European basis and iswell placed to tap into the growth in this market. This business has now beenintegrated and merged with the business of Team Telecom in order to gaineconomies of scale in management, operations and administration, and nowoperates as Hutchison Team Telecom under one integrated management team. Thecombined business is currently bidding for a number of exciting longer termbusiness opportunities and has already secured several next generationtechnology pilot projects which, if successful, will extend to major frameworkagreements for the forthcoming financial year and beyond. Team Simoco, our professional mobile radio business (PMR), has focused itsenergies this year on extending its product base and further developing its UKand overseas distribution channels. A series of new radio and trunking productshave been developed including the Xfin infrastructure range. Xfin revolutionisesthe way that PMR technology is both priced and used. This has in turn seen TeamSimoco win two sizeable project orders at the close of the year and has led toseveral other opportunities. Together with its TETRA digital products range,this has put Team Simoco at the forefront of the PMR industry and provides astrong base that we believe can be exploited over the coming months and yearsahead. Standard product sales grew steadily and UK maintenance services continueto build, in line with our objective to increase the recurring revenueproportions of the business, and although the business did suffer from slowerthan anticipated international sales in the first half of the year, the businessbegins the new financial year with a significantly improved order book. Water I am pleased to report that Water Services has recorded profit before interestand tax of £4.2 million for the year (2005: £2.9 million), an increase of 43%.These results include a contribution for the first time of £0.1 million fromKemac. Significant organic growth has been achieved by each of the otherbusinesses within the Division but particularly H2O Water Services (H2O) andMeter U. H20, which undertakes water meter installation and small works operations, madea significant profit contribution to the Division following completion duringthe year of the integration of Atlantic Water Services. Contract extensions withUnited Utilities, Yorkshire Water and Scottish Water, together with re-securingcontracts with South East Water and contract awards with new clients includingBrey Utilities and Northumbrian Water, provide a firm platform for growth nextyear. In the last quarter, work has been secured for our newly formed leakagerepair service and this is expected to grow further next year. In November 2005, Water Services acquired Kemac which undertakes water meterinstallation, water regulation audit and rectification and call out plumbingservices. The integration of Kemac into the wider Water Services businesscontinues to progress to plan. Kemac has enhanced both our geographical coverageand client base, which now includes Thames Water and Three Valleys Water, andfirmly reinforces our national presence. Metro Rod, which provides drain and environmental services, increased profits byover 10% and the business is well positioned for the new financial year. MeterU, our meter reading business, has performed strongly in the year with revenuesand profits growing by greater than 80%. Meter U now has in excess of 500 meterreaders and over the course of the year we have increased the number of readstaken per month by 0.4 million. Our relationship with our key client, Siemens,continues to develop and we are currently exploring a number of otheropportunities to enhance our service offering. Cross selling Management across the Group takes particular interest in fostering crossselling. Each of our Divisions has activities that are complementary to thoseoffered by other Divisions in the Group especially following the variousacquisitions made during the course of the year. Opportunities completed so farhave included the replacing of external suppliers with internal suppliers.However, the challenge during the next 12 months is to profit from theopportunities that are now being created. Already, several cross divisionalintroductions have been made resulting in joint working and bids. This isexpected to gain momentum over the next twelve months. Head office Head office costs are mainly comprised of salaries, including the Group's HR andIT functions, and also professional costs. Head office costs for the year wereslightly less than expectations at £3.0 million (2005: £2.2 million). After taking account of one off credits totalling £0.5 million to Head officecosts in 2005, relating principally to the settlement of certain historicliabilities for amounts less than previously provided, the underlying increasein Head office costs for the year was £0.3 million. This increase is caused bythe full year effect of costs related to maintaining Spice's public listing andalso investment in infrastructure to support the enlarged Spice group followingacquisitions made in the year. Acquisitions Six acquisitions have been made during the year, which are summarised below. Maximum Initial net potential cash Initial share contingent consideration consideration consideration £'m £'m £'mLamva 5.2 0.5 - Circle Britannia and 15.2 - 0.1Serviceline Hutchison 1.1 - 3.9 Contingent consideration based on earnings for the 12 months to February 2007 Kemac 2.0 - 4.2 Contingent consideration based on earnings for the 18 months to April 2007 Baineport 5.0 - 1.3 Contingent consideration based on the renewal of certain contracts Maintech 2.1 - 0.8 Contingent consideration based on earnings for the period to April 2007 30.6 0.5 10.3 Initial net cash consideration paid in respect of these acquisitions totals£30.6 million with £0.5 million also being paid as share consideration. Deferredcontingent consideration of up to £10.3 million might also become payabledepending on earnings and the renewal of certain contracts. Integration of theseacquired businesses has either been completed or is progressing according toplan. During the year, the Group has also recognised within intangible fixedassets £2 million of contingent consideration relating to the acquisition of AirRadio, the likelihood of payment of which during the year ending April 2009 isnow considered probable. Outlook We continue to be pleased with the overall Group performance and trading remainsin line with expectations. Spice remains well placed to continue to groworganically (including by cross selling across operating divisions) within itsexpanding markets, and continues to pursue complementary acquisitionopportunities. The Board continues to believe that the long term prospects forthe Group remain strong and continues to look to the future with confidence. W S RigbyChief Executive Officer Financial review The financial performance of the Group continues to be strong. The acquisitionsmade during the year have contributed significantly to the increased profitsreported as has the performance of our Water business. Operating margins haveimproved during the year and cash generation has been particularly pleasing. Turnover During 2006, turnover increased by 55% to £132.9 million (2005: £85.5 million),of which acquisitions contributed £37.2 million. Organic turnover growth hasbeen recorded within each of our Divisions apart from Telecoms which wasimpacted by slower than anticipated international sales in the first half of theyear. Profit on ordinary activities before interest, tax and amortisation ofintangible fixed assets (EBITA) EBITA increased by 58% to £9.8 million (2005: £6.2 million), of whichacquisitions contributed £3.1 million in the year. Our Water Services Divisionhas performed particularly strongly, with EBITA growth exceeding 41%. EBITA operating margins for the Group improved to 7.4% (2005: 7.2%). This is apleasing result after taking account of the integration of acquisitions madeduring the course of the year. Interest Interest payable for the year was £0.8 million (2005: £0.6 million). The Grouphas benefited from cash raised at the placing in September 2005 together withthe cash generation of our operations but offset by the cost of acquisitionsmade. We highlighted at the half year that the Group had also taken theopportunity to re-negotiate its banking facilities with HSBC Bank which hasresulted in more favourable borrowing terms. Interest cover for the year was10.3 times (2005: 10.2 times). Following the year end, the Group has extendedits banking facilities from £30 million to £60 million. Profit on ordinary activities before tax Profit on ordinary activities before tax increased by 42% to £7.4 million (2005:£5.2 million). The charge relating to the amortisation of intangible fixedassets has significantly increased in the year to £1.6 million (2005: £0.4million) reflecting the amortisation of goodwill arising on acquisitions made inthe year. Tax The Group's effective rate of tax for the year was 23.5% (2005: 29.1%) which islower than the standard rate of tax principally as a result of tax reliefarising on the exercise of share options and the utilisation of prior year taxlosses. Earnings per share Diluted earnings per share at 12.6 pence (2005: 10.8 pence) increased by 16% andadjusted diluted earnings per share (before amortisation of intangible fixedassets and non-operating exceptional costs) at 16.1 pence (2005: 12.1 pence)increased by 33%. In prior years, the Group's ESOP had adequate shares to satisfy all optionsvested and also options granted but not yet vested. As a result of optionsgranted in the year, this is no longer the case and new shares will either beissued or bought on the market to make up this difference. Dividend The Board has recommended a final dividend of 1.9 pence (2005: 1.7 pence) pershare payable on 19 September 2006 to shareholders on the register at 8September 2006. An interim dividend of 0.7 pence per share (2005: 0.5 pence) waspaid on 14 February 2006, making a total dividend of 2.6 pence per share (2005:2.2 pence per share) for the year. The dividend is covered 4.9 times by earnings(2005: 4.7 times). Cash flow The Group has significantly improved cash generated in the year. Net cashinflows from operating activities increased by £5.8 million to £9.8 million(2005: £4.0 million). The Group converted 100% of EBITA into operating cash flow(2005: 65% conversion). During the year, working capital utilised increased by£2.0 million connected principally to investment made within acquisitions duringthe year. Capital expenditure was consistent with the prior year and the Groupdisposed of one freehold property for cash proceeds of £0.3 million. In September 2005, the Group placed 7,009,346 new shares at a price of 214 pencewith institutional and other investors to raise net proceeds of approximately£14.5 million. Balance Sheet Net assets have increased to £39.6 million (2005 as restated: £18.1 million).This increase reflects the impact of the net placing proceeds together withretained profit for the year and cash generated from the exercise of employeeshare options. The placing proceeds were used to repay bank debt. Net bank debtat the year end was £13.4 million (2005: £4.5 million). During the year, the Group's freehold land and buildings were revalued by a firmof independent chartered surveyors, resulting in an uplift in the value oftangible fixed assets by £0.6 million. Changes in UK accounting standards On 1 May 2005, the Group adopted FRS 21 Events after the balance sheet date.The main impact of FRS 21, which is reflected within these financial statements,is that dividends payable are now accounted for when paid. The Group alsoadopted the presentational requirements of FRS 25 Financial Instruments:Disclosure and Presentation, on 1 May 2005, and considered FRS 25 in determiningdisclosures made within these financial statements. On 1 May 2006, the Group adopted FRS 20 Share based payments. FRS 20 seeks toreflect the cost of share based remuneration, including option schemes, withinthe profit and loss account. The effect of FRS 20 has not been reflected withinthese financial statements but will be within statements prepared for the yearending April 2007. International Financial Reporting Standards ("IFRS") The Group continues to prepare for the conversion from UK accounting standardsto IFRS. The Group established a project team in 2005 to plan for and achieve asmooth transition to IFRS. The project team is looking at all implementationaspects of IFRS including accounting policies and system impacts. The Group hasnot yet determined the full effect of adopting IFRS and expects to adopt IFRSwithin its financial statements for the year ending April 2008. O J LightowlersGroup Finance Director Consolidated profit and loss account for the year ended 30 April 2006 2006 2005 Note £'000 £'000 as restatedTurnover:- Continuing operations 95,695 85,508- Acquisitions 37,235 - Group turnover 2,5 132,930 85,508Cost of sales (93,360) (59,713) Gross profit 39,570 25,795Administrative expenses (31,376) (19,943) EBITA 9,790 6,208Amortisation of intangible fixed assets (1,596) (356) Operating profit:- Continuing operations 6,060 5,852- Acquisitions 2,134 - Group operating profit 8,194 5,852Losses arising on disposal of fixed assets - (77)Net interest payable (797) (567) Profit on ordinary activities before tax 5 7,397 5,208Tax on profit on ordinary activities (1,739) (1,515) Profit on ordinary activities after tax 5,658 3,693Equity minority interests - (5) Profit for the year attributable to equity shareholders 5,658 3,688Dividends 3 (943) (177) Retained profit for the year 4,715 3,511 Earnings per share (pence per share)Basic 4 13.6 11.6Diluted 4 12.6 10.8 EBITA comprises profit on ordinary activities before interest, tax, amortisationof intangible fixed assets and non-operating exceptional costs. Consolidated balance sheet as at 30 April 2006 2006 2005 Note £'000 £'000 as restatedFixed assets Development expenditure 825 712Purchased goodwill 41,458 6,950Negative goodwill - (174)Intangible fixed assets 42,283 7,488Tangible fixed assets 13,623 11,876Investments 212 212 56,118 19,576Current assetsStock 4,264 1,773Debtors 32,607 16,609 36,871 18,382Creditors - amounts falling due withinone year (33,294) (16,990)Net current assets 3,577 1,392Total assets less current liabilities 59,695 20,968Creditors - amounts falling due aftermore than one year (12,237) (1,437)Provisions for liabilities and charges (7,820) (1,389)Net assets 39,638 18,142 Capital and reserves Called up equity share capital 4,947 4,213Share premium account 27,462 13,104Revaluation reserve 2,103 1,555Capital redemption reserve 100 100Profit and loss account 5,026 (830)Equity shareholders' funds 6 39,638 18,142 Consolidated cash flow statement for the year ended 30 April 2006 2006 2005 Note £'000 £'000Net cash inflow from operating activities 7a 9,780 4,024Returns on investments and servicing of financeNet interest paid (789) (560)Interest element of finance lease payments (8) (7) (797) (567) Tax paid (785) (1,483) Capital expenditure and financial investment Purchase of tangible fixed assets (2,286) (2,308)Development expenditure (335) (329)Sale of tangible fixed assets 481 1,786 (2,140) (851)Acquisitions Purchase of trade and assets - (1,362)Purchase of subsidiary undertakings (33,028) -Net cash acquired with subsidiary undertakings 3,301 - (29,727) (1,362) Equity dividends paid (943) (177) Net cash outflow before financing (24,612) (416) Financing Principal repayment due under finance leases (79) (133)Sale of investments - own shares 1,102 1,141Net proceeds from issue of shares 14,527 11,267Bank loan repayments (16,516) (11,812)Bank loan advances 28,277 1,750Net cash inflow from financing 27,311 2,213 Increase in cash in the year 7b, 7c 2,699 1,797 Notes to the preliminary announcement for the year ended 30 April 2006 1 Basis of accounting The audited consolidated financial information for the year ended 30 April 2006has been prepared in accordance with applicable UK accounting standards and isconsistent with accounting policies applied in the financial statements for theyear ended 30 April 2005, with the exception of the adoption of FRS 21 EventsAfter The Balance Sheet Date and FRS 22 Earnings per Share which were adopted on1 May 2005. Comparative numbers have been restated to reflect the impact of theadoption of FRS 21. In addition, the parts of FRS 25 Financial Instruments:Disclosure and Presentation relating to presentation were adopted on 1 May 2005and considered in determining disclosures made within the financial information.The financial information included in this announcement has been extracted fromthe audited financial statements for the years ended 30 April 2006 and 2005. Thecontent of this announcement has been agreed with the Company's auditors. This preliminary announcement does not constitute the Group's financialstatements. The Group's 2006 Annual report and financial statements, on whichthe Company's auditors, PricewaterhouseCoopers LLP, have given an unqualifiedopinion in accordance with Section 235 of the Companies Act 1985, are to bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. The Group's 2005 accounts, which contain an unqualified audit report,have been filed with the Registrar of Companies. 2 Turnover Turnover, which excludes value added tax, arises from several activities.Turnover is recognised in the profit and loss account at the point that aservice is provided or products supplied for each of the following activities: • facilities management and maintenance services; • consultancy, infrastructure design and asset maintenance services; • private mobile radio products; • drain care, maintenance, repair and cleaning services; • services for the development and support of telecommunications networks; • property maintenance; and • information technology installation, commissioning and maintenance activities. Where the Group operates as principal to the transaction, turnover is recognisedat gross values. Where the Group acts as agent in the transaction, with thefranchisee being the principal, the Group recognises within turnover the netcommission earned on the transaction. 3 Dividends 2006 2005 £'000 £'000 as restatedAmounts recognised as a distribution from shareholders' funds duringthe yearFinal dividend paid of 1.7 pence per share for the year ended 30April 2005 (2005: nil) 633 - Interim dividend paid of 0.7 pence per share for the year ended 30April 2006 (2005: 0.5 pence) 310 177 943 177 Proposed final dividend of 1.9 pence for the year ended 30 April 2006(2005: 1.7 pence) 847 614 Dividends amounting to £93,000 (2005: £136,000) have been waived by the ESOP andtherefore deducted in arriving at the aggregate of dividends proposed. It isproposed that the final dividend per share amounting to £847,000 (2005:£633,000) will be paid on 19 September 2006 to those shareholders on theregister at 8 September 2006. The adoption of FRS 21 has given rise to an increase in shareholders' funds of£614,000 at 30 April 2005. In accordance with FRS 21, the final dividend for theyear ended 30 April 2006 will be accounted for, following payment of thatdividend, in the first half of the year ending 30 April 2007. 4 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of shares in issue duringeach period. The weighted average number of shares, after adjusting for sharesheld by the ESOP, in issue during the year used in the calculation of basicearnings per share was as follows: 2006 2005 '000 '000Weighted average shares for basic earnings per share 41,667 31,900 Diluted earnings per share is the basic earnings per share adjusted for thedilutive effect of the conversion into fully paid shares of the weighted averagenumber of share options outstanding during the year. The weighted average numberof shares in issue during the period used in the calculation of diluted earningsper share was as follows: 2006 2005 '000 '000Weighted average shares for diluted earnings per share 45,051 34,043 Adjusted earnings per share have been calculated so as to exclude the effect ofthe amortisation of all intangible fixed assets and non-operating exceptionalcosts. Adjusted earnings per share have been presented in order that the effectson reported earnings of the amortisation of intangible fixed assets andnon-operating exceptional costs can be fully appreciated. Adjusted earnings usedin the calculation of basic and diluted earnings per share reconciles to basicearnings as follows: 2006 2005 £'000 £'000Basic earnings 5,658 3,688Non-operating exceptional costs - 77Amortisation of intangible fixed assets 1,596 356Adjusted earnings 7,254 4,121 No adjustment has been made for tax since the amortisation of intangible fixedassets is not expected to be allowable for tax purposes. Earnings per share (pence per share)Basic 13.6 11.6Diluted 12.6 10.8Adjusted earnings per share (pence pershare)Basic 17.4 12.9Diluted 16.1 12.1 5 Segmental analysis The turnover for the year was derived from the Group's principal activities andis attributable to the following markets: 2006 2005By destination £'000 £'000 UK 130,439 83,830Continental Europe 2,126 853Rest of the World 365 825 132,930 85,508 All turnover originates in the United Kingdom. The Group's profit before taxsubstantially arises from UK operations and consequently the following analysesare presented by business segment only. 5. Segmental analysis (continued) Turnover for the year is derived from the Group's principal activities asfollows: 2006 2005 £'000 £'000Commercial ServicesFacilities 17,332 -Utility ServicesElectricity 58,875 36,742Telecoms 13,954 13,493Water 42,237 35,045 Head office 532 228 132,930 85,508 The Group's profit before tax was derived from its principal activities asfollows: 2006 2005 £'000 £'000Commercial ServicesFacilities 1,071 -Utility ServicesElectricity 3,917 2,780Telecoms 2,058 2,373Water 4,193 2,937 Head office (3,045) (2,238) 8,194 5,852Non-operating exceptional costs - (77)Net interest payable (797) (567) 7,397 5,208 6 Reconciliation of movement in equity shareholders' funds 2006 2005 £'000 £'000 as restatedProfit for the year 5,658 3,688Dividends (943) (177)Retained profit for the year 4,715 3,511Unrealised surplus on revaluation of properties 587 -Proceeds from sale of own shares 1,102 1,141Net proceeds from issue of shares 15,092 11,267Net addition to equity shareholders' funds 21,496 15,919Opening equity shareholders' funds 18,142 2,223 Closing equity shareholders' funds 39,638 18,142 Opening equity shareholders' funds were originally stated as £17,528,000 at 1May 2005 prior to the adoption of FRS 21, as described in note 1. 7 Notes to the cash flow statement 7a) Reconciliation of operating profit to net cash inflow 2006 2005 £'000 £'000Operating profit 8,194 5,852Depreciation of tangible fixed assets 2,072 1,720Amortisation of negative goodwill (174) (220)Amortisation of intangible fixed assets 1,770 576Profit on sale of fixed assets (41) -(Increase)/decrease in stock (1,367) 742Increase in debtors (5,637) (2,271)Increase/(decrease) in creditors 4,963 (2,375)Net cash inflow from operating activities 9,780 4,024 7b) Analysis of net debt At At 1 May Non cash 30 April 2005 Cash flows movements 2006 £'000 £'000 £'000 £'000Bank overdraft (2,713) 2,699 - (14)Increase in cash during the year (2,713) 2,699 - (14)Bank loans due within one year (243) (1,024) - (1,267)Bank loans due after one year (1,429) (10,737) - (12,166)Finance leases due within one year (55) 79 (83) (59)Finance leases due after one year (8) - (63) (71)Net debt (4,448) (8,983) (146) (13,577) 7c) Reconciliation of net cash inflow to movement in net debt 2006 2005 £'000 £'000Increase in cash in the year 2,699 1,797Net proceeds received from share issue 14,527 11,267Sale of investments - own shares 1,102 1,141Cash inflow from financing (27,311) (2,213)Change in net debt resulting from cash flows (8,983) 11,992New and acquired finance leases (146) (36)Net debt at 1 May (4,448) (16,404)Net debt at 30 April (13,577) (4,448) 8 Annual General Meeting The Annual General Meeting of Spice Holdings plc will be held at YorkshireSculpture Park, Bretton Hall, West Bretton, Wakefield, WF4 4LG on Wednesday 6September 2006 at 2.00pm. The notice of the Annual General Meeting containsitems of special business, two of which are explained further below. Resolution 9 will be proposed as a special resolution to change the name of theCompany to "Spice plc". The shorter name of "Spice" is more striking andmemorable and was unavailable at Companies House until recently. Resolution 10 will be proposed as an ordinary resolution to approve the Companyentering into a contract to purchase Wellfield House for £1,650,000. Part ofWellfield House is currently leased by Spice and used as its head office. Duringthe year, Spice paid £82,500 to Tree Tots Limited in consideration for which anoption was granted by Tree Tots Limited to Spice which gives Spice the right topurchase Wellfield House for £1,650,000 subject to shareholder approval of theproposed contract. L Rigby, the wife of W S Rigby is a Director of Tree TotsLimited. Under section 320 of the Companies Act 1985, shareholder approval isrequired before Spice may enter into the contract to purchase Wellfield Housesince W S Rigby and Tree Tots Limited are connected parties. The agreed purchaseprice for Wellfield House was determined after obtaining two independentvaluations from chartered surveyors. The option fee of £82,500 will be deductedfrom the agreed purchase price and is refundable in the event that shareholderapproval is not obtained. It is considered that acquiring the freehold toWellfield House would allow the Company maximum flexibility to adapt and use thewhole of the premises to meet head office and other Group accommodationrequirements 9 Availability of annual report The annual report and financial statements will be sent to all shareholders on 1August 2006. Copies may be obtained from the Company Secretary at PO Box 111,Bradford Road, Morley, Leeds LS27 0YE for a period of one month from 1 August2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Spire Healthcare