14th Dec 2006 07:02
Spice PLC14 December 2006 14 December 2006 Spice plc ("Spice" or "the Group"), Interim results - period ended 29 October 2006 Spice plc ("Spice" or "the Group"), the provider of outsourced support servicesto the Commercial, Public and Utility Sectors, is pleased to announce itsinterim results for the period ended 29 October 2006. Financial highlights • Profit before tax of £4.7 million (2005 restated: £2.8 million) - 68% increase • EBITA* of £7.2 million (2005 restated: £3.6 million) - 98% increase • Operating profit converted into operating cash - £5.3 million (2005 restated: £3.1m) - 74% increase • Diluted earnings per share of 6.5 pence (2005 restated: 4.8 pence) - 35% increase • Adjusted diluted earnings per share of 9.9 pence (2005 restated: 6.1 pence) - 62% increase • Interim dividend of 1.0 pence per share (2005: 0.7 pence) - 43% increase *EBITA comprises profit on ordinary activities before interest, tax andamortisation of intangible fixed assets 2005 comparative numbers have beenrestated, where appropriate, to reflect the adoption of FRS 20 Share basedpayments Operational highlights • September 2006 - Appointment of Michael Shallow as a non-executive Director • October 2006 - Hutchison Team Telecom agrees five year framework agreement with Huawei • November 2006 - Creation of Public Services division • December 2006 - Freedom agrees the renewal of EDF Energy maintenance contract for a further five years • December 2006 - Meter U agrees a new four year partnership agreement with Siemens • December 2006 - H20 agrees four year framework agreement with Anglian Water Simon Rigby, Chief Executive Officer commented: "We have delivered a strong performance with a 98% increase in profits (20% ofwhich is pure organic growth) in the first half of the year for ourshareholders. We believe that the first half marks a step change in the scale ofour business. "All our markets are growing quickly driven by respective regulators. Inparticular, our water services business has benefited from the environmental andinfrastructure context we have in the UK today. Our leakage repair business hashad a stellar start and our water meter installation and reading businesses havehad a record first half. "We remain pleased with the overall performance since the half year end withgood underlying visibility of earnings. The Board is focused on converting crossselling opportunities into earnings and remains confident of continued growthover the remainder of this financial year. We continue to look to the futurewith confidence." - Ends - For further information, please contact: Spice plc Tel: 0113 384 3838Simon Rigby, Chief Executive OfficerOliver Lightowlers, Group Finance DirectorCarl Chambers, Corporate Development Director Financial Dynamics Tel: 020 7831 3113Billy CleggCaroline Stewart Chief Executive Officer's statement I am pleased to present our interim results for the six month period ended 29October 2006 which again record strong financial performance from our growingexisting operations and also from acquisitions made in the period. Turnover forthe period ended 29 October 2006 was £102.6 million (2005: £55.6 million) andprofit on ordinary activities before interest, tax and amortisation ofintangible fixed assets (EBITA) was £7.2 million (2005 restated: £3.6 million),increases of 85% and 98% respectively. During the period, Spice operated in two sectors, Commercial Services andUtility Services: Commercial Services Energy The newly established Energy Services business was created in June 2006 when weacquired Inenco, the UK's leading energy management business. I am pleased toreport that Inenco has performed ahead of our expectations for the four and halfmonths since acquisition and that the business contributed EBITA of £0.6 millionfor the six month period ended 29 October 2006. New customers such as Bhs, TheSpirit Group and Kellogg's have been secured in the period as well asmaintaining excellent retention rates of existing customers such as Marks &Spencer, J Sainsbury and John Lewis. Inenco provides a comprehensive energy management service including strategicprocurement, invoice verification, accounting services, climate changeagreements, energy conservation project management, carbon neutral programmesand renewable energy projects. Since 1968, Inenco has built a comprehensive,blue-chip customer base across both the commercial and industrial sectors.Inenco procures around £1 billion per annum of electricity and gas on behalf ofcustomers including Gala Group, J P Morgan, Interchange & Consort Hotels andSheffield Forgemasters. Energy conservation projects are also being delivered onan on going basis to large industrial customers such as McVities, Coca Cola andImperial College. We expect that there will be three significant drivers for customers to useInenco's services over the coming years as follows: • high and volatile energy prices; • increasing EU regulation; and • climate change. The requirement to reduce energy costs is a key driver but increasinglycustomers are also concerned about corporate social responsibility. Inenco hasdeveloped a range of services including the sourcing of renewable energy throughto the management of carbon neutral projects. The climate of volatile energyprices and concern about climate change is set to continue for the foreseeablefuture and Inenco is ideally placed to benefit from these trends. Facilities Facilities Services reported EBITA of £1.9 million (2005: £0.4 million) for thesix months ended 29 October 2006, an increase of 373%. These results include acontribution for the first time of £0.5 million from Breval. Serviceline, the one stop shop facilities management (FM) provider, hascontinued to successfully grow its client base over the year to date adding TKMaxx, The Body Shop, Swatch, Knight Frank and Paul the Bakers as new clients. Inaddition, both Debenhams and British Waterways have become Serviceline clients,taking the full integrated service on a regional basis, having previously onlytaken maintenance services from Circle Britannia. During the period, Circle Britannia has significantly increased volumes ofdomestic insurance reinstatement work undertaken with Norwich Union. We havealso started to undertake commercial insurance reinstatement works as well. Atthe same time, Circle Britannia has also been successful in growing itsmaintenance business and small works operations with new and existing clients. In June 2006, we acquired Breval which specialises in the design, installationand maintenance of heating, ventilation, and air-conditioning (HVAC) systems andalso provides specialist asbestos removal services. Breval brings a high levelof technical skills to the business and already a number of joint projects havebeen commissioned with clients such as Starbucks and Waterstones. We believethat there is great potential for other such opportunities to be developed inthe future, and Breval also continues to develop existing relationships with thelikes of Lloyds TSB and Scottish Water. The facilities outsourcing market remains very competitive, however, theopportunities for the business remain substantial and we believe that thebusiness is well placed to take advantage of these opportunities. Utility Services Electricity During the first half of the year, Electricity Services increased EBITA by 71%to £3.0 million (2005: £1.7 million). The integration of Lamva, Baineport andMaintech into the Freedom brand has now been completed. This enables Freedom totackle any electrical network issue, project or programme of works withexpertise across all elements. We now truly deliver a "cradle to grave" serviceboth to utilities and private network owners. The potential for growth in theutilities sector has never been better and the key to our success will be toattract, retain and develop our own people. We now have over 15% of our staff astrainees, apprentices or graduates and this will enable us to meet the demandsplaced on us by our customers. During the period, we have slightly modified our service offerings from fiveservice islands to six to take into account the significant anticipated growthopportunities ahead in overhead line wood pole work and have therefore splitFreedom Power Projects and Freedom Power Lines into separate focused businesses.This also aligns our service offerings with the workstreams which our customersare tendering. Freedom Power Lines has seen excellent organic growth across theEDF Energy Networks' footprint and has won a number of 33KV projects across theEast whilst continuing to develop its business in the South of England.Recently, we have also won two contracts with CE Electric (Yorkshire andNorthern Electricity). Within Freedom Consultancy Services, our Wayleaves and Consents business hasdoubled in size over the period and is now the largest supplier of theseservices in the South East. We have key Wayleave resource working on the OlympicPark project with EDF Energy. Freedom Data Services, who are also working on theOlympic Park project, has seen its customer base grow with the additions ofScotia Gas, Balfour Beatty and Three Valleys Water. Freedom ProfessionalServices has experienced significant growth in the mix of customers and volumesover the period which has consolidated Freedom as a key nationwide resource incivil design. Project wins have included Penwortham GIS Substation for UnitedUtilities and Inner Dowsing Wind Farm for Centrica. We continue to anticipate significant growth over the next ten years within ourFreedom Volume Asset Replacement business. Most of the existing 11 KV switchgearin the UK are 50 years old and need to be replaced to improve both the qualityand reliability of supply. During the year ended April 2006, we securedswitchgear replacement contracts with EDF Energy, CE Electric and CentralNetworks. Freedom Asset Care and Maintenance has performed strongly during the first halfof the year with revenues some 12% ahead of the comparative period for lastyear. Traditional contracts for vegetation management are showing significantgrowth due to the longer growing season and our experience of managing a largenumber of assets has enabled us to innovate to improve the quality and deliveryof our service offering. Recently, Freedom was selected as preferred bidder toprovide management and maintenance services to all three licensed areas of EDFEnergy's Network Business in relation to the maintenance of their buildings andcivil assets. It is anticipated that the related contract will be signed by 31December 2006. Freedom was incumbent in two out of three EDF Energy licenseareas and therefore this contract represents a substantial expansion of worksand underpins our visibility of future revenues. We are also developing newcustomer relationships and are tendering in several areas to win work fromnon-utilities. Maintech, our private network maintenance and installationbusiness, has enjoyed a sound start to the year, having agreed an additional 80maintenance contracts in the first half of the year. Following the award of acontract to renew five substations at Birmingham University worth £1.4 million,we believe that Maintech is now well positioned to win other larger networkenhancement projects. Freedom Network Solutions has enjoyed an excellent start to the year withseveral tendering opportunities having arisen for wind farm and othercontestable connections throughout the UK. During the period we have commencedwork on wind farm connections at Red Tile Farm and also North Pickenham. Wecontinue to view renewable energy as being a major growth area for the business. Telecoms Telecoms Services reported EBITA in the first half of the year of £1.8 million(2005: £0.9 million). This represents a 100% improvement over the same periodlast year. Each of the three businesses that together form Telecoms Serviceshave performed ahead of expectations. This bodes well for the full year as orderbooks within each of the businesses are ahead of the same period last year. AirRadio won in open competition a new three year mobile data contract (D74) forBritish Airways (BA) during the period. We have opened a new digital network atBirmingham International Airport, the first of its kind in the UK. Growingdemand at other airports has meant that we have had to enhance capacity on ournetworks. Cellular radio services and other new products have been introducedinto the portfolio to good effect which has accelerated growth in non BAservices. We continue to work closely with BA and British Airports Authority(BAA) regarding the communications requirements of Heathrow Terminal 5 ahead ofthe operational phases and hope to see additional work from this over the nexttwelve months. The integration of Team Telecom and Hutchison has been completed. The newbusiness Hutchison Team Telecom (HTT) has agreed long term framework contractswith Alcatel and Huawei for the provision of engineering services. The Huaweicontract specifically supports BT's 21st century network (BT21CN) project whichis a large internet protocol (IP) deployment programme expected to run for thenext ten years. As well as carrying out an increasing number of ad-hoc projects,several other maintenance contracts have also been signed in the periodincreasing the proportion of recurring revenues generated by the business. Webelieve that the BT21CN project will contribute to the business strongly goingforward however this will not now be seen until during the year ending April2008. We are confident that the business is well positioned. Team Simoco delivered better than expected performance in the first half of theyear. Sales and profits were both substantially better than the same period lastyear and our order book is 30% higher. The launch of the XFin and TETRA Gtechnology has been very well received and are the main reason for the improvingperformance of the business. Contracts for both technologies have already beenwon in different parts of the world with a significant number of bids alsooutstanding. These contracts are smaller in value but more numerous than thelarge international system sales contracts that the business has historicallyrelied upon. Additionally the business secured a five year framework agreementto supply refurbishment and maintenance services to London Underground as a partof the much larger Connect project. Whilst little in the way of revenue has beenseen from this project in the first half we are hopeful that the benefit of thiscontract will be seen in the second half of this year and thereafter. Water Water Services has reported EBITA of £2.8 million (2005: £2.3 million) for thesix months ended 29 October 2006. This represents a 20% increase against thecomparative six month period. Each of our businesses has contributed strongly tothis performance. H20 has experienced an excellent start to the year with strong demand during theperiod for water leakage repair services, which were launched in March 2006.Leakage repair services are now being provided to five water companies withinthe UK as well as to commercial clients including Punch Taverns and NewcastleUniversity. During the period, we secured the renewal of our meter installationcontract with Northumbrian Water. Water meter installation volumes continue tobe strong as economic and environmental pressures remain. We do not expect thesepressures to be lifted and, indeed, have commenced two new pilot meterinstallation projects during the period which we hope will lead to longer termframework arrangements. In addition, following the successful conclusion of ourpilot meter replacement project for Anglian Water, we have signed a four yearframework agreement to continue providing these services. Metro Rod has again improved both sales and profits. A number of contract winshave been secured in the period including the provision of drain andenvironmental services to Argos, Homebase and DSG International via three yearframework agreements. During the period, a review of the franchise networkstructure has been undertaken which has resulted in the creation of twoadditional franchises. This on-going review is expected to lead to the creationof further franchises during the next twelve months, stimulating further growth. The sales and profits generated by Meter U have continued to increase in theperiod. Resource levels are now in excess of 520 meter readers and we arecurrently undertaking around 6.2 million customer visits per quarter forSiemens. In December 2006, we concluded a new four year partnership agreementwith Siemens, with whom we are currently exploring a number of other futureopportunities. Cross selling Cross selling forms a growing part of Spice's future growth strategy. We believethat the Group has a very strong starting position from which to translateopportunities into earnings, as a result of the natural overlap that existsbetween our operating divisions. Already our strategy of "little but often"through our focus on delivering a large number of small value cross sells isbeing rewarded. In November 2005, we acquired Kemac which had historically provided technicalbased water services to water companies in the South of England and complementedour existing meter operation business focused on water companies in the North.Part of the rationale for this acquisition was to sell technical services towater companies in the North and meter operations to water companies in theSouth. In 2007, Kemac expects to commence water regulation surveys, followed byrectification works, in Yorkshire. As noted above, H20 has been awarded aframework contract by Anglian Water for meter replacement services taking ourmeter operations services to Kemac's Southern based customers. The cross selling opportunities created by the acquisition of Inenco in June2006 have already begun to be converted. Home Retail Group (owner of Argos andHomebase) is a longstanding customer of Inenco and was recently introduced toMetro Rod by Inenco, resulting in Metro Rod winning a three year contract toprovide drainage maintenance services across the whole of the UK estate of Argosand Homebase. We believe that other such opportunities exist following theacquisition of Inenco, not least created by the overlap of Inenco's energymanagement service with the 700 private electricity networks across the UKmaintained by Freedom. The formation of our Public Services division, following the acquisition ofApollo Heating Limited and Pargas Heating Limited, gives us the opportunity tosell gas maintenance to our Commercial customers as well as developing our gasmeter operations capabilities. We continue to be excited by the cross sellingopportunities that exist within the business and momentum continues to gather. Head office Head office costs include the Group's share based payments charge, following theadoption of FRS 20 on 1 May 2006. Acquisitions Two acquisitions have been made during the period, both of which occurred inJune 2006. Firstly, we acquired the issued share capital of Breval for net consideration of£8.3 million in cash. Breval specialises in the design, installation andmaintenance of HVAC systems and also provides asbestos removal services.Secondly, we acquired the issued share capital of Inenco for consideration of upto £11.8 million. The consideration was in the form of bank guaranteed loannotes. Inenco is the leading energy management business in the UK and operatesin three areas; cost control, consultancy and fuel cards. In November 2006, the Group acquired the issued share capital of Apollo for netcash consideration of £9.7 million. Apollo together with Pargas (issued sharecapital acquired in December 2006 for net cash consideration of £9.6 million)form the foundations of a new Public Services division of Spice. Apollo andPargas install, service and maintain gas appliances and heating systems indomestic and commercial properties owned by social housing bodies and localauthorities. They currently have service and maintenance agreements coveringapproximately 87,000 properties, such agreements typically being for periods ofbetween two and five years Pargas also provides gas meter replacement servicesand emergency first response services to gas distribution businesses, whichinvolves identifying and making safe gas leaks. The range of services provided also includes the annual review of appliances andsystems and the production of certificates for landlords confirming compliancewith safety regulations. These are non discretionary spends for social landlordsand local authorities and therefore, we believe, less likely to be affected byany changes that might occur within Government spend connected to the DecentHomes initiative. Financial Review Turnover Turnover from existing operations at £95.6 million (2005: £46.7 million) is up105% on the comparative six months. Acquisitions made during the periodcontributed £7.0 million of turnover, giving rise to total Group turnover of£102.6 million (2005: £55.6 million), an increase of 85%. Profit on ordinary activities before interest, tax and amortisation ofintangible fixed assets (EBITA) EBITA increased by 98% to £7.2 million (2005 restated: £3.6 million). Each ofour businesses has contributed to this result, with strong levels of organicgrowth from existing operations recorded in each. Like for like performance isillustrated below: 6 months to 6 months to 29 October 30 October 2006 2005 £'000 £'000EBITA:Existing operations 4,586 3,8262006 acquisitions 1,098 -Part year effect of 2005 acquisitions 2,425 -FRS 20 Share based payment charge (900) (180) 7,209 3,646 The table shows that EBITA from existing operations was £4.6 million (2005: £3.8million), representing organic growth of 20% for the period. Separately,acquisitions made during 2006 contributed £1.1 million to EBITA. Spice made various acquisitions during 2005, which contributed to EBITA for partof that year but which have contributed to EBITA for the whole of the periodended 29 October 2006. For example, Circle Britannia was acquired in September2005. Its results for September and October 2006 are shown within existingoperations, as are the comparative numbers for the period from acquisition toOctober 2005. The results of Circle Britannia for the period May to August 2006are shown within the part year effect of 2005 acquisitions, which totals £2.4million. EBITA operating margins for the Group improved to 7.0% (2005 restated: 6.6%).Underlying operating margins, excluding the effect of the adoption of FRS 20were 7.9% (2005: 6.9%). Interest Interest payable for the period was £0.8 million (2005: £0.3 million). The Grouphas extended its banking facilities from £30 million to £70 million. Interestcover for the period is 6.5 times compared with 10.0 times (restated) last year. Profit on ordinary activities before tax Profit on ordinary activities before tax has increased to £4.7 million (2005restated: £2.8 million). The Group's amortisation charge has increasedsignificantly from £0.6 million to £1.7 million during the period which isattributable to acquisitions made in 2005 and 2006. Earnings per share Diluted earnings per share at 6.5 pence (2005 restated: 4.8 pence) increased by35% and adjusted diluted earnings per share at 9.9 pence (2005 restated: 6.1pence) by 62%. Dividend The Board has approved an interim dividend of 1.0 pence (2005: 0.7 pence) pershare payable on 13 February 2007 to shareholders on the register at 26 January2007. Cashflow Net cash inflows from operating activities increased by £2.2 million to £5.3million (2005: £3.1 million). The Group converted 97% of operating profit intooperating cash flow (2005 restated: 100%). During the period working capitalutilised increased by circa £4.1 million connected principally with investmentwithin our Facilities and Electricity businesses. Balance Sheet Net assets have increased to £43.6 million (2005 restated: £35.7 million),reflecting the retained profit and cash generated from the exercise of employeeshare options. Net debt is £31.6 million (30 April 2006: £13.6 million). The increase isattributable to consideration paid in respect of the acquisition of Breval,certain earn outs connected to acquisitions made during the year ended April2006, and loan notes issued in connection with the acquisition of Inenco. TheInenco loans notes are expected to have a maturity of less than one year andtherefore have been recorded within creditors falling due within one year,giving rise to the Group having net current liabilities at 29 October 2006 of£5.7 million (2005 restated: net current assets of £2.3 million). Changes in UK accounting standards On 1 May 2006, the Group adopted FRS 20 Share based payments. FRS 20 reflectsthe cost of share based remuneration, including option schemes, within theprofit and loss account. Comparative numbers have been restated to reflect theimpact of the adoption of FRS 20 where appropriate. International Financial Reporting Standards (IFRS) The Group continues to prepare for the conversion from UK accounting standardsto IFRS. During the period the Group's IFRS project team has continued toevaluate the expected impact of the adoption of IFRS. The Group expects to adoptIFRS within its financial statements for the year ending April 2008. Outlook We remain pleased with the overall Group performance since the half year end andtrading continues to be in line with our expectations with good underlyingvisibility of earnings. The Board is focused on converting cross sellingopportunities into earnings and remains confident of continued growth over theremainder of this financial year. We continue to look to the future withconfidence. W S RigbyChief Executive Officer14 December 2006 Consolidated profit and loss accountfor the six months ended 29 October 2006 Note Unaudited Unaudited Audited 6 months to 6 months to Year ended 29 October 2006 30 October 2005 30 April 2006 £'000 £'000 £'000 as restated as restatedTurnover:- Continuing operations 95,566 55,580 132,930- Acquisitions 7,067 - -Group turnover 2, 6 102,633 55,580 132,930Cost of sales (73,044) (39,028) (93,360)Gross profit 29,589 16,552 39,570Administrative expenses (24,062) (13,473) (31,951)EBITA 7,209 3,646 9,215Amortisation of intangible fixed assets (1,682) (567) (1,596)Operating profit:- Continuing operations 4,816 3,079 7,619- Acquisitions 711 - -Group operating profit 5,527 3,079 7,619Profit arising on disposal of fixed assets - 31 -Net interest payable (847) (311) (797)Profit on ordinary activities before tax 4,680 2,799 6,822Tax on profit on ordinary activities 3 (1,404) (813) (1,566)Profit on ordinary activities after tax 3,276 1,986 5,256Dividends 4 (854) (633) (943)Retained profit for the period 2,422 1,353 4,313Earnings per share (pence per share)Basic 5 7.3 5.1 12.6Diluted 5 6.5 4.8 12.0 Consolidated balance sheetas at 29 October 2006 Note Unaudited Unaudited Audited 29 October 30 October 30 April 2006 2005 2006 £'000 £'000 £'000 as restated as restatedFixed assetsDevelopment expenditure 782 815 825Purchased goodwill 59,675 29,678 41,458Negative goodwill - (174) -Intangible fixed assets 60,457 30,319 42,283Tangible fixed assets 14,799 12,702 13,623Investments 212 212 212 75,468 43,233 56,118Current assetsStock 6,649 3,480 4,264Debtors 43,294 26,787 32,672 49,943 30,267 36,936Creditors - amounts falling due within one (55,658) (28,007) (33,294)yearNet current (liabilities)/assets (5,715) 2,260 3,642Total assets less current liabilities 69,753 45,493 59,760Creditors - amounts falling due after more (17,576) (8,739) (12,237)than one yearProvisions for liabilities and charges (8,571) (1,073) (7,677)Net assets 43,606 35,681 39,846Capital and reservesCalled up share capital 4,947 4,946 4,947Share premium account 27,462 27,462 27,462Revaluation reserve 2,103 1,513 2,103Capital redemption reserve 100 100 100Profit and loss account 8,994 1,660 5,234Equity shareholders' funds 7 43,606 35,681 39,846 Consolidated cash flow statementfor the six month ended 29 October 2006 Note Unaudited Unaudited 6 Audited 6 months to months to Year ended 30 29 October 30 October April 2006 2005 2006 £'000 £'000 £'000 Net cash inflow from operating activities 8a) 5,335 3,069 9,780Returns on investments and servicing of financeNet interest paid (842) (310) (789)Interest element of finance lease payments (5) (1) (8) (847) (311) (797)Taxation (1,235) (94) (785)Capital expenditure and financial investmentPurchase of tangible owned fixed assets (1,536) (1,008) (2,286)Development expenditure (86) (206) (335)Sale of tangible fixed assets 149 348 481 (1,473) (866) (2,140)Acquisitions and disposalsPurchase of subsidiary undertakings (12,511) (23,422) (33,028)Net cash acquired with subsidiary undertakings 3,860 2,015 3,301 (8,651) (21,407) (29,727)Equity dividends paid (854) (633) (943)Net cash outflow before financing (7,725) (20,242) (24,612)FinancingPrincipal repayment due under finance leases (52) (36) (79)Sale of investments - own shares 438 880 1,102Net proceeds from issue of shares - 14,526 14,527Bank loan repayments (634) (1,672) (16,516)Bank loan advances 5,962 9,000 28,277 5,714 22,698 27,311(Decrease)/increase in cash 8c) (2,011) 2,456 2,699 Notes to the Interim reportfor the six months ended 29 October 2006 1 Basis of accounting The interim financial statements have been prepared using the same accountingpolicies as were used in the Group's statutory financial statements for the yearended 30 April 2006 except for the adoption of FRS 20 Share based payments.Comparative numbers have been restated to reflect the impact of the adoption ofFRS 20 where appropriate. The interim financial statements for the six months ended 29 October 2006 andfor the six months ended 30 October 2005 contained within the interim report donot constitute statutory financial statements and are unaudited. The figures forthe year ended 30 April 2006 have been extracted from the financial statementsfor 2006 except for adjustments made for the adoption of FRS 20 described above.These financial statements received an unqualified auditors' report and havebeen delivered to 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; • water meter installation and meter reading; • information technology installation, commissioning and maintenance activities; and • energy, water and telecommunications cost control. 3 Taxation The taxation charge on the profit on ordinary activities has been based upon theestimated effective tax rate of 30.0% (2005 restated: 29.0%) for the currentyear. 4 Dividends Unaudited Unaudited Audited 6 months to 29 6 months to 30 Year ended October October 30 April 2006 2005 2006 £'000 £'000 £'000 Amounts recognised as a distribution from shareholders'funds during the yearFinal dividend paid of 1.9 pence per share for the year 854 633 633ended 30 April 2006 (2005: 1.7 pence)Interim dividend paid of 0.7 pence per share for the - - 310year ended 30 April 2006 (2005: 0.5 pence) 854 633 943Proposed interim dividend of 1.0 pence for the period 449 310 310ended 29 October 2006 (2005: 0.7 pence) In accordance with FRS 21, the interim dividend for the period ended 29 October2006 will be accounted for, following payment of that dividend, in the secondhalf of the financial year. It is proposed that the interim dividend amountingto £449,000 (2005: £310,000) will be paid on 13 February 2007 to thoseshareholders on the register at 26 January 2007. 5 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 period used in the calculation of basicearnings per share was as follows: Unaudited Unaudited Audited 6 months to 29 6 months to Year ended October 30 October 2005 30 April 2006 2006 '000 '000 '000 Weighted average shares for basic earnings per share 44,871 38,845 41,667 Diluted earnings per share is the basic earnings per share adjusted for theeffect of the conversion into fully paid shares of the weighted average numberof share options outstanding during the year. The weighted average number ofshares in issue during the period used in the calculation of diluted earningsper share was as follows: Unaudited Unaudited Audited 6 months to 29 6 months to 30 Year ended October October 30 April 2006 2005 2006 '000 '000 '000 Weighted average shares for diluted earnings per share 50,202 41,246 45,051 Adjusted earnings per share have been calculated so as to exclude the effect ofthe amortisation of all intangible fixed assets and non operating exceptionalitems. Adjusted earnings per share have been presented in order that the effectson reported earnings of the amortisation of intangible fixed assets and nonoperating exceptional items can be fully appreciated. Adjusted earnings used inthe calculation of basic and diluted earnings per share reconciles to basicearnings as follows: Unaudited Unaudited Audited 6 months to 6 months to Year ended 29 October 30 October 30 April 2006 2005 2006 £'000 £'000 £'000 as restated as restatedBasic earnings 3,276 1,986 5,256Non operating exceptional items - (31) -Amortisation of intangible fixed assets 1,682 567 1,596Adjusted earnings 4,958 2,522 6,852 Earnings per share (pence per share)Basic 7.3 5.1 12.6Diluted 6.5 4.8 12.0 Adjusted earnings per share (pence per share)Basic 11.0 6.5 16.4Diluted 9.9 6.1 15.7 6 Segmental analysis The turnover for the period was derived from the Group's principal activitiesand is attributable to the following markets: Unaudited Unaudited Audited 6 months to 29 6 months to 30 Year ended October October 30 April 2006 2005 2006 £'000 £'000 £'000 By destinationUK 100,776 54,570 130,439Continental Europe 1,501 667 2,126Rest of the World 356 343 365 102,633 55,580 132,930 Turnover for the period is derived from the Group's principal activities asfollows: Unaudited Unaudited Audited 6 months to 6 months to Year ended 29 October 30 October 30 April 2006 2005 2006 £'000 £'000 £'000Commercial ServicesEnergy 5,057 - -Facilities 18,824 3,865 17,332Utility ServicesElectricity 43,088 25,352 58,875Telecoms 8,524 6,396 13,954Water 27,135 19,837 42,237Head office 5 130 532 102,633 55,580 132,930 Profit before tax is derived from the Group's principal activities as follows: Unaudited Unaudited Audited 6 months to 29 6 months to 30 Year ended October October 30 April 2006 2005 2006 £'000 £'000 £'000 as restated as restated Commercial ServicesEnergy 621 - -Facilities 1,943 411 1,547Utility ServicesElectricity 2,990 1,747 4,380Telecoms 1,757 932 2,424Water 2,805 2,337 4,522Head office (2,907) (1,781) (3,658)EBITA 7,209 3,646 9,215Non-operating exceptional items - 31 -Amortisation of intangible fixed assets (1,682) (567) (1,596)Net interest payable (847) (311) (797)Profit before tax 4,680 2,799 6,822 Head office costs have been restated from £1,601,000 to £1,781,000 for theperiod ended October 2005 and from £3,083,000 to £3,658,000 for the year endedApril 2006 to reflect the adoption of FRS 20 Share based payments. The Group'sFRS 20 charge has been recorded within Head office for the purposes of thissegmental analysis. 7 Reconciliation of movement in equity shareholders' funds Unaudited Unaudited Audited 6 months to 29 6 months to Year ended October 30 October 30 April 2006 2005 2006 £'000 £'000 £'000 as restated as restatedProfit for the period 3,276 1,986 5,256Dividends (854) (633) (943)Retained profit for the period 2,422 1,353 4,313Unrealised surplus on revaluation of freehold land and - - 587buildingsFRS 20 Share based payments charge 900 180 575Proceeds from sale of own shares 438 880 1,102Issue of shares - 15,565 15,565Costs of share issue - (474) (473)Net addition to equity shareholders' funds 3,760 17,504 21,669Opening equity shareholders' funds 39,846 18,177 18,177Closing equity shareholders' funds 43,606 35,681 39,846 Opening shareholders' funds at 1 May 2005 have been restated from £18,142,000 to£18,177,000 to reflect the adoption of FRS 20 Share based payments. 8 Notes to the cash flow statement 8a) Reconciliation of operating profit to net cash inflow Unaudited Unaudited Audited 6 months to 6 months to 30 Year ended 29 October October 30 April 2006 2005 2006 £'000 £'000 £'000 as restated as restated Operating profit 5,527 3,079 7,619Depreciation of tangible fixed assets 1,312 925 2,072Amortisation of negative goodwill - - (174)Amortisation of intangible fixed assets 1,682 567 1,770FRS 20 Share based payments charge 900 180 575Profit on sale of fixed assets - - (41)Increase in stocks (1,112) (749) (1,367)Increase in debtors (8,793) (3,479) (5,637)Increase in creditors 5,819 2,546 4,963Net cash inflow from operating activities 5,335 3,069 9,780 8b) Analysis of net debt At 1 May 2006 Cash flows Non cash At movements 29 October 2006 £'000 £'000 £'000 £'000 Bank overdraft (14) (2,011) - (2,025)Decrease in cash during the period (14) (2,011) - (2,025)Bank loans due within one year (1,267) 634 (634) (1,267)Bank loans due after one year (12,166) (5,962) 634 (17,494)Finance leases due within one year (59) 52 (28) (35)Finance leases due after one year (71) - (11) (82)Loan notes due within one year - - (10,704) (10,704)Net debt (13,577) (7,287) (10,743) (31,607) 8c) Reconciliation of net cash inflow to movement in net debt Unaudited Unaudited Audited 6 months to 6 months to 30 Year ended 30 29 October 2006 October April 2005 2006 £'000 £'000 £'000 (Decrease)/increase in cash in the period (2,011) 2,456 2,699Net proceeds received from share issue - 14,526 14,527Sale of investments - own shares 438 880 1,102Cash inflow from financing (5,714) (22,698) (27,311)Change in net debt resulting from cash flows (7,287) (4,836) (8,983)Loan notes issued (10,704) - -New and acquired finance leases (39) (1) (146)Net debt at 1 May (13,577) (4,448) (4,448)Net debt at 29 October 2006 (31,607) (9,285) (13,577) 9 Availability of Interim report The interim report will be sent to all shareholders on 3 January 2007. Copiesmay be obtained from the Company Secretary at Wellfield House, Victoria Road,Morley, Leeds, LS27 7PA for a period of one month from today's date. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Spire Healthcare