Competitive pressures, and reduced capital projects, were blamed for a poor performance at Spice's gas social housing business, which is now loss-making. The utility outsourcing specialist has taken a £42.9m impairment charge against that unit and this, along with high start-up costs relating to energy contracts with United Utilities and Scottish Power, have dragged the group into the red.
As such, the group is undertaking a wider review of the troubled public facing unit, and analysts think that that management may even seek to exit the business. Still, the commercial and industrial facing gas distribution unit has continued to win blue-chip clients and both the supply and utilities distribution businesses have been performing well. Indeed, revenues from the supply unit surged 39 per cent in the period as more legislation helped drive growth. The utilities unit should see the benefits of the Scottish Power deal stream through during the second half.
The weaker trading in the gas business, and the one-off charges, have led broker WH Ireland to reduce full-year estimates by 9 per cent. The broker now expects full-year pre-tax profits of £36.2m, giving EPS of 7.3p (2009: £32.3m/7.1p).
SPICE (SPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 62p | MARKET VALUE: | £218.4m | |
| TOUCH: | 61-62p | 12-MONTH HIGH: | 97p | LOW:34p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 45p* | NET DEBT: | 74% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 193 | 9.40 | 2.33 | 0.36 |
| 2009 | 193 | -31.5 | -9.46 | 0.40 |
| % change | - | - | - | +11 |
Ex-div: 13 Jan Payment: 10 Feb *Includes intangible assets of £245.5m, or 70p per share | ||||
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