Contract extensions give Spice a spark

SPICE today announced two contract extensions through its electricity business with EDF Energy which it said would “remove further risk” from the business.

The Yorkshire-based utility support services group, which this week rebuffed a second approach from private equity firm Cinven to buy the business, said the extended contracts would run until 2015.

Spice’s shares were up 1p at 61p in early trading today. 

Martin Towers, chief executive of Spice, said: “We have an important, long standing partnership with EDF Energy, and we are delighted to have extended these contracts. This is excellent news, built upon our exceptional service delivery and technical skills base.
 
“Spice now has five years of revenue visibility within its important distribution division, in a market with strong regulatory and environmental drivers. These extensions remove further risk from Spice and adds an additional level of certainty to future work flows.”

The contract extensions, which have been won by Freedom, its electricity business in its distribution division, will see Freedom work on schemes entitled Major Substation Projects ‘workstream one’ and Overhead Line Works ‘workstream five’.

Earlier this week, Spice reported its financial results for the year ended April 30, a landmark it described as “a further milestone in the restoration of shareholder value”.

Spice saw revenues over the period increase by 11% to £310.7m from £279.6m the previous year.

Profit on ordinary activities before tax, exceptional costs and amortisation of intangible fixed assets was unchanged at £31.5m.

However, Spice posted a loss after tax for the year of £56.2m, compared to a profit of £17.2m last year.