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Spice facilities services work hit by high street slump

Profits in the facilities services division of support services specialist Spice have been hit by the economic slump on the high street.

An interim results statement for the six months up to the end of October said the facilities service division's Earnings Before the deduction of Interest, Tax and Amortization (EBITA) had fallen by £900,000 to £1.3million compared to £2.2mill in the same period last year.

The report added that the division's performance was not expected to improve in the rest of the financial year.

Overall the company's performance was far more positive with EBITA rising by 61 per cent to £19.3 million thanks largely to big rises in profits for its billing services and electricity services divisions.

But, within facilities services the company admits trading has been “difficult” – although it argues it has gained market share by continuing to grow its customer base.

Facilities services business 'exposed to the high street'

The report said: “The performance of this business reflects the difficult trading conditions within parts of the business which are exposed to the UK high street.

“These clients have been quick to adjust their costs to reflect prevailing market conditions and have been deferring property maintenance expenditure wherever possible. As a consequence both our revenues and our margins have reduced.”

The division is reorganising to align services for four key sectors – Professional Services, Commercial Property, Residential Property and Risk Management. It also expects energy efficiency to become more important.

Simon Rigby, Spice chief executive, said: 'We remain confident about the second half of this financial year and beyond with any short term softness in our facilities market place expected to be off set by on going strength in our energy and utility markets.”

South seeing growing competition within Gas Services

Elsewhere in the company the Gas Services division has seen EBITA jump to £2.4mill from £1.8mill and it now maintains more than 150,000 properties through a network of 500 CORGI register gas installers.

The company said local authorities, housing associations and social landlords are increasingly looking for “bundled services” including gas maintenance and responsive repairs.
However, it said the south of the UK was becoming “increasingly competitive over the past six months”.

The report said: “We have taken steps to consolidate our southern operations into a single business unit, which will give us greater scale and scope to win larger contract opportunities going forward.”

Carbon Reduction Commitment and Climate Change Act to drive market

In energy services earnings also increased and Spice predicted climate change legislation and in particular the Carbon Reduction Commitment (CRC) will stimulate the market.

The report said: “This will act as a massive driver for many of our consultancy services and already we are seeing early adopter behaviour from organisations such as Punch Taverns, BHS and Gala, who are pushing ahead with smart metering or carbon management programmes in order to stay ahead of the game.”

Mr Rigby said: ““We expect the Climate Change Act will create a number of new legislative drivers and opportunities for us.”