Spice switches off the gas as turnaround plan stays on track

The Leeds-based group offloaded the loss-making gas business to

Liverpool plumbing group Booth Securities for nothing.

Spice also sold its telecoms business a fortnight ago for 32.8m.

Analysts said the disposal was a good deal and shares rose nine per

cent to 42.25p.

Chief executive Martin Towers said the disposal vindicated a turnaround plan he set in place three months ago.

"The two must-do things that were part of the story have been accomplished," he said.

"The telecoms business is the one that dealt with the debt levels and gave us a robust balance sheet.

"The gas business was important because it was a loss-making business and that's helped the earnings going forward."

Gas provides checks and maintenance for registered social landlords but made a 6.4m annual loss and was behind a 42.9m writedown in December. It has been hit hard by increasing competition from out-of-work gas engineers during the downturn.

It earned revenues of 34.3m in the year to the end of April and had assets of about 10.4m.

"During the past two years, the gas business has been a material distraction for the group and a drain on resources," said Mr Towers.

Of Spice's public-facing distribution, only facilities management remains, and is widely expected to be sold next.

"(By the) disposal of two time-consuming (businesses) we are

alleviating management stretch which means more and more you can focus on the key businesses," said Mr Towers.

"It's just another tick in the box in the rehabilitation of Spice."

Spice now plans to concentrate on its core business, which includes work such as checking overhead power lines and installing water meters. Mr Towers said utilities and energy markets have strong underlying regulatory and environmental drivers.

"This should be taken positively as gas lost 6.4m last year and it had been feared they would have to close it and incur a significant exceptional charge," said Liberum analyst William Shirley.

"This is a very positive move, " added analysts at Arden Partners. "Getting out of this business is a notable achievement and just what the market wanted."

But Leeds-based analyst John Cummins at WH Ireland said concerns still existed around the renewal of multi-million pound contracts with EDF, pricing in electricity and water markets and former chief executive Simon Rigby's 8.6 per cent stock overhang.