6 July – results and offer update

News that private equity group Cinven has increased its conditional offer price to between 62p and 65p per share has not impressed the board of Spice which has once again rejected the proposals as undervaluing the company.  Having seen the group’s annual results for the year to 30 April we tend to share this viewand believe that the stock has further upside.  Pre-tax profits before exceptionals were similar to the previous year at £31.5m, with diluted earnings per share on the same basis coming out at 6.05p.  The increasing confidence at the group is also shown by the fact that the company intends to pay a final dividend of 1.22p.  Following the various disposals including the telecoms business and loss-making gas business pro-forma net debt has fallen to £91m and a very confident statement from the CEO leads us to retain our recommendation of BUY.