Inspace plc

Inspace plc

January 25, 2007 05:34 ET

Inspace plc:Pre-close Statement

LONDON, UNITED KINGDOM--(CCNMatthews - Jan. 25, 2007) - Inspace plc (AIM:INSP), one of the UK's leading specialist service providers to the social housing market, will announce its final results for the year ended 31 December 2006 on Tuesday 27 March 2007. An analyst briefing will be held at 09:00 that same morning at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS.

The Directors are pleased to confirm that the overall trading position is in line with market forecasts for the year ended 31 December 2006.

The acquisition of Widacre Limited on 31 August 2006, which was a major strategic development for Inspace, has already begun to deliver positive benefits. Its contribution to results for the year ended 31 December 2006 is likely to exceed original expectation, it has significantly strengthened workload visibility, and it has improved the prospects of securing significant 'Decent Homes' stock reinvestment contracts moving forward. Widacre has been fully integrated into Group operations with all social housing activity now operating under the name of Inspace Partnerships and affordable housing activity operating as Inspace Homes.

Customer support has been excellent, acknowledging the strategic merit in assembling a combined maintenance, stock reinvestment and design and build service in response to evolving government policy. The announcement by Rt Hon Ruth Kelly MP, Secretary of State for Communities and Local Government, on 17 January 2007 that the Housing Corporation and English Partnerships are now to be combined under the banner of the new Communities England agency provides further evidence of a shift towards holistic, sustainable and more sophisticated solutions to meet the growing demand for social housing.

Widacre's increasing contribution to Group results has relieved the pressure on pre-acquisition operations, which faced a number of short term challenges highlighted at the half year, and allowed an accelerated and more radical approach towards shaping and developing the enlarged business.

In social housing terms, the business has successfully mobilised two new repair and maintenance contracts, for the borough of Hinckley and Bosworth and for Yorkshire Coast Homes, and has secured four further social housing frameworks with the Connected consortium, Hyde Housing Group, Thames Valley Housing Association and Aldwyck Housing Association, expected to contribute total combined sales of around GBP 60 million over four years, starting in 2008. This brings the total number of secured frameworks to twenty-three, and the total value of secured orders and frameworks awarded since the summer to in excess of GBP 160 million. Secured orders and frameworks now sit at around GBP 1.4 billion. Of equal importance, this division appears closer to winning its first major Decent Homes contract. Having recently been selected as 'reserve contractor' for a major scheme involving significant Decent Homes investment suggests the Group's increasing competitiveness in a strategically important and previously underexploited sector.

Affordable housing operations are already well placed for 2007, with most unit sales now reserved and the majority already exchanged.

Despite the short term impact on sales, the corporate assets division has continued to implement a change programme aimed at increasing the quality and visibility of its workload and the efficiency of its operational delivery. The programme, which includes smaller, shorter term or lower margin accounts being sacrificed to concentrate efforts upon those offering greater growth potential, is now entering what is expected to be the last and most radical phase. This will see operational teams realigned around customer accounts rather than regional centres, and the roll out of new service management and financial control systems following the completion of software development. These changes are expected to unlock real efficiency benefits during the second half of 2007.

The Directors are satisfied with the progress achieved during the period and are confident that a solid platform has been established for future growth across all three divisions.

Notes to editors

Inspace plc is a property based support services group, and one of the UK's leading specialist service providers to the social housing market, Inspace has three complementary areas of activity: social housing, affordable housing and corporate assets.

Social Housing - creating and maintaining sustainable homes
The division is one of the UK's leading specialist support service providers to social housing landlords through long term framework contracts. Its services comprise major 'repair and maintenance', 'stock reinvestment' and new build programmes for local authorities, Arms Length Management Organisations (ALMO) and Registered Social Landlords (RSLs).

Total spending on social housing is currently around GBP 14 billion per annum, of which around GBP 10.3 billion is spent on repair, maintenance and improvement. Of this, GBP 4 billion is spent on ongoing repair and maintenance, with the remaining GBP 6 billion being spent on capital projects such as major refurbishment and improvement. This includes a contribution of between GBP 1 billion and GBP 2 billion a year from the Decent Homes initiative. The provision of new housing, which is currently running at around 35,000 units a year, adds a further GBP 3.5 billion to this sum.

Affordable Housing - developing integrated communities
The affordable housing division specialises in the provision of low cost homes for sale in partnership with RSLs, usually alongside social housing built by the Social Housing division, as part of more extensive mixed tenure schemes. It has already established a number of joint venture companies with RSLs and through its involvement in the Key London Alliance consortium, has been appointed to provide mixed tenure developments under the Government's London Wide Initiative.

Corporate Assets - improving and maintaining public and private real estate
The corporate assets division provides a comprehensive repair, maintenance, capital works and interior design service across public and private sector non-residential real estate. It delivers 24/7 integrated maintenance services across England, Scotland and Wales through its national network of branches and 'home based' mobile engineers. Its specialist design-led service offers customers an integrated interior design, installation and furnishing 'one stop' solution.

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