Released: 28/06/2007
RNS Number:1790Z
Spiritel PLC
28 June 2007
Embargoed until 0700, 28 June 2007
SPIRITEL plc
("Spiritel" or "the Company")
TRADING UPDATE FOR THE YEAR TO 30 APRIL 2007 AND RESULT OF EGM
Spiritel plc (AIM: STP), the telecommunications services business, today
provides a trading update for its financial year ended 30 April 2007.
During the year to 30 April 2007, we created the new Spiritel Retail division as
a means of leveraging the core capabilities of the business and accessing the
significantly higher margins available to businesses owning end customers. This
is in line with our strategy to diversify away from the competitive UK wholesale
voice markets. Initially we are achieving this strategy via acquisition - three
companies were acquired during the period.
The financial results for the period provide a clear endorsement of the strategy
with major progress being recorded in profitability and cash flow over the year.
The Company recorded a loss before tax of over £1 million in the first half of
the year but expects to report adjusted EBITDA close to breakeven during the
second half, in line with expectations. Spiritel's two divisions recorded
combined revenues of £13.6 million (2006: £15.6 million).
The results include initial contributions from the three businesses acquired
during the period to form Spiritel Retail - six months from CallPlan, five
months from Networks Direct (now Ashland Networks) and two months from Ashland.
The original business, now trading as Spiritel Wholesale, experienced continuing
tough market conditions and, in response, the Company initiated a programme to
eliminate unprofitable revenues, which had the effect of increasing gross
margins as the product mix changed. Margin improvements mean the Company's
expected EBITDA results for the full year will have been achieved in spite of
aggregate revenues coming in below market expectations.
Limited penetration from two new ventures, MyPhone (an unlimited calls service
for UK based Indians calling India) and 118 918 (the Company's directory enquiry
service supporting Oxfam) reduced revenues from initial expectations. The
Company is considering a one-off write down of the VoIP (Voice over Internet
Protocol) platform associated with MyPhone.
For the current year to 30 April 2008, we are confident that the good progress
being made in the Retail division will continue and that the Wholesale revenues
and earnings will stabilise. The Company is now operating profitably and
generating cash with a full contribution from the three acquired businesses.
Additional earnings enhancing acquisitions are planned for the Retail division,
adding to the customer base and further increasing the range of products and
services available to these customers. The Company expects to deliver on
increased cross-selling opportunities as acquired businesses are fully
integrated.
Management has also been addressing the strengthening of the balance sheet as it
seeks to restore value to shareholders. An Extraordinary General Meeting was
held yesterday, 27 June, at which shareholder approval for the modification of
the terms attached to the Company's redeemable preference shares, loan notes and
loans was sought. The Company is pleased to report that at the EGM, all the
resolutions were duly passed.
Commenting, Alastair Mills, Chief Executive of Spiritel said: "The successful
implementation of our new strategy is beginning to be reflected in financial
performance. The three stages of our strategy of building a high quality
telecoms business focused on providing a wide range of communications services
to business customers are: acquire, integrate and grow. We have now completed
the integration stage for the first acquisitions and I am pleased to report that
our first cross-sales have been achieved as we continue to focus on selling more
products to more customers.
"We look forward to updating shareholders as to further progress in due course."
-ends-
For further information please visit www.spiritelplc.com or contact:
Spiritel plc Tavistock Communications
Alastair Mills Simon Hudson
Chief Executive Clemmie Carr
Tel: +44 20 7160 0100 Tel: +44 20 7920 3150
Teather & Greenwood
Sindre Ottesen
Tel: +44 207 426 9000
Note to Editors
Spiritel is a telecommunications group that offers a range of traditional and
next generation telecommunications' services and products to business customers.
The Group listed on AIM in July 2004 (AIM: STP). Spiritel's customers who range
from large blue chip corporates to SMEs are served through the Group's two
divisions - Spiritel Wholesale and Spiritel Retail.
Spiritel Retail was established in 2006 to offer a growing range of
communications products and services to a broad spread of UK business customers.
Through the recent acquisitions of CallPlan Ltd, Networks Direct UK Ltd and The
Ashland Group the division has gained relationships with almost 1,000 SME
customers and blue chips including Regent Inns, Marriott and Whitbread.
Spiritel Wholesale provides a range of voice and data products to UK and
international operators and is responsible for the development and hosting of
the Group's growing VoIP infrastructure. The services offered to operators
include UK and international call termination and the latest generation of
IP-based communications technologies for carrier and business customers.
Spiritel is a consolidator in the highly fragmented UK telecoms reseller market.
The Group proposes to deliver shareholder value through acquisitions, which
bring complementary products and skill sets to the Group's offering and
organically via the cross selling of Group products by fellow subsidiaries and
joint ventures.
This information is provided by RNS
The company news service from the London Stock Exchange
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