Released: 18/10/2007
RNS Number:9112F
Spiritel PLC
18 October 2007
Embargoed until 07.00, 18 October 2007
SPIRITEL PLC
("Spiritel" or "The Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2007
Spiritel plc (AIM: STP), the telecommunications services business today
announces preliminary results for the year ended 30 April 2007.
Commenting on the results, Lord St. John of Bletso said: "The year to 30 April
2007 has been one of rationalisation, acquisition and integration for Spiritel.
Our adopted strategy to acquire complementary and earnings enhancing businesses
to deliver scale and profitability has been applied consistently. As a result,
we have seen particular progress via acquisition in the Business division of
Spiritel supported by higher margins in our Technologies division."
Summary:
-Three transformational acquisitions made during the year
-1,000 new business customers and expansion in the range of Group products
and services
-New management team
-Proven delivery of outlined strategy, with platform for the next phase of
growth
-Post year end -
-Return to cash generation and EBITDA profitability
-Major hosted VoIP trial with Regent Inns
-Senior debt facility arranged
Chief Executive, Alastair Mills added: "This has been a transformational year
for Spiritel. We have acquired and integrated three new businesses into the
Group and grown our customer base and product portfolio to record levels.
Spiritel now has over 1,000 SME and corporate clients and we have built upon our
existing expertise in IP based communications to launch a new range of converged
data and hosted VoIP services alongside traditional voice and data products.
Most significantly, since the year end, the Group has moved into EBITDA
profitability."
For further information please visit www.spiritelplc.com or contact:
Spiritel plc Tavistock Communications Landsbanki Securities
Alastair Mills Simon Hudson Sindre Ottesen
Chief Executive Clemmie Carr Sebastian Jones
Tel: +44 20 7160 0100 Tel: +44 20 7920 3150 Tel: +44 20 7426 9000
Chairman's statement
Introduction
I am pleased to report on what has been a significant turnaround year for
Spiritel. The Group has grown into its new dual Technologies and Business
structure and made substantial progress towards turning losses of previous years
into EBITDA profitability and cash generation. We achieved positive EBITDA
shortly after the year end and expect to report an operating profit for the year
to 30 April 2008.
The year to 30 April 2007 has been one of rationalisation followed by
acquisition and integration for Spiritel. Our adopted strategy to acquire
complementary and earnings enhancing businesses to deliver scale and
profitability has been applied consistently. As a result, we have seen
particular progress via acquisition in the Business division of Spiritel
supported by higher margins in our Technologies division.
Results
Group turnover for the year was £13.6 million (2006: £15.6 million). Decreases
in wholesale voice revenues due to challenging market conditions and a focus on
more profitable revenue streams were offset by new turnover and profits from the
newly established Business division. The part year contribution from Spiritel
Business, which recorded a 50% gross margin, resulted in overall gross margin
improvement from 12.2% to 14.9%.
The restructuring of the Group into two complementary divisions resulted in
significant charges to operating profits, as detailed in the financial
statements. The reported operating loss of £2.396 million (2006: £0.737 million)
includes goodwill amortisation and exceptional items of £1.168 million (2006:
£nil). Adjusting for these costs produces an operating loss of £1.228 million
(2006: £0.737 million). The loss before taxation was £3.010 million (2006:
£0.751 million). The key metric used by the Board in assessing financial
performance is adjusted operating profit (operating profit adjusted for
non-trading items and depreciation). Adjusted operating profit for the current
year was a £0.644 million loss (2006: £0.294 million loss).
The reported figures for the year ended 30 April 2007 do not highlight the
progress that we have made as almost all of the loss was incurred during the
first half when the contribution from Spiritel Business was negligible. The
second half saw significant progress towards profitability and we are confident
that we will report an operating profit during the year to 30 April 2008.
For a fuller explanation of results for the year ended 30 April 2007 please see
the Financial review from CEO Alastair Mills.
Restructure
The Group is progressing its business model of acquiring communications service
providers which leverage our existing business and allow us to move closer to
the end customer. Spiritel's operating activities have been restructured into
two clear business areas: Spiritel Technologies (replacing Spiritel Wholesale)
and Spiritel Business (replacing Spiritel Retail).
Spiritel Technologies is now focused on building upon its experience and
expertise in IP technology, whilst continuing to provide voice termination
services. It also manages and maintains the network infrastructure for its own
and Spiritel Business's growing operations. Spiritel Business provides a
broadening range of communications products and services to business users and
now has over 1,000 corporate and SME clients.
Acquisitions
During the year, the Group progressed its acquisition strategy by acquiring
three businesses, now fully integrated into Spiritel Business. All have added
new customer relationships and complementary products and services.
The first acquisition was CallPlan Limited in September 2006, which was followed
with Networks Direct (UK) Limited in October 2006. Our most significant
acquisition to date came in March 2007 with Ashland Group Limited. Ashland has
changed the scale of the Group's infrastructure, with new technical support,
nationwide engineering coverage, 24/7 customer care, retail billing,
telemarketing and sales. Based in Wigan, Ashland has become the platform for the
ongoing growth of the Business division through further acquisitions and will
enable us to extract savings through synergies from future transactions.
All three acquisitions completed during the year have been earnings enhancing
from completion and now offer organic growth opportunities through the cross
selling of products and services throughout the enlarged customer base.
Importantly, our acquisitions for Spiritel Business have increased our earnings
visibility, as we have gained strong customer relationships with contracted
maintenance and support revenues.
Strategy
Spiritel's goal is to deliver consistent and growing profitability. There are
three stages to our strategy to achieve this: the first is to acquire sub-scale
resellers, which will grow both our customer and product base. The second stage
is to fully integrate those businesses into the Group so as to deliver
synergistic savings and broaden our product offering. The third stage is to
focus on organic growth based on an expanded range of services and an enlarged
customer base. By selling more products to each customer, we will increase
average revenue per user, reduce churn and enhance margins. Via this strategy of
acquisition, integration and growth we are evolving Spiritel into a complete
provider of converged voice and data services.
It is in this way that we intend to deliver value to shareholders, including the
generation of appropriate returns for our new and old investors alike.
Board
There have been a number of changes to the Board and senior management team
designed to support the Group's new business model and structure. Last year we
appointed Steven Maine to the position of Deputy Chairman. Steven is a former
CEO of Kingston Communications plc and has been on our Board since April 2006.
Following the acquisition of Ashland in March 2007, Anthony Vose joined the
Board and is now a Non-Executive Director. In May 2007, we appointed Ronnie
Smith to the Board as Group Finance Director. Ronnie, who joined us in July
2006, has been a key member of the new management team and has contributed
significantly to the Group's development in recent months.
I would like to take this opportunity to thank the founders of the Company, Mark
Willard and John Vergopoulos, for their contribution since listing. John stepped
down as a Director in October 2006 and Mark in March 2007 to pursue other
business interests.
Current trading and outlook
During the year we gained a new range of products and services, relationships
with over 1,000 business customers and have put in place a new Board and
management team capable of continuing the excellent progress we have made. Since
the year end we have returned to EBITDA profitability; a significant achievement
for Spiritel and testament to the Group's successful implementation of our
stated business plan and strategy for growth.
Our recent progress in the development and delivery of emerging IP based
services, as evidenced by the VoIP/Wi-Fi trial for Regent Inns, gives us
particular cause for optimism. Whilst still offering the full range of
traditional voice and data services to business customers, our ability to
demonstrate the IP product roadmap to customers is a differentiator for Spiritel
and one that we expect to generate significant revenues in the near future.
Whilst giving attention to the organic growth opportunities available from
having new products to sell to an enlarged customer base, we intend to continue
our assertive acquisition policy and remain on the lookout for additional
earnings enhancing transactions, with a number presently under review.
I believe that the skills and experience of our invigorated team combined with
the effectiveness of our business model and strategy for growth will enable us
to make the most of the opportunities we see in the coming year.
Lord St John of Bletso
Chairman
17 October 2007
Chief Executive's review
Overview
This has been a transformational year for Spiritel. We have acquired and
integrated three new businesses into the Group and grown our customer base and
product portfolio to record levels. Spiritel now has over 1,000 SME and
corporate clients and we have built upon our existing expertise in IP based
communications to launch a new range of Wi-Fi and VoIP services alongside
traditional voice and data products. We have successfully repositioned the Group
to focus on business end-users and we now offer a broader variety of services to
more customers. We have developed a robust business model that will deliver cash
generation and earnings visibility. Ultimately we are building a business of
scale which is successfully competing with much larger rivals in the delivery of
communications products and services
to UK businesses.
We have now completed the restructure of the Group. Our Technologies division,
apart from servicing its own blue chip customers, provides the competitive cost
base and advanced engineering environment that has enabled the Business division
to compete strongly on voice and data pricing and provide exceptional quality in
the delivery of IP based services. We are confident that together the two
divisions enhance the Spiritel product proposition.
Spiritel Business
During the year, Spiritel Business has established itself as one of the few
companies that can provide a full service offering covering fixed line and
mobile services, telephone system installation and maintenance, and the
development and delivery of emerging IP based voice and data products.
Spiritel Business was established by combining the three acquired businesses,
Ashland Group, CallPlan and Networks Direct (UK), to create a division that is
structured across three discrete but complementary product lines, namely,
Networks (fixed line voice, broadband and line rental), IP Communications
(telephone systems, Wi-Fi and VoIP) and Mobile.
The acquisition and integration of three established businesses has brought
scale to the Group, including nationwide engineering coverage and a back office
infrastructure capable of delivering the level of customer service and support
expected by our SME and corporate customers. Establishing this level of scale is
a significant achievement as we look to grow our product range and customer
base, organically and through acquisition. From its Wigan base, Spiritel
Business has the infrastructure to integrate future acquisitions swiftly and so
deliver synergies and cross selling opportunities.
In addition to creating a platform on which we can build the Business division,
the acquisition of Ashland also brought a leading position in the delivery of
telephony and data services to the hospitality sector including, amongst others,
Marriott, Whitbread, Spirit and Regent Inns. These blue chip customers take a
growing range of services from Spiritel Business such as structured cabling and
telephony systems and have provided recent contract successes to supply hosted
VoIP and Wi-Fi solutions. We are confident that during the year ahead we can
build upon our strength in the hospitality sector by broadening our product
portfolio and cross selling new products into this well established customer
base.
The acquisitions have also brought key vendor relationships that provide
confidence over quality of service and underpin our product development work.
CallPlan achieved Telstra Platinum accreditation during the year (the first
reseller in Europe to gain such status) and Ashland continues to enjoy an award
winning relationship with Mitel - whose latest products are being used for our
hosted VoIP trials currently in progress. Our objective is that customers
recognise Spiritel Business as a fully accredited centre of excellence. We plan
to develop more key partnerships and alliances as we continue to grow Spiritel
Business.
Spiritel Technologies
Spiritel Technologies continues to play a key part in the Group's success by
generating significant earnings from wholesale voice services and fulfilling a
critical support role for Spiritel Business in terms of design and management of
network infrastructure and product development.
During the year we focused on higher margin routes from wholesale voice
services, resulting in gross margins increasing from 7% in May 2006 to 15% by
April 2007. Post year end, gross margins have increased further to 17%. Spiritel
Technologies is increasingly focusing on IP technology where our experience and
infrastructure are enabling us to support Spiritel Business in the design and
supply of VoIP and related technology to end users. Our recent success with
Regent Inns was achieved by close co-ordination between the Technologies and
Business divisions.
In addition to network management and product development, Spiritel Technologies
is also supporting Spiritel Business through voice and data quality monitoring,
IT services and Group voice and data procurement. This is a critical component
of our "acquire, integrate and grow" strategy and has enabled us to rapidly
integrate our acquisitions into the new Group structure and strengthen our cross
selling proposition.
Strategy and progress - acquire, integrate, grow
The progress we have achieved this year stems from the implementation of our
business model and the execution of our stated strategy for growth. Three
successful acquisitions, restructuring our business into two divisions and the
resulting return to EBITDA profitability post year end are evidence of the
success of this strategy.
In its simplest form our strategy is to acquire, integrate and grow. We have
demonstrated that we can execute attractively priced acquisitions and are
confident that we can continue to do so within an industry characterised by the
consolidation of sub-scale telecoms resellers in a fragmented marketplace.
We have developed an integration framework that enables us to plan for and
deliver value from each transaction, in terms of synergies and cross selling.
Our ability to promptly integrate acquisitions within Spiritel Business has and
will allow us to maximise the benefits in terms of customer value, product
propositions, earnings enhancement and strong cash flow.
Our acquisition criteria include new customer bases into which we can deliver
the full range of Group products, bolt-on acquisitions that can deliver savings
through synergies and the addition of new products/services that we can cross
sell into our existing customer base. We have recorded successes in all these
areas during the year and it is the cross selling of existing and new products
that will deliver the organic growth in the year ahead.
Management
During the year we welcomed Jonny Shanmuganathan as Managing Director of
Spiritel Technologies. Jonny joined us from NASDAQ listed Arbinet, where he was
Vice President for Sales in EMEA. Jonny has been instrumental in the
transformation of Spiritel Technologies and its focus on the IP based services
that are supporting the growth and development of Spiritel Business.
We are also pleased to confirm the appointment of David Anahory as Managing
Director of Spiritel Business. David, who was a commercial director with
Carphone Warehouse, joins us on 1 November 2007. David brings considerable
experience from his senior roles with One Tel and Carphone Warehouse and we look
forward to his contribution as Spiritel Business continues to focus on both
acquisitive and organic growth.
Further to this Ronnie Smith joined the Board as Group Finance Director
following our year end.
With the acquisition of three businesses during the year our Group now comprises
over 80 staff, up from 15 last year. This provides us with the scale and
resource needed to support our customers and deliver our growth targets in the
year ahead.
Financial review
Group turnover decreased to £13.649 million (2006: £15.564 million) due to a
combination of continuing tough conditions in Spiritel Technologies' traditional
wholesale voice markets and the implementation of a programme to eliminate
unprofitable revenues. The latter delivered gross margins from continuing
operations of 11.1% during the second half of the year, compared to 9.2% during
the first half.
The three businesses acquired during the year to form Spiritel Business,
contributed £1.627 million to turnover - seven months from CallPlan, six months
from Networks Direct and two months from Ashland Group. The gross margin of 50%
from Spiritel Business increased Group gross margin to 14.9% (2006: 12.2%).
The restructuring and refocusing of the Group resulted in substantial
exceptional costs being incurred during the year. Most of these costs were
non-cash items from writing down those investments in tangible and intangible
fixed assets where the carrying value was not commensurate with revenues and
profits.
During the year the Group recorded an operating loss before goodwill
amortisation and exceptional items of £1.228 million (2006: £0.737 million). In
assessing the progress in the Group's financial results, the Directors review
Adjusted Operating Profit (after adding back non-trading items and depreciation
of £0.584 million). Non-trading items for the year include launch costs for 118
918 and the FRS 20 charge for share options. The adjusted loss of £0.644 million
(2006: £0.294 million) is in line with management expectations. Almost all of
the adjusted operating loss was incurred during the first half of the year with
close to break even performance during the second half. The profitability of
Spiritel Business was the main contributor to the significant performance
improvement in the second half of the year.
Since year end the Group has recorded positive EBITDA. This will be reported in
the results for the six months to 31 October 2007 which will be the first set of
published results to include full contributions from both divisions. We are
confident that as progress continues in the Business division and core revenues
and earnings stabilise within Spiritel Technologies we will report an operating
profit for the year ending 30 April 2008.
In June 2007 we obtained shareholder approval to amend the terms of Penta
Capital's debt and preference shares to give conversion rights over ordinary
shares at a premium to the share price. This has substantially reduced our
ongoing interest costs and provides potential to strengthen our balance sheet on
exercise of the conversion rights. In July 2007 we secured a £1.375 million debt
facility from Clydesdale Bank to restructure debt and provide access to funds to
execute our strategy of acquisitive and organic growth. We also brought a major
institutional investor on board.
Summary and outlook
This year has been the most significant in the Group's history. We announced a
new strategy and made great progress in its execution by acquiring three
earnings-enhancing businesses that significantly broaden our product portfolio
and customer base. We are now trading at an EBITDA positive level and we aim to
maintain this progress as we remain on the acquisition trail and have a number
of attractively priced potential targets in our sights.
The recent announcement of the hosted VoIP trials, won against two of the
largest companies in our sector, marked a breakthrough for the Group. The win
confirmed our position as a market leader in the provision of IP based services
and we anticipate this area delivering significant growth in the year ahead. We
hope to make further announcements with regard to the roll out of advanced
hosted VoIP services to some of our blue chip customers in the hospitality
sector.
The outlook for the remainder of the current financial year is positive. We now
have an EBITDA profitable Group with an impressive breadth of products and
services that we are selling to a growing SME and corporate customer base. We
have put in place the groundwork from which to maintain the growth we have
started to see across the whole Group. We have a new and energised management
team operating within two clearly defined divisions, both of which have solid
prospects for expansion. Our progress in terms of customer numbers, product set,
earnings and cash generation is clear. We look forward to furthering this
momentum in this financial year and beyond.
The progress could not have been delivered without the dedication and commitment
of the expanded Spiritel team. I would like to take this opportunity to thank
them for their hard work and achievements this year. I look forward to building
upon what we have achieved so far and continuing our drive to return value to
our shareholders through the consistent application of our proven strategy for
growth in the coming year.
Alastair Mills
Chief Executive
17 October 2007
Consolidated profit and loss account
For the year ended 30 April 2007
Before
goodwill Goodwill
amortisation amortisation
and and
exceptional exceptional
items items Total Restated
2007 2007 2007 2006
Audited Audited Audited Audited
Note £'000 £'000 £'000 £'000
--------------------------------------------------------------------------------
Turnover - continuing
operations 12,022 - 12,022 15,564
- acquisitions 1,627 - 1,627 -
--------------------------------------------------------------------------------
2 13,649 - 13,649 15,564
Cost of sales (11,613) - (11,613) (13,671)
--------------------------------------------------------------------------------
Gross profit 2,036 - 2,036 1,893
Administrative expenses
--------------------------------------------------------------------------------
Other administrative expenses (3,264) (219) (3,483) (2,630)
Exceptional administrative
expenses 3 - (949) (949) -
--------------------------------------------------------------------------------
Total administrative expenses (3,264) (1,168) (4,432) (2,630)
Operating (loss)/profit
- continuing operations (1,464) (1,168) (2,632) (737)
- acquisitions 236 - 236 -
--------------------------------------------------------------------------------
(1,228) (1,168) (2,396) (737)
Share of operating loss of
joint venture (25) - (25) (16)
--------------------------------------------------------------------------------
(1,253) (1,168) (2,421) (753)
Net interest (589) 2
--------------------------------------------------------------------------------
Loss on ordinary activities
before taxation 2 (3,010) (751)
Tax on loss on ordinary
activities 21 82
--------------------------------------------------------------------------------
Loss on ordinary activities
after taxation (2,989) (669)
Minority interest 134 26
Loss for the financial year (2,855) (643)
--------------------------------------------------------------------------------
Loss per share in pence
Basic and diluted 5 (1.31) (0.45)
--------------------------------------------------------------------------------
Consolidated statement of total recognised gains and losses
--------------------------------------------------------------------------------
2007 Restated
2006
£'000 £'000
--------------------------------------------------------------------------------
Loss for the financial year (2,855) (643)
Prior year adjustments (15) -------------
Total gains and losses recognised since last financial
statements (2,870)
-------------------------------------------------------------------
Consolidated balance sheet
For the year ended 30 April 2007
--------------------------------------------------------------------------------
Restated
2007 2006
Audited Audited
£'000 £'000
--------------------------------------------------------------------------------
Fixed assets
Intangible assets 4,859 33
Tangible assets 408 864
--------------------------------------------------------------------------------
5,267 897
Current assets
Stocks 392 -
Debtors 3,007 1,016
Cash at bank and in hand 322 98
--------------------------------------------------------------------------------
3,721 1,114
Creditors: amounts falling due within one year (8,264) (1,919)
--------------------------------------------------------------------------------
Net current liabilities (4,543) (805)
--------------------------------------------------------------------------------
Total assets less current liabilities 724 92
--------------------------------------------------------------------------------
Creditors: amounts falling due after more than one year 4,812 4,694
Provisions for liabilities 17 18
--------------------------------------------------------------------------------
4,829 4,712
Capital and reserves
Called up share capital 3,162 1,654
Share premium account 4,550 2,850
Reverse acquisition reserve (5,763) (5,763)
Other reserves 97 15
Profit and loss account (6,151) (3,376)
--------------------------------------------------------------------------------
Shareholders' deficit (4,105) (4,620)
--------------------------------------------------------------------------------
724 92
--------------------------------------------------------------------------------
Consolidated cash flow statement
For the year ended 30 April 2007
--------------------------------------------------------------------------------
2007 2006
Audited Audited
Note £'000 £'000
--------------------------------------------------------------------------------
Net cash (outflow)/inflow from operating activities 6 (1,177) 31
Returns on investments and servicing of finance
Interest received 5 5
Interest paid (6) (3)
--------------------------------------------------------------------------------
Net cash (outflow)/inflow from returns on
investments and servicing of finance (1) 2
Taxation
Corporation tax paid (9) (151)
Capital expenditure and financial investment
Purchase of tangible fixed assets (101) (655)
Sales of tangible fixed assets 6 -
--------------------------------------------------------------------------------
Net cash outflow from capital expenditure and
financial investment (95) (655)
Acquisitions
Consideration and expenses (3,456) -
Net cash acquired with subsidiary undertaking 646 -
Purchase of minority shares in subsidiary
undertaking - (7)
--------------------------------------------------------------------------------
Net cash outflow from acquisitions (2,810) (7)
--------------------------------------------------------------------------------
Cash outflow before financing (4,092) (780)
Financing
Receipts from borrowing 3,100 450
Issues of shares (net of expenses) 1,223 -
Hire purchase repayments (7) -
Expenses in connection with conversion of loan notes - (2)
--------------------------------------------------------------------------------
Net cash inflow from financing 4,316 448
--------------------------------------------------------------------------------
Increase / (decrease) in cash in the year 7 224 (332)
--------------------------------------------------------------------------------
Reconciliation of movements in shareholders' deficit
For the year ended 30 April 2007
----------------------------------------------------------------------
Restated
2007 2006
Audited Audited
£'000 £'000
----------------------------------------------------------------------
Retained loss for the financial year (2,855) (643)
Credit for equity settled share based payments 62 15
Equity component of compound financial
instrument 100 -
Issue of share capital (net of expenses) 3,208 1,998
----------------------------------------------------------------------
Net increase in shareholders' deficit 515 1,370
Opening shareholders' deficit (4,620) (5,990)
----------------------------------------------------------------------
Closing shareholders' deficit (4,105) (4,620)
----------------------------------------------------------------------
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 30 April 2007
1. PRINCIPAL ACCOUNTING POLICIES
BASIS OF PREPARATION AND FINANCIAL INFORMATION
The financial information in this preliminary announcement has been prepared in
accordance with the accounting policies set out in the financial statements of
Spiritel plc for the period ended 30 April 2006. These accounting policies have
remained unchanged for the financial year ended 30 April 2007, with the
exception of the treatment of the Company's share options following the
mandatory adoption of FRS 20 "Share based payments". The fair value of share
options, determined at the date of grant, is recognised as an expense over the
vesting period of the options. The 2007 results have been prepared on this basis
and the 2006 results have been restated to reflect this change in policy.
The financial information in this document does not constitute the Company's
statutory accounts for the year ended 30 April 2007 or 2006, but is derived from
those accounts. Statutory accounts for 2006 have been delivered to the Registrar
of Companies and those for 2007 will be delivered following the company's Annual
General Meeting. The auditors have reported on these accounts and their reports
were unqualified and did not contain statements under sections 237(2) or (3) of
the Companies Act 1985.
2. SEGMENTAL INFORMATION
The turnover and loss on ordinary activities before taxation are attributable to
the principal activity of the Group.
TURNOVER BY DESTINATION
2007 2006
£000 £000
---------------------------------------------------------------------
United Kingdom 13,424 15,449
Europe 199 109
United States 26 6
-------- --------
Group turnover 13,649 15,564
======== ========
3. EXCEPTIONAL ITEMS
The following exceptional costs were charged in arriving at the operating loss
of the Group:
2007 2006
£000 £000
----------------------------------------------------------------------
Reorganisation and restructuring costs 151 -
Impairment charges 712 -
Bad debts written off 86 -
-------- --------
Total exceptional costs 949 -
======== ========
4. DIVIDENDS
The Directors do not recommend the payment of a dividend. (2006: £nil).
5. LOSS PER SHARE
The loss per share is based on the loss of £2,855,000 (2006 restated: £643,000)
and 217,231,927 (2006: 142,278,943) ordinary 1p shares, being the weighted
average number of shares in issue during the year. The share options are not
dilutive and therefore a diluted earnings per share calculation has not been
presented.
6. NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
2007 Restated
2006
£000 £000
----------------------------------------------------------------------
Operating loss (2,396) (737)
Depreciation 322 428
Loss on disposal of tangible fixed assets 12 2
Impairment of tangible fixed assets 422 -
Amortisation of goodwill 219 -
Impairment of goodwill 227 -
Decrease in stocks 2 -
Decrease/(increase) in debtors 14 (66)
(Decrease)/increase in creditors (44) 389
Equity settled share based payments 45 15
-------- --------
Net cash (outflow)/inflow from operating (1,177) 31
activities ======== ========
7. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2007 2006
£000 £000
----------------------------------------------------------------------
Increase/(decrease) in cash in the year 224 (332)
Cash inflow from financing (3,100) (450)
Cash outflow from hire purchase agreements 7 -
-------- --------
Change in net debt resulting from cash flows (2,869) (782)
Hire purchase agreements acquired with subsidiary
undertakings (184) -
Loan notes converted to ordinary shares - 2,000
Other non-cash items (488) -
-------- --------
Change in net debt in the year (3,541) 1,218
Net debt at 1 May 2006 (5,046) (6,264)
-------- --------
Net debt at 30 April 2007 (8,587) (5,046)
======== ========
8. ACQUISITIONS
During the year the Company acquired the whole of the issued ordinary share
capital of CallPlan Limited, Networks Direct (UK) Limited and Ashland Group
Limited, on 11 September 2006, 13 October 2006 and 2 March 2007 respectively.
The net assets acquired, consideration paid and goodwill arising on acquisition
are summarised below:
Networks
Direct Ashland
CallPlan (UK) Group
Limited Limited Limited
£'000 £'000 £'000
----------------------------------------------------------------------
Tangible fixed assets - - 205
Stocks - - 394
Debtors 80 16 1,925
Cash 87 - 559
Trade and other creditors (34) - (1,220)
Hire purchase agreements - - (184)
Corporation tax (42) - (220)
Deferred tax - - (19)
-------- -------- --------
Net assets acquired 91 16 1,440
Acquisition costs (49) (119) (223)
Goodwill 590 1,763 2,683
-------- -------- --------
Consideration 632 1,660 3,900
======== ======== ========
Satisfied by:
Cash 405 1,010 1,650
Deferred consideration to be settled
in cash 227 - 1,000
Issue of share capital - 650 1,250
-------- -------- --------
632 1,660 3,900
======== ======== ========
Copies of the Annual Report and Accounts will be posted to shareholders shortly.
Copies are available from the Company's head office at 18 King William Street,
London EC4N 7BP. It will also be possible to download the Annual Report from the
Group's website: www.spiritelplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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