Member Info for splishsplosh

2009 Spiritel failed to acquire a number of competitors, who are now exiting the recession stronger and of course pressuring margin. The sales team last on average 12-18 months and the business model of cheap service contracts and then billing clients for all work at list price is not sustainable. It does not take an IT manager too long to realise he has no discount on on his PBX work. Hotels business doing fairly well, however that is only supported by Marriott in the main, all leveraging opportunities are diminishing. As for the mobile business....margin pressure again, hence the current share price. Good luck to those with stock, it will always be a £250 horse bet type punt - even the Directors have given up buying!

18 December 2009 SPIRITEL PLC ("SpiriTel" or "the Company") FUNDRAISING Further to the announcement of 3 November, SpiriTel plc, (AIM:STP), the business communications service provider, is pleased to announce that it has now raised the total of P10million by way of convertible loan notes. The initial amount raised was P9.2million. The loan notes are convertible at 40p per ordinary share with a 10 per cent yield and are repayable at the Company's option, no later than November 2014, with a 20 per cent redemption premium. The additional funds have come from a variety of new investors and include participation from Alastair Mills, Ronnie Smith, Lord St John of Bletso and Steven Scott. The interests of the Directors following this participation (including loan notes held by their spouses) are as follows:

Headline information: Overall sales and profits - £19.7m+ Gross Profit £7.6m (38.5%) - arising from 2337 customers - yet you read in P8, 2300 are classified as SME and 700 were acquired with the purchase of EDC. That means Spiritel only has 37 large corporate accounts and its whole business is concentrated in the small corporate sector which is still in deep trouble. Does anyone know what Spiritel bad debt write-off or % debtor book is?

Saw earlier comment "The new funds will be used to allow the Company to continue its successful acquisition strategy as a consolidator of the highly fragmented telecoms reseller sector." Sector not fragmented, it has been consolidated by manufacturer and reseller integration. Daily news confirms this, hence advising to sell. T-Mobile / Orange / Nortel / Avaya / Vodafone / new technology initiatives like M2M seem to suggest differently. Spiritel are trying to secure acquisitions, no doubt we will see some news by Jan 31st, "throwing enough mud so some will surely stick" to source acquisition targets. £1m seems to be the going rate with an earn out, then in the second line suggesting in the PR release it may not have to be paid ( so the company will not achieve the value expected - why buy?) Good luck to those with stock, I hope your wait is not in years

Spiritel travels down the same avenues it has done since 2007 (especially if viewed from the perspective of the various Internet share group message posts/clubs). It is not their fault, however it must be remembered a turnover of £16m makes it a small fish, some unlisted companies have greater turnover in the same sector. The T-Mobile takeover and consolidation of the UK mobile comms market will lead to increased pressure on margin in a target market. Their positioning was correct, the price paid debatable, hindsight is a wonderful thing! Spiritel are not the sole vertical specialist with any major PBX manufacturer, clients still complain of SLA and consolidation issues, they now they will be remedied soon. New competitors and accredited specialists in their chosen verticals have come onto the scene in 2008 and 2009. The market pressures have caused sales revenue margins to drop by 15%+, cost of equipment is down by c.30% (their clients know this through competitive tendering so little to be gained), service contracts average anything from <£1k to £10K per site, bad debts have increased, debtor days extended - so to talk of cash at bank is wrong , all cash at bank is utilised or committed. AT communications Group Plc is one to look at to read their story. Spiritel must acquire to make up the shortfall in performance, a hold until 2013 when their lack of European business will be made up by the UK recovery and the short term 2012 London boost

The Lingfield net cost of the hotel development is estimated at approximately £27m. Financing for the development has been secured in the form of a £23m term loan. Marriott will be on a management contract to ensure the ROI is met. Arena needs to do more like this to standardise its race day and related activity offer.

For those prepared to wait, time to hang on, I have sold as I am getting better returns in other sectors. STP has become a dormant beast, hibernating well past the winter period with a concerning company debt/equity ratio. A link which may help: http://www.business.barclays.co.uk/BBB/A/Content/Files/Barclays_TT_Newsletter_2.pdf

Company trying its best to consolidate acquisitions and new business. Is iSTP mobile, traditional voice or simply a very junior Kingston Comms. Margins in sector being squeezed all the time, Penta investment value down because of economy and cash payments are required in 09/10 to former owners of acquired companies. Opinion split on investment value, core company contract base will see them through, BBC, Whitbread & Marriott support STP. Market is expecting news release soon.