STP.L Regulatory News (STP)

30 Dec 2005 07:00

Spiritel PLC30 December 2005 For immediate release 30 December 2005 SPIRITEL PLC ("Spiritel" or "the Company") Interim results for the six months ended 31 October 2005 Spiritel plc (AIM: STP), the telecommunications services business, is pleased toannounce its interim results for the six months ended 31 October 2005. This is the first time that the Company, which joined AIM following a reversetakeover in July 2004, has issued interim results for a six month period ending31 October. The interim results to 31 October 2004 comprised an eight monthperiod. The results originally published for the period ended 31 October 2004have been restated using the principles of reverse acquisition accountingadopted and explained in the Company's financial statements for the year ended30 April 2005. Highlights • Trading at Spiritel has proceeded in line with Directors' expectations. Cash flow from operating activities was positive in the period at £278,000 compared with a cash outflow of £250,000 in the eight months to 31 October 2004 restated. The pre-tax loss was £0.209 million (2004 restated: loss of £2.47 million) reflecting planned investment in establishing the Company's VoIP (voice over internet protocol) telephony product suite and network of reseller partners. • Significant progress in delivering the Company's strategy of becoming a leading player in VoIP telephony, which is widely expected to replace traditional fixed line telephony in coming years. • Expo Communications, Spiritel's core call termination division, traded profitably during the period and delivered the majority of the Company's sales. • Spiritel Technologies, the Spiritel division that focusses on VoIP products and services, has developed rapidly during the period under review having signed a series of reseller agreements and extended its product range to include broadband telephony services for the residential market and IP trunking solutions for corporates. • Since the period end Spiritel Technologies has signed agreements with PNC Telecom Services Ltd and Swift Internet and also signed a landmark agreement with Entacall Telecommunications, under which Entacall will deliver 10,000 residential VoIP customers within 12 months. • In July 2005, Alastair Mills was appointed Chief Executive and Mark Willard, the Company's founder and former Chief Executive, became President. Commenting on the results, Lord St John of Bletso, Spiritel's Chairman, said: "The period under review has been one of substantial progress for the Company. Itwas a period of diversification during which the foundations were laid for thesignificant growth of Spiritel Technologies' VoIP products and services. Thepace of Spiritel Technologies' development is a reflection of the strength ofExpo Communications, our core call termination division, which trades profitablyand allows us to bundle termination services with a range of VoIP products." For further information: Spiritel plc 020 7160 0100Alastair Mills, Chief ExecutiveJohn Vergopoulos, Deputy Chairman Teather & Greenwood 020 7426 9000Jeff Keating Buchanan Communications 020 7466 5000Mark Court/Mary-Jane Johnson Notes for Editors: About Spiritel plc Spiritel (AIM: STP) is the holding company for a growing group of companieswhose focus is telecommunications services and products. Spiritel, through itsSpiritel Technologies division, has developed a suite of leading-edge VoIPproducts, positioning the Company to benefit from the migration from traditionaltelephony to VoIP services. Spiritel Technologies' route to market is viareseller partners. Spiritel's initial trading division, Expo Communications, wasfounded in 2000 and is one of Europe's leading call termination businessesfocussing on calls from fixed lines to mobiles. Expo's client base includesTelewest, Level (3), Colt, One.Tel and Your Communications among others.Spiritel Technologies' VoIP products are highly complementary to Expo'stermination services as most phone calls made via VoIP require termination inthe same way as calls from traditional fixed line phones. Spiritel joined the AIM market of the London Stock Exchange in July 2004. For further information please visit www.spiritelplc.com CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW The half year to 31 October 2005 has seen strong progress across our business.An investment phase during the half year has resulted in a platform for thecontinued growth of the business during the current half of the financial yearand beyond. The success of our Spiritel Technologies division in launching VoIPproducts and forming trading agreements endorses both our business model and ourdiversification strategy. Our business model exploits the cash flow from ourcore call termination business to help fund investment in VoIP products and ourstrategy is to sell bundled services to end users via resellers. Expo Communications Expo Communications has performed in line with Directors' expectations duringthe period. It has traded profitably and delivered the majority of the Company'ssales. The run-rate sales figure is lower than at the same time last yearreflecting the continued impact of the OFCOM price control determination in theautumn of 2004. However the gross margin has improved to 13.6 per cent (2004restated: 11.6 per cent), underlining the solid performance by ExpoCommunications in a competitive marketplace. Spiritel Technologies We have been delighted by the progress at Spiritel Technologies in the period interms of product development and execution of the channel strategy with resellerpartners. As a result, we are benefiting from both the speed to market of ourVoIP products and also from reach in that our resellers have access to customerbases ranging from residential customers through SMEs to corporates. We continueto expect a significant contribution from Spiritel Technologies as the migrationfrom traditional telephony to VoIP accelerates. We are also continuing to pursueopportunities with further strategic partners within the UK, in mainland Europeand in Asia. Board changes In July 2005, Alastair Mills was appointed Chief Executive and Mark Willard, theCompany's founder and former Chief Executive, became President. It is announcedtoday that John Vergopoulos, the Company's Executive Deputy Chairman, willbecome Non-Executive Deputy Chairman. Financials The overall gross margin for the six months ended 31 October 2005 improved to 15per cent (2004 restated: 12 per cent) even though turnover fell to £8.12 million(2004 restated: £15.87 million) resulting from last year's OFCOM price controldetermination. The operating loss for the period was £0.15 million compared witha loss of £2.44 million in 2004. The 2004 figure includes an exceptional cost of£2.56 million in relation to amortisation of goodwill on the reverseacquisition. Net cash inflow from operating activities in the period was £0.28million compared with a net cash outflow figure of £0.25 million in 2004. Theloss per share in the period was 0.16p (2004 restated: loss of 1.94p). Outlook The first half of the year has been one of investment in Spiritel Technologiesand we look forward to reaching profitability during the second half of thecurrent financial year. Through this investment we have developed a VoIPplatform, complemented by call termination, and we have also established, andcontinue to establish strategic routes to market. We anticipate significantrevenues from our VoIP products in the year to 31 April 2007. In the past fewweeks, we have been encouraged by the appetite among resellers for selling VoIPproducts and by our pipeline of further potential strategic partners, giving usconfidence in our future prospects. Our growth strategy will remain focussed onorganic and acquisitive growth and we continue to evaluate potentialacquisitions to leverage the Company's product and skill sets and to furtherextend routes to market. Lord St John of Bletso Alastair MillsChairman Chief Executive SPIRITEL PLC CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT For the six months ended 31 October 2005 Six months Eight months ended 31 October ended 31 October 2005 2004 Unaudited Unaudited Note £'000 £'000 Turnover - continuing operations 8,117 15,874 Cost of sales - continuing operations (6,885) (14,031) Gross profit - continuing operations 1,232 1,843 Other administrative expenses (1,378) (1,726)Exceptional items - (2,557)Administrative expenses (1,378) (4,283) Operating (loss) / profit 3Continuing operations 140 426Acquisitions (286) (2,866) (146) (2,440) Net interest payable (63) (29) Loss on ordinary activities before taxation (209) (2,469) Tax on loss on ordinary activities (11) - Loss transferred from reserves (220) (2,469) (Loss) per share in pence 5 (0.16) (1.94) There were no recognised gains or losses other than the loss for the financialperiod. SPIRITEL PLC CONSOLIDATED SUMMARISED BALANCE SHEET AT 31 OCTOBER 2005 31 October 2005 31 October 2004 Unaudited Unaudited £'000 £'000 Fixed assets 944 412 Current assetsDebtors 954 621Cash at bank and in hand 92 225 1,046 846 Creditors: amounts falling due within one year 1,359 1,056 Net current liabilities (313) (210) Total assets less current liabilities 631 202 Creditors: amounts falling due after more than one year (Note 6) 6,757 6,633 Provision for liabilities and charges 84 126 6,841 6,759Capital and reservesCalled up share capital 1,378 1,327Share premium account 1,128 302Reverse acquisition reserve (5,763) (5,763)Profit and loss account (2,953) (2,423)Shareholders' deficit (6,210) (6,557) 631 202 SPIRITEL PLC CONSOLIDATED SUMMARISED CASHFLOW STATEMENT For the six months ended 31 October 2005 Six months Eight months ended 31 October ended 31 October 2005 2004 Unaudited Unaudited £'000 £'000 Net cash inflow / (outflow) from operating activities (Note 7) 278 (250) Returns on investments and servicing of finance - 4 Taxation (120) (18) Capital expenditure (496) (122) Acquisitions and disposals - (237) Financing - 146 (Decrease) in cash (Note 8) (338) (477) NOTES TO THE INTERIM RESULTS For the six months ended 31 October 2005 1). INTERIM FINANCIAL INFORMATION The interim financial information covers the six months ended 31 October 2005,is unaudited and does not constitute statutory financial statements. Spiritel joined the Alternative Investment Market (AIM) on 28 July 2004 via thereverse takeover by Expo Communications Limited of Roshni Investments plc, anacquisition vehicle that joined AIM in March 2004. The comparative figures inthese statements cover the eight month period ended on 31 October 2004. Theresults originally published for the period ended 31 October 2004 have beenrestated using the principles of reverse acquisition accounting adopted andexplained in the Company's financial statements for the period ended 30 April2005. 2). PRINCIPAL ACCOUNTING POLICIES The interim financial information has been prepared using the same accountingpolicies as set out in the Annual Report and Accounts for the period ending 30April 2005 apart from the adoption of FRS 25 Financial Instruments: Disclosureand Presentation, whereby preference shares have been reclassified as financialliabilities within Creditors: amounts falling due after more than one year. 3). EXCEPTIONAL ITEMS The following exceptional costs were charged in arriving at the operating lossof the Group: Six months Eight months ended 31 October ended 31 October 2005 2004 Unaudited Unaudited £'000 £'000 Amortisation of goodwill acquired in reverse takeover - 2,557 4). DIVIDENDS The Directors do not recommend the payment of a dividend. 5). EARNINGS PER SHARE The loss per share is based on the equity losses of £220,000 (2004: loss of£2,469,000) and 137,819,803 (2004: 127,416,000) ordinary shares of 1p each,being the weighted average number of ordinary shares in issue during the period.The weighted average number of ordinary shares for the eight months ended 31October 2004 assumes that the 124,000,000 ordinary shares issued in relation tothe reverse acquisition of Spiritel plc by Expo Communications Limited existedfor the entire period. Spiritel plc shares have been included since 28 July2004, the date of the reverse takeover, and all other shares have been includedin the computation based on the weighted average number of days since issuance. 6). PREFERENCE SHARES 4,100,000 redeemable preference shares of £1 each have been classified asfinancial liabilities and included within Creditors: amounts falling due aftermore than one year (2004: £4,100,000). 7). NET CASH (OUTFLOW) / INFLOW FROM OPERATING ACTIVITIES Six months Eight months ended 31 October ended 31 October 2005 2004 Unaudited Unaudited £'000 £'000 Operating (loss) (146) (2,440)Depreciation & amortisation 191 2,710(Increase) in debtors (20) (483)Increase / (decrease) in creditors 253 (37)Net cash inflow / (outflow) from operating activities 278 (250) 8). RECONCILIATION OF NET CASH FLOW TO MOVEMENT OF NET DEBT Six months Eight months ended 31 October ended 31 October 2005 2004 Unaudited Unaudited £'000 £'000 (Decrease) in cash in the financial period (338) (477)Loan notes issued in connection with acquisition - (2,500)Preference shares issued in connection with acquisition - (4,100)Other non-cash items (63) (33)Movement in net (debt) / funds in the financial period (401) (7,110) Net (debt) / funds at 1 May 2005 (6,264) 702Net (debt) / funds at 31 October 2005 (6,665) (6,408) This information is provided by RNS The company news service from the London Stock Exchange