STP.L Regulatory News (STP)

5 Nov 2008 07:00



5 November 2008

SPIRITEL PLC

("SpiriTel", "the Group" or "the Company")

TRADING UPDATE

SpiriTel plc, (AIM: STP), the business communications service provider, today issues an update on current trading for the six months to 31 October 2008. 

First half revenue expected to be not less than £10.50 million (2007: £6.84 million), up 54%

Underlying EBITDA** expected to be not less than £0.85 million (2007: £0.23 million), up 270%

Balance sheet restructure including conversion of Penta debt at significant premium to share price delivering £800,000 annual interest savings

Penta debt reduced from £11.46 million at 30 April 2008 to £7.85 million at 31 October 2008

On track to meet current market expectations for the full year

Revenue for the first half of the current year to 30 April 2009 is expected to be over 54% ahead of the comparable period from last year with Underlying EBITDA** profitability increasing by 270%. The Company's funding partner, Penta Capital, remains fully committed to the business and during the period converted £3.2m of loan facilities to ordinary shares at prices of 1.1p and 1.5p per share. Penta now holds 313.8 million shares in SpiriTel, representing 49.99% of the issued ordinary shares of the Company.

The significant improvement in financial performance is a result of both organic and acquisitive growth. The management team is successfully implementing the Group's strategy of acquiring complementary businesses with corporate customer bases, integrating the acquired businesses quickly and efficiently, and driving organic growth from the cross-selling opportunities presented by a rapidly growing customer base. During the period, SpiriTel completed the integration of WN1 (a B2B mobile reseller) and acquired and integrated ED Communications (a network services provider). Performance of both acquisitions has, to date, exceeded management expectations. The results for the first half will reflect only a partial contribution from ED Communications, which was acquired in August 2008.

The Company recently announced a £1 million, three year managed service agreement with Young and Co.'s, Brewery Plc. Work on the contract will commence this month and represents further progress toward the key strategic objective of increasing future earnings visibility. 

Commenting on the update, Alastair Mills, CEO of SpiriTel, said: "Our significantly improved financial performance demonstrates successful delivery of our strategy of acquisition, integration and growth. All acquired businesses have been rapidly integrated into our existing operations in Wigan and London and are now fully rebranded within SpiriTel Business. We are continuing to focus on cross-selling our integrated product portfolio into the substantially enlarged customer base."

He added: "Our increasing level of contracted revenues and the continued growth in our order pipeline, despite a tough economic climate, underpin our expectation to meet full year market forecasts and continue the delivery of value to shareholders."

**Underlying EBITDA is defined as Operating Profit after adding back charges for depreciation, amortisation, share based payments and exceptional costs.

For further information please visit www.spiritelplc.com or contact:

Notes to Editors 

SpiriTel is a fully integrated business communications group which enables its customers to take advantage of the opportunities created by rapidly changing telecoms markets as the migration to Internet Protocol (IP) based services accelerates. The Group is a consolidator of the highly fragmented UK telecoms reseller market and is building a substantial customer base and scale through selective acquisitions. We are organised into two divisions: SpiriTel Technologies, which focuses on IP networking and wholesale voice services; and SpiriTel Business, which provides a full range of voice and data services directly to our Business customers. 

SpiriTel offers fixed and mobile voice and data communications solutions including Voice over IP (VoIP), data networking, telephone systems and ISP services to a rapidly expanding customer base. We are a leader in the provision of new, but proven, VoIP solutions that are firmly based on the old-fashioned service values which run throughout the Group.