STP.L Regulatory News (STP)

28 Jun 2007 07:03

Spiritel PLC28 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, todayprovides 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 asa means of leveraging the core capabilities of the business and accessing thesignificantly higher margins available to businesses owning end customers. Thisis in line with our strategy to diversify away from the competitive UK wholesalevoice markets. Initially we are achieving this strategy via acquisition - threecompanies were acquired during the period. The financial results for the period provide a clear endorsement of the strategywith 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 ofthe year but expects to report adjusted EBITDA close to breakeven during thesecond half, in line with expectations. Spiritel's two divisions recordedcombined revenues of £13.6 million (2006: £15.6 million). The results include initial contributions from the three businesses acquiredduring the period to form Spiritel Retail - six months from CallPlan, fivemonths from Networks Direct (now Ashland Networks) and two months from Ashland.The original business, now trading as Spiritel Wholesale, experienced continuingtough market conditions and, in response, the Company initiated a programme toeliminate unprofitable revenues, which had the effect of increasing grossmargins as the product mix changed. Margin improvements mean the Company'sexpected EBITDA results for the full year will have been achieved in spite ofaggregate revenues coming in below market expectations. Limited penetration from two new ventures, MyPhone (an unlimited calls servicefor UK based Indians calling India) and 118 918 (the Company's directory enquiryservice supporting Oxfam) reduced revenues from initial expectations. TheCompany is considering a one-off write down of the VoIP (Voice over InternetProtocol) platform associated with MyPhone. For the current year to 30 April 2008, we are confident that the good progressbeing made in the Retail division will continue and that the Wholesale revenuesand earnings will stabilise. The Company is now operating profitably andgenerating 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 andservices available to these customers. The Company expects to deliver onincreased cross-selling opportunities as acquired businesses are fullyintegrated. Management has also been addressing the strengthening of the balance sheet as itseeks to restore value to shareholders. An Extraordinary General Meeting washeld yesterday, 27 June, at which shareholder approval for the modification ofthe terms attached to the Company's redeemable preference shares, loan notes andloans was sought. The Company is pleased to report that at the EGM, all theresolutions were duly passed. Commenting, Alastair Mills, Chief Executive of Spiritel said: "The successfulimplementation of our new strategy is beginning to be reflected in financialperformance. The three stages of our strategy of building a high qualitytelecoms business focused on providing a wide range of communications servicesto business customers are: acquire, integrate and grow. We have now completedthe integration stage for the first acquisitions and I am pleased to report thatour first cross-sales have been achieved as we continue to focus on selling moreproducts 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 CommunicationsAlastair Mills Simon HudsonChief Executive Clemmie CarrTel: +44 20 7160 0100 Tel: +44 20 7920 3150 Teather & GreenwoodSindre OttesenTel: +44 207 426 9000 Note to Editors Spiritel is a telecommunications group that offers a range of traditional andnext generation telecommunications' services and products to business customers.The Group listed on AIM in July 2004 (AIM: STP). Spiritel's customers who rangefrom large blue chip corporates to SMEs are served through the Group's twodivisions - Spiritel Wholesale and Spiritel Retail. Spiritel Retail was established in 2006 to offer a growing range ofcommunications products and services to a broad spread of UK business customers.Through the recent acquisitions of CallPlan Ltd, Networks Direct UK Ltd and TheAshland Group the division has gained relationships with almost 1,000 SMEcustomers and blue chips including Regent Inns, Marriott and Whitbread. Spiritel Wholesale provides a range of voice and data products to UK andinternational operators and is responsible for the development and hosting ofthe Group's growing VoIP infrastructure. The services offered to operatorsinclude UK and international call termination and the latest generation ofIP-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, whichbring complementary products and skill sets to the Group's offering andorganically via the cross selling of Group products by fellow subsidiaries andjoint ventures. This information is provided by RNS The company news service from the London Stock Exchange