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(HUG) 2009-09-30 07:07 Spectrum Interactive PLC - Final Results
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Final Results 30 September 2009 `Spectrum Interactive plc` `("Spectrum", the "Company" or the "Group")` Preliminary audited results for the year ended 30 June 2009 Spectrum Interactive plc (LSE:SIN), the leading provider of public internet access and payphone services, is pleased to announce its preliminary results for the year ended 30 June 2009. Highlights * Completion, post year-end, of reorganisation of the business into two key divisions, Travel and Hospitality, to focus on delivering a more comprehensive range of communications, IT and entertainment solutions to customers * Growth in WiFi revenue to £4.2m, up 19% from prior year * Interactive business (WiFi and internet desks) now comprises 56% of Group turnover, up from 45% in 2008 and 25% in 2007 * Total turnover from continuing operations down 7% to £14.0m (2008: £15.1m), principally due to 21% decline in payphone turnover * EBITDA down 7% to £2.95m (2008: £3.16m), a solid result in a challenging market environment * Profit before tax of £0.8m (2008: £1.0m), ahead of market expectations * Strong cash generation reduced net debt from £5.2m to £3.8m * Continued removal of approximately 1,000 underperforming UK payphones; total UK payphone units now approximately 4,000 Simon Alberga, Chairman of Spectrum Interactive commented: "This has been a challenging year, with our two key markets, airports and hotels, both seeing reductions in their customer numbers. In addition, our payphone business has continued to decline. Against this backdrop we believe that the results for the year demonstrate a solid achievement." +-------------------------------------------------------------------+ `\| Spectrum Interactive plc \| Arbuthnot Securities \|` `\| Tel: 01442 205520 \| Limited \|` `\| Mark Lewarne \| Tel: 020 7012 2139 \|` `\| Chief Executive Officer \| Alasdair Younie \|` `\| Philip Congdon \| \|` `\| Chief Financial Officer \| \|` `\| \| \|` +-------------------------------------------------------------------+ `CHAIRMAN'S STATEMENT` INTRODUCTION I am pleased to report our final results for the year ended 30 June 2009. This has been a challenging year, with our two key markets, airports and hotels, both seeing reductions in their customer numbers. In addition, our payphone business has continued to decline. Against this backdrop we believe that the results for the year demonstrate a solid achievement. We have recently completed a reorganisation of the business into two principal commercial divisions, Travel and Hospitality. This will enable us to deliver a more comprehensive range of communications, IT and entertainment solutions to our customers, and I look forward to reporting further progress on this development in due course. During the year we took a difficult decision with regards to our German subsidiary. This business, almost all payphone-related, had declined to the point where it was in our opinion no longer viable and was going to need substantial support from the rest of the Group, and we therefore felt we had no choice but to put the subsidiary into administrative receivership in July 2008. Financial Review Group turnover from continuing operations fell 7% during the period from £15.1m to £14.0m driven by the 21% decline in payphone turnover from £7.7m to £6.1m. Interactive services (WiFi and internet desks) now comprise 56% of Group turnover, up from 45% in 2008 and 25% in 2007. We maintained a keen focus on costs during the year and managed to improve our gross margin from 40% to 42%. Within this there was a sharp decline in the margin on internet desks, which we are addressing urgently. Administrative expenses fell from £5.6m to £5.0m, although excluding the discontinued German operation administrative expenses were roughly flat. Profit before tax was £0.8m (2008: £1.0m). As in previous years the business was cash generative, and although EBITDA (earnings before, interest, taxes, depreciation and amortisation) declined from £3.16m to £2.95m due to challenging market conditions, we reduced net debt from £5.2m to £3.8m. Outlook During the next 12 months, our priorities will be: aggressive development of our Travel and Hospitality businesses by extending the range of solutions and services we offer to our customers; continued acquisition of new customer sites; continued rationalisation of the payphone business; and the selective pursuit of acquisitions which deliver complementary solutions and partner locations. The directors are not recommending the payment of a dividend for the year (2008:nil). I would like to extend my thanks and congratulations to the management and employees for their hard work and dedication during a difficult year. SIMON ALBERGA Chairman CONSOLIDATED INCOME STATEMENT YEAR TO 30 JUNE 2009 2009 2008 `Note £ £` Revenue continuing operations 2 13,983,879 15,099,719 discontinued operations 209,645 2,337,267 `14,193,524 17,436,986` `Cost of sales (8,200,847) (10,519,367)` `Gross profit 5,992,677 6,917,619` `Administrative expenses (4,968,285) (5,594,086)` `OPERATING PROFIT 1,024,392 1,323,533` `Investment revenues 185 6,202` `Finance costs (234,287) (355,498)` `PROFIT BEFORE TAX 790,290 974,237` `Tax (89,560) (551,320)` PROFIT FOR THE YEAR `continuing operations 668,148 470,746` `discontinued operations 32,582 (47,829)` `700,730 422,917` `Earnings per share - basic 3 2.08 1.26p` `Earnings per share - diluted 3 2.04 1.24p` `EBITDA 4 2,954,398 3,160,661` CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE YEAR TO 30 JUNE 2009 2009 2008 `£ £` `Exchange difference on translation of foreign (22,595) (362,670)` operations `Net expense recognised directly in equity (22,595) (362,670)` `Profit for the financial year 700,730 422,917` `Total recognised income and expense for the 678,135 60,247` year CONSOLIDATED BALANCE SHEET 30 JUNE 2009 `Group` 2009 2008 `£ £` NON CURRENT ASSETS `Goodwill 4,198,055 4,198,055` `Other intangible assets 1,260,026 1,497,463` `Property, plant and equipment 4,378,232 5,421,621` `Deferred tax asset 1,559,871 1,649,431` `11,396,184 12,766,570` CURRENT ASSETS `Inventories 88,755 138,293` `Trade and other receivables 1,384,377 1,841,196` `Cash and cash equivalents 527,880 963,667` `2,001,012 2,943,156` `TOTAL ASSETS 13,397,196 15,709,726` CURRENT LIABILITIES `Trade and other payables (1,957,452) (2,903,717)` `Current tax liabilities - (154,840)` `Obligations under finance leases (501,889) (302,554)` `Overdrafts (591,548) (864,558)` `Borrowings (1,532,078) (1,803,284)` `Provisions (222,195) (360,980)` `Deferred revenue (130,180) (100,363)` `(4,935,342) (6,490,296)` `NET CURRENT LIABILITIES (2,934,330) (3,547,140)` NON-CURRENT LIABILITIES `Borrowings (1,263,417) (2,272,921)` `Obligations under finance leases (451,064) (891,488)` `(1,714,481) (3,164,409)` `TOTAL LIABILITIES (6,649,823) (9,654,705)` `NET ASSETS 6,747,373 6,055,021` EQUITY `Called up share capital 339,035 339,035` `Share premium account 5,459,283 5,459,283` `Own shares (2,553) (2,553)` `Share-based payment reserve 132,922 118,705` `Retained earnings 818,686 140,551` `TOTAL EQUITY 6,747,373 6,055,021` CONSOLIDATED CASH FLOW STATEMENT YEAR TO 30 JUNE 2009 `Notes Group` 2009 2008 `£ £` Net cash from operating activities continuing operations 2,379,582 2,723,040 discontinued operations 30,241 221,288 `2,409,823 2,944,328` Investing activities `Interest received 185 6,202` `Purchase of plant, property and equipment (783,625) (2,095,519)` `Purchase of intangible assets (20,000) (1,194,464)` `Cash outflow on discontinuation of German (201,847) -` business Net cash used in investing activities continuing operations (803,440) (3,174,332) discontinued operations (201,847) (109,449) `(1,005,287) (3,283,781)` Financing activities `Repayment of borrowings (1,417,278) (1,386,953)` `Repayment of obligations under finance (541,847) (455,411)` leases `New loans raised 113,893 350,000` `Proceeds from sale and leaseback 300,514 550,064` `Net cash used in financing activities (1,544,718) (942,300)` `Net decrease in cash and cash equivalents (140,182) (1,281,753)` `Cash and cash equivalents at the beginning 99,109 1,336,847` of the year `Effect of foreign exchange rate changes (22,595) 44,015` Cash and cash equivalents at the end of the `year (63,668) 99,109` (including bank overdraft) KEY PERFORMANCE INDICATORS `All figures exclude discontinued 2008 2009 Increase` `operations (decrease) %` Payphones `Units installed at year end 5,095 4,063 (20)%` Average units earning revenue during `the year 5,452 4,605 (16)%` `Total revenue £ 7,717,621 6,105,889 (21)%` `Average revenue per unit per month £ 118 110 (7)%` WiFi `Units installed at year end 974 1,046 7%` Average units earning revenue during `the year 845 991 17%` `Total revenue £ 3,551,316 4,231,168 19%` `Average revenue per unit per month £ 350 355 1%` Internet desks `Units installed at year end 1,744 1,697 (3)%` Average units earning revenue during `the year 1,702 1,765 4%` `Total revenue £ 3,830,782 3,646,822 (5)%` `Average revenue per unit per month £ 188 172 (9)%` 1. Basis of preparation The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's annual general meeting. The `auditors have reported on those accounts; their reports were` unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under S.498 (2) or (3) Companies Act 2006. `While the financial information included in this preliminary` announcement has been prepared in accordance with the recognition and measurement criteria of IFRSs, this announcement itself does not contain sufficient information to comply with IFRS's. The Company expects to publish full financial statements that comply with IFRSs in early November 2009 GOING CONCERN The Directors have reviewed the Group's cash flow and covenant forecasts for twelve months from the date of signing this statement, and have considered the impact that the current economic uncertainty may have on the trading activity of the Group. New bank facilities were signed during the year, amending the terms of one of the loans to spread certain repayments more evenly. At the same time, the existing overdraft facility was also renewed for a further twelve months. This overdraft facility of £750,000 is due for renewal in March 2010. The board is assuming it will continue to be available after that date, and the bank have indicated that they see no reason why it would not be renewed. In the course of the current year the Group will be bidding for new business and seeking to retain existing customers as and when their contracts come up for renewal. On this basis, the board considers the going concern basis of preparation for the financial statements to be appropriate. 2. Segmental information The Board has considered the primary segments to date to be the three main business areas, payphones, internet desks and WiFi. This is the information that the board itself concentrates on, particularly given the very different dynamics of the three areas. The secondary segment split is geographical, i.e. the split between the UK business and Germany. As the German business is now discontinued this split will not be relevant in future periods and the primary segmental split will be market sectors with product lines as the secondary split. Year to 30 June 2009 `Payphones Desks WiFi Discontinued Other Total` `Operation` `£ £ £ £ £ £` `Revenue 6,105,889 3,646,822 4,231,168 209,645 - 14,193,524` `Gross profit 3,104,036 941,987 1,873,647 73,007 - 5,992,677` `Depreciation (478,104) (711,703) (419,151) - (65,046) (1,674,004)` `Amortisation - (65,089) (192,348) - - (257,437)` `Segment 2,625,932 165,195 1,262,148 73,007 (65,046) 4,061,236` result Unallocated `corporate (3,036,844)` expenses `Operating 1,024,392` profit Interest receivable `and similar 185` income Interest payable and `similar (234,287)` charges `Profit 790,290` before tax `Tax (89,560)` `Profit after 700,730` tax Other information `Capital 24,983 263,211 360,565 - 154,866 803,625` additions Balance sheet Assets `Segment 4,627,806 3,955,172 2,786,790 - - 11,369,768` assets Unallocated `corporate 2,027,428 2,027,428` assets `Consolidated 13,397,196` total assets Liabilities `Segment (2,743,916) (633,390) (512,583) - - (3,889,889)` liabilities Unallocated `corporate (2,759,934) (2,759,934)` liabilities Consolidated `total (6,649,823)` liabilities `2. SEGMENTAL INFORMATION (continued)` Year to 30 June 2008 `Payphones Desks WiFi Discontinued Other Total` `Operation` `£ £ £ £ £ £` `Revenue 7,717,621 3,830,782 3,551,316 2,337,267 - 17,436,986` `Gross profit 3,553,826 1,429,125 1,238,536 696,132 - 6,917,619` `Depreciation (636,599) (661,533) (237,900) - (60,450) (1,596,482)` `Amortisation - (84,228) (156,418) - - (240,646)` `Segment 2,917,227 683,364 844,218 696,132 (60,450) 5,080,491` result Unallocated `corporate (3,756,958)` expenses `Operating 1,323,533` profit Interest `receivable 6,202` and similar income Interest `payable and (355,498)` similar charges `Profit 974,237` before tax `Tax (551,320)` `Profit after 422,917` tax Other information `Capital 15,177 695,310 1,166,111 109,449 122,705 2,108,752` additions Balance sheet Assets `Segment 5,399,093 4,982,083 2,613,384 529,120 - 13,523,680` assets Unallocated `corporate - - - - 2,186,046 2,186,046` assets `Consolidated 15,709,726` total assets Liabilities `Segment (4,052,664) (1,137,564) (441,000) (614,698) - (6,245,926)` liabilities Unallocated `corporate - - - - (3,408,779) (3,408,779)` liabilities Consolidated `total (9,654,705)` liabilities 3. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: 2009 2008 `Earnings £ £` `Earnings for the purpose of basic and diluted 700,730 422,917` earnings per share 2009 2008 Number of shares Weighted average number of ordinary shares for `the purpose of basic earnings per share 33,648,166 33,648,166` `Effect of dilutive potential ordinary shares: 725,039 468,337` share options Weighted average number of ordinary shares for `the purpose of diluted earnings per share 34,373,205 34,116,503` 2009 2008 `Earnings per share p p` `Basic 2.08 1.26` `Diluted 2.04 1.24` 4. EBITDA (earnings before interest, taxes, depreciation and amortisation) 2009 2008 `£ £` `Profit on ordinary activities after tax 700,730 422,917` `Net interest 234,102 349,296` `Tax 89,560 551,320` `Depreciation 1,673,109 1,596,482` `Amortisation 257,437 240,646` `EBITDA 2,954,938 3,160,661` ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
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