(STP.L) Spiritel PLC Buy/Sell

LONDON, Nov 9 (Reuters) - Spiritel Plc:

RNS Number : 1814C Spiritel PLC 09 November 2009

9 November 2009

SPIRITEL PLC

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

ACQUISITION OF ADK COMMUNICATIONS LIMITED

Eighth acquisition in three years

SpiriTel plc (AIM: STP), the business communications service provider, is pleased to announce the acquisition of ADK Communications Limited ("ADK"), for an initial consideration of up to £1.0 million, as the Group continues its successful acquisition strategy as a consolidator of the highly fragmented telecoms reseller sector.

ADK, based in Hertfordshire, is a provider of voice and data services to almost 300 SME customers. The acquisition increases SpiriTel's customer base to approximately 2,800 businesses. ADK recorded a profit before tax of £0.46m for the year to 31 March 2009 on revenue of £1.6m and had net assets of £0.1m at that date. As an independent telecoms reseller, ADK has an above average customer spend of approximately £500 per month. ADK focuses exclusively on voice and data and the Directors of SpiriTel believe there is a significant opportunity to promote the Group's integrated service offering into the ADK customer base.

Under the terms of the acquisition, SpiriTel has agreed to pay £1.0m in cash on completion. A performance related earn-out payment of up to £0.5m may also be payable in cash in January 2011. Based on the current performance of ADK, the Directors estimate that the additional consideration payable would be approximately £0.2 million.

ADK is SpiriTel's eighth acquisition in three years and follows last week's announcement of a substantial fundraising and the acquisition of Edge Solutions. The transaction is expected to be immediately earnings enhancing and, as with SpiriTel's previous acquisitions, will be swiftly integrated into SpiriTel's Business Division, providing additional operational synergies.

Commenting on the acquisition, Alastair Mills, Chief Executive of SpiriTel said: "The acquisition of ADK is another exciting step in our acquisition-led growth strategy. The customer base is a strong fit for SpiriTel and further leverages the operational scale of our Business Division. SpiriTel has an excellent track record in effective acquisition integration and we are confident that ADK will prove a highly profitable addition to our Business Division."

Alasdair Buckling, Director of ADK said: "We have worked hard to establish a high quality customer base and believe that in SpiriTel we have found a partner who can provide our customers with the full range of IP based communications in our rapidly evolving sector. I am delighted to link up with an award winning company such as SpiriTel and I am confident that our customers are in good hands".

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

SpiriTel plc Tavistock Communications FinnCap
Alastair Mills Simon Hudson Geoff Nash
Chief Executive Duncan McCormick Marc Young
Tel: 020 7160 0100 Tel: 020 7920 3150 Tel: 020 7600 1658

Notes to Editors

SpiriTel is a business communications group which is taking advantage of the opportunities created by rapidly changing telecoms markets in the UK 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 earnings-enhancing acquisitions. We are organised into two divisions, SpiriTel Technologies - focused on our infrastructure and IP products and services - and SpiriTel Business, which provides our fully integrated range of voice and data services direct to business customers.

Today, the Group offers a broad range of voice and data communications products and services to a customer base of small and medium sized enterprises and an increasing number of larger national and international organisations. We are a recognised leader in the provision of new, but proven, Voice over IP (VoIP) solutions that are firmly based on the old-fashioned service values, which run throughout the Group.

This information is provided by RNS The company news service from the London Stock Exchange

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LONDON, Nov 3 (Reuters) - Spiritel Plc:

RNS Number : 8147B Spiritel PLC 03 November 2009

3 November 2009

SPIRITEL PLC

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

£10 MILLION FUNDRAISING

Led by Penta Capital with participation by Synergy Capital and Toscafund

ACQUISITION OF EDGE SOLUTIONS LTD

A specialist provider of voice and data services

SpiriTel plc, (AIM:STP), the business communications service provider, is pleased to announce the issue of up to £10 million loan notes and the acquisition of Edge Solutions Ltd ("Edge"), for an initial consideration of £3.6 million. 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.

The fundraise, led by SpiriTel's largest shareholder Penta Capital, includes participation by Synergy Capital and Toscafund. The loan note issue is expected to raise a total of £10 million, of which £9.2 million has already been subscribed. 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.

Edge is based in London and is a leading provider of voice and data services to almost 200 corporate customers, which include Guoman Thistle, Boden and several blue chip financial institutions. The acquisition increases SpiriTel's customer base to approximately 2,500 businesses. Edge's client base delivers a market leading average customer spend of over £2,000 per month, with an annual churn rate of less than 2 per cent. It is anticipated that the high quality customer base will present significant cross selling opportunities for SpiriTel.

Edge is SpiriTel's seventh acquisition in three years. The transaction is expected to be immediately earnings enhancing and as with SpiriTel's previous acquisitions, will be swiftly integrated into SpiriTel's Business Division, providing operational cost synergies. The majority of SpiriTel's revenues are now recurring in nature under long term contracts, providing a increased level of earnings visibility to the Group.

Under the terms of the acquisition, SpiriTel has agreed to pay £3.6 million in cash on completion. Performance related earn-out payments of up to £5.7 million may also payable in cash by January 2011. Based on the current performance of Edge, the Directors estimate that the additional consideration payable would be approximately £1.2 million. In the financial year ending April 2009, Edge reported revenues of £5.5 million, EBITDA of £0.7 million and profit before tax of £0.6 million. Edge is currently trading at a level of profitability significantly ahead of this and as at 30 April 2009, had net assets of £0.4 million.

Ronnie Smith, Chief Financial Officer of SpiriTel, said of the fundraising, "We are delighted to have raised substantial funds from some high quality, experienced investors who understand our sector and the SpiriTel consolidation model. Their commitment is an endorsement of both our strategy and the strength of our management team. We welcome our new investors and look forward to further expanding the Group for the benefit of our stakeholders."

Commenting on the acquisition, Alastair Mills, Chief Executive of SpiriTel said: "The acquisition of Edge represents a significant step in our 'Acquire, Integrate and Grow' strategy. We have a track record in successful acquisition and integration and the delivery of organic growth from cross selling our converged product portfolio. We are delighted to be adding Edge to the Group and as our largest acquisition to date with a first class customer list, the deal will have a significant impact on future earnings."

He added: "I am also delighted that Steve Burgess is joining the SpiriTel team to head up our Networks line of business, the largest within the Group".

Steve Burgess, Managing Director of Edge Solutions said: "This is a very exciting development for Edge staff and customers. SpiriTel is recognised as a leading provider of integrated communications services for business customers and we are looking forward to building on Edge's recent success alongside such a well established and respected B2B service provider. We are confident of contributing to the ongoing success of SpiriTel".

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

SpiriTel plc Tavistock Communications FinnCap
Alastair Mills Simon Hudson Geoff Nash
Chief Executive Duncan McCormick Marc Young
Tel: 020 7160 0100 Tel: 020 7920 3150 Tel: 020 7600 1658

Notes to Editors

SpiriTel is a business communications group which is taking advantage of the opportunities created by rapidly changing telecoms markets in the UK 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 earnings-enhancing acquisitions. We are organised into two divisions, SpiriTel Technologies - focused on our infrastructure and IP products and services - and SpiriTel Business, which provides our fully integrated range of voice and data services direct to business customers.

Today, the Group offers a broad range of voice and data communications products and services to a customer base of small and medium sized enterprises and an increasing number of larger national and international organisations. We are a recognised leader in the provision of new, but proven, Voice over IP (VoIP) solutions that are firmly based on the old-fashioned service values, which run throughout the Group.

This information is provided by RNS The company news service from the London Stock Exchange

MSCEAPFAELXNFFE

RNS Number : 6782B Spiritel PLC 30 October 2009

SpiriTel Plc ("SpiriTel" or "the Company")

Result of General Meeting and AGM

Conversion of Loan Facilities and Preference Shares held by Penta Capital, a waiver of the obligations under Rule 9 of the City Code, and a Capital Reorganisation

SpiriTel Plc (AIM: STP) is pleased to announce that at the General Meeting and AGM held earlier today all the resolutions were duly passed.

Accordingly shareholders have granted approval for, inter alia, the 1 for 100 consolidation in the Company's ordinary shares of 1p each. Every 100 existing ordinary shares of 1 p each shall be consolidated into one new ordinary share of £1 each which shall then be sub-divided into one new ordinary share of 1 p each ("New Ordinary Share") and 99 deferred shares of 1 p each. The deferred shares have no voting rights or rights to receive a dividend and will not be admitted to trading on AIM.

Application has been made for 6,276,396 New Ordinary Shares of 1p each to be admitted to trading on AIM. The share register for existing ordinary shares of 1p each will close at 5.00pm on 30 October 2009. Accordingly, following approval of the share consolidation, it is expected that the New Ordinary Shares will commence trading on AIM at 8.00am on 2 November 2009.

Shareholders have also approved a waiver of the obligations under Rule 9 of the City Code in respect of Penta Capital and accordingly approved the conversion of loan facilities and preference shares held by Penta Capital (as detailed in the circular to shareholders dated 7 October 2009). Consequently 11,418,014 New Ordinary Shares ("the Conversion Shares") have been issued to Penta Capital and application has been made for the Conversion Shares to be admitted to trading on AIM. It is expected that the 11,418,014 Conversion Shares will commence trading on AIM at 8.00am on 2 November 2009.

The ISIN number for the SpiriTel New Ordinary Shares of 1p each will be GB00B4TF5D13. Following the consolidation, conversion and admission, there will be 17,694,410 New Ordinary Shares of 1p each in the Company in issue. The total enlarged issued share capital of the Company will be 17,694,410. Share certificates in respect of the New Ordinary Shares are expected to be dispatched by 13 November 2009.

The Company holds no Ordinary Shares in treasury. Therefore, following the consolidation and conversion, the total number of voting rights in the Company is 17,694,410. The above figure may be used by shareholders in determining whether they are required to notify their interest in, or a change to their interest in, the Company under the Disclosure and Transparency Rules.

CEO, Alastair Mills commented: "The capital reorganization and the conversion of Penta's debt are significant steps in the development of the Company. We now have the foundations for ongoing, sustained growth of the Group. Penta's conversion of debt is an important endorsement of our model and we thank them for their continuing support. We look forward to further progress in the year ahead."

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

SpiriTel Plc FinnCap
Alastair Mills Geoff Nash/Marc Young

Chief Executive
Tel: 020 7160 0100 Tel. 020 7600 1658

This information is provided by RNS The company news service from the London Stock Exchange

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RNS Number : 3921A Spiritel PLC 07 October 2009

SpiriTel Plc ("SpiriTel" or "the Company")

Posting of Circular, Notice of General Meeting and Notice of AGM

Conversion of Loan Facilities and Preference Shares held by Penta Capital, a waiver of the obligations under Rule 9 of the City Code, and a proposed Capital Reorganisation

Further to the preliminary announcement of results on 1 October 2009, SpiriTel Plc (AIM: STP) announces that it has today posted a circular to approve, inter alia: the conversion of Loan Facilities and Preference Shares held by Penta Capital; a waiver of the obligations under Rule 9 of the City Code, and a proposed Capital Reorganisation. The Company has also today posted notice of its AGM to be held at 10.30 a.m. on 30 October 2009.

1. Background

Since 2006, SpiriTel has grown rapidly through acquisition and further acquisitive growth remains key to the medium term growth strategy. More recently, access to growth capital both via equity and debt markets has been significantly reduced for all companies and accordingly the Directors believe that the opportunity to execute the medium term growth strategy has been diminished. The Directors believe that, if the Penta Funds undertake the Second Conversion then SpiriTel will benefit in number of ways. The Company will have a much stronger balance sheet, unencumbered by the Penta Indebtedness and the conversion will significantly increase the market capitalisation of the Company at the Conversion Price. In addition, the Company will not face the £550,000 annual interest cost which, under the current Loan Facilities and Preference Shares, is due to accrue from May 2010. With a stronger balance sheet SpiriTel will be much better able to continue its acquisitive strategy, focusing on earnings enhancing transactions.

The Concert Party comprises inter alia: the Penta Funds; Penta Capital; Steven Scott, David Calder, Torquil Macnaughton, Mark Phillips, Paul Cassidy and Charles Schrager (being members of Penta Capital) and, with the exception of Charles Schrager, directors of Penta Capital Partners (Holdings) Limited, the corporate member of Penta Capital and all other funds managed or controlled by Penta Capital. Steven Scott, one of the Directors, is also a member of Penta Capital and a director of each of the general partners of the Penta Funds. In light of his relationship with the Penta Funds, Steven Scott is not deemed independent for the purpose of recommending Shareholders to vote in favour of the Whitewash Resolution.

Accordingly SpiriTel proposes the following for approval at the General Meeting, that:

RNS Number : 0142A
  Spiritel PLC
  01 October 2009
   

1 October 2009

SPIRITEL PLC

("SpiriTel" or "The Group")

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2009

SpiriTel plc (AIM: STP), the business communications group, is pleased to announce preliminary results for the year ended 30 April 2009. 

Commenting on the results, Chairman, Lord St. John of Bletso said: "I am pleased to report on a further year of growth and development for SpiriTel plc. The Company has made significant progress despite an increasingly tough operating environment which has seen several competitors fall by the wayside. As a fully integrated business communications provider delivering fixed, mobile, data and networking services to a substantial customer base the Group is very well placed to progress its chosen strategy of 'acquire, integrate, grow' to deliver increased shareholder value."

Highlights: 

- Underlying EBITDA* 61% ahead of prior year at £1.5 million (2008: £0.9 million)

- Revenue up 18% to £19.7 million (2008: £16.7 million)

- Gross profit up 19% to £7.6 million (2008: £6.4 million)

- Pre tax loss £1.7 million (2008: £4.0 million), after non-cash finance costs** of £0.8 million (2008: £3.1 million)

- Post year end new 5 year debt and overdraft facility of £4.5m agreed with Clydesdale Bank

- Earnings enhancing acquisition of ED Communications completed 

- Cross selling contracts signed worth £7 million over their term

- Customer base increased to 2,337 at year end (2008: 1,525)  

- Post year end balance sheet restructure - conversion terms agreed over up to £6.85 million of Penta debt and waiver of up to £550,000 of annual interest costs 

* Operating profit after adding back charges for depreciation, amortisation, share-based payments and exceptional costs 

** Non-cash finance costs comprise loss arising on modification and conversion of preference shares and change in fair value of embedded derivatives.

Chief Executive, Alastair Mills added: "We operate in a dynamic sector and the Board believes that we now stand at a particularly exciting point in the Company's development.  We have demonstrated our ability to enhance earnings through acquisitions, followed up by significant cross-selling successes from our range of converged products and services into both new and existing customer bases.  The foundations are in place to deliver ongoing value to shareholders and I look forward to the coming year with confidence." 

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

 SpiriTel plc        Tavistock Communications  finnCap
 Alastair Mills      Simon Hudson              Geoff Nash
 Chief Executive     Duncan McCormick          Marc Young
 Tel: 020 7160 0100  Tel: 020 7920 3150        Tel: 020 7600 1658

      CHAIRMAN'S STATEMENT

Lord St John of Bletso, Chairman

I am pleased to report on a further year of growth and development at SpiriTel. The Company has made significant progress despite an increasingly tough operating environment which has seen several competitors fall by the wayside. 

SpiriTel made its sixth acquisition during the year to 30 April 2009, acquiring and fully integrating ED Communications ("EDC") into the SpiriTel Business Division. The Group is now a well established, fully integrated business communications provider. During the year the Company has proven the value of its integrated offering to the enlarged customer base by successfully cross-selling its expanded range of products and services. These results include full year contributions from all six acquisitions with the exception of EDC, which is included for the eight months since acquisition. 

Results

As a result of both acquisitive and organic growth - including initial sales from over £7 million of cross-selling contract wins signed during the year - revenues are up markedly, by 18% to £19.7 million (2008: £16.7 million). Most significantly, underlying EBITDA (defined as operating profit after adding back charges for depreciation, amortisation, share-based payments and exceptional costs) increased by 61% to £1.5 million (2008: £0.9 million). The results, and in particular the impressive growth in earnings, demonstrate ongoing success in the execution of the Company's "Acquire, Integrate, Grow" strategy. The economies of selectively bolting on acquired assets are now evident.

The previously reported decline in profitability from the Technologies Division continues to adversely impact Group profits. However, this decline, combined with rapid growth in the Business Division, has reduced our exposure to riskier and more volatile wholesale markets. 52% of overall Group revenues in 2009 result from the Business Division's higher quality, contracted B2B revenues, compared to 40% in 2008. This trend has continued since the year end.

Dividend 

SpiriTel is still pursuing its acquisition, integration and growth strategy and is continuing to invest funds into the business. The Directors are therefore not recommending the payment of a dividend for the year to 30 April 2009.

Proposed debt conversion 

Since the year end, we have agreed a further planned restructuring of the indebtedness to Penta Capital Partners ("Penta") in our balance sheet, the terms of which will be communicated to shareholders in a circular that also convenes a shareholder meeting to approve the transaction. The proposals include Penta converting up to £6.9 million of debt into equity at a price of 0.6p per ordinary share. The Directors consider that the proposals will significantly strengthen the balance sheet and better position the Company to raise capital for acquisitions. This is an important step for the Group and we value Penta's support through their proposed debt for equity conversion.

Outlook

Whilst the Business Division has continued to perform in line with expectations, trading remains challenging for the Technologies Division and we do not foresee a significant turnaround in its core wholesale markets. However, the Technologies Division continues to add significant value through managing our IP-based infrastructure, on which several of the Business Division's product solutions are based.

The Group now benefits from much higher levels of earnings visibility, due to the Business Division's emphasis on contracted and recurring revenues from SMEs and larger corporate customers. This, combined with a wide range of business-critical products and services, means SpiriTel is well positioned to weather the ongoing economic storm. Through a combination of further earnings enhancing acquisitions for the Business Division and organic growth, driven by the cross-selling of an integrated product portfolio, we expect to continue to increase revenue and earnings for the benefit of all shareholders.

Lord St John of Bletso

Chairman

30 September 2009

CHIEF EXECUTIVE'S REVIEW

Alastair Mills, Chief Executive

SpiriTel has matured considerably in the year under review. Our sixth acquisition further enhances our reputation as a leading consolidator of the telecoms reseller sector and together with our success in cross-sales demonstrates our ability to deliver organic and acquisitive growth. As a management team, we are constantly reviewing acquisition opportunities that can grow earnings, enhance the product set and provide more cross-selling opportunities. We operate in a dynamic sector and the Board believes that we now stand at a particularly exciting point in the Company's development. The accelerating migration to converged communications is a driving force behind increased levels of corporate activity in the sector. Convergence is also changing customer behaviour with more businesses insisting that their supplier offers the full range of fixed, mobile, voice and data services. For those companies that have capital to deploy for acquisitions and an integrated product range to sell to business customers, these are exciting times.

Financial highlights

The year to 30 April 2009 represents a full year's contribution from all of SpiriTel's acquisitions to date, apart from EDC. This is reflected in significantly improved financial results despite one of the most challenging trading environments seen for many years, particularly in the Technologies Division's wholesale markets. Performance was improved in each of the following key financial metrics:

- Revenue up 18% to £19.7 million (2008: £16.7 million).

- Gross profit up 19% to £7.6 million (2008: £6.4 million).

- Underlying EBITDA* up 61% to £1.5 million (2008: £0.9 million).

The 18% increase in Group revenue is pleasing given the difficult economic conditions, but even more so is the 53% growth in Business Division revenues largely offsetting a 5% decline in the lower margin, wholesale services from the Technologies Division. The increasing contribution from our Business Division represents a significant change in the Group's earnings profile. The majority of the Business Division's revenues are generated from long-term contracts, of up to seven years, providing a greater level of earnings visibility to the Group as a whole. 

The 61% increase in underlying EBITDA* demonstrates the success of our "Acquire, Integrate, Grow" model. 

In particular, we are able to convert significant elements of gross profit directly into EBITDA by bolting acquisitions quickly and efficiently onto our already established operations and existing cost base. By effective profiling of newly-acquired customers, we then identify and pursue cross-sale opportunities.

The loss before taxation for the year was £1.7 million (2008: £4.0 million loss), after deducting non-cash finance charges of £0.8 million (2008: £3.1 million). The non-cash finance charges relate to IFRS costs on modification and conversion of indebtedness to Penta.

Since the year end we have agreed a proposed balance sheet restructuring with Penta converting up to £6.9 million of debt into equity at a price of 0.6p per ordinary share. This follows on from a similar £2.6 million debt to equity conversion by Penta in May 2008.

The Directors believe that the proposed conversion of Penta debt will benefit SpiriTel in a number of ways. The Company will have a much stronger balance sheet, unencumbered by £6.9 million of Penta indebtedness and, at the conversion price, the proposed conversion will significantly increase the market capitalisation of the Company. In addition, the Company will not be liable for the £550,000 annual interest cost which is due to accrue from May 2010. With a stronger balance sheet SpiriTel will be better positioned to raise capital and continue its recent successful acquisitive strategy, focusing on earnings enhancing transactions. Penta's support for SpiriTel is invaluable and we thank them for their continued faith in our business model and management team. 

We also continue to benefit from the support of Clydesdale Bank. During the year under review we secured an extension to our loan facility to fund the acquisition of ED Communications and at the year end we had a total facility of £3.4million with the bank. In May 2009 the Group's facilities were increased to £4.5million, repayable over five years. 

Strategy

Despite the ongoing consolidation in our sector, the UK telecommunications market remains highly fragmented. This, alongside the accelerating demand from customers for converged, IP-based services, provides the opportunity for us to further execute the Group's "Acquire, Integrate, Grow" strategy. Our strategy is to grow shareholder value through selective, earnings enhancing acquisitions, followed by consistent organic growth being driven by cross-selling our integrated product portfolio.

SpiriTel continues to pursue selective acquisitions as we look to build a business with the operational scale and the broad product offering that business and corporate consumers increasingly demand. Having completed six acquisitions, led by the same management team, not only are we clear on the type of businesses that we are looking for in terms of quickly adding value to the Group, but we are also experienced in the critical phase of integration, which commences well in advance of completion of the deal. All acquisitions now follow the same integration framework which was developed internally to meet our corporate objectives. The process is led by a senior member of the management team and helps ensure that we maximise both cost and revenue synergy opportunities, whilst minimising disruption to the Group and the newly-acquired business.

We expect to continue to target growth through earnings enhancing acquisitions and following the proposed restructure of our balance sheet, we expect to be well positioned to raise new capital to deploy in the acquisition of new customers and products in order to enhance earnings. 

In recent months we have been particularly encouraged by our successes in cross-sales of our growing product range to existing customers. During the 12 month period to April 2009, we secured cross-sales contracts valued at more than £7 million. This is contracted and recurring revenue and delivers a new level of earnings visibility to the Group. During the year we profiled our expanded customer base and estimated that our existing customers are spending a total of over £80 million on telecoms services that SpiriTel could potentially provide from our current product portfolio. Although rapidly growing, our penetration of this spend is currently less than 15% which illustrates the upside opportunity which we intend to exploit by deploying our successful cross-selling strategy. 

Acquisitions

SpiriTel continued its recent series of acquisitions this year with the purchase of ED Communications, which added approximately 700 business customers who were rapidly integrated into our Networks line of business. This acquisition provides a typical example of how the Group is now able to bolt on a customer base efficiently and then enhance its contribution through cost synergies and cross-selling. The total consideration for this company will total £1.4 million, including earn out.

The full year contribution from mobile business WN1, acquired in April 2008, proved even more successful than we had hoped and this line of business continues to deliver strong organic growth. WN1 is highly profitable and, by adding a range of mobile voice and data services, the transaction completed our integrated product portfolio. Since the year end, converged voice and data mobile solutions have grown to over one third of our total mobile sales. Not only are we delighted with the earnings contribution from WN1, now integrated as SpiriTel Mobile, but the mobility offering is a differentiator in comparison to many competitors who are limited to a fixed line offering. 

During the year we looked closely at a number of acquisition opportunities, including several larger companies. We believe we have demonstrated our ability to grow shareholder value from the selective addition of bolt on acquisitions and we continue to actively pursue opportunities which deliver short-term earnings enhancement benefits and cross-sell opportunities. 

Operations

SpiriTel's customer base now numbers some 2,300 separate accounts for business and public sector companies and organisations. Greater customer numbers result in increased cross-selling opportunities and although we focus on larger customers more than many of our competitors, the size of the base is an obvious, yet important key performance indicator for the Business Division. The current customer base is 53% larger than at April 2008 and 227% above 2007 levels. 

Our customers are served by our two complementary Divisions: SpiriTel Business and SpiriTel Technologies - working alongside and supporting each other. The Business Division has three lines of business: IP Communications, Networks and Mobile. SpiriTel IP Communications provides an advanced range of IP networking services to business customers alongside traditional structured cabling, equipment and maintenance services. SpiriTel Networks offers fixed line services including calls, lines and broadband. SpiriTel Mobile provides mobile voice and data services, including BlackBerry and other converged voice and data services.

Whilst ensuring our team delivers an exceptional level of customer service, during the year we have focused on cost control and despite the EDC acquisition and the associated addition of 700 new customers staff numbers have only risen to 109 at the year end. (2008: 104). We continue to offer nationwide engineering coverage to our customers along with 24/7/365 support. We have also been able to reduce our cost base through the utilisation of our own technological expertise in the remote management of customer sites. Over 70% of customer faults reported to our IP Communications service team are now fixed remotely from our operations centres in London and Wigan, with no employee visit to the customer's site being required. 

A key aspect of our Business Division is its ability to act as a one stop shop for business customers by providing a fully integrated product offering. Whilst we remain cautious on heavy investment in the research and development of new technology, our strategic partnerships with leading vendors such as O2 and Mitel enable us to remain well positioned to capitalise on the rapidly changing telecoms market. 

Of particular note is the continued growth of our hosted VoIP offering, where extensions sold and supported grew by 86% over the year. Major contract wins included hosted VoIP, as part of a managed services contract, across Young & Co Brewery's estate and SpiriTel's success was recognised when we won the VoIP Solution of the Year award in October 2008 at the National Comms Business Awards. SpiriTel also won a number of other industry awards over the past year and continues to build on the excellent relationships that we have forged with industry leading partners including 02, BlackBerry and Mitel. Our newly acquired Mobile business also achieved 02 Centre of Excellence status in August 2008. 

To support integration of acquisitions and ensure we maximise the cross-sell opportunity for all acquired customer bases, we implemented a Group-wide CRM facility during the year. Following several notable cross-selling wins in early 2009, we achieved our largest cross-sale to date in May 2009, a 30 month network services deal with a global hotel group that is expected to generate up to £4 million in revenue over the contract term. The deal involved SpiriTel replacing BT, that still has an estimated 50% total market share, as supplier. The contract win provides evidence of our ability to service major corporates as well as our 2,300 SME customers and also illustrates clearly the steps we are taking to maximise the significant cross-sell opportunities we are identifying. 

      Summary and outlook

The year to 30 April 2009 was a year of significant progress for SpiriTel. We delivered strong revenue growth and an even greater uplift in underlying EBITDA*. We also continued to gain widespread recognition for the quality of our IP-based services and the innovation we have demonstrated in the delivery of converged communications services. 

Our strategy of targeted acquisitions which bring immediate earnings enhancement, and ongoing cross-sell opportunities, has seen revenue and profits rise substantially in the past year, as we start to benefit from full contributions from acquisitions. We have a highly scalable model where we can bolt on new, earnings enhancing assets whilst maintaining the delivery of consistent organic growth.

Whilst we have felt the challenges of a severe economic downturn and more specifically an ongoing, declining profitability in the wholesale markets, the contribution from our rapidly growing Business Division is very encouraging. We have demonstrated our ability to enhance earnings through acquisitions, followed up by significant cross-selling successes from our range of converged products and services into both new and existing customer bases. Although we are not immune to the impact of a recessionary economic environment, our product set is naturally defensive and our downside exposure is mitigated. We are witnessing a renewed and growing interest in cost savings that are prompting new sales opportunities. Our ability to add value to our customers through innovative and cost effective solutions, gives us confidence about our prospects through the economic downturn.

SpiriTel has an experienced and energised management team, and a highly skilled and committed staff who have together proved their ability to execute strategy. The foundations are in place to deliver ongoing value to shareholders and I look forward to the coming year with confidence.

Alastair Mills

Chief Executive

30 September 2009

* Operating profit after adding back charges for depreciation, amortisation, share-based payments and exceptional costs.
      CONSOLIDATED INCOME STATEMENT

Year ended 30 April 2009
                                                2009      2008
                                                £000      £000
 Continuing operations                    
 Revenue                                      19,718    16,674
 Cost of sales                              (12,087)  (10,259)
 Gross profit                                  7,631     6,415
 Administrative expenses                     (8,280)   (7,261)
 Underlying EBITDA                             1,514       938
 Depreciation                                  (212)     (180)
 Share-based payments                          (204)     (190)
 Exceptional costs                             (663)     (620)
 Amortisation of other intangible assets     (1,084)     (794)
 Operating loss                                (649)     (846)
 Operating loss                                (649)     (846)
 Finance income                                    -         5
 Finance costs                               (1,059)   (3,206)
 Loss before taxation                        (1,708)   (4,047)
 Tax credit                                      774       289
 Loss for the financial year                   (934)   (3,758)
 Loss per share in pence                  
 Basic and diluted                            (0.16)    (1.19)

      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                                 Share capital  Share premium   Reverse acquisition      Other   Retained     Total
                                          £000           £000              reserve    reserves      losses     £000
                                                                               £000       £000        £000
 Balance at 1 May 2007                   3,162          4,550               (5,763)         97     (6,107)  (4,061)
 Loss and total recognised loss              -              -                     -          -     (3,758)  (3,758)
 for the financial year
 Credit for equity-settled                   -              -                     -        190           -      190
 share-based payments 
 Equity component of compound                -              -                     -        333           -      333
 financial instruments 
 Transfer between reserves                   -              -                     -       (55)          55        -
 Balance at 30 April 2008                3,162          4,550               (5,763)        565     (9,810)  (7,296)
 Loss and total recognised loss              -              -                     -          -       (934)    (934)
 for the financial year
 Credit for equity-settled                   -              -                     -        204           -      204
 share-based payments 
 Issue of share capital (net of          3,114            385                     -          -           -    3,499
 expenses)
 Modification and conversion of              -              -                     -      1,545           -    1,545
 financial instruments - equity
 component 
 Transfer between reserves                   -              -                     -      (349)         349        -
 Balance at 30 April 2009                6,276          4,935               (5,763)      1,965    (10,395)  (2,982)

      CONSOLIDATED BALANCE SHEET

As at 30 April 2009

                                                            2009      2008
                                                            £000      £000
 Assets                                               
 Non-current assets                                   
 Goodwill                                                  5,695     5,292
 Other intangible assets                                   4,484     4,392
 Property, plant and equipment                               696       438
                                                          10,875    10,122
 Current assets                                       
 Inventories                                                 384       353
 Trade and other receivables                               2,493     2,151
 Cash and cash equivalents                                     -     1,058
                                                           2,877     3,562
 Total assets                                             13,752    13,684
 Current liabilities                                  
 Trade and other payables                                (4,471)   (4,595)
 Borrowings                                              (1,536)     (457)
 Obligations under finance leases                           (61)      (84)
 Current tax payable                                        (36)     (442)
                                                         (6,104)   (5,578)
 Non-current liabilities                              
 Trade and other payables                                  (116)     (432)
 Borrowings                                              (9,468)  (13,603)
 Obligations under finance leases                              -      (55)
 Deferred tax liabilities                                (1,046)   (1,312)
                                                        (10,630)  (15,402)
 Total liabilities                                      (16,734)  (20,980)
 Net liabilities                                         (2,982)   (7,296)
 Equity attributable to equity holders of the parent  
 Capital and reserves                                 
 Share capital                                             6,276     3,162
 Share premium                                             4,935     4,550
 Reverse acquisition reserve                             (5,763)   (5,763)
 Other reserves                                            1,965       565
 Retained losses                                        (10,395)   (9,810)
 Total equity                                            (2,982)   (7,296)

      CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 30 April 2009
                                                    Note     2009     2008
                                                             £000     £000
 Cash flows from operating activities 
 Loss before taxation                                     (1,708)  (4,047)
 Adjustments for: 
 Net finance costs                                          1,059    3,201
 Depreciation and amortisation                              1,296      974
 Impairment of tangible fixed assets                            -       64
 Impairment of intangible fixed assets                        113        -
 Impairment of goodwill                                       199        -
 (Increase)/decrease in inventory                            (31)       63
 Increase in receivables                                    (146)     (17)
 (Decrease)/increase in payables                          (1,168)      617
 Equity-settled share-based payments                          204      190
 Interest paid                                              (230)    (135)
 Cash (used in)/from operating activities                   (412)      910
 Income taxes paid                                          (259)        -
 Net cash (used in)/from operating activities               (671)      910
 Cash flows from investing activities 
 Acquisition of subsidiaries net of cash acquired      2    (797)    (998)
 Payment of deferred and contingent consideration           (382)  (1,227)
 Purchase of property, plant and equipment                  (470)    (229)
 Net cash used in investing activities                    (1,649)  (2,454)
 Cash flows from financing activities 
 Net proceeds from issue of share capital                     333        -
 Proceeds from borrowings (net)                               480    2,347
 Payment of finance lease liabilities                        (78)     (67)
 Net cash from financing activities                           735    2,280
 Net (decrease)/increase in cash and equivalents          (1,585)      736
 Cash and equivalents at beginning of year                  1,058      322
 Cash and equivalents at end of year                        (527)    1,058

      NOTES TO THE FINANCIAL INFORMATION 

1. Basis of preparation

The financial information in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU) under the accounting policies set out in the financial statements of Spiritel plc for the year ended 30 April 2008. These accounting policies have remained unchanged for the financial year ended 30 April 2009.

This financial information has been prepared under the historical cost convention, except for the revaluation of certain financial instruments. The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 30 April 2009 or 30 April 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 and their reports were unqualified. 

2. Business combinations

On 4 August 2008, SpiriTel plc acquired 100% of the issued share capital of ED Communications Limited, a company based in the UK. The total cost includes the components stated below. The purchase price was settled in cash. 

                                                                          £000
 Purchase price                                                            800
 Contingent consideration under earn out agreement payable in cash          90
 (discounted)
 Deferred consideration payable in cash (discounted)                       426
 Due diligence fees                                                         36
 Other professional fees                                                    54
                                                                         1,406

A maximum of £1,700,000 of consideration may become payable depending on the level of gross profit achieved by the business during July 2009. In the opinion of the Directors, the likely amount of contingent consideration payable is £100,000.

The assessment of the fair values of the assets and liabilities of ED Communications Limited for each class of the acquiree's assets and liabilities recognised at the acquisition date are as follows:

                                 Book value             Fair value     Fair value to the
                                        £000           adjustments                 Group
                                                              £000                  £000
 Intangible fixed assets                   -                 1,289                 1,289
 identified
 Property, plant and equipment            97                  (97)                     -
 Trade and other receivables             196                     -                   196
 Cash and cash equivalents                44                     -                    44
 Total assets                            337                 1,192                 1,529
 Trade payables                         (53)                     -                  (53)
 Other taxes                            (40)                     -                  (40)
 Other payables                        (175)                     -                 (175)
 Deferred tax                              -                 (361)                 (361)
 Total liabilities                     (268)                 (361)                 (629)
 Net assets acquired                      69                   831                   900
 Goodwill arising on the                                                             506
 acquisition
 Consideration                                                                     1,406
 Satisfied by: 
 Cash                                                                                890
 Deferred and contingent                                                             516
 consideration to be settled in
 cash (discounted)
                                                                                   1,406

Goodwill on the acquisition of ED Communications Limited is largely attributable to the cross-selling opportunities.

During the period from the date of acquisition to 30 April 2009, ED Communications Limited generated revenue of £1,121,000 and an operating profit of £287,000. Due to the lack of IFRS specific data for ED Communications Limited prior to its acquisition, the pro-forma revenue and profit of the Group, had this acquisition taken place on 1 May 2008, have not been disclosed as they cannot be reliably determined.

Reconciliation to the consolidated statement of cash flows:

 Cash consideration                                                       890
 Cash and cash equivalents acquired                                      (44)
 Refund of WN1 Limited consideration - completion accounts adjustments   (49)
 Net cash flow arising on acquisitions                                    797

3. Post balance sheet events

During September 2009, the Company entered into an agreement with Penta Capital LLP, the manager of the Penta Funds, for the modification of the conversion terms attaching to the Penta loans, loan notes and redeemable preference shares. The agreement is conditional upon the following:

*     the granting of a waiver by the Panel on Takeovers and Mergers of the requirement under Rule 9 of the City Code on Takeovers and Mergers, that would otherwise arise on Penta Fund 1 Limited Partnership and Penta Fund 1 SP Limited Partnership (the "Penta Funds"), to make a general offer to shareholders of the Company as a result of the allotment of new ordinary shares to the Penta Funds which would take the aggregate holding of the Penta Funds to greater than 50% of the issued ordinary share capital.

*     a review of the conversion terms by the Company's nominated adviser and confirmation that the directors consider the terms of conversion are fair and reasonable so far as the SpiriTel shareholders are concerned

*     approval of the waiver and modification of the conversion terms by the ordinary shareholders at an Extraordinary General Meeting.

Subject to shareholder approval at an Extraordinary General Meeting: 

*     all of the current rights to convert the Company's indebtedness to the Penta Funds into ordinary shares will lapse immediately

*     all of the current rights to interest on the Company's indebtedness to the Penta Funds will lapse immediately

*     the Penta Funds will immediately convert up to £6.85 million of the Company's indebtedness into ordinary shares of the Company at the price of 0.6p per ordinary share so that, following this conversion, the Penta Funds aggregate holding will represent up to 82.3% of the Company's issued ordinary share capital.

Copies of the Annual Report and Accounts will be posted to shareholders shortly. Copies are available from the Company's head office at 18 King William Street, London EC4N 7BP. It will also be possible to download the Annual Report and Accounts from the Group's website www.spiritel.com

This information is provided by RNS
The company news service from the London Stock Exchange
 
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