Business communications service provider SpiriTel has issued a 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.”