TIDMSIN
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 GBP4.2m, 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 GBP14.0m
(2008: GBP15.1m), principally due to 21% decline in payphone
turnover
* EBITDA down 7% to GBP2.95m (2008: GBP3.16m), a solid result in a
challenging market environment
* Profit before tax of GBP0.8m (2008: GBP1.0m), ahead of market
expectations
* Strong cash generation reduced net debt from GBP5.2m to GBP3.8m
* 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 GBP15.1m to GBP14.0m driven by the 21% decline in payphone turnover
from GBP7.7m to GBP6.1m. 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 GBP5.6m to
GBP5.0m, although excluding the discontinued German operation
administrative expenses were roughly flat.
Profit before tax was GBP0.8m (2008: GBP1.0m). As in previous years the
business was cash generative, and although EBITDA (earnings before,
interest, taxes, depreciation and amortisation) declined from GBP3.16m
to GBP2.95m due to challenging market conditions, we reduced net debt
from GBP5.2m to GBP3.8m.
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 GBP GBP
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
GBP GBP
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
GBP GBP
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
GBP GBP
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 GBP 7,717,621 6,105,889 (21)%
Average revenue per unit per month GBP 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 GBP 3,551,316 4,231,168 19%
Average revenue per unit per month GBP 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 GBP 3,830,782 3,646,822 (5)%
Average revenue per unit per month GBP 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 GBP750,000 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
GBP GBP GBP GBP GBP GBP
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
GBP GBP GBP GBP GBP GBP
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 GBP GBP
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
GBP GBP
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---
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