Does anybody know much about this company, graph looking good from previous lows??

Kivver,

The following was e-mailed to me yesterday. Happy reading and good luck.

Ramu

Buy Spectrum Interactive at 91.5p
Suggests Conrad Windham of A1m-Analyst.com
Spectrum Interactive (SIN) listed on AIM on 25th April 2005. The company operates 9,300 payphones and internet terminals in the UK and Germany. It is profitable, cash generative and growing organically and through acquisition. For 2005, house-broker Seymour Pierce has forecasts a pre-tax profit of 3 million pounds, worth 7.5p in earnings, and a dividend of 2.2p per share. For 2006 the broker has forecast pre-tax profits to rise to 4 million pounds, worth 10.7p per share in earnings, and a dividend of 4.3p per share.

With the shares trading at 91.5p this puts them on a price earnings ratio of 12.2 falling to 8.55. The dividend is attractive too, with a forecast yield of 2.4% rising to 4.7%. For a fast growing business with high barriers to entry the shares remain cheap, buy.

The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. A1m-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the FSA and can be contacted at 49 Rivington St, London EC2A 3QB or on 0207 033 9389


The Business

Spectrum Interactive was established in May 2002 through a management
buy-out of the payphone and internet terminal business of NWP Communications. The MBO was led by the company's current chief executive,
Mark Lewarne. The business was previously a part of NWP Communications, which went into receivership in April 2002 as a result of an unsuccessful venture into mobile phone distribution. In August 2004 Spectrum acquired some of the assets of a UK competitor, IPN, a public payphone business. Some 750 sites were acquired from IPN, which have been upgraded following a significant investment by Spectrum.

Spectrum also operates UK Explorer, a business which it acquired in February
2005. UK Explorer provides fixed and wireless internet access to the public
across the UK and Germany. Coupled with Spectrum's existing internet
operations, the acquisition of UK Explorer means that the company has in the region of 1,000 internet terminals and kiosks in hotels, airports and youth
hostels across the UK. The company also operates 100 internet terminals in
Germany.

80% of the company's revenue comes from its payphone and telephony services.
In its eighteen month revenue model to December 2004 there was a noticeable
growth in the income being achieved from its internet operations.

Whilst the company is not dependent upon any one single customer or site it has a
number of long term agreements in place for the provision of payphones, especially within the hospitality and travel sectors, where clients include BAA, West Yorkshire Public Transport, Welcome Break, and the German national rail network, as well as the Hamburg, Berlin and Frankfurt underground networks.

Spectrum also earns revenue from PAC payments from BT for freephone calls
from its payphones. PAC payments arise when callers phone international
destinations that are routed via a reseller of phone minutes, as well as other 0800 calls for the likes of customer services. Spectrum receives 8.1p per minute through PAC payments from BT. The company is responsible for collecting the cash from its payphones, as well as the maintenance, cleaning and installation of its estate.

The majority of the company's 1,100 fixed and wireless internet units throughout the UK and Germany are on long-tern contracts. The units are focussed on travellers, and its customer base is predominantly tourists, hence why its units are in place with airport operators such as BAA, Birmingham Airport, Leeds-Bradford Airport, and Newcastle Airport, as well as hotels and hostels including the Youth Hostel Association. The cost of accessing its internet units is 1 pound for 10 minutes in the UK and 1 Euro for 10 minutes in Germany. Spectrum is enhancing its internet operations through making its street kiosks available as Wi-Fi hotspots and payphone kiosks.

Spectrum sells advertising space on the side of its public site kiosks, thus utilising its national network of high street locations. Contracts can be for one single site or up to 500 sites. Ad campaigns have been run for Sainsbury's, Waitrose, KFC, Nike and Specsavers.

Spectrum plans to grow through deploying new payphones in high-revenue locations and redeploying sites from low to high revenue locations. In Germany, Spectrum is actively growing its estate with around 40 new private site payphone installations each month. The company is constantly working on introducing new products and services to its existing product range.

The Directors

The chief executive of the business is Mark Lewarne, who has thirteen years
of experience with the business, having been commercial director and chief operating officer of the business when it was a part of NWP Communications. Lewarne has also worked for Palmer & Harvey and The Kingfisher Group. Mark Lewarne holds 5,558,902 shares in the business, 16.4% of the equity. The managing director of the business is Keith Gurden, who was responsible for establishing Columbus, a payphone operator in Germany in 1994. Gurden holds 1,112,231 shares, 3.28% of the equity. The largest shareholder in
Spectrum is Lord David Young of Graffham, who holds 9,532,443 shares, 28.12%
of the equity. Lord Young is the former Secretary of State for Trade and
Industry, as well as being the former executive chairman of Cable & Wireless.

Investment Conclusion

The placing of 7,413,979 shares at 93p in April 2005 will enable the company to pay back its debt, as well as providing cash to grow the business. The balance sheet from 31st December 2004 showed that the total assets less current liabilities position stood at 13.4 million pounds, although 6.234 million pounds of this was from intangible assets made up predominantly of goodwill.

The sector average PE for telecommunication services is 12.25, which would put Spectrum Interactive shares at 131p. At this price the yield would be 3.28% versus the sector average of 3.65%. A share price of 131p would provide upside of 43% from the current level of 91.5p. This is the twelve-month price target, buy.

Key Data

EPIC: SIN
Spread: 89 - 94p
Market: AIM

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Cheers Ramu - are you interested in this company?

Kivver,

Interested but funds tied up elsewhere.

Kivver this was featured in The Momentum Investor, (June) as a buy at 96p...

up again today, it certainly has momentum but why?

Kivver,
Sorry for delay in answer. This one has only been going since april and line of resistance at 94 has been broke in the last two or three days we now have to wait and see if the l of resistance becomes support. A number of indicators are bullish and others are neutral. Sorry cant be more helpful. SD

May just have bottomed now

looking stronger and turning around

ABOUT SPECTRUM

Spectrum Interactive is the UK's leading independent public access internet kiosk operator with over 1,715 kiosks nationwide.

Spectrum Interactive plc floated on AIM in April 2005 and is chaired by Lord Young of Graffham former Chairman of Cable & Wireless. The company has a turnover of c.a 18m per year and has operations in both the UK and Germany providing public internet services and managed payphones to in excess of 1,000 corporate clients.

In the UK Spectrum have built up excellent relationships with their premier clients such as BAA, working closely with its client partners to deliver a flexible and competitive service to the millions of people using the UK's busiest airports and currently operate internet services in 18 of the top 20 UK airports as well as over 300 hotels nationwide.

Spectrum have extended their public internet service to encompass a WiFi capability for laptop and PDA users, often combined with the Spectrum Cyber-Desk to create a communications area within a busy site. WiFi access has also been enabled from London street payphone kiosks in partnership with T-Mobile. Spectrum are actively developing a product roadmap for its internet product group.

FINANCIALS

Mkt cap 7.9m
Net borrowings 5.7m
Share price 23.5p
EPS at interim stage 3.72p
Broker f/c to June 2006 6.5p eps & 1.9p dividend.
Broker f/c p/e ratio 3.6
(No tax payable on eps 2006)


NEGATIVES

Phone revenue declined 20% year on year, and recently the company has bought more payphone estate. The German operation had a difficult year albeit profitable, with fierce competition from mobile phones.
Net Debt is fairly high, although Interest costs have reduced 60% after IPO funds. Some theft from Payphones.


STRATEGY

Spectrum aim to convert Payphones into a growth area, by more advertising, the recent payphone acquisition added further estate, to offer greater coverage. Moreover, they are slowly turning payphones into ATM's & Payphones, 33 so far, slower than expected because of some local authority objections, but from these they receive 3,000pa & a transaction related fee. Also Microcells (for 2G & 3G) are being housed in payphones & WI-FI too, all these factors helped reduce the 20% decline in payphone call revenue to just 6% payphone revenue decline.

A further strategy is to use payphone cash to expand their Internet activities. This grew 400% at interims & 58% organically.

They say that Internet activity should be the main part of the business within 3 years from Feb 2005 IPO. This year should see something like 5m t/o compared with 14m elswhere, making circa 19m.


THOUGHTS

I think this company has been only superfically looked at by many investors. I can see why they bought 638 payphones recently in hotels etc; not only a one year payback, but also new blue chip clients, that they can sell their interet activities too, these profitable units numbered over 1200 at interims & now stand at 1715.

I can see why payphones have been bought for a song & even with the current decline in payphone call revenue are expected to pay back in just over 2 years, it makes Spectrum much more attractive, to house ATM's Microcells, Wi-fi & give greater coverage of adverstising, for which they have many blue chip names.

But best of all we have a rapidly growing Internet core, which I guess it could be argued you are buying for a little more than the current p/e ratio of 3.6 providing the payphone revenues only decline say another 5 or 6%....this will depend on the ATM growth, advertising & Microcell & Wi-fi growth....of which incidently the latter is expected "to grow significantly"


The ex German CEO appears to have helped slaughter the share price to it's current level, but the overhang appears to have largely gone now, at this stage while investors are overlooking Spectrum, will they in two years time when the interactive business will be the main part of the business, if objectives are acheived?

looking a cracking recovery stock now, p/e circa 3.5 yield 9%, overhang appears gone, 4 annoucements of new Internet & WI-fi business in August.....................take a look at the graph.

Steady progress, despite other small AIm shares suffering, p/e of circa 5, shut London Office, paid off 1m of debt & only c33% gearing, and a fast exapnding tech side.

Bit high on the debt level isnt it Peter?. Always thought you kept well away from companys with debt to service.

FINANCIALS

Mkt cap 7.9m
Net borrowings 5.7m
Share price 23.5p
EPS at interim stage 3.72p
Broker f/c to June 2006 6.5p eps & 1.9p dividend.
Broker f/c p/e ratio 3.6
(No tax payable on eps 2006)

Must admit it does look tempting and could have a good run in the next 6 months. Its very cheap for a telco stock.

Debt was 11m Roger, now 5m, paid 1m off last year alone.

The figure above isn't accurate, if you check the last trading statement, it's now 5m.

Now they are (excluding exceptionals this year for london office closure etc) making 2m a year, so debt is just 2.5 times profit, also with circa 15m of assets, it's only geared at 33%.

Companies I am wary of are those with 100% or more gearing.


The tech side is really growing fast, and will overtake the 'cash cow' side, I think it's overlooked by many, because of growing things like advertising,ATM's & Microcells & Wi-fi, even the payphone cash cow only declined 6% overall.

Furthermore I they have over 80% of Airport people footfall, in their airports for Internet & WI-FI may become a new section on it's own with over 1m t/o this year expected.

Even on a 20% tax charge, eps is expected to hit circa 6p at 25p share price that is cheap.

And even the boring recent payphone acquisitions are going to pay for themselves in little over 24 months, that's good business, especially as they were bought to get leads into the faster growing interactive area.

Along with Ashpool a major holding for me Roger.

Blimey if its a s big as your ashpool holding you must be backing this one very seriously. Im very tempted.

Many thanks for the analysis above.

No problem, a pleasure.

News for Early Sep & August:

September 2006
UKs fastest growing airport (Blackpool) gets Spectrum Internet desks
August 2006
Spectrum add WiFi CCTV at University of Sunderland

Sinatra- London Palladium show..... promoted on over 200 Spectrum central London payphone sites.

Spectrum Internet services sign 3 Landscove Holiday Parks

St. Christophers Inns extend internet contract with Spectrum

Spectrum add Bristow Heliport to its Aberdeen Airport operations ... providing WiFi & Internet Desks

Spectrum are pleased to announce the completion of their installations into nearly 170 Premier Travel Inn hotels across the UK.

Spectrum expands Travelodge WiFi internet services from 26 to 96 (270% increase)

New 5 year contract signed with Bristol Airport, Internet kiosks doubled.

Profits expected to be slighty below forecasts excluding exceptionals (f/c 2.2m) Directors confident of reasonable growth in Revenue & profits for 2006-7.

Wifi expected to exceed 1m t/o for 2006-07

Net debt reduced by circa 1m in 2006 to 5m.

Peter are they in direct competion with BT with the old pay phones what used to be the old red kiosks? or have they bough some of the BT estate?.

Thanks in anticipation.

Roger their payphone estate is mainly London, with some cracking locations like Leicester Square. They are the second biggest after BT & payphone services made just short of 1m at the interim stage, a superb cash cow, to pay off debt & fund the fast growing interactive side, also payphones are having ATM's attached to them, to bring in further revenue, advertising as mentioned, Wi-fi hot spots in conjuction with T Mobile, & also Microcells which should further increase with 3G.

Their phones seem to be kept in good clean order and many pics can be found on the website http://www.spectruminteractive.co.uk/index.php

Thanks peter Ill have a look at the site.

Forgot to mention the final divi should be around 1.5p too...results 26th of this month.

8th-September-2006

PRESS RELEASE

Spectrum open latest Internet Retail Shop at BAA Heathrow T1 Arrivals



Spectrum has taken the opportunity offered by BAA, to add an additional Internet Retail Shop at Heathrow T1 Arrivals.

The new Retail Shop located in the Heathrow Terminal One landside arrivals area, in ideally situated and operated unmanned 24/7 in a prime location. The new area is in addition to other recent retail investments within BAA including Heathrow T1 checking and Gatwick Village shopping areas.

Daniel Gray, Head of Group Marketing and Product Innovation, comments "we are committing to BAA with serious new investment, and with new bespoke designs, focused on their retail and airport environments. Our other recent BAA retail areas have proved highly successful, and we look forward continuing close relations with BAA, to maximise these areas". 8th-September-2006

.
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11th-September-2006

PRESS RELEASE

Spectrum Interactive complete clean sweep of London Airports - Internet now at Luton Airport


Spectrum Interactive plc is to install Internet Desks at London Luton Airport, resulting in Spectrum operating Internet Desks at all five of London International Airports, (Heathrow, Gatwick, Stansted, City and now Luton).

London Luton Airport and Spectrum have agreed to build an Internet Retail Shop, similar to four others that Spectrum has built this year at BAA's Heathrow and Gatwick Airports. The desks will operate a range of functionality including surfing, MSN Messenger, word, excel and USB port functions.

The latest addition to Spectrum's BAA retail installations is at Heathrow Terminal One Arrivals area which opened this week, with a bespoke design, 10 internet desks, and even a helpdesk telephone area.

With nearly 1,800 installed desks Spectrum has been a leader in public access Internet Desks & Kiosks for a number of years, and are the market leader in UK Airports. Spectrum has contracts directly with 21 airports in England and Scotland, as well as operations with concessions within two further airports.

Daniel Gray, Head of Group Marketing & Product Innovation for Spectrum Interactive, commented, "we are extremely pleased to complete this agreement and to reinforce our position as market leader for public Internet Access at UK airports. In line with our product strategy, we are currently developing new features and services to offer through our desks, which will generate new revenues for Spectrum and it's airport partners. Spectrum continues to operate successfully in the busiest, most demanding, and high profile locations!"

Up 4.5p but still the p/e is little over 6 & a cracking divi, to boot.

I understand from the latest broker note that

Advertising revenue was up 32% in street phones.

Payphones didn't decline as much in the second half as the first half.

this year financial forecasts are 2.5m profit before tax 5.9p eps (20% tax c)

next year 2.8m profit before tax 5.8p eps (30% tax charge)


Yield 6%+ at current price.

PRESS RELEASE

Spectrum Internet Services with Coffee Mania at the Wales Millennium Centre

Spectrum Interactive have installed two internet kiosks and WiFi service with Coffee Mania at the Wales Millennium Centre (Cardiff).

Wales Millennium Centre is a vibrant, living centre with activity throughout the day and into the night. Visitors can listen to free music over a cup of coffee or glass of wine, visit the hands-on interactive gallery, or join in with one of the wide range of creative workshops. It is a place to browse, relax and soak up the atmosphere.

Now visitors to the Millennium Centre are able to access the internet at Coffee Mania and surf the net whilst they relax with a coffee. Spectrum Interactive have installed two internet kiosks on site, enabling anyone to browse the internet.

Spectrum also provide wireless access on site (WiFi) so that customers with their own laptops or PDAs are able to log on to the internet using their own equipment.

From IC this w/e

Spectrum is switching between two quite different telecom businesses. On the one hand, it operates over 9,000 payphones (over half of which are in London) whose revenue is rapidly diminishing. On the other hand, income from internet terminals and wireless internet links in hotels and airports is rapidly increasing. So in 2005-06, profits from payphones more than halved to 749,000, while income from internet terminals jumped from 211,000 to 511,000. And these trends will continue as the company is spending no working capital on the payphones, but over 2m this year supplying 80 internet terminals a month in the UK and Germany as well as wiring 10 hotels a month with wireless networking. To date 300 hotels have been wired including Travelodge and Premier Travel Inns, covering 30,000 rooms.

Before goodwill amortisation and one-off costs, last year's profits were little changed at 2m. If there's no goodwill charge this year, brokers think that profits could rise to 2.5m on sales modestly higher at 18.4m. But in place of a nil-rate tax charge (and a 734,000 deferred tax credit in 2004-05) there could be a 20 per cent tax charge. So broker Seymour Pierce is only looking for earnings of 5.9p a share and a little-changed dividend. BUY.

Nice and steady progress.

Just me in these?

New thread

http://www.moneyam.com/InvestorsRoom/posts.php?tid=10629#lastread

New thread

http://www.moneyam.com/InvestorsRoom/posts.php?tid=10629#lastread

No Im in Peter. Nice to see the steady rise of the last few days.

P/E now 5/6?.

GF

What do you see as the catalyst to drive these back up to the 90's or back up to Jan 05 prices. Don't hold but trawling for new investments.

MS

Way too cheap Mickey. New technology taking over from the core phone business.
City becoming aware how cheap they are aswell.

If you look at Peter Hippeys analysis you wont go far wrong I think hes got it bang on here.