Final results

    Final results
             



SPECTRUM INTERACTIVE PLC

Preliminary Announcement
Year to 30 June 2008


Spectrum Interactive PLC
30 September 2008


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 2008.

Highlights

  * Interactive turnover up 39% to £7.9m (2007: £5.7m), of which WiFi
    turnover up 132% to £3.7m (2007: £1.6m)

  * Interactive business (WiFi and internet desks) now comprises 45%
    of Group turnover, up from 32% in 2007 and 21% in 2006

  * Total turnover down 2.3% to £17.4m (2007: £17.9m) due to 21%
    decline in payphone turnover

  * EBITDA up 8% to £3.16m (2007: £2.92m)

  * Profit before tax (PBT) of £1.0m (2007: loss of £4.5m)

  * Profit before tax, amortisation of goodwill and impairment
    charges (PBTA) of £1.2m (2007: £0.6m)

  * New projects include the roll-out of WiFi services to over 332
    Travelodge hotels, extension of WiFi services to 229 Premier Inn
    hotels, new WiFi contracts with Birmingham, Newcastle and
    Leeds/Bradford airports, the installation of internet desks and
    payphones into Heathrow Terminal 5, and a long-term contract with
    Clear Channel for media advertising on the street payphone estate

  * Rapid removal of over 1,000 underperforming UK payphones; total
    UK payphone units now under 5,000

Lord Young of Graffham, Chairman of Spectrum Interactive commented:
"This has been a year of solid achievement during which we have
continued to build our rapidly developing interactive business.  At
the same time, we have undertaken a comprehensive rationalisation of
our UK payphone business.  Whilst Spectrum will not be immune to the
impact of an economic slowdown, we are confident that the current
year will deliver profitable growth, and we believe that our focus on
airports and mid-market hotels will make the business reasonably
resilient to any downturn.  During the next 12 months, our priorities
will be to continue the rationalisation of the payphone business, the
development of new internet desk and WiFi sites, the development of
new interactive products and services, and selectively the pursuit of
acquisitions which deliver complementary products and locations for
our interactive business."


+-------------------------------------------------------------------+
| Spectrum Interactive plc                      | Seymour Pierce    |
| Tel: [phone]                             | Tel: [phone]     |
| Mark Lewarne                                  | 8032              |
| Chief Executive                               | Mark Percy / Matt |
| Officer                                       | Thomas            |
| Philip Congdon                                |                   |
| Chief Financial Officer                       |                   |
| Daniel Gray                                   |                   |
| Head of Marketing & Communications            |                   |
+-------------------------------------------------------------------+


                        CHAIRMAN'S STATEMENT

INTRODUCTION

I am pleased to report our final  results for the year ended 30  June
2008.  This has been a year of solid achievement during which we have
continued to build  our rapidly  developing interactive  business.
Interactive turnover grew by  39% from £5.7m  to £7.9m, within  which
growth in WiFi revenues was  particularly strong, increasing 132%  to
£3.7m.   Growth in WiFi was partly  driven by the rapid rollout of  a
new contract with Travelodge to install  WiFi services in all 332  of
their UK hotels.

At the same time, we have undertaken a comprehensive  rationalisation
of our UK  payphone business,  removing 1,300  unprofitable units  to
leave an estate of  just 5,000 units,  mostly in high-revenue  street
and airport locations.  We also signed a contract with Clear  Channel
in October 2007  for exclusive  outdoor advertising  on our  payphone
kiosks.  Despite a 21% decline in payphone turnover during the  year,
the average  monthly  revenue per  payphone  declined by  only  3.4%,
underlining the effectiveness of our rationalisation strategy.

We announced last year that it  was our intention to exit our  German
payphone operation.  Unfortunately  our efforts to  find a buyer  for
this business  were not  successful, and  with regret  we placed  the
German company into administrative receivership in July 2008.  We  do
not expect this  development to  materially impact  upon the  Group's
overall financial performance or position.

Financial Review
Group turnover fell by 2.3% during  the period from £17.9m to  £17.4m
reflecting the 21% decline in  payphone turnover.  Gross margin  from
interactive activities accounted for 39% of overall gross margin,  up
from 30% in the previous year.

Profit before  tax  (PBT) was  £1.0m  (2006: loss  of  £4.5m).   PBT,
excluding the prior  year impairment charges,  doubled from £0.5m  to
£1.0m as a result of the reduced dependency on payphone revenues  and
robust interactive growth.    As in previous  years the business  was
EBITDA  positive,  with   growth  from  £2.9m   to  £3.2m.    Capital
expenditure during the year was £2.1m, and net debt increased, mainly
as a result of this capital expenditure, from £4.5m to £5.2m.

Growth Factors

The Company  has  continued  its  strategy of  using  cash  from  its
payphone business to  fuel growth in  its interactive business.   The
main development project  in the year  was the rollout  of WiFi  into
Travelodge hotels.  The introduction of an online pre-booking service
for  WiFi  utilising  the  Travelodge   website  has  been  a   great
success.

Additionally we have extended  our service to  Whitbread who own  the
Premier Inn hotel estate.  The  Spectrum WiFi service is  operational
in 229 Premier Inn hotels in the UK and Ireland.

Importantly, both these  site owners  have continued  to acquire  and
build new  properties in  defiance of  gloomy economic  predictions.
This, along with new contract wins in a number of independent hotels,
is providing Spectrum  with good  organic growth and  we now  operate
WiFi in over 900 locations and in excess of 50,000 rooms.

We have continued  to win  new airport contracts,  adding WiFi  deals
with  Leeds/Bradford,  Newcastle  and  Birmingham  to  our   existing
internet desk service at these  airports.  We also completed work  at
Heathrow  Terminal  5  where  we  operate  both  internet  desks  and
payphones.  However, growth  in our internet  desk business has  been
handicapped to  a  degree  by various  significant  airport  terminal
reorganisations.  Usage on our internet desks is beginning to migrate
away from e-mail to services such as on-line games, social networking
sites  and  entertainment  websites  such  as  BBC  i-player.    This
development is central to our strategy for growing and increasing the
profitability of this product line.

On the payphone side our rationalisation programme, combined with the
new Clear  Channel  deal,  has  engendered  a  leaner  business  with
improved margins.  We  are projecting a  further decline in  payphone
turnover but  envisage this  business  remaining profitable  for  the
foreseeable future.


                  CHAIRMAN'S STATEMENT (continued)

Outlook

We are confident that 2008-9 will deliver profitable growth.   Whilst
Spectrum will not be immune from the impact of an economic  slowdown,
our focus on airports and mid-market hotels should make the  business
reasonably resilient to any downturn.

During the next  12 months, our  priorities will be  to continue  the
rationalisation of  the payphone  business,  the development  of  new
internet desk  and WiFi  sites, the  development of  new  interactive
products and services,  and selectively the  pursuit of  acquisitions
which  deliver   complementary  products   and  locations   for   our
interactive business.

Our strategy always foresaw that 2008-9 would be a peak year for debt
repayments and in the  light of the current  situation in the  credit
markets we will  be managing  our cash very  carefully, with  capital
expenditure expected to be lower than in the previous two years.

In view of the  continued evolution and  development of the  company,
the directors are not recommending the payment of a dividend for  the
year.

Finally I extend my thanks and congratulations to the management  and
employees for their work  this year in  achieving the objectives  and
targets set out by the business. After a difficult period, we can now
look forward with confidence to delivering further profitable  growth
over the coming year and beyond.


LORD YOUNG OF GRAFFHAM
Chairman

CONSOLIDATED INCOME STATEMENT
YEAR TO 30 JUNE 2008

                                                    2008         2007
                                       Note            £            £

Revenue                                   1   17,436,986   17,850,427

Cost of sales                               (10,519,367) (10,649,536)

Gross profit                                   6,917,619    7,200,891

Impairment of German goodwill and                      -  (5,005,065)
plant, property and equipment
Other administrative expenses                (5,594,086)  (6,310,925)

Total administrative expenses                (5,594,086) (11,315,990)

OPERATING PROFIT (LOSS)                        1,323,533  (4,115,099)

Investment revenues                                6,202       11,422
Finance costs                                  (355,498)    (390,897)

PROFIT (LOSS) BEFORE TAX                         974,237  (4,494,574)

Tax                                            (551,320)    (294,267)

PROFIT (LOSS) FOR THE YEAR                       422,917  (4,788,841)


Earnings (loss) per share -               3        1.26p     (14.25)p
basic

Earnings (loss) per share - diluted       3        1.24p     (14.12)p


EBITDA                                         3,160,661    2,919,099

PBTA                                           1,214,883      591,853

EARNINGS BEFORE INTEREST, IMPAIRMENT,
TAX , DEPRECIATION AND AMORTISATION
(EBITDA)

Operating profit / (loss)                      1,323,533  (4,115,099)
Add back : depreciation                        1,596,482    1,947,771
Add back : amortisation                          240,646       81,362
Add back : impairment                                  -    5,005,065

                                               3,160,661    2,919,099

PROFIT BEFORE TAX AND AMORTISATION
(PBTA)

Profit before tax                                974,237  (4,494,574)
Add back : amortisation                          240,646       81,362
Add back : impairment                                  -    5,005,065

                                               1,214,883      591,853


CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
YEAR TO 30 JUNE 2008

                                                     2008        2007
                                                        £           £



Exchange difference on translation of foreign   (362,670)      46,594
operations

Net (expense) income recognised directly in     (362,670)      46,594
equity
Profit (loss) for the financial year              422,917 (4,788,841)

Total recognised income and expense for the        60,247 (4,742,247)
year



CONSOLIDATED BALANCE SHEET
30 JUNE 2008


                                        2008         2007
                                           £            £
NON CURRENT ASSETS
Goodwill                           4,198,055    4,198,055
Other intangible assets            1,497,463    1,724,876
Property, plant and equipment      5,421,621    4,921,292
Deferred tax asset                 1,649,431    2,200,751

                                  12,766,570   13,044,974

CURRENT ASSETS
Inventories                          138,293       29,877
Trade and other receivables        1,841,196    2,782,967
Cash and cash equivalents            963,667    1,336,847

                                   2,943,156    4,149,691

TOTAL ASSETS                      15,709,726   17,194,665

CURRENT LIABILITIES
Trade and other payables         (2,903,717)  (4,730,527)
Current tax liabilities            (154,840)    (134,260)
Obligations under finance leases   (467,362)    (336,972)
Overdrafts                         (864,558)            -
Borrowings                       (1,638,476)  (1,215,825)
Provisions                         (360,980)    (446,240)
Deferred revenue                   (100,363)     (48,505)

                                 (6,490,296)  (6,912,329)

NET CURRENT LIABILITIES          (3,547,140)  (2,762,638)

NON-CURRENT LIABILITIES
Borrowings                       (2,437,729)  (3,590,389)
Obligations under finance leases   (726,680)    (697,173)

                                 (3,164,409)  (4,287,562)

TOTAL LIABILITIES                (9,654,705) (11,199,891)

NET ASSETS                         6,055,021    5,994,774

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          118,705      112,555
Retained earnings                    140,551       86,454

TOTAL EQUITY                       6,055,021    5,994,774



CONSOLIDATED CASH FLOW STATEMENT
YEAR TO 30 JUNE 2008

                                                     2008        2007
                                                        £           £

Net cash from operating activities              2,944,328   2,754,484


Investing activities
Interest received                                   6,202      11,422
Purchase of plant, property and equipment     (2,095,519) (1,749,380)
Purchase of intangible assets                 (1,194,464)           -
Proceeds from the disposal of plant, property           -      24,127
and equipment
Acquisitions                                            -   (198,110)

Net cash used in investing activities         (3,283,781) (1,911,941)


Financing activities
Dividend paid                                           -   (406,882)
Repayment of borrowings                       (1,386,953) (1,273,000)
Repayment of obligations under finance leases   (455,411)   (162,173)
New bank loans raised                             350,000           -
Proceeds from sale and leaseback                  550,064     977,190
Proceeds from the exercise of share options             -       1,352

Net cash used in financing activities           (942,300)   (863,513)

Net decrease in cash and cash equivalents     (1,281,753)    (20,970)

Cash and cash equivalents at the beginning of   1,336,847   1,266,480
the year

Effect of foreign exchange rate changes            44,015      91,337

Cash and cash equivalents at the end of the
year                                               99,109   1,336,847
(including bank overdraft)


KEY PERFORMANCE INDICATORS


                                                             Increase
                                                           (decrease)
                                          2006-7    2007-8          %

Payphones
Units installed at year end                8,038     6,715    (16.4%)
Average units earning revenue during       8,747     7,109    (18.7%)
the year
Total revenue £                       12,176,619 9,563,948    (21.5%)
Average revenue per unit per month £         116       112     (3.4%)


WiFi
Units installed at year end                  621     1,016     +63.6%
Average units earning revenue during         557       884     +58.7%
the year
Total revenue £                        1,586,111 3,686,919    +132.5%
Average revenue per unit per month £         237       348     +46.8%


Internet desks
Units installed at year end                1,934     1,968      +1.8%
Average units earning revenue during       1,907     1,917      +0.5%
the year
Total revenue £                        4,087,697 4,186,119      +2.4%
Average revenue per unit per month £         179       182      +1.7%
Return on capital employed                  7.6%     15.5%      +104%



1. Basis of preparation

The financial  information  set out  above  does not  constitute  the
Company's statutory  accounts for  the years  ended 30  June 2008  or
2007, but is derived from those accounts. Statutory accounts for 2007
have been delivered to the Registrar of Companies and those for  2008
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
s237(2) or (3) Companies Act 1985.

2. Segmental information

The Board considers the primary segments 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.


               Payphones       Desks      WiFi       Other       Total
Year to 30             £           £         £           £           £
June 2008

Revenue        9,563,948   4,186,119 3,686,919           -  17,436,986

Gross profit   4,098,681   1,528,516 1,290,422           -   6,917,619

Depreciation   (636,599)   (661,533) (237,900)    (60,450) (1,596,482)
Amortisation           -    (84,228) (156,418)           -   (240,646)

Segment        3,462,082     782,755   896,104    (60,450)   5,080,491
result

Unallocated                                                (3,756,958)
corporate
expenses

Operating                                                    1,323,533
profit
Interest                                                         6,202
receivable
and similar
income
Interest                                                     (355,498)
payable and
similar
charges

Profit                                                         974,237
before tax

Tax                                                          (559,581)

Profit after                                                   414,656
tax

Other
information

Capital          116,024     695,310 1,152,878     131,307   2,095,519
additions


Balance
sheet

Assets
Segment        5,741,376   4,982,082 2,613,384           -  13,336,842
assets
Unallocated            -           -         -   2,372,884   2,372,884
corporate
assets

Consolidated                                                15,709,726
total assets

Liabilities
Segment      (4,052,664) (1,137,564) (441,000)           - (5,631,228)
liabilities
Unallocated            -           -         - (4,023,477) (4,023,477)
corporate
liabilities

Consolidated                                               (9,654,705)
total
liabilities



2. Segmental information (continued)

Year to 30 June 2007

               Payphones       Desks      WiFi       Other        Total
                       £           £         £           £            £

Revenue       12,176,619   4,087,697 1,586,111           -   17,850,427

Gross profit   5,048,321   1,518,125   634,445           -    7,200,891

Depreciation (1,159,593)   (653,305)  (44,230)    (90,643)  (1,947,771)
Amortisation           -    (81,362)         -           -     (81,362)
Impairment   (5,005,065)           -         -           -  (5,005,065)

Segment      (1,116,337)     783,458   590,215    (90,643)      166,693
result

Unallocated                                                 (4,281,792)
corporate
expenses

Operating                                                   (4,115,099)
loss

Interest                                                         11,422
receivable
and similar
income
Interest                                                      (390,897)
payable and
similar
charges

Loss before                                                 (4,494,574)
tax

Tax                                                           (294,267)

Loss after                                                  (4,788,841)
tax

Other
information

Capital          330,979   2,032,270   492,181      75,181    2,930,611
additions

Balance
sheet

Assets

Segment        6,832,858   5,456,026 1,746,535           -   14,035,419
assets
Unallocated            -           -         -   3,159,246    3,159,246
corporate
assets

Consolidated                                                 17,194,665
total assets

Liabilities

Segment      (4,419,624) (1,866,975)         -           -  (6,286,599)
liabilities
Unallocated            -           -         - (4,913,292)  (4,913,292)
corporate
liabilities

Consolidated                                               (11,199,891)
total
liabilities



3. Earnings per share

The calculation of the basic and diluted earnings per share is based
on the following data:


Earnings                                             2008        2007
                                                        £           £

Earnings for the purpose of basic and diluted     414,656 (4,788,841)
earnings per share


                                                     2008        2007
Number of shares                                       No          No

Weighted average number of ordinary shares for
the purpose of basic                           33,648,166  33,602,865
earnings per share
Effect of dilutive potential ordinary shares:     468,337     300,512
share options

Weighted average number of ordinary shares for
the purpose of diluted                         34,116,503  33,903,377
earnings per share


                                                     2008        2007
Earnings per share                                      p           p

Basic                                                1.26     (14.25)
Diluted                                              1.24     (14.12)

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