- Part 2: For the preceding part double click ID:nRSH5689Ua
the Group as a whole. It operates to a schedule of matters specifically reserved for its decision.
Although not required to retire this year in accordance with the articles, corporate governance guidance recommends that
non-executive directors with more than 9 years' service are re-elected annually, and John Booth and Nicholas Taylor, having
been directors since 1996 and 2006 respectively, offer themselves for re-election.
The Company has purchased insurance to cover its directors and officers against any costs they may incur in defending
themselves in any legal proceedings instigated against them as a direct result of duties carried out on behalf of the
Company. The insurance does not provide cover in the event that a director is proved to have acted fraudulently or
dishonestly.
The directors are able to seek independent professional advice as necessary, for the furtherance of their duties, at the
Company's expense within designated financial limits.
The following committees deal with specific aspects of the Group's affairs:
Audit committee
The audit committee is chaired by Nicholas Taylor with John Booth and Annette Nabavi being the other members throughout the
year, together with Darren Boyce until his resignation on 24 November 2015. The board is satisfied that for the year under
review and thereafter Mr Taylor has adequate recent and relevant commercial and financial knowledge and experience to chair
the committee; it also considers that Mrs Nabavi has such knowledge and experience.
The remit of the committee is to:
· consider the continued appointment of the external auditors, and their fees, terms of engagement and independence,
including the appointment of the auditors to undertake non-audit work;
· liaise with the external auditors in relation to the nature and scope of the audit;
· review the form and content of the financial statements and any other financial announcements issued by the
Company;
· review any comments and recommendations received from the external auditors;
· review the Company's statements on internal control systems and the policies and process for identifying and
assessing business risks and the management of those risks by the Company.
The audit committee convenes at least twice a year to review the 6 monthly and annual financial statements and at these
meetings in 2015 Eddie Buxton, Dale Todd (who acted as secretary to the committee) and the external auditors attended by
invitation.
In 2015 it also liaised informally with the executive directors in relation to published financial information and other
audit-related matters. Nicholas Taylor and Annette Nabavi also met separately with the external auditors in the absence of
executive management.
The principal issues addressed by the committee during the year were:
· the external auditors' year-end report for 2014, the review of the Group's preliminary results in 2015 and the
disclosures in the 2014 annual report.
· the external audit plan for the 2015 financial statements which included a review of the audit objectives, scope,
timetable and deliverables.
· the re-appointment of BDO LLP as external auditors, their independence and objectivity and their fee.
· consideration of the external auditors' observations on the internal financial controls arising from their annual
audit.
BDO LLP is retained to perform audit and audit-related work for the Group. The committee monitors the nature and extent of
non-audit work undertaken by the auditors, including reviewing the letter of independence provided by the auditors annually
which includes details of audit and non-audit work undertaken. The committee is satisfied that there are adequate controls
in place to ensure auditor independence and objectivity. Details of audit and non-audit fees for the period under review
are shown in note 7 of the financial statements.
Remuneration committee
Annette Nabavi is chair of the remuneration committee, its other members being John Booth and Nicholas Taylor. The
committee met twice during the year. The committee's report to shareholders on directors' remuneration is set out below.
Nomination committee
The nomination committee had two members during 2015, both non-executive, being John Booth, chairman, and Nicholas Taylor.
The committee meets as required and met twice in 2015, Annette Nabavi also attending each meeting by invitation. Its terms
of reference include:
· reviewing the structure, size and composition of the board;
· identifying and nominating suitable candidates to fill vacancies on the board.
Board attendances
The following table shows the attendance of the directors at meetings of the board and the Audit, Remuneration and
Nomination committees during the year.
Board Audit committee Remuneration committee Nomination committee
Number of meetings in the year
J Booth 15 2 2 2
D Boyce 13 2 - -
E Buxton 16 - - -
A McCaffery 12 - - -
A Nabavi 15 2 2 -
K Stevens 15 - - -
N Taylor 16 2 2 2
D Todd 16 - - -
Conflicts of interest
The Group has established procedures for the disclosure and review of any conflicts, or potential conflicts, of interest
which the directors may have and for the authorisation of such conflict matters by the board. The board considers that
these procedures are operating effectively.
Relationship with shareholders
The Chairman's statement and the Strategic report above include a detailed review of the business and future developments.
In addition to regular financial reporting, significant matters relating to trading or development of the business are
released to the market by way of Stock Exchange announcements as required.
The directors meet with institutional and other shareholders when possible, usually following the announcement of the
Company's results, to keep them informed about the performance and objectives of the business. Nicholas Taylor and Annette
Nabavi also attended certain shareholder meetings during 2015, representing the non-executive directors, to better
understand the shareholders' views and to ensure there is an independent channel for their views, should that be
necessary.
The annual general meeting provides a further forum for shareholders to communicate with the board.
Internal control
The board is ultimately responsible for the Group's systems of internal control, and for reviewing their effectiveness.
Such systems can provide reasonable, but not absolute, assurance against material misstatement or loss. The board believes
that the Group has internal control systems in place appropriate to the size and nature of its business.
The directors do not consider that an internal audit function is required, given the size and nature of the business at
this time. This situation is reviewed annually.
The Group maintains a comprehensive process of financial reporting. The annual budget is reviewed and approved by the
board before being formally adopted, following which the board receives at least monthly financial reports of the Group's
performance compared to the budget, with explanations of significant variances. Monthly cash flow forecasts are provided
to the board, as are budget reforecasts if deemed appropriate.
The executive directors monitor key performance indicators on a monthly basis, management of these being delegated to the
Group's senior management.
The board undertakes a rolling review of known and potential risks, and addresses newly identified risks as they arise,
with controls put in place to minimise their potential effect on the Group.
The key operational functions of the Group are subject to processes established and externally audited under ISO9001,
ISO20000 and ISO27001, which the directors consider to be a valuable additional internal and external control tool of the
business.
Operating control
Each executive director has defined responsibility for specific aspects of the Group's operations. The executive
directors, together with key senior executives, meet regularly - both at weekly management meetings and on an ad hoc basis
- to discuss day-to-day operational matters.
Investment appraisal
Capital expenditure is controlled via the budgetary process, the budget being approved by the board. Expenditure is
approved as required by the chief executive. Acquisitions and significant unbudgeted capital expenditure are reviewed by
the board as they arise.
Risk management
The board is responsible for identifying the major business risks faced by the Group and for determining the appropriate
course of action to manage these risks. The Group's approach to financial risk management is further explained in note 22
to the financial statements.
Going concern
The Group has a sound financial record including strong operating cash flows derived from a substantial level of recurring
revenue across a range of sectors and as a consequence and after reviewing cash balances, borrowing facilities and
projected cash flows, the directors have a reasonable expectation that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis
in preparing the financial statements.
Report of the remuneration committee
The remuneration committee's remit is to measure the performance of, and determine remuneration policy relating to,
directors and senior employees. To support this responsibility it has access to professional and other advice external to
the Group. Taking these factors into account, it then makes recommendations to the board.
The committee consists of three non-executive directors, Annette Nabavi (chair of the committee), Nicholas Taylor and John
Booth, and met twice during 2015.
Remuneration policy
The Group's executive director remuneration policy is designed to attract and retain directors of the calibre required to
maintain the Group's position in its marketplace.
The executive director remuneration package consists of up to four elements:
(a) Basic salary
An executive director's basic salary is determined by the remuneration committee at the beginning of each year. In
deciding appropriate levels the committee considers the relative responsibilities of each of the directors. The basic
salary of the executive directors was increased with effect from 1 February 2016.
(b) Pension contributions and other benefits
Executive directors are entitled to employer pension contributions of 3% of basic salary, or additional salary in lieu
thereof.
They also receive a car allowance and membership of private health, permanent health and life assurance schemes.
(c) Bonus
The executive directors are eligible to receive bonuses, dependant on Group profitability and other performance criteria.
(d) Share options
Eddie Buxton, Kevin Stevens and Dale Todd have been granted share options, details of which are shown below.
Directors' service agreements
Executive directors' service agreements, which include details of remuneration, will be available for inspection at the
annual general meeting. Each executive director has a six month rolling service agreement.
Non-executive directors
John Booth and Nicholas Taylor each have a three month rolling contract. Annette Nabavi has a contract which expires in
normal circumstances on 26 June 2017 but which is terminable on 3 months' notice.
The remuneration of the non-executive directors is agreed by the executive directors, and is based upon the level of fees
paid at comparable companies and taking account of the directors' evolving responsibilities. Taking these factors into
account, the remuneration of the non-executive directors was reviewed in 1 February 2016. The non-executives receive no
payment or benefits other than their fees and associated auto-enrolment pension contributions, although Mrs Nabavi was a
beneficiary of consultancy fees during the year as described below (2014: Mrs Nabavi and Mr Taylor).
Directors remuneration
The remuneration of the directors in office during the year was as follows:
Salaries/ Pension Total Total
fees Benefits Bonus contributions 2015(1) 2014(1, 2)
Non executive directors
J D S Booth 41 - - - 41 40
D K Boyce (3) 20 - - - 20 4
A P Nabavi (4) 25 - - - 25 13
N J Taylor (5) 31 - - - 31 30
Executive directors
E Buxton 190 12 5 6 213 243
A J McCaffery 149 21 5 5 180 191
K Stevens 136 11 12 4 163 161
W D Todd 151 12 5 5 173 199
________ ________ ________ ________ ________ ________
743 56 27 20 846 881
_______ _______ _______ _______ _______ _______
(1) Excluding social security costs in respect of the above amounting to £102,000 (2014: £109,000), and excluding gains on
the exercise of share options in the year of £291,000 (2014: £182,000).
(2) Total 2014 remuneration of £881,000 includes bonuses of £120,000, employer pension contributions of £16,000 and
benefits of £55,000, so that salaries amounted to £690,000.
(3) In addition to his fees as a director stated above, Proximity Communications Ltd paid £64,000 (2014: £14,000 plus
£1,000 expenses) to a company of which Mr Boyce is a shareholder and director in respect of consultancy services provided
to Proximity following its acquisition.
(4) In addition to her fees as a director stated above, the Company paid £11,000 (2014: £13,000) to a company of which Mrs
Nabavi is a shareholder and director in respect of consultancy services provided to the Company during the year.
(5) In 2014, in addition to his fees as a director stated above, the Company paid £20,000 (2015: £Nil) to a company of
which Mr Taylor is a shareholder and director in respect of consultancy services provided to the Company during that year.
The directors are the only employees of the Company.
Directors' interests in ordinary shares
The directors' interests in the ordinary shares of the Company are shown in the report of the directors below. These
include holdings under the Company's Share Incentive Plan, to which all of the directors subscribe apart from non-executive
director Mrs Nabavi.
Share options
On 18 May 2009 the directors of the Company approved the adoption of the Maintel Holdings Plc 2009 Option Plan. The
following options remain outstanding under the Plan:
Option holder Number of shares Date of grant Option price Expiry of option
Eddie Buxton 107,818 18 May 2009 200p 18 May 2019
Eddie Buxton 107,818 18 May 2009 300p 18 May 2019
Dale Todd 10,000 17 April 2013 345p 17 April 2023
Dale Todd 10,000 19 December 2013 525p 19 December 2023
Kevin Stevens 10,000 29 May 2014 530p 29 May 2024
All options have vested.
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options
during the year:
2015Numberof options 2015WAEP 2014Numberof options 2014WAEP
Outstanding at the beginning of the year 299,545 245p 329,545 233p
Granted during the year - - 10,000 530p
Exercised during the year (53,909) 100p (40,000) 220p
________ ________ ________ ________
Outstanding at the end of the year 245,636 276p 299,545 245p
________ ________ ________ ________
The Company's mid-market share price at 31 December 2015 was 760p per share, and the high and low prices during the year
were 807.5p and 600p respectively.
Share Incentive Plan
In 2006 the Company established the Maintel Holdings Plc Share Incentive Plan ("SIP"). The SIP is open to all employees
with at least 6 months' continuous service with a Group company, and allows employees and directors to subscribe for
existing shares in the Company at open market price out of their gross salary. The employees own the shares from the date
of purchase, but must continue to be employed by a Group company and hold their shares within the SIP for 5 years to
benefit from the full tax benefits of the plan. At 31 December 2015 there were 86,670 shares held by the SIP, representing
0.8% of the issued share capital of the Company (2014: 89,747 and 0.8%).
The report of the remuneration committee was approved by the board on 7 April 2016.
A P Nabavi
Chair of the remuneration committee
Report of the directors
for the year ended 31 December 2015
The directors present their annual report together with the audited financial statements for the year ended 31 December
2015.
Principal activities
The principal activities of the Group continue to be the provision of contracted managed services, the sale and
installation of telecommunications systems and the provision of fixed line, mobile and data telecommunications services,
predominantly to the enterprise business sector.
Results and dividends
The consolidated statement of comprehensive income is set out below and shows the profit of the Group for the year.
During the year the Company paid a final dividend of 11.6p per ordinary share in respect of the 2014 financial year,
amounting to £1.243m (2014: 9.0p, amounting to £961,000), and an interim dividend in respect of 2015 of 12.8p per share,
amounting to £1.378m (2014: 9.3p and £993,000 respectively). A second interim dividend in respect of 2015 of 16.5p per
share was paid on 5 April 2016, at a cost of £1.777m.
Strategic report
A review of the business and future developments of the Group is set out in the Strategic report above.
Directors
The directors of the Company as at 31 December 2015 and their interests in the ordinary shares of the Company at that date
were as follows:
Number of 1p ordinary shares
2015 2015 2014 2014
Beneficial Non-beneficial Beneficial Non-beneficial
J D S Booth 2,760,301 - 2,759,674 -
E Buxton 4,654 81,816 4,225 85,522
A J McCaffery 2,055,629 - 2,055,085 -
A P Nabavi - - - -
K Stevens 2,671 - 2,334 -
N J Taylor 15,947 77,523 15,368 81,379
W D Todd 37,941 78,529 47,397 82,350
D Boyce was a director of the Company until his resignation on 24 November 2015. He had no interest in the ordinary shares
of the Company during that time.
J D S Booth is a shareholder in Herald Investment Trust plc which has an interest in 610,000 1p ordinary shares in the
Company; this is in addition to Mr Booth's beneficial holding above.
The non-beneficial holdings above relate to holdings of the Share Incentive Plan, of which the respective directors are
trustees.
Since the year end, the Share Incentive Plan has acquired a net 1,021 shares in total, including 60 in respect of K
Stevens. There were no other changes in the directors' shareholdings between 31 December 2015 and 7 April 2016.
Substantial shareholders
In addition to the directors' shareholdings, at 7 April 2016 the Company had been notified of the following shareholdings
of 3% or more in the ordinary share capital of the Company:
Number of % of issued
1p ordinary ordinary
shares shares
J A Spens 1,731,171 16.1%
Marlborough Fund Managers Ltd 1,461,300 13.6%
Herald Investment Trust plc 610,000 5.7%
Share capital
Details of the share capital of the Company are shown in note 23 of the financial statements.
53,909 shares were issued in the year on the exercise of share options; no shares were repurchased during the year.
The existing authority for the repurchase of the Company's shares is for the purchase of up to 1,606,115 shares. A fresh
authority, for the purchase of up to 1,614,196 shares, will be sought at the forthcoming annual general meeting.
Employees
Maintel's success is dependent on the knowledge, experience and motivation of its employees, and so on the attraction and
retention of those staff. The Group offers competitive compensation packages, including bonus structures where
appropriate, to align employee interest with that of the Group. The Group's management ensures that there is continual
investment in external and internal training of employees, and monitors the compliance with both statutory regulation and
best practice with regard to equal opportunities.
The Group gives full and fair consideration to applications for employment from disabled persons, having regard to their
particular aptitudes and abilities and to their training and career development. This includes, where applicable and
possible, the retraining and retention of staff who become disabled during their employment.
Periodic updates are distributed to employees, and a Group intranet is core to open communication amongst employees; this
continues to be developed.
The Company established a Share Incentive Plan in 2006, allowing employees and directors to invest tax effectively in its
shares, and so aligning employee interests with those of shareholders. Under the plan, shares are acquired by employees out
of pre-tax salary, with ownership vesting at that time, and are held by trustees on behalf of the employees. The plan is
therefore separate from the assets of the Group.
Environment
The Group acknowledges its responsibilities to environmental matters and where practicable adopts environmentally sound
policies in its working practices, such as recycling paper and packaging waste and using specialist recyclers of scrap
telecommunications and IT equipment. A major consideration when replacing company cars is their impact on the environment.
The Group also makes use of in-house video-conferencing facilities to reduce the need for regional meetings. Maintel Europe
Limited has ISO14001:2004 accreditation for its environmental management systems.
Financial instruments
Details of the use of financial instruments by the Group are contained in note 22 of the financial statements.
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any
information needed by the Company's auditors for the purposes of their audit and to ensure that the auditors are aware of
that information. The directors are not aware of any relevant audit information of which the auditors are unaware.
A resolution proposing the re-appointment of BDO LLP as auditors of the Company will be proposed at the forthcoming annual
general meeting.
On behalf of the board
E Buxton
Director
7 April 2016
Statement of directors' responsibilities
Directors' responsibilities
The directors are responsible for preparing the annual report and financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors
have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards), including FRS101 "Reduced Disclosure Framework"
("FRS101") and applicable law. Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of
the Group for that period. The directors are also required to prepare financial statements in accordance with the rules of
the London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to
ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website.
Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of the directors. The directors' responsibility
also extends to the ongoing integrity of the financial statements contained therein.
Independent auditors' report
TO THE SHAREHOLDERS OF MAINTEL HOLDINGS PLC
We have audited the financial statements of Maintel Holdings Plc for the year ended 31 December 2015 which comprise the
consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash flows, the company statement of financial position and
the related notes. The financial reporting framework that has been applied in the preparation of the consolidated financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The
financial reporting framework that has been applied in preparation of the parent company financial statements is applicable
law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS101 'The
Financial Reporting Standard applicable to the UK and Republic of Ireland'.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required
to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
· the financial statements give a true and fair view of the state of the group's and the parent company's affairs as
at 31 December 2015 and of the group's profit for the year then ended;
· the consolidated financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
· the parent company's financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
· the parent company financial statements are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Julian Frost (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
7 April 2016
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Consolidated statement of comprehensive income
for the year ended 31 December 2015
Note 2015 2014
£000 £000
Revenue 4 50,623 41,890
Cost of sales (31,571) (26,292)
________ ________
Gross profit 19,052 15,598
Other operating income 12 -
Administrative expenses
Intangibles amortisation 14 (2,235) (1,472)
Exceptional costs 12 (884) (809)
Other administrative expenses (11,530) (9,375)
(14,649) (11,656)
________ ________
Operating profit 7 4,415 3,942
Financial income 8 1 2
Financial expense 8 (265) (135)
________ ________
Profit before taxation 4,151 3,809
Taxation 9 (69) (865)
________ ________
Profit and total comprehensive income attributable to owners of the parent 4,082 2,944
________ ________
Earnings per share
Basic 11 38.0p 27.6p
Diluted 11 37.5p 27.2p
________ ________
________
________
The notes following the consolidated statement of cash flows form part of these consolidated financial statements
Consolidated statement of financial position
at 31 December 2015
Note 2015 2015 2014 2014
£000 £000 £000 £000
Non current assets
Intangible assets 14 18,132 20,367
Property, plant and equipment 16 673 314
________ ________
18,805 20,681
Current assets
Inventories 17 1,298 1,436
Trade and other receivables 18 11,040 12,419
Cash and cash equivalents 2,784 3,347
________ ________
Total current assets 15,122 17,202
________ ________
Total assets 33,927 37,883
________ ________
Current liabilities
Trade and other payables 19 20,276 20,809
Current tax liabilities 257 828
Borrowings 20 2,000 2,500
________ ________
Total current liabilities 22,533 24,137
________ ________
Non current liabilities
Deferred tax liability 21 834 1,242
Borrowings 20 4,000 7,500
________ ________
Total net assets 6,560 5,004
________ ________
Equity
Issued share capital 23 108 107
Share premium 24 1,169 1,116
Capital redemption reserve 24 31 31
Translation reserve 24 88 47
Retained earnings 24 5,164 3,703
________ ________
Total equity 6,560 5,004
________ ________
6,560
5,004
________
________
The consolidated financial statements were approved and authorised for issue by the board on 7 April 2016 and were signed
on its behalf by:
W D Todd
Director
The notes following the consolidated statement of cash flows form part of these consolidated financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2015
Capital
Share Share redemption Translation Retained
capital premium reserve reserve earnings Total
Note £000 £000 £000 £000 £000 £000
At 31 December 2013 107 1,028 31 - 2,713 3,879
Profit and total comprehensive income for the year - - - - 2,944 2,944
Foreign currency translation differences - - - 47 - 47
Dividend 10 - - - - (1,954) (1,954)
Issue of new ordinary shares - 88 - - - 88
________ ________ ________ ________ ________ ________
At 31 December 2014 107 1,116 31 47 3,703 5,004
Profit and total comprehensive income for the year - - - - 4,082 4,082
Foreign currency translation differences - - - 41 - 41
Dividend 10 - - - - (2,621) (2,621)
Issue of new ordinary shares 23 1 53 - - - 54
________ ________ ________ ________ ________ ________
At 31 December 2015 108 1,169 31 88 5,164 6,560
________ ________ ________ ________ ________ ________
________
________
________
________
________
________
The notes following the consolidated statement of cash flows form part of these consolidated financial statements
Consolidated statement of cash flows
for the year ended 31 December 2015
2015 2014
Note £000 £000
Operating activities
Profit before taxation 4,151 3,809
Adjustments for:
Intangibles amortisation 14 2,235 1,472
Loss/(profit) on sale of fixed asset 4 (1)
Depreciation charge 16 191 184
Interest receivable 8 (1) (2)
Interest payable 8 265 135
________ ________
Operating cash flows before changes in working capital 6,845 5,597
Decrease/(increase) in inventories 138 (94)
Decrease in trade and other receivables 1,379 1,403
(Decrease)/increase in trade and other payables (533) 197
________ ________
Cash generated from operating activities 7,829 7,103
Tax paid (1,048) (1,049)
________ ________
Net cash flows from operating activities 6,781 6,054
________ ________
Investing activities
Purchase of plant and equipment 16 (554) (87)
Proceeds from disposal of plant and equipment - 6
Purchase price in respect of business combination - (11,994)
Net cash acquired with subsidiary undertaking - 3,526
- (8,468)
Interest receivable 8 1 2
________ ________
Net cash flows from investing activities (553) (8,547)
________ ________
Financing activities
Proceeds from borrowings - 10,000
Repayment of borrowings (4,000) (2,750)
Interest payable 8 (265) (135)
Issue of new ordinary shares 23 54 88
Equity dividends paid 10 (2,621) (1,954)
________ ________
Net cash flows from financing activities (6,832) 5,249
________ ________
Net (decrease)/increase in cash and cash equivalents (604) 2,756
Cash and cash equivalents at start of period 3,347 544
Exchange differences 41 47
________ ________
Cash and cash equivalents at end of period 2,784 3,347
________ ________
2,784
3,347
________
________
The notes below form part of these consolidated financial statements
Notes forming part of the consolidated financial statements
for the year ended 31 December 2015
1 General information
Maintel Holdings Plc is a public limited company incorporated and domiciled in the UK, whose shares are publicly traded on
the Alternative Investment Market (AIM). Its registered office and principal place of business is 160 Blackfriars Road,
London SE1 8EZ.
2 Accounting policies
The principal policies adopted in the preparation of the consolidated financial statements are as follows:
(a) Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards,
International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards
Board (IASB) as adopted by the European Union ("adopted IFRSs"), IFRIC interpretations and with those parts of the
Companies Act 2006 applicable to companies preparing their accounts in accordance with adopted IFRSs.
(b) Basis of consolidation
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they
formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all
three of the following elements are present: power over the investee, exposure to variable returns from the investee, and
the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and
circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the
consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities
are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in
the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from
the date on which control ceases.
(c) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and can be
reliably measured.
Revenue represents sales to customers at invoiced amounts and commissions receivable from suppliers, less value added tax.
Revenue from sales of technology, professional services and network services is recognised when the goods or services are
provided. Amounts invoiced in advance in respect of managed service contracts are deferred and released to the consolidated
statement of comprehensive income on a straight line basis over the period covered by the invoice. Connection commissions
received from mobile network operators are recognised (a) where commission is payable in advance, when the customer
contract has been accepted by the network operator and is therefore legally binding, less an allowance for expected future
clawbacks, and (b) where commission is payable on a monthly basis, in the month to which commission relates.
(d) Operating leases
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an "operating
lease"), the total rentals payable under the lease are charged to the consolidated statement of comprehensive income on a
straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the
rental expense over the lease term on a straight-line basis.
Rentals receivable under operating leases are credited to the consolidated statement of comprehensive income on a
straight-line basis over the term of the lease. The aggregate cost of lease incentives offered is recognised as a reduction
of the rental income over the lease term on a straight-line basis.
(e) Employee benefits
The Group contributes to a number of defined contribution pension schemes in respect of certain of its employees, including
those established under auto-enrolment legislation. The amount charged in the consolidated statement of comprehensive
income represents the employer contributions payable to the schemes in respect of the financial period. The assets of the
schemes are held separately from those of the Group in independently administered funds.
The cost of all short term employee benefits is recognised during the period the employee service is rendered.
Holiday pay is expensed in the period in which it accrues.
(f) Redundancy costs
Redundancy costs are those costs incurred from the date the redundancy decision is made.
(g) Interest
Interest income and expense is recognised on an accruals basis.
(h) Taxation
Current tax is the expected tax payable on the taxable income for the year, together with any adjustments to tax payable in
respect of previous years.
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, except for differences
arising on:
· the initial recognition of goodwill;
· the initial recognition of an asset or liability in a transaction which is not a business combination and at the
time of the transaction affects neither accounting nor taxable profit; and
· investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it
is probable that the difference will not reverse in the foreseeable future.
A deferred tax asset is recognised only to the extent that it is more probable than not that future taxable profits will be
available against which the asset can be utilised.
Management judgement is used in determining the amount of deferred tax asset that can be recognised, based upon the likely
timing and level of future taxable profits together with future tax planning strategies.
The amount of the deferred tax asset or liability is measured on an undiscounted basis and is determined using tax rates
that have been enacted or substantively enacted by the date of the consolidated statement of financial position and are
expected to apply when the deferred tax assets/liabilities are recovered/settled.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets
and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
· the same taxable Group company; or
· different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of
deferred tax assets or liabilities are expected to be settled or recovered.
(i) Dividends
Dividends unpaid at the reporting date are only recognised as a liability at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the Company. Proposed but unpaid dividends that do not
meet these criteria are disclosed in the notes to the consolidated financial statements.
(j) Intangible assets
Goodwill
Goodwill represents the excess of the fair value of the consideration of a business combination over the acquisition date
fair value of the identifiable assets, liabilities and contingent liabilities acquired; the fair value of the consideration
comprises the fair value of assets given. Contingent consideration is included in cost at its acquisition date fair value
and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or
loss. Direct costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset and carried at cost with any impairment in carrying value being charged to
the consolidated statement of comprehensive income.
Customer relationships
Customer relationships are stated at cost, or fair value where acquired through a business combination, less accumulated
amortisation. Where these assets have been acquired through a business combination, the cost will be the fair value
allocated in the acquisition accounting.
Customer relationships are amortised over their estimated useful lives of (i) six years in respect of managed service
contracts, (ii) seven years in respect of network services and mobile contracts.
(k) Impairment of non-current assets
Impairment tests on goodwill are undertaken annually on 31 December. Customer relationships and other assets are subject to
impairment tests whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Where the
carrying value of an asset exceeds its recoverable amount (being the higher of value in use and fair value less costs to
sell), the asset is written down accordingly in the administrative expenses line item in the consolidated statement of
comprehensive income and, in respect of goodwill impairments, the impairment is never reversed.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on
the asset's cash-generating unit (being the lowest group of assets in which the asset belongs for which there are
separately identifiable cash flows). Goodwill is allocated on initial recognition to each of the Group's cash-generating
units that are expected to benefit from the synergies of the combination giving rise to goodwill.
(l) Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and any impairment in value. Depreciation
is provided to write off the cost, less estimated residual values, of all tangible fixed assets over their expected useful
lives, at the following rates:
Office and computer equipment - 25% straight line
Motor vehicles - 25% straight line
Leasehold improvements - over the remaining period of the lease
Property, plant and equipment acquired in a business combination is initially recognised at its fair value.
(m) Inventories
Inventories comprise (i) maintenance stock, being replacement parts held to service customers' telecommunications systems,
and (ii) stock held for resale, being
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