REG - Maintel Holdings PLC - Final Results <Origin Href="QuoteRef">MAIH.L</Origin> - Part 4
08/04/2016 07:05
- Part 4: For the preceding part double click ID:nRSH5689Uc
financial liabilities
Secured bank loan 4,000 7,500
________ ________
Current financial liabilities
Trade payables 5,148 4,896
Other payables 601 399
Secured bank loan 2,000 2,500
________ ________
7,749 7,795
________ ________
The maximum credit risk for each of the above is the carrying value stated above. The main risks arising from the Group's
operations are credit risk, currency risk and interest rate risk, however other risks are also considered below.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit
evaluations are performed on customers as deemed necessary based on, inter alia, the nature of the prospect and size of
order. The Group does not require collateral in respect of financial assets.
At the reporting date, the largest exposure was represented by the carrying value of trade and other receivables, against
which £157,000 is provided at 31 December 2015 (2014: £218,000). The provision represents an estimate of potential bad
debt, goodwill credits and additional costs to completion to be incurred in respect of the year end trade receivables, a
review having been undertaken of each such year end receivable. The largest individual receivable included in trade and
other receivables at 31 December 2015 owed the Group £1.6m including VAT (2014: £1.6m). The Group's customers are spread
across a broad range of sectors and consequently it is not otherwise exposed to significant concentrations of credit risk
on its trade receivables.
The movement on the provision is as follows:
2015 2014
£000 £000
Provision at start of year 218 149
Provision used (89) (27)
Additional provision made 28 96
________ ________
Provision at end of year 157 218
________ ________
A debt is considered to be bad when it is deemed irrecoverable, for example when the debtor goes into liquidation, or when
a credit or partial credit is issued to the customer for goodwill or commercial reasons.
The Group had past due trade receivables not requiring impairment as follows:
2015 2014
£000 £000
Up to 30 days overdue 1,707 1,590
31-60 days overdue 271 943
More than 60 days overdue 8 56
________ ________
1,986 2,589
________ ________
Cash and cash equivalents at 2015 and 2014 year ends are represented by cash and short term deposits, primarily with Lloyds
Bank plc.
Foreign currency risk
The functional currency of all Group companies is Sterling apart from Maintel International Limited, which is registered in
and operates from the Republic of Ireland and whose functional currency is the Euro. The consolidation of the results of
that company is therefore affected by movements in the Euro/Sterling exchange rate. In addition, some Group companies
transact with certain customers and suppliers in Euros or Dollars, and those transactions are affected by exchange rate
movements during the year but are not deemed material in a Group context.
Interest rate risk
The Group had borrowings of £6.0m at 31 December 2015 (2014: £10.0m), together with a £1.0m overdraft facility. The
interest rate charged is related to LIBOR and bank rate respectively and will therefore change as those rates change. If
interest rates had been 0.5% higher/lower during 2015, and all other variables were held constant, the Group's profit for
the year would have been £48,000 higher/lower due to the variable interest element on the loan.
The Group expects to be in a net borrowing position in the immediate future, and received only £1,000 interest during the
year (2014: £2,000).
Liquidity risk
Liquidity risk represents the risk that the Group will not be able to meet its financial obligations as they fall due.
This risk is managed by balancing the Group's cash balances, banking facilities and reserve borrowing facilities in the
light of projected operational and strategic requirements.
Market risk
As noted above, the interest payable on borrowings is dependent on the prevailing rates of interest from time to time.
Capital risk management
The Group's objective when managing capital is to safeguard its ability to continue as a going concern in order to provide
returns to shareholders. Capital comprises all components of equity - share capital, capital redemption reserve, share
premium, translation reserve and retained earnings. Typically returns to shareholders will be funded from retained
profits, however in order to take advantage of the opportunities available to it from time to time, the Group will consider
the appropriateness of issuing shares, repurchasing shares, amending its dividend policy and borrowing, as is deemed
appropriate in the light of such opportunities and changing economic circumstances.
23 Share capital
Authorised
2015 2014 2015 2014
Number Number £000 £000
Ordinary shares of 1p each 17,571,840 17,571,840 176 176
_________ _________ _________ _________
Allotted, called up and fully paid
2015 2014 2015 2014
Number Number £000 £000
Ordinary shares of 1p each 10,768,487 10,714,578 108 107
_________ _________ _________ _________
53,909 ordinary shares were issued in the year on exercise of a share option.
24 Reserves
Share capital, share premium, translation reserve and retained earnings represent balances conventionally attributed to
those descriptions.
The capital redemption reserve represents the nominal value of ordinary shares repurchased and cancelled by the Company and
is undistributable in normal circumstances.
The Group having no regulatory capital or similar requirements, its primary capital management focus is on maximising
earnings per share and therefore shareholder return.
A second interim dividend of 16.5p per share in respect of the year to 31 December 2015 was paid on 5 April 2016; this
dividend is not provided for in these financial statements.
25 Share Incentive Plan
The Company established the Maintel Holdings Plc Share Incentive Plan ("SIP") in 2006. The SIP is open to all employees
with at least 6 months' continuous service with a Group company, and allows employees to subscribe for existing shares in
the Company out of their gross salary. The shares are bought by the SIP on the open market. 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.
26 Share based payments
On 18 May 2009 the directors of the Company approved the adoption of the Maintel Holdings Plc 2009 Option Plan.
The remuneration committee's report above describes the options granted over the Company's ordinary shares.
In aggregate, options are outstanding over 2.3% of the current issued share capital. The number of shares under option and
the vesting and exercise prices may be adjusted at the discretion of the remuneration committee in the event of a variation
in the issued share capital of the Company.
27 Operating leases
As at 31 December, the Group had future minimum rentals payable under non-cancellable operating leases as set out below:
2015 2015 2014 2014
Land and Land and
buildings Other buildings Other
£000 £000 £000 £000
The total future minimum lease payments are due as follow:
Not later than one year 583 121 475 87
Later than one year and not later than five years 2,601 98 122 59
Later than five years 2,663 - - -
________ ________ ________ ________
5,847 219 597 146
________ ________ ________ ________
________
The commitment relating to land and buildings is in respect of the Group's London, Dublin and Thatcham offices; the
changes in leases associated with these premises are described in the Strategic report. The remaining commitment relates to
contract hired motor vehicles (which are typically replaced on a 3 year rolling cycle), office equipment, datacentre space
rental and licencing of billing software.
Part of the London premises has been sublet, with future minimum rentals receivable under non-cancellable operating leases
as set out below:
2015 2014
Land and Land and
buildings buildings
£000 £000
The total future minimum lease payments are due as follow:
Not later than one year 129 -
Later than one year and not later than five years 257 -
________ ________
386 -
________ ________
________
28 Related party transactions
Transactions with key management personnel
The Group has a related party relationship with its directors and executive officers. The remuneration of the individual
directors is disclosed in the remuneration committee report. The remuneration of the directors and other key members of
management, consisting of certain subsidiary company directors, during the year was as follows:
2015 2014
£000 £000
Short term employment benefits 1,409 1,573
Contributions to defined contribution pension scheme 25 36
________ ________
1,434 1,609
________ ________
Other transactions
The Group traded during the year with E Buxton, A J McCaffery and K Stevens. Transactions in 2015 and 2014 amounted in
aggregate to less than £1,000 in each case.
The Group traded during the year with The Imaginarium Studios Limited, a company in which J D S Booth is a shareholder.
Imaginarium purchased telecommunication services from the Group in the year amounting to £3,000 net of VAT (2014: £3,000),
of which £Nil (2014: £Nil) was owed at the year end.
In 2014, the Company paid fees of £20,000 to Hopton Hill Limited, a company of which N J Taylor is a shareholder and
director, in respect of consultancy services provided to the Company relating to the acquisition of Proximity (2015:
£Nil).
The Company paid fees of £11,000 (2014: £13,000) to Anchusa Consulting Limited, a company of which A P Nabavi is a
shareholder and director, in respect of consultancy services provided to the Company.
Proximity paid fees of £64,000 (2014: £14,000 plus £1,000 expenses) to TCB Consulting, a company of which D K Boyce is a
shareholder and director, in respect of consultancy services provided to the company.
The Group paid commissions in the year to J A Spens, a shareholder in the Company, amounting to £3,000 net of VAT (2014:
£9,000), of which £Nil (2014: £1,000) was owed at the year end. These commissions relate to revenues earned by the Group
following an introduction to a customer by Mr Spens.
29 Post balance sheet events
On 1 January 2016, as part of the integration of the Proximity business, its business and assets, together with those of
its 100% subsidiary, Achilles Professional Services Limited, were variously transferred to Maintel Europe Limited and
Maintel Voice and Data Limited.
Company balance sheet
at 31 December 2015 - prepared under FRS101
Note 2015 2015 2014 2014
£000 £000 £000 £000
Fixed assets
Investment in subsidiaries 5 22,225 24,825
Current assets
Debtors 6 404 518
Cash at bank and in hand 71 948
________ ________
475 1,466
Creditors: amounts falling duewithin one year
Creditors 7 7,010 6,518
Borrowings 8 2,000 2,500
________ ________
Net current liabilities (8,535) (7,552)
Creditors: amounts falling dueafter one year
Borrowings 8 (4,000) (7,500)
________ ________
Total assets less current liabilities 9,690 9,773
________ ________
Capital and reserves
Called up share capital 9 108 107
Share premium 1,169 1,116
Capital redemption reserve 31 31
Profit and loss account 8,382 8,519
________ ________
Shareholders' funds 9,690 9,773
________ ________
________
________
The Company 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 below form part of these financial statements.
Reconciliation of movement in shareholders' funds
for the year ended 31 December 2015 - prepared under FRS101
Capital Profit and
Share Share redemption loss
capital premium reserve account Total
£000 £000 £000 £000 £000
At 1 January 2014 107 1,028 31 7,367 8,533
Profit for year - - - 3,106 3,106
Dividends paid - - (1,954) (1,954)
Issue of new ordinary shares - 88 - - 88
________ ________ ________ ________ ________
At 31 December 2014 107 1,116 31 8,519 9,773
Profit for year - - - 2,484 2,484
Dividends paid - - - (2,621) (2,621)
Issue of new ordinary shares 1 53 - - 54
________ ________ ________ ________ ________
At 31 December 2015 108 1,169 31 8,382 9,690
________ ________ ________ ________ ________
________
________
________
________
________
The notes below form part of these financial statements.
Notes forming part of the Company financial statements
at 31 December 2015
1 Accounting policies
The Company financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of
Financial Reporting Requirements and Financial Reporting Standard 101 Reduced Disclosure Framework with effect from 1
January 2014.
The principal accounting policies are summarised below; they have been applied consistently throughout the year and the
preceding year.
(a) Basis of preparation
The financial statements of the Company are presented as required by the Companies Act 2006.
The company has applied FRS101 'Reduced Disclosure Framework' in these financial statements, which is based on the
recognition and measurement requirements of International Financial Reporting Standards (IFRS) as adopted by the European
Union. It intends to continue to use FRS101 for the foreseeable future.
(b) Investments
Investments in subsidiary undertakings are stated at cost unless, in the opinion of the directors, there has been
impairment to their value, in which case they are written down to their recoverable amount.
(c) 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.
(d) Dividends
Dividends unpaid at the balance sheet 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 accounts.
(e) Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of disclosure exemptions conferred by FRS101.
Therefore these financial statements do not include:
· certain comparative information as otherwise required by EU endorsed IFRS;
· certain disclosures regarding the company's capital;
· a statement of cash flows;
· the effect of future accounting standards not yet adopted;
· the disclosure of the remuneration of key management personnel; and
· disclosure of related party transactions with other wholly owned members of the group headed by Maintel Holdings
Plc.
In addition, and in accordance with FRS101 further disclosure exemptions have been adopted because equivalent disclosures
are included in the consolidated financial statements of Maintel Holdings Plc. These financial statements do not include
certain disclosures in respect of:
· Share based payments;
· Financial Instruments (other than certain disclosures required as a result of recording financial instruments at
fair value);
· Impairment of assets
Other than the adoption of the reduced disclosures there was no material effect of applying FRS101 for the first time.
(f) Judgements and key areas of estimation uncertainty
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The
principal use of estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year relates to the potential impairment of the carrying value
of investments.
The Company assesses at each reporting date whether there is an indication that its investments may be impaired. In
undertaking such an impairment review, estimates are required in determining an asset's recoverable amount; those used are
shown in note 14 of the consolidated accounts. These estimates include the asset's future cash flows and an appropriate
discount to reflect the time value of money. The range of estimates reflects the relative risk profiles of the relevant
cash generating units.
2 Employees
The directors' remuneration is shown in note 6 of the consolidated financial statements.
3 Profit for the financial period
The Company has taken advantage of the exemption under S408 of the Companies Act 2006 and has not presented its own profit
and loss account in these financial statements. The profit for the year of the Company, after tax and before dividends
paid, was £2,484,000 (2014: £3,106,000). The auditor's remuneration for audit services to the Company in the year was
£9,000 (2014: £9,000).
4 Dividends paid on ordinary shares
Details of dividends paid and payable are shown in note 10 of the consolidated financial statements.
5 Investment in subsidiaries
Shares in
subsidiary
undertakings
£000
Cost
At 1 January 2014 12,911
Additions in the year 11,994
________
At 31 December 2015 and 31 December 2014 24,905
________
Provision for impairment
At 31 December 2014 and 1 January 2014 80
Provision for impairment in the year 2,600
________
At 31 December 2015 2,680
________
Net book value
At 31 December 2015 22,225
________
At 31 December 2014 24,825
________
On 24 October 2014 the Company acquired the entire share capital of Proximity Communications Limited, for a gross
consideration of £12.0m, paid in cash.
Whilst the directors envisage an improvement in its results in the future, the profitability of subsidiary Maintel Mobile
Limited in 2015 does not currently justify its £7.0m investment carrying value in the Company's accounts and a £2.6m
provision for impairment has therefore been made against the investment.
Details of the Company's subsidiaries are shown in note 15 of the consolidated financial statements.
6 Debtors
2015 2014
£000 £000
Amounts owed by subsidiary undertakings 221 419
Other tax and social security 16 54
Prepayments and accrued income 46 22
Corporation tax recoverable 121 23
________ ________
404 518
________ ________
All amounts shown under debtors fall due for payment within one year.
7 Creditors
2015 2014
£000 £000
Amounts due to subsidiary undertakings 6,934 6,391
Trade creditors 39 61
Accruals and deferred income 37 66
________ ________
7,010 6,518
________ ________
8 Borrowings
2015 2014
£000 £000
Non-current bank loans - secured 4,000 7,500
Current bank loans - secured 2,000 2,500
________ ________
6,000 10,000
________ ________
On 24 October 2014 the Group entered into a £13.0m facility agreement with Lloyds Bank plc to support the acquisition of
Proximity, replacing its previous facilities with Lloyds. This was split between a £6.0m term loan and a £7.0m revolving
credit facility, the latter incorporating a £1.0m overdraft facility.
The term loan is repayable in quarterly instalments over a 3 year period, and had reduced to £3.5m by 31 December 2015. The
revolving facility is due for renewal on 24 October 2017 and the overdraft facility, which was not drawn at 31 December
2015 or 31 December 2014 has been renewed and is due for further renewal on 1 November 2016.
The facilities are secured by a fixed and floating charge over the assets of the Company and its subsidiaries. Interest is
payable on amounts drawn on the term loan and revolving credit facility at a variable rate of 2.25% per annum over LIBOR,
with a reduced rate payable on undrawn facility. Interest is payable on amounts drawn under the overdraft facility at a
rate of 2.25% over base rate.
Covenants based on adjusted EBITDA to net finance charges and net debt to EBITDA ratios are tested on a quarterly basis;
these tests have been passed to date.
The directors consider that there is no material difference between the book value and fair value of the loan.
9 Share capital
Authorised
2015 2014 2015 2014
Number Number £000 £000
Ordinary shares of 1p each 17,571,840 17,571,840 176 176
_________ _________ _________ _________
Allotted, called up and fully paid
2015 2014 2015 2014
Number Number £000 £000
Ordinary shares of 1p each 10,768,487 10,714,578 108 107
_________ _________ _________ _________
53,909 ordinary shares were issued in the year on exercise of a share option.
10 Related party transactions
Transactions with other Group companies have not been disclosed as permitted by FRS101, as the Group companies are wholly
owned.
11 Contingent liabilities
As security on the Group's loan and overdraft facilities, the Company has entered into a cross guarantee with its
subsidiary undertakings in favour of Lloyds Bank plc. At 31 December 2015 each subsidiary undertaking had a net cash
balance.
The Company has entered into an agreement with Maintel Europe Limited, guaranteeing the performance by Maintel Europe of
its obligations under the lease on its London premises.
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