REG - Maintel Holdings PLC - Final Results <Origin Href="QuoteRef">MAIH.L</Origin> - Part 4
20/03/2017 07:06
- Part 4: For the preceding part double click ID:nRST8724Zc
benefit to the Group of the non-taxable profits,
the deferred tax charge is adjusted above. An increase of £500,000 in the deferred tax asset relating to Datapoint useable
losses was reflected in the income statement and similarly adjusted for above.
Azzurri has brought forward capital allowances and tax losses, so that it will pay no tax in respect of its 2016 profits.
On acquisition, a deferred tax asset was acquired in respect of its capital allowances and tax losses, and a deferred tax
charge of £100,000 and £642,000 respectively has been recognised in the income statement in respect of the period's
profits. As this does not reflect the reality and benefit to the Group of the non-taxable profits, the deferred tax charge
is adjusted above.
A decrease of £275,000 in the deferred tax liability relating to intangible assets was reflected in the income statement
and similarly adjusted for above.
2016 2015
Number Number
(000s) (000s)
Weighted average number of ordinary shares of 1p each 13,092 10,754
Potentially dilutive shares 204 145
________ ________
13,296 10,899
________ ________
Earnings per share
Basic 16.0p 38.0p
Basic and diluted 15.8p 37.5p
Adjusted - basic but after the adjustments in the table above 78.0p 60.3p
Adjusted - basic and diluted after the adjustments in the table above 76.8p 59.5p
________ ________
________
________
The adjustments above have been made in order to provide a clearer picture of the trading performance of the Group.
In calculating diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. The Group has one category of potentially dilutive ordinary share,
being those share options granted to employees where the exercise price is less than the average price of the Company's
ordinary shares during the period.
12 Exceptional costs
Most of the exceptional costs incurred in the year were related to the Azzurri acquisition covering associated legal and
professional fees, redundancy costs, integration project costs and corporate restructuring fees. These and the other costs
analysed below have been shown as exceptional costs in the income statement as they are not normal operating expenses:
2016 2015
£000 £000
Property-related legal and professional costs 13 110
Acquisition-related redundancy costs 1,263 237
Other redundancy costs 170 -
Cost of rebrand 19 56
Legal and professional fees relating to Azzurri integration 260 -
Legal and professional fees relating to the acquisition of Azzurri 2,515 -
Duplicated occupation and dilapidation costs on London premises - 391
Rent penalty on Dublin premises - 90
________ ________
4,240 884
________ ________
13 Business combinations
On 4 May 2016 the Company acquired the entire share capital of Azzurri at the following provisional fair value amounts:
£000
Purchase consideration
Cash 47,028
________
Assets and liabilities acquired
Tangible fixed assets 2,778
Inventories 2,635
Trade and other receivables 19,321
Cash 1,595
Trade and other payables (27,242)
________
(913)
Intangible assets
Customer relationships 16,030
Software 2,550
ICON brand 3,278
Azzurri brand 202
Product platform 1,299
Deferred tax asset 2,639
Deferred tax liability on intangible assets (4,319)
________
Net assets and liabilities acquired 20,766
________
Goodwill 26,262
________
Cash flows arising from the acquisition were as follows:
Purchase consideration settled in cash (47,028)
Direct acquisition costs (note 12) (2,515)
Cash balances acquired 1,595
________
(47,948)
________
Azzurri was acquired to complement and extend the Group's existing offerings of telecommunications and data services and
enable further cross-selling to and from other Group operations, as further described in the strategic report. The goodwill
is attributable to the workforce of the acquired business, cross-selling opportunities and cost synergies that are expected
to be achieved from sharing the expertise and resource of Maintel with that of Azzurri and vice versa.
The acquisition of Azzurri Communications Limited was effected by the acquisition of its parent company, Warden Holdco
Limited for a purchase consideration of £47.0m. Warden Holdco Limited is the ultimate holding company of Azzurri
Communications Limited and its subsidiaries. Warden Midco Limited, Azzurri Holdings Limited and Azzurri Capital Limited are
intermediate holding companies of Azzurri Communications Limited and its subsidiaries.
The business was acquired for a cash consideration of £1, together with procurement of its senior debt facilities, loan
notes, and acquisition related fees of £20.5m, £24.0m, and £2.5m respectively. These acquired liabilities were settled
immediately following acquisition, and therefore formed part of the aggregate purchase consideration of £47.0m.
The purchase consideration quoted in the admission document for the Azzurri acquisition was £48.5m, but this was reduced to
£47.0m through price adjustment mechanisms.
The customer relationships, software, brand and product platforms are estimated to have a useful life of one to eight years
based on the directors' experience of comparable intangibles and are therefore amortised over those periods and are subject
to an annual impairment review.
A deferred tax liability of £4.3m has been recognised above which is being credited to the income statement pro rata to the
amortisation of the intangibles. The Azzurri related amortisation charge in 2016 is £2.5m.
The trade and other receivables are stated net of impairment allowances of £0.8m, which were the company's best estimate of
cash flows not collected.
Since its acquisition, Azzurri has contributed the following to the results of the Group before management charges of
£1.1m:
£000
Revenue 57,783
________
Profit before tax 2,506
________
Azzurri's revenue for the period 1 January 2016 to 31 December 2016 was £86.0m and before management charges, its profit
before tax, including amortisation, exceptional and pre acquisition debt costs was £0.4m.
The Group incurred £2.5m of third party costs related to this acquisition. These costs are included in administrative
expenses in the consolidated statement of comprehensive income.
14 Intangible assets
Goodwill Customer relation-ships Brands Product platform Software Total
£000 £000 £000 £000 £000 £000
Cost
At 1 January 2015 10,172 15,252 - - - 25,424
_______ _______ _______ _______ _______ _______
At 31 December 2015 10,172 15,252 - - - 25,424
Acquired in the year 26,262 16,030 3,480 1,299 2,550 49,621
Additions - - - - 132 132
_______ _______ _______ _______ _______ _______
At 31 December 2016 36,434 31,282 3,480 1,299 2,682 75,177
_______ _______ _______ _______ _______ _______
Amortisation and impairment
At 1 January 2015 317 4,740 - - - 5,057
Amortisation in the year - 2,235 - - - 2,235
_______ _______ _______ _______ _______ _______
At 31 December 2015 317 6,975 - - - 7,292
Amortisation in the year - 3,631 408 108 586 4,733
_______ _______ _______ _______ _______ _______
At 31 December 2016 317 10,606 408 108 586 12,025
_______ _______ _______ _______ _______ _______
Net book value
At 31 December 2016 36,117 20,676 3,072 1,191 2,096 63,152
_______ _______ _______ _______ _______ _______
At 31 December 2015 9,855 8,277 - - - 18,132
_______ _______ _______ _______ _______ _______
_______
_______
_______
Amortisation charges for the year have been charged through administrative expenses in the statement of comprehensive
income.
Goodwill
The carrying value of goodwill is allocated to the cash generating units as follows:
2016 2015
£000 £000
Network services division 21,134 443
Managed service and technology division 11,676 8,861
Mobile division 3,307 551
________ ________
36,117 9,855
________ ________
For the purposes of the impairment review of goodwill, the net present value of the projected future cash flows of the
relevant cash generating unit are compared with the carrying value of the net assets for that unit; where the recoverable
amount of the cash generating unit is less than the carrying amount of the net assets, an impairment loss is recognised.
Projected operating margins for this purpose are based on a five year horizon and 3% rate of growth, and a pre-tax discount
rate of 14% is applied to the resultant projected cash flows. The Group's impairment assessment at 31 December 2016
indicate that there is significant headroom for each unit.
The discount rate is based on conventional capital asset pricing model inputs and varies to reflect the relative risk
profiles of the relevant cash generating units. Sensitivity analysis using reasonable variations in the assumptions shows
no indication of impairment.
Fully amortised intangibles with a combined cost of £1.860m (2015: £1.413m) relating to the District Holdings Limited,
Callmaster Limited and Redstone acquisitions are included within intangibles and are still used within the business.
15 Subsidiaries
The Company owns investments in several subsidiaries including several which did not trade during the year. The following
were the principal subsidiary undertakings at the end of the year:
Maintel Europe Limited
Maintel International Limited (previously Datapoint Communications Limited)
Azzurri Communications Limited (acquired on 4 May 2016)
The acquisition of Azzurri Communications Limited was effected by the acquisition of its parent company, Warden Holdco
Limited on 4 May 2016. Warden Holdco Limited is the ultimate holding company of Azzurri Communications Limited and its
subsidiaries. Warden Midco Limited, Azzurri Holdings Limited and Azzurri Capital Limited are intermediate holding companies
of Azzurri Communications Limited and its subsidiaries.
Both Maintel Europe Limited and Azzurri Communications Limited provide goods and services in the managed services and
technology sector, network services and mobile services. Maintel International Limited provide goods and services in the
managed services and technology sector.
The following subsidiaries of the Company were dormant as at 31 December 2016:
Maintel Finance Limited District Holdings Limited
Maintel Network Solutions Limited Unified Group Limited
Unified Professional Services Limited Unified Networks Services Limited
Proximity Communications Limited (hived up into Maintel Europe Limited on 1 January 2016) Achilles Professional Services Limited (hived up into Maintel Europe Limited on 1 January 2016)
Datapoint Customer Solutions Limited (hived up into Maintel Europe Limited on 1 October 2016) Maintel Voice and Data Limited (hived up into Maintel Europe Limited on 1 October 2016)
Maintel Mobile Limited (hived up into Azzurri Communications Limited on 1 October 2016) Datapoint Global Services Limited (hived up into Maintel Europe Limited on 1 October 2016)
-
The following subsidiaries of the Company were dormant and were in the process of being dissolved as at 31 December 2016:
Maintel London Limited (dissolved on 17 January 2017) Unified Communications Limited (dissolved on 17 January 2017)
DVH Group LimitedAzzurri Scotland Limited Wireless Air Ware LimitedSirocom Limited
Siroconnect Limited Azzurri Trustees Limited
Netwise Systems Limited FH Brown Office Technologies Limited
Azzurri Mobile Limited Focus Communications International Limited
Azzurri Data Limited Callmedia Limited
MiTech Europe Limited MiTech Group Limited
MitTech Digitalk Limited MiTech Services Limited
Smart Connection Company Limited MiTech AMS Limited
MiSpace Limited Plenitude Data Services Limited
Smart House (UK) Limited
Each subsidiary company is wholly owned and, other than Maintel International Limited and Azzurri Scotland Limited is
incorporated in England and Wales. Maintel International Limited is incorporated in the Republic of Ireland and Azzurri
Scotland is incorporated in Scotland.
Each subsidiary, other than Maintel International Limited, has the same registered address as the parent. Maintel
International Limited's registered address is 9 Clanwilliam square, Grand canal quay, Dublin 2, Ireland. Azzurri Scotland
Limited's registered address is Turcan Connell, Princes exchange, 1 Earl Grey street, Edinburgh, EH3 9EE, Scotland.
16 Property, plant and equipment
Property, plant and equipment
Freehold building Leasehold Improvements Office and computer equipment Motor vehicles Total
£000 £000 £000 £000 £000
Cost or valuation
At 1 January 2015 - 571 2,475 47 3,093
Additions - 336 218 - 554
Disposals - (489) (1,221) - (1,710)
Exchange differences - (4) (3) - (7)
________ ________ ________ ________ ________
At 31 December 2015 - 414 1,469 47 1,930
Additions - 18 420 - 438
On acquisition of Azzurri 1,768 1,128 5,562 - 8,458
Exchange differences - 2 - - 2
________ ________ ________ ________ ________
At 31 December 2016 1,768 1,562 7,451 47 10,828
________ ________ ________ ________ ________
Depreciation
At 1 January 2015 - 553 2,192 34 2,779
Provided in year - 11 168 12 191
Disposals - (488) (1,218) - (1,706)
Exchange differences - (5) (2) - (7)
________ ________ ________ ________ ________
At 31 December 2015 - 71 1,140 46 1,257
On acquisition of Azzurri 147 825 4,708 - 5,680
Provided in year 17 119 461 1 598
________ ________ ________ ________ ________
At 31 December 2016 164 1,015 6,309 47 7,535
________ ________ ________ ________ ________
Net book value
At 31 December 2016 1,604 547 1,142 - 3,293
________ ________ ________ ________ ________
At 31 December 2015 - 343 329 1 673
________ ________ ________ ________ ________
________
________
________
The significant level of disposals in the previous year, mostly fully depreciated assets, primarily relates to (a) the
cessation of use of the ERP system acquired with Datapoint, and (b) leasehold improvements, furniture and IT equipment
disposed of on the vacation of three properties during that year; the additions in the current year relate to continued
investment in the ICON platform and expanding capacity in the data centre infrastructure.
17 Inventories
2016 2015
£000 £000
Maintenance stock 1,970 1,008
Stock held for resale 2,912 290
________ ________
4,882 1,298
________ ________
Cost of inventories recognised as an expense 17,274 8,579
________ ________
Provisions of £542,000 were made against the maintenance stock in 2016 (2015: £79,000), with no reversal of provisions
having been made in either year.
18 Trade and other receivables
2016 2015
£000 £000
Trade receivables 17,383 7,147
Other receivables 388 9
Prepayments and accrued income 11,600 3,884
________ ________
29,371 11,040
________ ________
All amounts shown above fall due for payment within one year.
19 Trade and other payables
2016 2015
£000 £000
Trade payables 9,909 5,148
Other tax and social security 4,658 1,650
Accruals 9,161 3,158
Other payables 4,344 601
Deferred managed service income 16,012 9,003
Other deferred income 6,012 716
________ ________
50,096 20,276
________ ________
Deferred managed service income relates to the unearned element of managed service revenue that has been invoiced but not
yet recognised in the consolidated statement of comprehensive income. Other deferred income relates to other amounts
invoiced but not yet recognised in the consolidated statement of comprehensive income.
20 Borrowings
2016 2015
£000 £000
Non-current bank loan - secured 30,688 4,000
Current bank loan - secured - 2,000
________ ________
30,688 6,000
________ ________
On 8 April 2016 the Group entered into new facilities with the Royal Bank of Scotland plc to support the acquisition of
Azzurri. These consist of a revolving credit facility totalling £36.0m in committed funds on a reducing basis for a five
year term (with an option to borrow up to a further £20.0m in uncommitted accordion facilities) and replaced the Company's
existing term and revolving credit facilities with Lloyds Bank plc which were fully repaid and terminated.
Under the terms of the facility agreement the committed funds reduce to £31.0m on the three year anniversary, and to £26.0m
on the four year anniversary from the date of signing.
Non-current bank loan above is stated net of unamortised issue costs of debt of £0.3m.
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 revolving credit facility and overdraft facility at a covenant depending tiered rate of
1.70 % to 2.85% per annum over LIBOR, with a reduced rate payable on undrawn facility. Interest is payable on amounts drawn
under the overdraft facility at covenant depending tiered rate of 1.70 % to 2.85% per annum over LIBOR.
Covenants based on adjusted EBITDA to net finance charges, net debt to EBITDA and operating cashflow to debt service ratios
are tested on a quarterly basis starting from 31 December 2016; these tests have been passed for 31 December 2016.
The directors consider that there is no material difference between the book value and fair value of the loan.
21 Deferred taxation
Property,
plant and Intangible Tax
equipment assets losses Other Total
£000 £000 £000 £000 £000
Net liability at 1 January 2015 10 2,144 (904) (8) 1,242
Charge/(credit) to consolidated statement of comprehensive income 79 (440) 451 2 92
Credit to consolidated statement of comprehensive income in respect of anticipated further use of tax losses - - (500) - (500)
________ _______ ________ ________ ________
Net liability at 31 December 2015 89 1,704 (953) (6) 834
Liability established against intangible assets acquired during the year - 4,319 - - 4,319
Asset acquired with Azzurri (1,997) - (642) - (2,639)
Charge/(credit) to consolidated statement of comprehensive income 85 (948) 1,146 (2) 281
Credit to consolidated statement of comprehensive income in respect of anticipated further use of tax losses - - (500) - (500)
Credit to consolidated statement of comprehensive income in respect of revaluation of liability against intangible assets - (275) - - (275)
________ ________ ________ ________ ________
Net liability at 31 December 2016 (1,823) 4,800 (949) (8) 2,020
________ ________ ________ ________ ________
________
________
________
The deferred tax liability represents a liability established under IFRS on the recognition of an intangible asset in
relation to the Maintel Mobile, Datapoint, Proximity and Azzurri acquisitions.
The deferred tax asset relates to (a) the anticipated use in the future of tax losses within the Datapoint companies which
were acquired in 2013, based on estimates of those companies' future profitability and relevant tax rates, and (b) the
amount of the tax value of capital allowances claimed in excess of depreciation provided in the accounts, and is calculated
using the tax rates at which the liabilities are expected to reverse.
The tax losses used to date for Datapoint are in excess of those envisaged at the time of acquisition, and the directors
have therefore increased the deferred tax asset by £0.5m in the year to reflect their expectation that more will be used in
the future. A change in tax rates in the future would increase or decrease the value of this asset.
The asset relating to the use of tax losses is based on the directors' judgement of a range of factors influencing their
anticipated use. A further undiscounted deferred tax asset of £1.2m (2015: £1.8m) relating to tax losses has not been
recognised on the grounds that there is insufficient evidence that the asset will be recoverable; use of these unrecognised
losses would be increased by the Datapoint companies making more than the anticipated future profits and/or an increase in
corporate tax rates.
Changes in tax rates and factors affecting the future tax charge
As described in note 9, the corporation tax rate will reduce from 20% to 19% with effect from 1 April 2017 and to 17% from
1 April 2020. The deferred tax liability balance at 31 December 2016 has been calculated on the basis that they will unwind
at the rate prevailing at the time of the amortisation charge. Based on their projected rate of unwinding and applying the
reduced future rates would result in a decreased deferred tax charge in the consolidated statement of comprehensive income
for the year, and an adjustment of £275,000 (2015: £Nil) to revalue the liability has been credited to the income statement
in the current year.
22 Financial instruments
The Group's financial assets and liabilities mainly comprise cash, borrowings, trade and other receivables and trade and
other payables.
Loans and receivables
2016 2015
£000 £000
Current financial assets
Trade receivables 17,383 7,147
Cash and cash equivalents 10,884 2,784
Other receivables 388 9
________ ________
28,655 9,940
________ ________
Financial liabilitiesmeasured at amortised cost
2016 2015
£000 £000
Non-current financial liabilities
Secured bank loan 30,688 4,000
________ ________
Current financial liabilities
Trade payables 9,909 5,148
Other payables 4,344 601
Other tax and social security 4,658 1,650
Accruals 9,161 3,158
Secured bank loan - 2,000
________ ________
28,072 12,557
________ ________
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 £416,000 is provided at 31 December 2016 (2015: £157,000). The provision represents an estimate of potential bad debt
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 2016 owed the Group £3.1m including VAT (2015:
£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:
2016 2015
£000 £000
Provision at start of year 157 218
Acquired provision of Azzurri 766 -
Provision used (442) (89)
Additional provision (reversed)/made (65) 28
________ ________
Provision at end of year 416 157
________ ________
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:
2016 2015
£000 £000
Up to 30 days overdue 2,258 1,707
31-60 days overdue 148 271
More than 60 days overdue 15 8
________ ________
2,421 1,986
________ ________
Cash and cash equivalents at 2016 and 2015 year-ends are represented by cash and short term deposits, primarily with Royal
Bank of Scotland and 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 £31.0m at 31 December 2016 (2015: £6.0m), together with a £5.0m overdraft facility
(2015:£1.0m). 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 2016, and all other variables were held constant, the
Group's profit for the year would have been £139,000 (2015: £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 £3,000 interest during the
year (2015: £1,000).
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
2016 2015 2016 2015
Number Number £000 £000
Ordinary shares of 1p each - 17,571,840 - 176
_________ _________ _________ _________
Allotted, called up and fully paid
2016 2015 2016 2015
Number Number £000 £000
Ordinary shares of 1p each 14,197,059 10,768,487 142 108
_________ _________ _________ _________
The Company adopted new Articles on 27 April 2016, which dispensed with the need for the Company to have an authorised
share capital.
3,428,572 shares were issued in the year in relation to the acquisition of Azzurri; no shares were repurchased during the
year.
24 Reserves
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.
The directors propose the payment of a final dividend in respect of 2016 of 17.4p per share; 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, which was updated in 2016. The SIP
is open to all employees and executive directors with at least 6 months' continuous service with a Group company, and
allows them 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 and directors 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 and on 20
August 2015 they approved the Maintel 2015 Long-term Incentive Plan.
The remuneration committee's report above describes the options granted over the Company's ordinary shares.
In aggregate, options are outstanding over 2.2% 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:
2016 2016 2015 2015
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 1,194 253 583 121
Later than one year and not later than five years 3,326 68 2,601 98
Later than five years 2,071 - 2,663 -
________ ________ ________ ________
6,591 321 5,847 219
________ ________ ________ ________
________
The commitment relating to land and buildings is in respect of the Group's London, Dublin, Thatcham, Weybridge, Aldridge
and Fareham offices; further details are given 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,
licencing of billing software and office supplies.
Part of the London premises has been sublet, with future minimum rentals receivable under non-cancellable operating leases
as set out below:
2016 2015
Land and Land and
buildings buildings
£000 £000
The total future minimum lease payments are due as follow:
Not later than one year 145 129
Later than one year and not later than five years 155 257
________ ________
300 386
________ ________
________
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:
2016 2015
£000 £000
Short term employment benefits 1,679 1,409
Contributions to defined contribution pension scheme 37 25
________ ________
1,716 1,434
________ ________
Other transactions
The Group traded during the year with E Buxton, A J McCaffery and K Stevens. Transactions in 2016 and 2015 amounted in
aggregate to less than £1,200 in each case.
The Group did not trade during the current 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 previous year amounting to £3,000, of
which no amounts were owed at 2015 year-end.
In 2016, the Company paid fees of £61,000 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 Azzurri (2015: £Nil).
The Company paid fees of £57,000 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 relating to the acquisition of Azzurri (2015: Other
consultancy; £11,000).
In the current year, Proximity paid £13,000 (2015: £64,000) 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 customer introduction related commissions in the previous year to J A Spens, a shareholder in the Company,
amounting to £3,000 and no amounts were owed at the 2015 year-end. No such transaction occurred in 2016.
29 Post balance sheet events
On 1 January 2017, as part of the integration of the Azzurri business, its business and assets were hived up into Maintel
Europe.
Company balance sheet
at 31 December 2016 - prepared under FRS101
Company number 3181729 Note 2016 2016 2015 2015
£000 £000 £000 £000
Fixed assets
Investment in subsidiaries 4 49,560 22,225
Current assets
Debtors 5 10,298 404
Cash at bank and in hand 1,499 71
________ ________
11,797 475
Creditors: amounts falling duewithin one year
Creditors 6 630 7,010
Borrowings 7 - 2,000
________ ________
Net current assets/(liabilities) 11,167 (8,535)
Creditors: amounts falling dueafter one year
Borrowings 7 (30,688) (4,000)
________ ________
Total assets less current liabilities 30,039 9,690
________ ________
Capital and reserves
Called up share capital 8 142 108
Share premium 24,354 1,169
Capital redemption reserve 31 31
Profit and loss account 5,512 8,382
________ ________
Shareholders' funds 30,039 9,690
_________ _________
_________
_________
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 £712,000 (2015: £2,484,000). The auditor's remuneration for audit services to the Company in the year was £16,000
(2015: £9,000).
The Company financial statements were approved and authorised for issue by the board on 17 March 2017 and were signed on
its behalf by:
M Townsend
Director
The notes below form part of these financial statements.
Reconciliation of movement in shareholders' funds
for the year ended 31 December 2016 - prepared under FRS101
Capital Profit
Share Share redemption and loss
capital premium reserve account Total
Note £000 £000 £000 £000 £000
At 1 January 2015 107 1,116 31 8,519 9,773
Profit and total comprehensive income 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
Profit and total comprehensive income for year - - - 712 712
Dividends paid 3 - - - (3,679) (3,679)
Issue of new ordinary shares 8 34 23,966 -
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