REG - Maintel Holdings PLC - Interim Results <Origin Href="QuoteRef">MAIH.L</Origin> - Part 2
19/09/2016 07:05
- Part 2: For the preceding part double click ID:nRSS1238Ka
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Financial expense (298) (139) (265)
(Loss)/profit before taxation (696) 2,094 4,151
Taxation expense (290) (287) (69)
(Loss)/profit for the period and attributable to owners of the parent (986) 1,807 4,082
Other comprehensive (expense)/income for the period
Exchange differences on translation of foreign operations (37) 54 41
Total comprehensive (loss)/income for the period (1,023) 1,861 4,123
(Loss)/earnings per share
Basic 3 (8.2p) 16.8p 38.0p
Diluted 3 (8.2p) 16.6p 37.5p
(37)
54
41
Total comprehensive (loss)/income for the period
(1,023)
1,861
4,123
(Loss)/earnings per share
Basic
3
(8.2p)
16.8p
38.0p
Diluted
3
(8.2p)
16.6p
37.5p
Maintel Holdings Plc
Consolidated statement of financial position
at 30 June 2016 (unaudited)
30 June 2016 30 June 2015 31 December 2015
Note £000 £000 £000
(unaudited) (unaudited) (audited)
Non current assets
Intangible assets 64,402 19,249 18,132
Property, plant and equipment 3,631 262 673
68,033 19,511 18,805
Current assets
Inventories 2,704 1,386 1,298
Trade and other receivables 35,539 12,578 11,040
Cash and cash equivalents 3,944 350 2,784
42,187 14,314 15,122
Total assets 110,220 33,825 33,927
Current liabilities
Trade and other payables 49,555 17,353 20,276
Current tax liabilities 116 396 257
Borrowings 8 - 2,000 2,000
Total current liabilities 49,671 19,749 22,533
Non current liabilities
Deferred tax liability 2,894 1,200 834
Borrowings 8 30,652 7,200 4,000
Total net assets 27,003 5,676 6,560
Equity
Issued share capital 142 108 108
Share premium 24,354 1,169 1,169
Capital redemption reserve 31 31 31
Share based remuneration reserve 24 - -
Translation reserve 51 101 88
Retained earnings 2,401 4,267 5,164
Total equity 27,003 5,676 6,560
6,560
Maintel Holdings Plc
Consolidated statement of changes in equity
for the 6 months ended 30 June 2016 (unaudited)
Share capital Share premium Capital redemption reserve Translation reserve Share based remuneration reserve Retained earnings Total
£000 £000 £000 £000 £000 £000 £000
At 1 January 2015 107 1,116 31 47 - 3,703 5,004
Profit for the period - - - - - 1,807 1,807
Other comprehensive income:
foreign currency translation differences - - - 54 - - 54
Total comprehensive income for the period - - - 54 - 1,807 1,861
Dividend - - - - - (1,243) (1,243)
Issue of new ordinary shares 1 53 - - - - 54
At 30 June 2015 108 1,169 31 101 - 4,267 5,676
Profit for the period - - - - - 2,275 2,275
Other comprehensive income:
foreign currency translation differences - - - (13) - - (13)
Total comprehensive income for the period - - - (13) - 2,275 2,262
Dividend - - - - - (1,378) (1,378)
At 31 December 2015 108 1,169 31 88 - 5,164 6,560
Loss for the period - - - - - (986) (986)
Other comprehensive income:
foreign currency translation differences - - - (37) - - (37)
Total comprehensive loss for the period - - - (37) - (986) (1,023)
Dividend - - - - - (1,777) (1,777)
Issue of new ordinary shares 34 23,966 - - - - 24,000
Share issue costs - (781) - - - - (781)
Grant of share options - - - - 24 - 24
At 30 June 2016 142 24,354 31 51 24 2,401 27,003
At 30 June 2016
142
24,354
31
51
24
2,401
27,003
Maintel Holdings Plc
Consolidated statement of cash flows
for the 6 months ended 30 June 2016 (unaudited)
6 months to 30 June 2016 6 months to 30 June 2015 Year to 31 December 2015
£000 £000 £000
(unaudited) (unaudited) (audited)
Operating activities
(Loss)/profit before taxation (696) 2,094 4,151
Adjustments for:
Intangibles amortisation 1,752 1,118 2,235
Share based payment charge 24 - -
(Loss)/profit on sale of fixed asset - (2) 4
Depreciation charge 195 103 191
Interest received (3) - (1)
Interest payable 298 139 265
Operating cash flows before changes in working capital 1,570 3,452 6,845
Decrease in inventories 22 50 138
(Increase)/decrease in trade and other receivables (3,971) (159) 1,379
Increase/(decrease) in trade and other payables 3,691 (3,456) (533)
Cash generated from/(consumed by) operating activities (see sub analysis below) 1,312 (113) 7,829
Cash generated from/(consumed by) operating activities excluding acquisition costs 3,826 (113) 7,829
Exceptional cost - acquisition costs (2,514) - -
Cash generated from/(consumed by) operating activities 1,312 (113) 7,829
Tax paid (231) (761) (1,048)
Net cash flows from operating activities 1,081 (874) 6,781
Investing activities
Purchase of plant and equipment (250) (51) (554)
Proceeds from disposal of plant and equipment - 2 -
Purchase price in respect of business combination (47,028) - -
Net cash acquired with subsidiary undertaking 1,595
(45,433) - -
Interest received 3 - 1
Net cash flows from investing activities (45,680) (49) (553)
Financing activities
Proceeds from borrowings 31,000 - -
Repayment of borrowings (6,000) (800) (4000)
Interest payable (298) (139) (265)
Issue of new ordinary shares 24,000 54 54
Share issue costs (781) - -
Issue costs of debt (348) - -
Equity dividends paid (1,777) (1,243) (2,621)
Net cash flows from financing activities 45,796 (2,128) (6,832)
Net increase/(decrease) in cash and cash equivalents 1,197 (3,051) (604)
Cash and cash equivalents at start of period 2,784 3,347 3,347
Exchange differences (37) 54 41
Cash and cash equivalents at end of period 3,944 350 2,784
(37)
54
41
Cash and cash equivalents at end of period
3,944
350
2,784
Maintel Holdings Plc
Notes to the interim financial information
1. Basis of preparation
The financial information in these interim results is that of the holding
company and all of its subsidiaries (the Group). It has been prepared in
accordance with the recognition and measurement requirements of International
Financial Reporting Standards as adopted for use in the EU (IFRSs) but does
not include all of the disclosures that would be required under IFRSs. Except
for the revised revenue recognition policy adopted in the Mobile segment, the
accounting policies applied by the Group in this financial information are the
same as those applied by the Group in its financial statements for the year
ended 31 December 2015 and are those which will form the basis of the 2016
financial statements.
From 1 January 2016, the Group has reviewed its Mobile revenue recognition
policy, and concluded to change its policy relating to the recognition of
advance commissions received from network operators. There is no material
difference in the financial statements as a result of adopting the new revenue
recognition policy.
A number of amendments to and interpretations of existing standards have
become effective for periods beginning on 1 January 2016, but no new
standards; none of these is expected to materially affect the Group.
The Group's results are not materially affected by seasonal variations.
The comparative financial information presented herein for the year ended 31
December 2015 does not constitute full statutory accounts for that period. The
Group's annual report and accounts for the year ended 31 December 2015 have
been delivered to the Registrar of Companies. The Group's independent
auditor's report on those statutory accounts was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006.
The financial information for the half-years ended 30 June 2016 and 30 June
2015 is unaudited but has been subject to a review in accordance with
International Standard on Review Engagements (UK and Ireland) 2410, ''Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity''.
In preparing the interim financial statements the directors have considered
the Group's financial projections, borrowing facilities and other relevant
financial matters, and the board is satisfied that there is a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. For this reason the directors continue
to adopt the going concern basis in preparing the financial statements.
2. Segmental information
For management reporting purposes and operationally, the Group consists of
three business segments: (i) telecommunications managed service and technology
sales, (ii) telecommunications network services, and (iii) mobile services.
Each segment applies its respective resources across inter-related revenue
streams which are reviewed by management collectively under these headings.
The businesses of each segment and a further analysis of revenue are described
under their respective headings in the business review.
The chief operating decision maker has been identified as the board, which
assesses the performance of the operating segments based on revenue and gross
profit.
Six months to 30 June 2016 (unaudited)
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Revenue 23,782 11,658 2,710 (90) 38,060
Gross profit 8,544 3,197 1,440 (82) 13,099
Other operating income 75
Total administrative expenses (9,017)
Intangibles amortisation (1,752)
Exceptional costs (2,806)
Operating loss (401)
Interest (net) (295)
Loss before taxation (696)
Taxation expense (290)
Loss after taxation (986)
Loss after taxation
(986)
Further analysis of revenue streams is shown in the business review.
Intercompany trading consists of telecommunications services, and recharges of
sales, engineering and rent costs, £46,000 (H1 2015: £86,000) attributable to
the managed service and technology segment, £41,000 (H1 2015: £38,000) to the
network services segment and £3,000 (H1 2015: £3,000) to the mobile segment.
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Other
Intangibles amortisation 111 - - 1,641 1,752
Exceptional costs 319 - - 2,487 2,806
-
-
1,641
1,752
Exceptional costs
319
-
-
2,487
2,806
Six months to 30 June 2015 (unaudited)
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Revenue 19,180 4,267 1,430 (127) 24,750
Gross profit 7,749 1,121 694 (82) 9,482
Total administrative expenses (6,033)
Intangibles amortisation (1,118)
Exceptional costs (98)
Operating profit 2,233
Interest (net) (139)
Profit before taxation 2,094
Taxation expense (287)
Profit after taxation 1,807
Profit after taxation
1,807
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Other
Intangibles amortisation 126 - - 992 1,118
Exceptional costs 98 - - - 98
-
-
992
1,118
Exceptional costs
98
-
-
-
98
Year ended 31 December 2015 (audited)
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Revenue 39,614 8,383 2,815 (189) 50,623
Gross profit 15,749 2,284 1,196 (177) 19,052
Other operating income 12
Total administrative expenses (11,530)
Intangibles amortisation (2,235)
Exceptional costs (884)
Operating profit 4,415
Interest (net) (264)
Profit before taxation 4,151
Taxation (69)
Profit after taxation 4,082
Profit after taxation
4,082
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Other
Intangibles amortisation 251 - - 1,984 2,235
Exceptional costs 884 - - - 884
-
-
1,984
2,235
Exceptional costs
884
-
-
-
884
Revenue is wholly attributable to the principal activities of the Group and
other than sales of £4,282,000 to EU countries and £966,000 to the rest of the
world, arises within the United Kingdom.
Intercompany trading consists of telecommunications services, and recharges of
sales, engineering and rent costs, £90,000 attributable to the managed service
and technology segment, £93,000 to the network services segment and £6,000 to
the mobile segment.
3. Earnings per share
Earnings per share is calculated by dividing the (loss)/profit after tax for
the period by the weighted average number of shares in issue for the period,
these figures being as follows:
6 months to 30 June 2016 6 months to 30 June 2015 Year to 31 December 2015
£000 £000 £000
(unaudited) (unaudited) (audited)
Earnings used in basic and diluted EPS, being (loss)/profit after tax (986) 1,807 4,082
Adjustments: Amortisation of intangibles 1,752 1,118 2,235
Exceptional costs (note 7) 2,806 98 884
Tax relating to above adjustments (934) (264) (666)
Deferred tax charge on Datapoint profits 239 179 451
Deferred tax charge on Azzurri profits 311 - -
Increase in deferred tax asset - - (500)
Adjusted earnings used in adjusted EPS 3,188 2,938 6,486
Deferred tax charge on Datapoint profits
239
179
451
Deferred tax charge on Azzurri profits
311
-
-
Increase in deferred tax asset
-
-
(500)
Adjusted earnings used in adjusted EPS
3,188
2,938
6,486
The adjustments above have been made in order to provide a clearer picture of
the trading performance of the Group.
Datapoint has brought forward tax losses, so that it will pay no tax in
respect of its 2016 profits. On acquisition and subsequently in 2015,
however, a deferred tax asset was recognised in respect of its tax losses, and
a deferred tax charge 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.
Azzurri has brought forward tax capital allowances, 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 a deferred tax charge 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.
6 months to 30 June 2016 6 months to 30 June 2015 Year to 31 December 2015
Number (000s) Number (000s) Number (000s)
Weighted average number of ordinary shares of 1p each 11,993 10,739 10,754
Potentially dilutive shares 200 140 145
12,193 10,879 10,899
140
145
12,193
10,879
10,899
(Loss)/profit per share
Basic (8.2p) 16.8p 38.0p
Basic and diluted (8.2p) 16.6p 37.5p
Adjusted - basic after the adjustments in the table above 26.6p 27.4p 60.3p
Adjusted - basic and diluted after the adjustments in the table above 26.1p 27.0p 59.5p
26.1p
27.0p
59.5p
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.
4. Earnings before interest, tax, depreciation and amortisation (EBITDA)
The following table shows the calculation of EBITDA and adjusted EBITDA:
6 months to 30 June 2016 6 months to 30 June 2015 Year to 31 December 2015
£000 £000 £000
(unaudited) (unaudited) (audited)
(Loss)/Profit before tax (696) 2,094 4,151
Net interest payable 295 139 264
Depreciation of property, plant and equipment 195 103 191
Amortisation of customer relationship intangibles 1,752 1,118 2,235
EBITDA 1,546 3,454 6,841
Exceptional costs 2,806 98 884
Adjusted EBITDA 4,352 3,552 7,725
3,454
6,841
Exceptional costs
2,806
98
884
Adjusted EBITDA
4,352
3,552
7,725
5. 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 2,903
Inventories 1,428
Trade and other receivables 20,528
Cash 1,595
Trade and other payables (25,588)
________
866
Intangible assets
Customer relationships 16,030
Software 2,369
Brand 3,480
Product platform 1,299
Deferred tax asset 2,459
Deferred tax liability on Intangible assets (4,319)
________
Net assets and liabilities acquired 22,184
________
Goodwill 24,844
________
Cash flows arising from the acquisition were as follows: £000
Purchase consideration settled in cash (47,028)
Direct acquisition costs (note 7) (2,514)
Cash balances acquired 1,595
________
(47,947)
________
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 business review.
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 and Warden Midco Limited are
the holding company and intermediate holding company 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 £0.5m.
The trade and other receivables are stated net of impairment.
Since its acquisition, Azzurri has contributed the following to the results of
the Group before management charges of £0.2m:
£000
Revenue 15,357
________
Profit before tax 1,116
________
Azzurri's revenue for the period 1 January 2016 to 30 June 2016 was £43.6m and
before management charges, its loss before tax, including exceptional and pre
acquisition debt costs was £2.5m.
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.
6. Dividends
6 months to 30 June 2016 6 months to 30 June 2015 Year to 31 December 2015
£000 £000 £000
(unaudited) (unaudited) (audited)
Dividends paid
Final 2014, paid 1 May 2015 - 11.6p per share - 1,243 1,243
Interim 2015, paid 7 October 2015 - 12.8p per share - - 1,378
Final 2015, paid 5 April 2016 - 16.5p per share 1,777 - -
1,777 1,243 2,621
1,777
1,243
2,621
The directors propose the payment of an interim dividend for 2016 of 13.4p
(2015: 12.8p) per ordinary share, payable on 12 October 2016 to shareholders
on the register at 30 September 2016. The cost of the proposed dividend,
based on the number of shares in issue as at 15 September 2016, is £1.9m
(2015: £1.4m).
7. Exceptional costs
On 4 May 2016 the Company acquired the entire issued share capital of Warden
Holdco Limited whose principal trading entity is Azzurri Communications
Limited. Legal and professional costs of £2.5m were incurred by Maintel in
2016 in relation to the acquisition, together with redundancy costs of £0.3m
as a result of synergies achieved pre and post-acquisition. H1 2015 redundancy
costs of £0.1m related to the acquisition of Proximity. These costs have been
treated as exceptional in the income statement as they are not normal
operating expenses.
8. Borrowings
30 June 2016 30 June 2015 31 December 2015
£000 £000 £000
(unaudited) (unaudited) (audited)
Current bank loan - secured - 2,000 2,000
Non-current bank loan - secured 30,652 7,200 4,000
30,652 9,200 6,000
30,652
9,200
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.
Independent review report to Maintel Holdings Plc
Introduction
We have been engaged by the company to review the financial information in the
interim results for the six months ended 30 June 2016 which comprises 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, and explanatory notes.
We have read the other information contained in the interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The interim results, including the financial information contained therein,
are the responsibility of and have been approved by the directors. The
directors are responsible for preparing the interim results in accordance with
the rules of the London Stock Exchange for companies trading securities on AIM
which require that the half-yearly report be presented and prepared in a form
consistent with that which will be adopted in the company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
Our responsibility
Our responsibility is to express to the company a conclusion on the financial
information in the interim results based on our review.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London
Stock Exchange for companies trading securities on AIM and for no other
purpose. No person is entitled to rely on this report unless such a person is
a person entitled to rely upon this report by virtue of and for the purpose of
our terms of engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for this
report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'', issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the financial information in the interim results for the six
months ended 30 June 2016 is not prepared, in all material respects, in
accordance with the rules of the London Stock Exchange for companies trading
securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
London
16 September 2016
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
This information is provided by RNS
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