REG - Maintel Holdings PLC - Interim Results <Origin Href="QuoteRef">MAIH.L</Origin> - Part 2
11/09/2017 07:06
- Part 2: For the preceding part double click ID:nRSK2882Qa
(3)
Total comprehensive income for the period - - (3) 3,080 3,077
Dividend - - - (1,902) (1,902)
Grant of share options - - - 73 73
At 31 December 2016 142 24,354 79 3,676 28,251
Profit for the period - - - 2,583 2,583
Other comprehensive income:
foreign currency translation differences - - (2) - (2)
Total comprehensive income for the period - - (2) 2,583 2,581
Dividend - - - (2,470) (2,470)
Grant of share options - - - 123 123
At 30 June 2017 142 24,354 77 3,912 28,485
(2,470)
Grant of share options
-
-
-
123
123
At 30 June 2017
142
24,354
77
3,912
28,485
Maintel Holdings Plc
Consolidated statement of cash flows
for the 6 months ended 30 June 2017
6 months to 30 June 2017 6 months to 30 June 2016 Year to 31 December 2016
£000 £000 £000
(unaudited) (unaudited) (audited)
Operating activities
Profit / (loss) before taxation 3,216 (696) 2,107
Adjustments for:
Intangibles amortisation 2,898 1,752 4,733
Share based payment charge 123 24 97
Depreciation charge 351 195 598
Loss on disposal of property, plant and equipment 157 - -
Interest received (2) (3) (3)
Interest expense 454 298 923
Operating cash flows before changes in working capital 7,197 1,570 8,455
Decrease / (increase) in inventories 853 22 (949)
Decrease / (increase) in trade and other receivables 274 (3,971) 990
(Decrease) / increase in trade and other payables (9,125) 3,691 2,328
Cash (used by) / generated from operating activities (see sub analysis below) (801) 1,312 10,824
Cash generated from operating activities excluding exceptional costs (651) 3,826 15,064
Exceptional cost - redundancy and other costs (150) - (1,725)
Cash generated from operating activities excluding acquisition legal and professional costs (801) 3,826 13,339
Exceptional cost - acquisition legal and professional costs - (2,514) (2,515)
Cash generated from operating activities (801) 1,312 10,824
Tax paid (5) (231) (236)
Net cash flows (used by) / generated from operating activities (806) 1,081 10,588
Investing activities
Purchase of plant and equipment (172) (250) (438)
Purchase of software - - (132)
Purchase price in respect of business combination - (47,028) (47,028)
Net cash acquired with subsidiary undertaking - 1,595 1,595
- (45,433) (45,433)
Interest received 2 3 3
Net cash flows used by investing activities (170) (45,680) (46,000)
Net cash flows used by investing activities
(170)
(45,680)
(46,000)
Financing activities
Proceeds from borrowings - 31,000 31,000
Repayment of borrowings (6,000) (6,000) (6,000)
Interest paid (629) (298) (628)
Issue of new ordinary shares - 24,000 24,000
Share issue costs - (781) (781)
Issue costs of debt - (348) (360)
Equity dividends paid (2,470) (1,777) (3,679)
Net cash flows from financing activities (9,099) 45,796 43,552
Net (decrease) / increase in cash and cash equivalents (10,075) 1,197 8,140
Cash and cash equivalents at start of period 10,884 2,784 2,784
Exchange differences (2) (37) (40)
Cash and cash equivalents at end of period 807 3,944 10,884
Cash and cash equivalents at end of period
807
3,944
10,884
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. 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 2016 and are those which will form the basis of the 2017
financial statements.
A number of amendments to and interpretations of existing standards have
become effective for periods beginning on 1 January 2017, but no new
standards; none of these is expected to materially affect the Group during
financial year 2017.
The Group notes IFRS15 Revenue from Contracts with Customers which is to be
adopted for all accounting periods beginning on or after 1 January 2018. At
this time, it remains not practical to provide a reasonable estimate in
relation to the effect of IFRS 15 until a detailed review has been completed.
During the half-year, the Group commenced assessing the impact of IFRS 15 on
the Group's revenue streams and its initial analysis on some key changes under
IFRS 15 which may be relevant to the group include:
- Mobile business: Connection commission revenues received from mobile
network operators on fixed line revenues are currently spread over the course
of the customer contract. Under IFRS 15 the group's mobile contracts with
customers include a number of performance obligations. Typically these include
an obligation to provide a hardware fund to the end users. Revenue recognition
under IFRS 15 is likely to be at a point in time which is different to the
current treatment.
- Contracts with customers which include both supply of technology goods
and installation services may in substance represent one performance
obligation under IFRS 15 and result in revenue recognition at a point in time
which is different to the current treatment whereby the supply of goods and
professional services are treated as separate sale arrangements.
- Finance costs on upfront payments from customers: Deferred revenue is
currently recognised within liabilities when customers are invoiced by the
group in advance of services being provided. Under IFRS 15, there may be a
requirement to recognise a finance cost in connection with payments received
up front from customers ahead of services being provided.
Further detailed analysis needs to be performed during H2 2017 on each of the
above matters, as well as the group's other revenue streams in assessing the
impact of any changes to revenue recognition policies to the transfer of
control concept under IFRS 15.
The Group's results are not materially affected by seasonal variations.
The comparative financial information presented herein for the year ended 31
December 2016 does not constitute full statutory accounts for that period. The
Group's annual report and accounts for the year ended 31 December 2016 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 2017 and 30 June
2016 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 2017 (unaudited)
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Revenue 35,972 24,268 3,586 - 63,826
Gross profit 10,942 7,000 1,664 - 19,606
Other operating income 77
Other administrative expenses (12,967)
Intangibles amortisation (2,898)
Exceptional costs (150)
Operating profit 3,668
Interest (net) (452)
Profit before taxation 3,216
Taxation expense (633)
Profit after taxation 2,583
Profit after taxation
2,583
Further analysis of revenue streams is shown in the business review.
The board does not regularly review the aggregate assets and liabilities of
its segments and accordingly, an analysis of these is not provided.
Intercompany trading consists of telecommunications services, and recharges of
sales, engineering and rent costs, £Nil (H1 2016: £46,000) attributable to the
managed service and technology segment, £Nil (H1 2016: £41,000) to the network
services segment and £Nil (H1 2016: £3,000) to the mobile segment.
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Intangibles amortisation - - - 2,898 2,898
Exceptional costs 150 - - - 150
-
2,898
2,898
Exceptional costs
150
-
-
-
150
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
Other 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)
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
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
Year ended 31 December 2016 (audited)
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Revenue 64,109 37,395 6,947 (155) 108,296
Gross profit 21,408 10,257 3,385 (137) 34,913
Other operating income 151
Other administrative expenses (23,064)
Intangibles amortisation (4,733)
Exceptional costs (4,240)
Operating profit 3,027
Interest (net) (920)
Profit before taxation 2,107
Taxation expense (13)
Profit after taxation 2,094
Profit after taxation
2,094
Managed service and technology Network services Mobile Central/ inter- company Total
£000 £000 £000 £000 £000
Intangibles amortisation 191 - - 4,542 4,733
Exceptional costs 2,305 - 76 1,859 4,240
-
-
4,542
4,733
Exceptional costs
2,305
-
76
1,859
4,240
Revenue is wholly attributable to the principal activities of the Group and
other than sales of £8.8m to EU countries and £1.0m 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, £0.1m attributable to the managed service
and technology segment, £0.1m to the network services segment and immaterial
amounts to the mobile segment.
3. Earnings per share
Earnings per share is calculated by dividing the profit / (loss) 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 2017 6 months to 30 June 2016 Year to 31 December 2016
£000 £000 £000
(unaudited) (unaudited) (audited)
Earnings used in basic and diluted EPS, being profit / (loss) after tax 2,583 (986) 2,094
Adjustments: Amortisation of intangibles 2,898 1,752 4,733
Exceptional costs (note 6) 150 2,806 4,240
Tax relating to above adjustments (665) (934) (1,333)
Deferred tax charge on Datapoint profits 262 239 504
Increase in deferred tax asset in respect of Datapoint losses - - (500)
Deferred tax charge on utilisation of Azzurri tax losses - - 642
Deferred tax charge on Azzurri capital allowances 194 311 100
Decrease in deferred tax liability of intangible assets - - (275)
Adjusted earnings used in adjusted EPS 5,422 3,188 10,205
Deferred tax charge on utilisation of Azzurri tax losses
-
-
642
Deferred tax charge on Azzurri capital allowances
194
311
100
Decrease in deferred tax liability of intangible assets
-
-
(275)
Adjusted earnings used in adjusted EPS
5,422
3,188
10,205
The adjustments above have been made in order to provide a clearer picture of
the trading performance of the Group.
Datapoint has brought forward historic tax losses, which the Group will
benefit from in respect of its 2017 taxable profits. On acquisition and
subsequently in 2016, 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 historic tax capital allowances, which the Group
will benefit from in respect of its 2017 taxable profits. On the acquisition
of Azzurri, 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 2017 6 months to 30 June 2016 Year to 31 December 2016
Number (000s) Number (000s) Number (000s)
Weighted average number of ordinary shares of 1p each 14,197 11,993 13,092
Potentially dilutive shares 263 200 204
14,460 12,193 13,296
204
14,460
12,193
13,296
Profit / (loss) per share
Basic 18.2p (8.2p) 16.0p
Diluted 17.9p (8.2p) 15.8p
Adjusted - basic after the adjustments in the table above 38.2p 26.6p 78.0p
Adjusted - diluted after the adjustments in the table above 37.5p 26.1p 76.8p
37.5p
26.1p
76.8p
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 2017 6 months to 30 June 2016 Year to 31 December 2016
£000 £000 £000
(unaudited) (unaudited) (audited)
Profit / (loss) before tax 3,216 (696) 2,107
Net interest payable 452 295 920
Depreciation of property, plant and equipment 351 195 598
Amortisation of intangibles 2,898 1,752 4,733
EBITDA 6,917 1,546 8,358
Exceptional costs (note 6) 150 2,806 4,240
Adjusted EBITDA 7,067 4,352 12,598
EBITDA
6,917
1,546
8,358
Exceptional costs (note 6)
150
2,806
4,240
Adjusted EBITDA
7,067
4,352
12,598
5. Dividends
6 monthsto 30 June 2017 6 months to 30 June 2016 Year to 31 December 2016
£000 £000 £000
(unaudited) (unaudited) (audited)
Dividends paid
Second interim 2015, paid 5 April 2016 - 16.5p per share - 1,777 1,777
Interim 2016, paid 12 October 2016 - 13.4p per share - - 1,902
Final 2016, paid 18 May 2017 - 17.4p per share 2,470 - -
2,470 1,777 3,679
2,470
1,777
3,679
The directors propose the payment of an interim dividend for 2017 of 14.7p
(2016: 13.4p) per ordinary share, payable on 5 October 2017 to shareholders on
the register at 22 September 2017. The cost of the proposed dividend, based
on the number of shares in issue as at 8 September 2017, is £2.1m (2016:
£1.9m).
6. Exceptional costs
On 4 May 2016, the Company acquired the entire issued share capital of Warden
Holdco Limited whose principal trading entity was 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 £1.3m
as a result of synergies achieved pre and post-acquisition and other costs of
£0.4m. Further redundancy costs of £0.5m were incurred in H1 2017 offset by a
credit release associated with an old payable no longer required of £0.3m,
resulting in a net cost of £0.2m being expensed. These costs have been treated
as exceptional in the income statement as they are not normal operating
expenses and are non-recurring costs.
7. Borrowings
30 June 2017 30 June 2016 31 December 2016
£000 £000 £000
(unaudited) (unaudited) (audited)
Non-current bank loan - secured 24,724 30,652 30,688
Non-current bank loan - secured
24,724
30,652
30,688
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 previous term and
revolving credit facilities with Lloyds Bank plc which were fully repaid and
terminated. During the periods to 30th June 2016 and 31 December 2016, amounts
drawn down on the facilities totalled £31.0m. During the period to 30 June
2017, the group made repayments of £6.0m.
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.
The non-current bank loan above is stated net of unamortised issue costs of
debt of £0.3m (30 June 2016: £0.3m; 31 December 2016: £0.3m).
8. Post balance sheet event.
On 1 August 2017, the acquisition of the entire share capital of Intrinsic
Technology Limited was completed for a consideration of £5.25m on a cash-free,
debt-free basis. The acquisition was funded by an extension to, and draw-down
under, the Company's existing revolving credit facility with the Royal Bank of
Scotland plc (the "RCF"). The RCF has been increased by £6m to £42m.
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 2017 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 ("the financial
information").
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 financial information.
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 Financial
Reporting Council 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 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 2017 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
United Kingdom
8 September 2017
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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