REG - Maintel Holdings PLC - Interim Results
29/09/2022 07:00
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RNS Number : 0771B Maintel Holdings PLC 29 September 2022
Maintel Holdings Plc
("Maintel", the "Company" or the "Group")
Interim results for the six months to 30 June 2022
Cloud transition continues, while hardware supply chain delays performance
Maintel Holdings Plc, a leading provider of cloud, network and security
managed services, is pleased to announce its interim results for the six
months to 30 June 2022.
Key Financial Information
Unaudited results for 6 months ended 30 June: 2022 2021 Increase/ (decrease)
Group revenue (£'m) 46.7 53.5 (12.7)%
Gross profit (£'m) 15.3 14.8 3.4%
Adjusted EBITDA 3.6 4.3 (16.6)%
(Loss)/ profit before tax (£'m) (0.5) 3.8 (113.2)%
Adjusted profit before tax ( 5 ) (£'m) 2.4 2.9 (18.3)%
Basic (loss)/ earnings per share (p) (1.8) 27.0 (106.5)%
Adjusted earnings per share ( 3 ) (p) 11.1 14.2 (21.8)%
Net cash debt( 4 ) (£'m) 19.4 19.1 1.5%
Contracted cloud seats 160,000 117,000 36.7%
Financial headlines
· Cloud transition continues to grow: 36.7% growth on contracted
seats to 160,000, associated cloud and software revenues amounts to £19.8m,
representing 42.4% of revenue for the period (H1 2021: 30.4%)
· Total recurring revenue continues to grow, and now represents
73.7% of Maintel's revenue for the period, up from 68.9% on a comparable
basis( 1 ) for H1 2021
· Gross Margin increases to 32.8%, up from 32.4% in H1 2022 on a
comparable basis( 1 ) (up from 27.8% on a statutory, unadjusted basis),
reflecting the growth of the higher margin cloud and software revenue stream
· Global hardware supply chain issue delays project implementations
and adversely impacts revenue: £46.7m in H1 2022 behind the comparative
period in H1 2021 (-10.6% on a like for like basis( 1 ))
· Adjusted EBITDA reduces to £3.6m (H1 2021: £4.3m), reflecting
the revenue dynamic
· Net debt( 4 ) at 30 June 2022 amounts to £19.4m, in line with
expectations
Operational highlights
· Sales order intake continues to grow, as the sales team performs
to target in H1, despite the slowdown in the public sector tenders and
customer concerns over hardware supply delivery
· Sales Order Book reaches an all time high with multi-year
contract values totalling over £45m
· Maintel's successful transition to a cloud and managed services
business continues successfully, as revenues from cloud and software customers
now reach £19.8m in H1 2022 up 24.5% compared to £15.9m in H1 2021, and now
represents 42.4% of the Company total revenue (H1 2021: 30.4% on a comparable
basis( 1 ))
· Organisational optimisation delivers £0.5m savings from the same
period last year, and on a comparable basis( 1 )
· Maintel enters a 3-year refinance agreement with HSBC for a £26m
Sustainability Linked Loan facility at improved terms
· Gabriel Pirona is appointed as Chief Financial Offer from 2 May
2022, bringing valuable experience into the Group which has already seen
significant operational improvements
Ioan MacRae, CEO commented:
The first half of FY22 has proved hugely frustrating with anticipated
challenges exceeding our initial expectations. The global hardware supply
chain crisis, and in particular the shortage of semiconductors, deterred
Maintel from delivering timely projects ordered by customers in the latter
part of 2021 and early 2022. The acute delays in global logistics translated
into significantly delayed revenue recognition for Maintel. The delayed
forecasted revenue for the supply of LAN, WAN, Wi-Fi and SD-WAN related
projects exceeded £6m for the first 6 months of 2022. Whilst supply chains
are set to improve, normalisation is not anticipated until the second quarter
of 2023.
As a strategic partner to many Health, Local, Housing and Education
organisations, Maintel's revenue suffered from the post-pandemic challenges
inherent to the public sector. The lasting effects of the pandemic and
subsequent activity slowdown led to a reduction in tender awards and continued
adjourned projects, whilst confirmation of new budgets are pending and full
access to sites was resumed.
Whilst managing these headwinds, our focus remains on the group's
transformation to a cloud, network and security managed services business,
continued sales performance, organisational optimisation, and the introduction
of new managed services.
Our transformation to a cloud and managed services business continues. In the
first half, we contracted a further 28,000 cloud seats, bringing our total
contracted cloud seats to 160,000, marking a 37.7% increase on H1 2021. It
was pleasing to see a mix of public and private cloud solutions being sold
during the period, proving our updated cloud portfolio is resonating across
our UCaaS and CCaas offerings.
Our sales team continue to build the sales order book with a strong order
intake for the first 6 months and in line with expectations. The sales team
have won some significant customer contracts, albeit the associated revenues
are unlikely to significantly benefit financial performance until 2023. Such
customer wins include Mid and South Essex NHS Foundation Trust for 11,000
public cloud seats, Hywell Dda University Health Board, IDH Group, Calor Gas,
Harrods, and Guy's and St Thomas' NHS Foundation Trust. These contracts cover
a mix of fully managed cloud, LAN and SD-WAN technologies.
The Group remains focused on managing the cost base, while not compromising
future growth, despite the impact of inflation and the associated price
increases from suppliers, as well as the salary increases to retain and
support staff with the rise in the cost of living. Careful cost management
and organisational optimisation continues with headcount at 496 at 30 June
2022, and operational expenses lower than the comparative period to 30 June
2021. As the cash generation in H1 2022 improved compared to the same period
in 2021, Net Debt( 4 ) remains at £19.4m and in line with expectations.
Notes
1 Comparable operations include continuing operations, excluding revenue and
EBITDA contributions from the disposed Managed Print Services division of
£0.0m (H1 2021: £1.2m) and £0.0m (H1 2020: £0.1m) respectively. Comparable
analysis also includes an adjustment in H1 2021 for reclassification of Costs
of Goods Sold to administrative expense for £1.8m (this is inline with the
presentation at year ended December 2021) and capitalisation of software
licence costs from Costs of Goods Sold of £0.6m, to match the H1 2022
presentation
2 Adjusted EBITDA is EBITDA of £3.2m (H1 2021: £7.9m), adjusted for
exceptional items and share based payments (note 5).
3 Adjusted earnings per share is basic (loss) per share of (1.8)p (H1 2021:
earnings per share of 27.0p), adjusted for intangibles amortisation,
exceptional items and share based payments (note 4). The weighted average
number of shares in the period was 14.3m (H1 2021: 14.4m).
4 Interest bearing debt (excluding issue costs of debt and IFRS 16 debt)
minus cash.
5 Adjusted profit before tax of £2.4m (H1 2020: 2.9m) is basic
(loss)/profit before tax, adjusted for intangibles amortisation, exceptional
items and share based payments.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014
For further information please contact:
Ioan MacRae, Chief Executive Officer 0344 871 1122
Gab Pirona, Chief Financial Officer
Dan Davies, Chief Technology Officer
finnCap, (Nomad and Broker)
Jonny Franklin-Adams / Emily Watts (Corporate Finance) 020 7220 0500
Sunila de Silva (Corporate Broking)
Oakley Advisory, (Financial Advisors) 020 7766 6900
Christian Maher
Chairman's statement
Whilst hardware supply-chain problems were a known threat at the end of 2021,
the delays and impact on business globally have proved more severe than
forecasted. The sales team continue to perform well, building the sales
order book, but we are disappointed that our vendor partners are unable to
supply the required hardware to deliver projects for our customers in a timely
way. The revenue impact has been significant and will remain so for the rest
of this year with supply chains not expected to normalise until the second
quarter of 2023.
The economic impact of the pandemic has further impeded the Group's results,
with continued delays to public sector tenders being issued and awarded, the
impact of which will be felt throughout the current financial year.
In the face of these economic and hardware challenges, it is good to see the
Group continue its successful transformation into a cloud and managed services
provider with contracted cloud seats increasing 37.7% on the same period last
year and a strong pipeline underpinning our ambition to drive total contracted
seats to 170,000 by year-end. Cloud services and associated revenues now
account for 42.4% of total Group revenues in the period at £19.8m, an
increase of 24.9% over the same period last year.
Despite the reduction in revenues (-10.6% on a comparable basis) and the cost
of inflation, the Group has maintained its debt position at £19.4m, in line
with the Board's expectations, through careful cost management and a programme
of restructuring. Headcount currently stands at 496, down from 600 at the end
of December 2020.
Our managed services and technology division saw an overall 23.0% decline in
revenue, with technology declining by 27.5% owing to the impact of the
semiconductor supply issues outlined above. Managed services declined by
18.2%, in line with expectations as customers downsize their estates or change
their technology, resulting in price erosion on renewal or on transition to
our cloud services. The latter saw a 39.3% increase in revenues to £6.0m (H1
2021: £4.3m) of pure cloud subscription revenue.
The Network Services division delivered a strong performance during the period
with revenues increasing by 4.9%, and gross margin expanding 7.4 percentage
points to 40.9% (H1 2021: 33.5%). The 39.3% increase in cloud subscription
revenues referred to above significantly contributed to the division's
results and delivered additional margin rich revenue from associated calls and
lines.
It was good to conclude the refinancing of the business with HSBC and pleasing
that the Group was the first technology business to be granted a
sustainability linked loan. The £26m facility, in place for a minimum of 3
years, provides better terms and the framework of a supportive banking
partner, proving invaluable through challenging times.
I am also delighted to welcome Gabriel Pirona to Maintel as our Chief
Financial Officer. Gab joined us in May 2022 and brings a wealth of
experience and knowledge to the Group. We look forward to his positive impact
on our performance as he brings greater efficiencies and agility into our
operations.
Outlook
The Board remains confident that Maintel will return to organic growth as
global supply chains normalise, likely in spring 2023. Consequently, we
expect H2 2022 trading to be consistent with the period reported. It is not,
we feel, timely to resume dividend payments, but this will be kept under
review as conditions improve.
Following a thorough review and upgrade of products and services offered by
the company carried out over the past 18 months, we strongly believe that
Maintel is well positioned to serve our customer base and address market needs
well into the future. Major customer contract awards in recent months confirm
this, even though the lack of hardware components is slowing project delivery
and the associated revenue recognition.
While public sector contract awards were lower than anticipated in H1 2022, we
expect an increase in tendering activity during H2 and into 2023 as investment
continues in digital transformation across local government, health, housing
and education sectors. Our expectation is to reach our contracted cloud seat
target of 170,000 at year-end, continuing the company's transition into a
cloud and managed services business.
Our sales team's performance year-to-date is encouraging, with a strong
forecast for the second half of 2022. The sales order book currently stands
at the highest value on record, proving the appeal of our solution offerings
and the strength of customer demand for our portfolio of products. This
underpins confidence that organic growth will resume as orders are fulfilled
and associated revenues flow through.
On behalf of shareholders, I would like to thank all our staff for their
continued hard work in frustrating circumstances, and for their sustained
commitment to our customers.
J D S Booth
Chairman
29 September 2022
Business review
Results for the 6 month period to 30 June 2022
Group revenue reduced by 12.6% to £46.7m (H1 2021: £53.5m), and on a
comparable basis( 1 ), reduced by 10.6% to £52.3m.
Recurring revenue as a percentage of total revenue (being all revenue
excluding one-off projects) grew to 73.7% (H1 2021: 68.3%).
Adjusted EBITDA( 2 ) reduced by 25.9% on a comparable basis( 1 ) mainly
reflecting the revenue dynamic in the first half of the year as we retain
staff and other operational expenses associated with the future delivery of
the order book. On a headline basis, adjusted EBITDA reduced by 16.6% to
£3.6m (H1 2021: £4.3m). The adjusted EBITDA for the 6 months to June 2022
has been impacted (by comparison to H1 2022) by the capitalisation of
subscription licenses of £0.6m. Please see note one to the interim financial
statements, on the basis of preparation.
Adjusted profit before tax( 5 ) was £2.4m (H1 2021: £2.9m).
The Group generated a loss before tax of £0.5m (H1 2021: profit of £3.8m)
and loss per share of 1.8p (H1 2021: earnings per share of 27.0p). This
includes a net exceptional debit of £0.3m (H1 2021: cost of £3.6m) (refer
note 7) and intangibles amortisation of £2.6m (H1 2021: £2.7m).
Adjusted earnings per share (EPS) decreased by 21.8% to 11.1p (H1 2021: 14.2p) 6 months
based on a weighted average number of shares in the period of 14.3m (H1 2021:
14.4m). to 30 June 2022 6 months
to 30 June 2021
£000 £000 Increase/
(decrease)
Revenue 46,746 53,469 (12.6)%
(Loss) / profit before tax (575) 3,817
Add back intangibles amortisation 2,651 2,718
Exceptional items (note 7) 261 (3,613)
Share based remuneration 71 27
Adjusted profit before tax 2,408 2,949 (18.3)%
Interest 398 557
Depreciation 808 825
Adjusted EBITDA( 2 ) 3,614 4,332 (16.6)%
Basic (loss)/earnings per share (1.8)p 27.0p -
Diluted (1.8)p 27.0p -
Adjusted (loss)/earnings per share( 3 ) 11.1p 14.2p
(21.8)%
Diluted 11.1p 14.2p (21.8)%
Review of operations
Maintel provides an entire suite of both private and public cloud, network,
and security services. The main private cloud services comprise ICON
Communicate (enterprise grade managed unified communications & contact
centre), ICON Now (Unified Communications as a Service for the mid-market),
ICON Secure (network security) and ICON Connect (managed WAN & SD-WAN),
with a now established portfolio of public cloud services such as ICON Teams
Connector (a managed voice service for Microsoft Teams), RingCentral (Unified
Communications and Contact Centre as a Service for the mid-market and
enterprise), Genesys (Contact Centre as a Service for the enterprise market)
and our own in house developed Callmedia CX Now (Contact Centre as a Service
for the mid-market).
Elements of cloud services revenues are currently accounted for in both the
managed services and technology division (under both managed services related
and technology revenue lines), and the network services division (under the
data connectivity services and cloud revenue lines). Cloud services revenues
accounted for 42.4% of total Group revenues in the period (H1 2021: 29.7%), an
increase of 13 percentage points, growing to £19.8m (H1 2021: £15.9m), an
increase of 24.9% over the same period last year.
The following table shows the performance of the three operating segments of
the Group.
6 months to 30 June 6 months
2022 to 30 June 2021
Revenue analysis £000 £000 (Decrease) / increase
Managed services related 12,730 15,558 (18.2)%
Technology((d)) 12,279 16,926 (27.5)%
Managed services and technology division 25,009 32,484 (23.0)%
Network services division 19,504 18,590 4.9%
Mobile division 2,233 2,395 (6.8)%
46,746 53,469 (12.6)%
Total Group
(d)Technology includes revenues from hardware, software, professional services
and other sales.
Managed services and technology division
The managed services and technology division provides the management,
maintenance, service and support of unified communications, contact centres
and local area networking technology on a contracted basis, on customer
premises. Services are provided both across the UK and internationally. The
division also supplies and installs project-based technology, professional and
consultancy services to our direct clients and through our partner
relationships.
6 months to 30 June 6 months to 30 June 2021
2022
£000 £000 Increase / (decrease)
Divisional revenue 25,009 32,484 (23.0)%
Divisional gross profit 6,610 7,455 (11.0)%
Gross margin (%) 26.4% 22.9%
Revenue in this division decreased by 20.1% on a comparable basis( 1 ) to
£25.0m, including an adjustment to exclude revenue contributions from the
disposed Managed Print Services division of £0.0m (H1 2021: £1.2m) and for
reclassification of Costs of Goods Sold to administrative expense for £1.8m
in H1 2022. These movements reflect the decline in our legacy on-premises
managed services customer base. The gross margin of the division contracted to
26.4% in H1 2022 from 28.6% on a comparable basis( 1 ) in H1 2021 as a result
of a greater percentage of third-party services, and some margin pressure on
technology sales, particularly in the public sector.
Within the division, technology saw a decline in revenues, by 27.5%, due to
the impact of semiconductor supply constraints, the weakening of the British
Pound against the US Dollar, and continued margin pressure on the larger
deals, particularly in the LAN and WIFI space and in Public Sector, and
movement in the mix of lower margin third party against internally delivered
professional services.
On a comparable basis( 1 ), the managed services base declined by 11.6% in the
period, mainly due to customers downsizing their estates or evolving
technologies as a result of the pandemic. Furthermore, as part of our
business transformation, we are transitioning some customers from on-premises
technology into Maintel cloud-based platforms where traditional "support" is
replaced by a longer term, recurring managed services revenue which is
reported in our network services division.
Network services division
The network services division sells a portfolio of connectivity and
communications services, including managed MPLS (multi-protocol label
switching) networks, SD-WAN services, security as a service, internet access
services, dedicated access to public cloud services, SIP (session initiation
protocol) telephony services, inbound and outbound telephone calls and cloud
based Unified Communications and Contact Centre solutions.
6 months 6 months
to 30 June to 30 June 2021
2022
£000 £000 Increase / (decrease)
Call traffic 1,443 2,187 (34.0)%
Line rental 3,715 3,606 3.0%
Data connectivity services 8,116 8,257 (1.7)%
Cloud 6,006 4,313 39.3%
Other 224 227 (2.1)%
19,504 18,590 4.9%
Total division
Division gross profit 7,918 6,232 27.1%
Gross margin (%) 40.9% 33.5%
Network services revenue grew by 4.9% in the period and the gross margin of
the division expanded to 40.9% including a 34 basis points impact from an
adjustment for capitalisation of subscription licenses of £0.6m. This
reflects the positive contribution of the continued significant growth in
cloud subscription revenues, up 39.3%, and an encouraging slow down of natural
erosion across both data connectivity (1.7% vs 5.0% from H1 2022 to H1 2021)
and fixed line revenues (3.0% growth vs 4.1% decline from H1 2020 to H1
2021).
The recovery in traditional fixed line revenues (shown above line rental) is
driven by the growth in cloud services, the majority of which pulls through
more margin rich SIP Trunking calls and lines revenue, reduced churn, and the
greater efficiencies we have realised through the deployment of a new carrier
grade, multi-tenanted Session Border Controller (SBC) infrastructure within
our ICON Platform.
The modest recovery in Data connectivity revenue decline is mainly a result of
the reduced churn in H1 2022 compared to H1 2021. In addition, multiple new
contract wins and key renewals in this space during H2 2021 and H1 2022,
resulting from our new SD-WAN multi-cloud connectivity proposition and a
renewed focus in this area, are yet to be realised as revenue due to hardware
supply chain issues, boding well for further recovery in this space,
particularly in 2023 and beyond as these contracts roll out and additional
contracts are secured.
Maintel has continued to invest in this area over the period, introducing a
new 5G router portfolio into our core offering.
Maintel cloud services
Maintel has continued to grow its cloud services for both unified
communications and contact centre applications - with 160,000 contracted cloud
seats (up 36.7% on H1 2021) and revenues from cloud & software customers
now at £19.8m, representing 42.4% of revenue (H1 2021: 29.7% of revenue).
During the first half of 2022, cloud deployment velocity showed signs of
improvement as our customers begin to recover from the pandemic and we remain
hopeful of reaching the target of 170,000 contracted seats at the end of 2022,
assuming an anticipated increase in public sector contract awards.
We continued to invest in our growth areas of cloud and software and
throughout the period have launched new products and services including the
spring release of our own Callmedia CX Now CCaaS public cloud offering, an
International SIP offering, enhancements to our ICON Teams Connector service
for Microsoft Teams and ongoing enhancements to our ICON Portal digital
customer engagement platform.
Mobile division
Maintel's mobile division generates revenue primarily from commissions
received under its dealer agreements with O2 and other providers and from
value added services such as mobile fleet management and mobile device
management.
6 months 6 months
to 30 June 2022 to 30 June
2021
£000 £000 Decrease
Revenue 2,234 2,395 (6.8)%
Gross profit 823 1,154 (28.7)%
Gross margin (%) 36.8% 48.2%
Number of customers 619 693 (10.7)%
Number of connections 27,341 26,995 1.3%
Revenue decreased by 6.8% to £2.2m (H1 2021: £2.4m) with gross profits at
£0.8m (H1 2021: £1.2m), and lower margins of 36.8% compared to 48.2% in the
prior period. The main contributing factor was the adverse variances in
bonuses earnt in the year from our main partners.
O2 continues to be our core partner and route to market, bolstered by our
Vodafone agreement which enhances our commercial offering as well as
increasing our ability to serve our customers more effectively and
efficiently. Lastly, our own ICON Mobilise wholesale offering is ideal for
customers who require an agile solution that caters for unique billing,
network, and commercial requirements.
Maintel's mobile go-to-market proposition will continue to focus on the
mid-market and low-end enterprise segments where our portfolio is best suited.
We continued to invest in this area during the period, with the launch of a
mobile reporting and management capability within our ICON Portal digital
customer engagement platform.
Administrative expenses
Administrative expenses mainly comprise costs related to the sales and
marketing teams, the support functions and the managerial positions, as well
as the associated growth generating investments and general costs. On a
comparable basis, the total other administrative expenses amounted to £13.0m
for the period, reduced from £13.4m in H1 2021 (up from £11.8m on statutory,
unadjusted basis for H1 2021, not including an adjustment in H1 2021 for
reclassification of Costs of Goods Sold to administrative expense for £1.8m).
The net £0.4m reduction mainly reflects the £0.5m savings from
organisational optimisation initiatives.
The overall headcount dropped by 2.9% or 15 FTEs and now stands at 496 (H1
2021: 511) as a result of the Group's programme of re-organisation and right
sizing of the business to facilitate our continued transition to a cloud and
managed services business as reported at the year-end 2021.
Cash flow
The Group net debt (excluding IFRS 16 liabilities and issue costs of debt) of
£19.4m at 30 June 2022, compares to £19.4m net debt at 31 December 2021.
6 months to 30 June 6 months
2022 to 30 June 2021
£000 £000
Cash generated by operating activities before disposal of managed print 3,279 1,345
services business
Taxation (paid)/ received (370) 50
Capital expenditure (1,412) (951)
Finance cost (net) (471) (446)
Issue costs of debt (234) (38)
Free cashflow 792 (40)
Net proceeds on disposal of Managed Print Services business - 4,395
Payments in respect of prior period business combination (311) (622)
Proceeds from borrowings 22,500 -
Repayment of borrowings (15,500) (3,659)
Lease liability repayments (517) (566)
Increase / (decrease) in cash and cash equivalents 6,964 (492)
Cash and cash equivalents at start of period (3,869) (3,845)
Exchange differences (5) (19)
Cash and cash equivalents at end of period 3,090 (4,356)
Bank borrowings (22,500) (14,841)
Net debt excluding issue costs of debt (19,410) (19,197)
Adjusted EBITDA (note 5) 3,614 4,332
The Group generated £3.3m of cash from operating activities compared to an
underlying H1 2021 comparator of £1.3m which excludes a £4.3m benefit
arising from the sale of the managed print service business. Cash generation
was very strong in the period, with reported cash conversion of adjusted
EBITDA( 6 ) at 111% (H1 2021: 52%). Cash collections remain strong, while the
Group also benefits from a sound bad debt position in the period. We are
confident that the cash generation will remain strong in H2.
Capital expenditure outlay of £1.4m in the period (H1 2022: £1.0m) was
driven by our continued investment across Maintel's product and service
portfolio.
Tax paid in the period is in relation to the Groups historical losses being
fully utilised and taxable profits arising in the year ended 31 December 2021.
COVID-19
Whilst restrictions have lifted, we will continue to monitor the situation and
remain mindful of possible further measures which could affect our ability to
deliver projects. Our staff wellbeing remains a top priority whilst managing
a hybrid working model with the gradual return to offices since 2021, subject
to any changes to Government guidelines.
Dividends
In line with the announcement made on 1 June 2021, the Board has made the
decision to continue to pause dividend payments until there is more certainty
around the ongoing impact of the pandemic and macro-political situation
impacting global supply of hardware. As such, the Board will not declare an
interim dividend for 2022 (H1 2021: Nil).
On behalf of the board
I G MacRae
Chief Executive Officer
2022
6 Cash conversion calculated as adjusted EBITDA plus working capital to
adjusted EBITDA.
Maintel Holdings Plc
Consolidated statement of comprehensive income (unaudited)
for the 6 months ended 30 June 2022
6 months 6 months
to 30 June to 30 June
2022 2021
Note £000 £000
(Unaudited) (Unaudited)
Revenue 2 46,746 53,469
Cost of sales (31,395) (38,628)
Gross profit 15,351 14,841
Other operating income 3 455 461
Administrative expenses
Intangibles amortisation (2,651) (2,718)
Exceptional items 7 (261) 3,613
Share based payments (71) (27)
Other administrative expenses (13,000) (11,796)
(15,982) (10,928)
Operating (loss) / profit (177) 4,374
Net financial costs (398) (557)
(Loss) / profit before taxation (575) 3,817
Taxation credit 323 61
(Loss) / Profit for the period and attributable to owners of the parent (252) 3,878
Other comprehensive income for the period
Exchange differences on translation of foreign operations 9 (6)
Total comprehensive (loss) / income for the period attributable to the owners of the parent (243) 3,872
Earnings / (loss) per share from continuing operations attributable to the
ordinary equity holders of the parent
Basic 4 (1.8)p 27.0p
Diluted 4 (1.8)p 27.0p
Maintel Holdings Plc
Consolidated statement of financial position (unaudited)
at 30 June 2022
30 June 31 December
2022 2021
Note £000 £000
(Unaudited) (Audited)
Non-current assets
Intangible assets 54,789 56,021
Right-of-use assets 2,711 3,173
Property, plant and equipment 1,427 1,091
Trade and other receivables 360 630
59,287 60,915
Current assets
Inventories 1,592 1,009
Trade and other receivables 29,089 30,229
Income tax 92 -
Cash and cash equivalents 3,090 -
33,863 31,238
Total assets 93,150 92,153
Current liabilities
Trade and other payables 43,087 43,805
Lease liabilities 840 906
Income tax - 267
Borrowings 8 2,400 19,362
Total current liabilities 46,327 64,340
Non-current liabilities
Other payables 482 455
Lease liabilities 1,853 2,251
Deferred tax liability 1,224 1,558
Borrowings 8 19,887 -
Total non-current liabilities 23,449 4,264
Total liabilities 69,773 68,604
Total net assets 23,377 23,549
Equity
Issued share capital 144 144
Share premium 24,588 24,588
Other reserves 70 61
Retained earnings (1,425) (1,244)
Total equity 23,377 23,549
Maintel Holdings Plc
Consolidated statement of changes in equity (unaudited)
for the 6 months ended 30 June 2022
Share capital
Other reserves Retained earnings
Share premium
Total
Note £000 £000 £000 £000 £000
At 31 December 2020 144 24,588 73 (5,964) 18,841
Profit for the period - - - 3,878 3,878
Other comprehensive income:
Foreign currency
Translation differences - - (6) - (6)
Total comprehensive loss for the period - - (6) 3,878 3,872
Share based payments - - - 27 27
At 30 June 2021 144 24,588 67 (2,059) 22,740
Profit for the period - - - 793 793
Other comprehensive income:
Foreign currency
Translation differences - - (6) - (6)
Total comprehensive loss for the period - - (6) 793 787
Share based payments - - - 22 22
At 31 December 2021 144 24,588 61 (1,244) 23,549
Loss for the period - - - (252) (252)
Other comprehensive income:
Foreign currency
translation differences - - 9 - 9
Total comprehensive income for the period - - 9 (252) 243
Share based payments - - - 71 71
At 30 June 2022 144 24,588 70 (1,425) 23,377
Maintel Holdings Plc
Consolidated statement of cash flows (unaudited)
for the 6 months ended 30 June 2022
6 months 6 months
to 30 June 2022 to 30 June 2021
£000 £000
Operating activities
(Loss)/ profit before taxation (575) 3,817
Adjustments for:
Net gain on sale of the Managed Print Services business - (4,043)
Intangibles amortisation 2,651 2,718
Non-cash items - (105)
Share based payment charge 71 27
Depreciation of plant and equipment 330 321
Depreciation of right of use asset 478 505
Interest expense (net) 398 557
Operating cash flows before changes in working capital 3,353 3,797
(Increase)/ decrease in inventories (583) 916
Decrease / (increase) in trade and other receivables 1,410 (5,810)
(Decrease) / increase in trade and other payables (226) 2,442
Cash generated from operating activities 3,954 1,345
Tax (paid) / received (370) 50
Net cash flows generated from operating activities 3,584 1,395
Investing activities
Purchase of plant and equipment (667) (76)
Purchase of software (1,420) (875)
Net Proceeds from the sale of the Managed Print Services business - 4,395
Purchase price in respect of prior period business combinations (311) (622)
Net cash flows used in investing activities (2,398) 2,822
Maintel Holdings Plc
Consolidated statement of cash flows (continued) (unaudited)
for the 6 months ended 30 June 2022
6 months 6 months
to 30 June 2022 to 30 June 2021
£000 £000
Financing activities
Proceeds from borrowings 22,500 -
Repayment of borrowings (15,500) (3,659)
Lease liability repayments (517) (566)
Interest paid (471) (446)
Issue costs of debt (234) (38)
Net cash flows generated / (used in) from financing activities 5,778 (4,709)
Net increase / (decrease) in cash and cash equivalents 6,964 (492)
Cash and cash equivalents at start of period (3,869) (3,845)
Exchange differences (5) (19)
Cash and cash equivalents at end of period 3,090 (4,356)
Maintel Holdings Plc
Notes to the interim financial information
1. Basis of preparation
The financial information in these unaudited interim results is that of the
holding company and all its subsidiaries (the Group). The financial
information for the half-years ended 30 June 2022 and 30 June 2021 does not
comprise statutory financial information within the meaning of s434 of the
Companies Act 2006 and is unaudited. It has been prepared in accordance with
the recognition and measurement requirements of UK adopted International
Accounting Standards (IAS) but does not include all the disclosures that would
be required under IAS. The accounting policies adopted in the interim
financial statements are consistent with those adopted in the last annual
report for financial year 2021 and those applicable for the year ended 31
December 2022.
During H1 2022, the below item was reviewed by management.
Intangible assets
Software licenses
During the period, a review of the change in the scale of the Group's
activities in use of these third-party licences took place. Based on increases
observed, it is deemed appropriate to begin to capitalise these items. These
purchases were not material in previous reporting periods and material amounts
that meet the criteria are being incurred for the first time. The H1 2022
results include capitalisation of subscription licenses of £0.6m.
The comparative financial information presented herein for the year ended 31
December 2021 does not constitute full statutory accounts for that period but
has been extracted from those accounts. The statutory accounts for the year
ended 31 December 2021 were filed with the Registrar of Companies. The audit
report on those statutory accounts was not qualified and did not contain a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying the report and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
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 2022 (unaudited)
Managed service and technology
Network services Total
Mobile
£000 £000 £000 £000
Revenue 25,009 19,504 2,233 46,746
Gross profit 6,610 7,918 823 15,351
Other operating income 455
Other administrative expenses (13,000)
Share based payments (71)
Intangibles amortisation (2,651)
Exceptional items (261)
Operating (loss) (177)
Interest (net) (398)
(Loss) before taxation (575)
Income tax credit 323
(Loss) after taxation (252)
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.
Managed service and technology Network services Central/
Mobile inter-
company Total
£000 £000 £000 £000 £000
Intangibles amortisation - - - 2,651 2,651
Exceptional items 107 - - 154 261
Six months to 30 June 2021 (unaudited)
Managed service and technology
Network services Total
Mobile
£000 £000 £000 £000
Revenue 32,484 18,590 2,395 53,469
Gross profit 7,455 6,232 1,154 14,841
Other operating income 461
Other administrative expenses (11,796)
Share based payments (27)
Intangibles amortisation (2,718)
Exceptional items 3,613
Operating profit 4,374
Interest (net) (557)
Profit before taxation 3,817
Income tax credit 61
Profit after taxation 3,878
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.
Managed service and technology Network services Central/
Mobile inter-
company Total
£000 £000 £000 £000 £000
Intangibles amortisation - - - 2,718 2,718
Exceptional items (3,613) - - - (3,613)
3. Other operating income
6 months 6 months
to 30 June 2022 to 30 June 2021
£000 £000
(unaudited) (unaudited)
455 461
Other operating income
Other operating income of £0.5m in the period relates to monies associated
with the recovery of research and development expenditure credits (H1 2021:
£0.5m).
4. Earnings per share
Earnings per share and adjusted 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 prepared as follows:
6 months 6 months
to 30 June 2022 to 30 June 2021
£000 £000
(unaudited) (unaudited)
Earnings used in basic and diluted EPS, being profit / (loss) after tax (252) 3,878
Adjustments: 2,099 2,275
Amortisation of intangibles on business combinations
Exceptional items (note 7) 261 (3,613)
Tax relating to above adjustments (607) (562)
Share based payments 71 27
Interest charge on deferred consideration 18 39
1,590 2,044
Adjusted earnings used in adjusted EPS
The adjustments above have been made to provide a clearer picture of the
trading performance of the Group.
6 months to 30 June 6 months
2022 to 30 June 2021
Number £000 Number £000
Weighted average number of ordinary shares of 1p each 14,362 14,362
Potentially dilutive shares 19 23
14,362 14,385
(Loss) / earnings per share
Basic (1.8)p 27.0p
Diluted (1.8p) 27.0p
Adjusted - basic after the adjustments in the table above 11.1p 14.2p
Adjusted - diluted after the adjustments in the table above 11.1p 14.2p
In calculating adjusted diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion of all
potentially dilutive 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.
5. Earnings before interest, tax, depreciation and amortisation (EBITDA)
The following table shows the calculation of EBITDA and adjusted EBITDA:
6 months 6 months
to 30 June 2022 to 30 June 2021
£000 £000
(unaudited) (unaudited)
(575) 3,817
(Loss) / Profit before tax
Net interest payable 398 557
Depreciation of property, plant and equipment 330 321
Depreciation of right of use asset 478 505
Amortisation of intangibles 2,651 2,718
EBITDA 3,282 7,918
Share based payments 71 27
Exceptional items (note 7) 261 (3,613)
Adjusted EBITDA 3,614 4,332
6. Dividends
The directors have decided not to declare an interim dividend for 2022 (2021:
nil).
7. Exceptional items
6 months 6 months
to 30 June 2022 to 30 June 2021
£000 £000
(unaudited) (unaudited)
Fees relating to revised credit facilities agreement 154 40
Staff restructuring and other employee related costs 153 380
Gain on disposal of the managed print services business (16) (4,043)
(Income) relating to onerous lease provision (30) -
Other - 10
261 (3,613)
Staff restructuring and other employee related costs of £153k (H1 2021:
£380k) includes £21k relating to untaken employee annual leave as a result
of COVID-19 (H1 2021: £158k).
8. Borrowings
30 June 2022 31 December 2021
£000 £000
(unaudited) (audited)
Current bank overdraft - secured 2,400 3,869
Current bank loan - secured 19,887 15,493
On 24 March 2022, the Group signed a new agreement with HSBC Bank plc ("HSBC")
to replace the National Westminster Bank Plc (NWB) facility. The new
facility with HSBC consists of a revolving credit facility ("RCF") of £20m
with a £6m term loan on a reducing basis. The maturity date of the
agreement is 3 years from the signing date. The term loan will be repaid in
equal monthly instalments 7 months from signing. Interest on the borrowings is
the aggregate of the applicable margin and SONIA for sterling / SOFR for USD /
EURIBOR for euros.
Covenants based on Adjusted EBITDA to Net Finance Charges and Total Net Debt
to Adjusted EBITDA are tested on a quarterly basis.
The non-current bank loan above is stated net of unamortised issue costs of
debt of £0.1m (31 December 2020: £0.1m).
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 loan facility at a covenant-depending tiered
rate of 2.60 % to 3.25% per annum over SONIA, with a reduced rate payable on
undrawn facility.
The Directors consider that there is no material difference between the book
value and fair value of the loan.
9. Post balance sheet events
There have been no events subsequent to the reporting date which would have a
material impact on the interim financial result.
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