REG - Maintel Holdings PLC - Interim results
19/09/2023 07:00
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RNS Number : 8342M Maintel Holdings PLC 19 September 2023
Maintel Holdings Plc
("Maintel", the "Company" or the "Group")
Interim results for the six months to 30 June 2023
Project delivery delays unwind in the first half of 2023, business
transformation accelerates.
Maintel Holdings Plc, a leading provider of cloud and managed communication
services, is pleased to announce its unaudited interim results for the six
months to 30 June 2023.
Key Financial Information
Unaudited results for 6 months ended 30 June: 2023 2022 Increase/ (decrease)
Group revenue (£'m) 47.5 46.7 1.7%
Gross profit (£'m) 16.0 15.3 4.6%
Adjusted EBITDA 3.7 3.6 2.8%
(Loss)before tax (£'m) (2.9) (0.5) 480.0%
Adjusted profit before tax ( 4 ) (£'m) 2.0 2.4 (20.8)
Basic (loss)/ earnings per share (p) (19.1) (1.8) (961.1)%
Adjusted earnings per share ( 2 ) (p) 2.6 11.1 (76.6)%
Net cash debt( 3 ) (£'m) 21.4 19.4 10.3%
Contracted cloud seats 181,000 160,000 13.1%
Highlights
· Group revenue was £47.5m, up 1.7% (2022: £46.7m) with recurring
revenue representing 75.1% of total revenue (2022: 73.7%).
· Revenue has increased year-on-year following the easing of supply
chain shortages and the continued successful unwinding of our contracted order
book built up during 2022.
· Significant progress in implementing the first phase of the
business's turnaround plan and moving to a more efficient operating model. The
Company continues to focus on shifting from generalist to specialist
communications solution designer and provider, allowing us to add more value
to our customers through identifying joint value creation.
· In turn recurring revenue grew by 3.3% compared to the same
period in 2022, faster than project revenue (-4.0%), increasing from 73.7% to
75.1%. We continue to grow secured, contracted and regular revenues
through our cloud communications, network and security managed service
products which have performed well through the pandemic and still have good
prospects for future growth.
· Revenues from Cloud and software customers increased as a
proportion of total Group revenue to 48.8% (H1 2022: 42.4%) which is important
to the business's market position as a digital communications specialist.
· Gross profit increased to £16.0m (2022: £15.3m) with gross
margin increasing to 33.6% (H1 2022: 32.8%). This increase flows from improved
commercial relationships with our vendors and focus and in turn being more
successful in securing higher value contracts within our customer base.
· Adjusted EBITDA has increased by 2.8%to £3.7m (H1 2022: £3.6m).
· Basic loss per share at 19.1p (H1 2022: loss per share at 1.8p),
flows from one-off restructuring costs (£1.9m) which pay back within one
year, plus increased interest charges (FY23: £1.0m, FY22: £0.4m) arising
from rising SONIA interest rates.
· The business's net debt( 3 ) increased to £21.4m, (2022:
£19.4m) owing almost exclusively to restructuring exceptional costs and
increased debt servicing charges. The benefits of restructuring will be
realised quickly and permanently.
Operational highlights
· H1 has been a period of focus on the turnaround plan and
implementation of new ways of working which will have sustainable and
progressive benefits.
· The product and sales teams are now fully aligned on the design
and provision of specialist digital communications, a strategic pivot from our
historic focus on being a generalist telecoms provider. Our sales force has
been realigned to support and deliver this strategic pivot.
· New working practices have been established which are already
yielding results, such as the acceleration of project implementation due to
closer engagement with our customer base, shortening the timescale from win to
bill, which will improve free cash generation in H2 2023.
· We are actively revisiting and exiting loss-making contracts and
have won a number of new high value contracts such as Kingfisher Group,
Harrods, Vanquis Banking Group, Angus Council, Northampton General Hospital
NHS Trust and The Leeds Teaching Hospital. Major new and existing customer
contract awards exceed £25m total contract value (TCV), of which over £17m
will be recurring revenue.
· Continued progress in cloud and managed services has delivered a
13.1% increase in contracted cloud seats to 181,000 at the half year-end (H1
2022: 160,000).
· Our sales order pipeline amounts to £32.0m. Following the 2022
delay in project roll-out, we have been able to accelerate service to our
customers in H1 2023, shortening the time from project to recurring revenue
into H2 2023 and 2024.
· The sales team has delivered above target results despite all the
changes in H1 and made significant progress signing deals in the private
sector.
· However, the implementation of new procurement framework change with
a 3 to 5 year cycle has led to a slow-down in public sector tenders.
· Having secured our place on the new framework agreement, activity
is now returning to normal levels.
· The Company expects to release annualised P&L improvements of
c.£11.0m (combining both revenue benefits and cost savings, as an exit run
rate from the end of December 2023), of which £3.0m fall into H1. Part of the
benefits will be re-invested in future growth, such as R&D, to generate
operational scalability.
The Company announces that its nominated adviser and broker finnCap Ltd, has
changed its name to Cavendish Capital Markets Limited, following a merger.
Commenting on the Group's results, Carol Thompson, Executive Chairman/Chief
Executive Officer said:
"2023 is proving a stimulating and positive year for the business. The outcome
of the first half giving greater clarity on where Maintel sits in its market
and future strategic imperatives. From that perspective the team feels strong
and well equipped to move forward at pace, delivering consistently high levels
of service to clients and doubling down in high growth areas where we have
historically seen success.
Remote and hybrid working have meant that technology providers have had to
evolve faster than any time in the last 10 years and Maintel is well placed
to support the new hybrid working and cloud centric environment within which
our products sit perfectly. In order to help our customers support this new
way of working and ensure collaboration, cooperation and productivity are not
lost, Maintel assumes the hybrid working environment as a medium-term feature
and are working hard on our new product innovations to service customers who
find themselves trying to find ways of making the "new normal" work for them.
The business made a strategic move into unified communications, secure
connectivity and customer experience solutions prior to the pandemic but due
to supply chain issues and slowdown in procurement cycles, the business's
success was constrained. These issues are resolved and we are now capitalising
on our early adoption and working with our vendors on developing next
generation efficiency and effectiveness models for our customers. Known for
being design experts and vendor agnostic, we are able to create the optimal
environment for our clients, safe in the knowledge we are highly regarded by
global providers such as Avaya, Cisco, Genesys, Mitel, RingCentral and
Unify. We aim to add new vendors to that list where the technology gives our
customers the edge both in terms of productivity and cost.
We are clear on our strategy, product, IP investment and customer engagement
model. The remainder of the financial year and beyond is about executing on
that strategy, building on the positive trading momentum continuing into H2
2023 from H1. Adjusted EBITDA is tracking ahead of management's expectation
and Maintel's strong order book and focused sales strategy underpins
management's confidence in the remainder of the year and now anticipates
achieving adjusted EBITDA for the financial year ahead of initial management
expectations, whilst total net debt is forecasted slightly higher to support
further investment in restructuring and the normalisation of the working
capital.
The search for a new permanent CEO continues, along with a new senior
independent non-executive director.
Whilst the dual role is in place, I continue to be supported by John Booth as
Deputy Chairman. During H1 we welcomed Clare Bates to the board as Chair of
the Remuneration Committee and she brings significant expertise, experience
and balance to the board. We are delighted to have her as part of the team.
Notes
1 Adjusted EBITDA is EBITDA of £1.6m (H1 2022: £3.2m), adjusted for
exceptional items (including one-off restructuring costs) and share based
payments (note 5).
2 Adjusted earnings per share is basic (loss) per share of (19.1)p (H1 2022:
loss per share of (1.8)p), adjusted for intangibles amortisation, exceptional
items and share based payments (note 4). The weighted average number of shares
in the period was 14.4m (H1 2022: 14.4m).
3 Interest bearing debt (excluding issue costs of debt and IFRS 16 debt)
minus cash.
4 Adjusted (loss) before tax of £1.9m (H1 2022: 2.4m) is basic (loss)
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
C Thompson
Executive Chairman
19 September 2023
For further information please contact:
Carol Thompson, Executive Chair 0344 871 1122
Gab Pirona, Chief Financial Officer
Dan Davies, Chief Technology Officer
Cavendish Capital Markets, (Nomad and Broker)
Jonny Franklin-Adams / Emily Watts (Corporate Finance) 020 7220 0500
Sunila de Silva (Corporate Broking)
Business review
Results for the six month period to 30 June 2023
Group revenue increased by 1.7% to £47.5m (H1 2022: £46.7m).
Recurring revenue grew by 3.3% compared to the same period in 2022, faster
than project revenue (-4.0%), increasing from 73.7% to 75.1%, as a percentage
of total revenue.
Our managed services and technology division declined marginally in revenue by
2.1% to £24.5m
(2022: £25.0m), with the managed service support base stable year on year at
£25.6m (annualised base figure), predominantly due to contract losses and
erosion stabilising, following price increases on renewals, and on-premise
customers transitioning to managed cloud services. Technology division
revenues decreased by 3.9% to £11.8m, in comparison to a particularly strong
equivalent period in 2022 (2022: £12.3m) aided by the project delivery of
orders closed in FY22, as well as licences associated with new SD-WAN sales,
hardware for cloud deployments and licences for existing system expansions.
The £11.8m revenue delivered in the first half of the current financial year
represents strong progress compared to £8.6m generated in the second half of
2022.
The number of contracted seats on our ICON and public cloud platforms
increased by 13.1% to 181,000 with revenue from cloud and software customers
now totalling £23.1m, 48.80% of Group revenue. The Group's cloud portfolio
continues to be enhanced by both public and private cloud solutions, and
revenue from cloud subscriptions and associated managed services grew 19.8% to
£7.0m. The continued revenue benefit from the additional contracted seats
will be realised in 2023 and beyond as these projects continue to be
delivered.
With regard to cost management, to date the business has delivered annualised
exit run-rate P&L improvements totalling £11.0m, of which £3.0m impacted
the period reported.
The cash conversion of the business was impacted in the period by the
exceptional costs associated with the cost restructure of the business, the
increased debt servicing charge and to a lesser extent the normalisation of
working capital. These exceptional cash flows pay back within one year and are
complete as at the end of H1.
Adjusted EBITDA( 1 ) increased by 2.8% mainly reflecting the revenue dynamic
in the first half of the year as well as the impact of the restructuring
programme.
The Group incurred a loss before tax of £2.9m (H1 2022: loss of £0.5m) and
loss per share of 19.1p (H1 2022: loss per share of 1.8p). This includes a net
exceptional charge of £1.9m (H1 2022: £0.3m) (refer note 7) and intangibles
amortisation of £2.8m (H1 2022: £2.6m).
Adjusted earnings per share (EPS) decreased by 76.6% to 2.6p (H1 2022: 11.1p)
based on a weighted average number of shares in the period of 14.4m (H1 2022:
14.3m).
6 months
to 30 June 2023 6 months
to 30 June 2022
£000 £000 Increase/
(decrease)
Revenue 47,461 46,746 1.7%
(Loss) before tax (2,928) (575)
Add back intangibles amortisation 2,842 2,651
Exceptional items (note 7) 1,946 261
Share based remuneration 124 71
Adjusted profit before tax 1,984 2,408 (17.6)%
Interest 974 398
Depreciation 757 808
Adjusted EBITDA( 1 ) 3,715 3,614 2.8%
Basic (loss) per share (19.1)p (1.8)p (961.1)%
Diluted (19.1)p (1.8)p (961.1)%
Adjusted (loss) per share( 2 ) 2.6p 11.1p
(76.6)%
Diluted adjusted (loss) per share 2.6p 11.1p (76.6)%
Review of operations
Maintel is a Managed Services Provider, with a focus on three core areas,
Unified Comms and Collaboration, Customer Experience and Secure Connectivity.
Our vision is to help every organisation to thrive through the application of
technology with a human touch. We see technology as the enabler, not the
outcome. Success for us is delivering tangible business benefits for our
customers, whether that be through increasing productivity, velocity, or
collaboration, strengthening their relationships with their own customers,
helping them grow, protecting them from cyber threats, reducing downtime or
saving cost.
The ways in which we can help our customers thrive are many and varied, and
our exceptional people apply the human touch to ensure that our customer's
journey with us is a true partnership and that we deliver on our promises.
This approach allows us to apply a common blueprint across everything we do,
allowing us to cover a diverse range of technology but with a common and
consistent customer experience.
Elements of cloud services revenues are currently accounted for in both the
managed services and technology division (under the technology revenue line)
and the network services division.
The following table shows the performance of the three operating segments of
the Group.
6 months to 30 June 6 months
2023 to 30 June 2022
Revenue analysis £000 £000 (Decrease) / increase
Managed services related 12,674 12,730 (0.4)%
Technology((a)) 11,801 12,279 (3.9)%
Managed services and technology division 24,475 25,009 (2.1)%
Network services division 20,892 19,504 7.1%
Mobile division 2,094 2,233 (6.2)%
47,461 46,746 1.5%
Total Group
(a)Technology includes revenues from hardware, software, professional services
and other sales.
Managed services and technology division
The managed services and technology division contains two distinct revenue
lines:
· Managed services: all support and managed service recurring
revenues for hardware and software located on customer premises. This combines
both legacy PBX and Contact Centre systems, which are in a managed decline
across the sector as organisations migrate to more effective and efficient
cloud solutions, with areas of technology such as Local Area Networking (LAN),
WIFI and security, which are still very much current and developing technology
areas and therefore enduring sources of revenue.
· Technology: all non-recurring revenues from hardware, software,
professional and consultancy services and other non-recurring sales.
Services are predominantly provided across the UK, with some customers also
having international footprints. 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 2022
2023
£000 £000 Increase / (decrease)
Divisional revenue 24,475 25,009 (2.1)%
Divisional gross profit 6,525 6,610 (1.3)%
Gross margin (%) 26.6% 26.4%
Revenue in this division decreased by 2.1% to £24.5m. Whilst the revenue from
the legacy on premise managed service business remained relatively flat, with
the expected churn in this space counteracted by new additions to the legacy
estate (most notably an outsourcing contract from Atos), the Technology
revenues declined by 3.9% as a result of the continued drive from upfront
perpetual software license purchases, to subscription based licensing models
and the mix of projects delivered in the period.
Network services division
The Network Services division is made up of three strategic revenue lines:
· Cloud - subscription and managed service revenues from cloud
contracts
· Data - subscription, circuit, co-location and managed service
revenues from Wide Area Network (WAN), SD-WAN, Internet access and managed
security service contracts
· Call traffic and line rental - recurring revenues from both
legacy voice and modern SIP Trunking contracts
6 months 6 months
to 30 June to 30 June 2022
2023
£000 £000 Increase / (decrease)
Call traffic 1,498 1,443 3.8%
Line rental 3,481 3,715 (6.3)%
Data connectivity services 8,742 8,116 7.7%
Cloud 6,959 6,006 15.9%
Other 212 224 (5.4)%
20,892 19,504 7.1%
Total division
Division gross profit 8,437 7,918 6.6%
Gross margin (%) 40.4% 40.9%
Network services revenue grew by 7.1% in the period, whilst the gross margin
of the division contracted slightly to 40.4% (H1 2022: 40.9%). This reflects
the positive contribution of the continued significant growth in cloud
subscription revenues, up 15.9%, and a return to steady growth for data
connectivity (up 7.7% vs a contraction of (1.7%) from H1 2021 to H1 2022),
driven by our success in winning and rolling out large Software Defined Wide
Area Network (SD_WAN) contracts since 2021 and the normalisation of the
hardware supply chain we've seen in the first half of this year.
Calls and lines line rental revenue declined by 6.3%, driven by a continued
migration away from the legacy PSTN services due to be turned off by BT at the
end of 2025. This was partially counteracted by an increase in call traffic
revenues (up 3.8%) driven by an increase in the volume of Inbound Calling
services, predominantly from large Contact Centre deployments.
Maintel cloud services
Maintel has continued to grow its cloud services for both unified
communications and contact centre applications - with 181,000 contracted cloud
seats (up 13.1% on H1 2022) and revenues from cloud & software customers
now at £23.1m, representing 48.6% of revenue (H1 2022: 42.4% of revenue).
During the first half of 2023, we continued to make good progress in
delivering our contracted cloud projects and have closed additional new key
contracts for the future in both the Private and Public cloud spaces.
Mobile division
Maintel's mobile division generates revenue primarily from commissions
received as part of its dealer agreements with O2 which scales in line with
growth in partner revenues, in addition to value added services sold alongside
mobile such as mobile fleet management and mobile device management.
6 months 6 months
to 30 June 2023 to 30 June
2022
£000 £000 Decrease
Revenue 2,094 2,234 (6.2)%
Gross profit 1,002 823 21.7%
Gross margin (%) 47.8% 36.8%
Number of customers 523 619 (15.5)%
Number of connections 28,671 27,341 4.8%
Revenue decreased by 6.2% to £2.1m (H1 2022: £2.2m) with gross profits at
£1.0m (H1 2022: £0.8m), and higher margins of 47.8% compared to 36.8% in the
prior period. The main contributing factor was the positive impact of 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 and our newly established relationship with Three, 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
mobile usage threshold alarming 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, excluding
depreciation, amounted to £12.6m for the period, slightly increased from
£12.1m in H1 2022. The net £0.5m increase mainly reflects salary increases
in line with inflation.
The overall headcount dropped by 6.3% or 31 FTEs and now stands at 465 (H1
2022: 496) as a result of the Group's programme of re-adapting to a scalable
efficient business to facilitate our transition to a communications specialist
.
Cash flow
The Group net debt (excluding IFRS 16 liabilities and issue costs of debt) of
£21.4m at 30 June 2023, compared to £16.6m net debt at 31 December 2022.
6 months to 30 June 6 months
2023 to 30 June 2022
£000 £000
Cash (used in)/generated by operating activities (1,898) 3,954
Taxation (paid) - (370)
Capital expenditure (1,195) (2,087)
Finance cost (net) (849) (471)
Issue costs of debt - (234)
Free cashflow (3,942) 792
Payments in respect of prior period business combination - (311)
Proceeds from borrowings 2,500 22,500
Repayment of borrowings (1,200) (15,500)
Lease liability repayments (644) (517)
(Decrease)/ Increase in cash and cash equivalents (3,286) 6,964
Cash and cash equivalents at start of period 6,136 (3,869)
Exchange differences (24) (5)
Cash and cash equivalents at end of period 2,826 3,090
Bank borrowings (24,200) (22,500)
Net debt excluding issue costs of debt (21,374) (19,410)
Adjusted EBITDA (note 5) 3,715 3,614
The Group generated -£1.9m of cash from operating activities compared to H1
2022 comparator of £3.9m.
Capital expenditure outlay of £1.2m in the period (H1 2023: £2.0m) was
driven by our continued investment across Maintel's product and service
portfolio.
No tax paid was paid in the first half of the financial year. In prior years
payments have been made in relation to the Groups historical losses being
fully utilised and taxable profits arising in the year ended 31 December 2022.
Dividends
In line with previous periods, the Board has made the decision to continue to
pause dividend payments. As such, the Board will not declare an interim
dividend for 2023 (H1 2022: Nil).
Outlook
The solid performance of our sales team year-to-date supports our expectations
of a strong performance for the second half of 2023. The sales order book
currently extends revenue potential beyond our original expectations. Private
sector business secured in the early months of 2023 is now being delivered and
supports strong project revenue streams. Whilst public sector contract awards
in the first half of the year were awaiting the implementation of the new
public framework, 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.
Leveraging the positive outcome of the first phase of the business
transformation, the performance in the second half of the year will benefit
from the full impact of the P&L improvement initiatives. Those benefits
will be compounded with the implementation of the second phase of the
transformation programme focussing on our property strategy, the delivery
model and growth acceleration.
The Board therefore expects H2 2023 trading to show further momentum building
on the period reported. Consequently, the Board is confident that Maintel will
achieve full year adjusted EBITDA ahead of initial expectations for the
financial year ending 31 December 2023. Total net debt is forecasted slightly
higher to support further investment in restructuring and the normalisation of
the working capital.
Although the Board does not feel it is timely to resume dividend payments,
this will be kept under review as conditions further improve.
On behalf of the board
C Thompson
Executive Chairman
19 September 2023
Maintel Holdings Plc
Consolidated statement of comprehensive income (unaudited)
for the 6 months ended 30 June 2023
6 months 6 months
to 30 June to 30 June
2023 2022
Note £000 £000
(Unaudited) (Unaudited)
Revenue 2 47,461 46,746
Cost of sales (31,497) (31,395)
Gross profit 15,964 15,351
Other operating income 3 339 455
Administrative expenses
Intangibles amortisation (2,842) (2,651)
Exceptional items 7 (1,946) (261)
Share based payments (124) (71)
Other administrative expenses (13,345) (13,000)
(18,257) (15,982)
Operating (loss) (1,954) (177)
Net financial costs (974) (398)
(Loss) before taxation (2,928) (575)
Taxation credit 180 323
(Loss) for the period and attributable to owners of the parent (2,748) (252)
Other comprehensive income for the period
Exchange differences on translation of foreign operations (20) 9
Total comprehensive (loss) for the period attributable to the owners of the parent (2,768) (243)
(Loss) per share from continuing operations attributable to the ordinary
equity holders of the parent
Basic 4 (19.1)p (1.8)p
Diluted 4 (19.1)p (1.8)p
Maintel Holdings Plc
Consolidated statement of financial position (unaudited)
at 30 June 2023
30 June 31 December
2023 2022
Note £000 £000
(Unaudited) (Audited)
Non-current assets
Intangible assets 51,267 52,989
Right-of-use assets 2,052 2,711
Property, plant and equipment 1,142 1,427
Trade and other receivables - 360
54,461 59,287
Current assets
Inventories 3,123 1,592
Trade and other receivables 31,555 29,089
Income tax 68 92
Cash and cash equivalents 2,826 3,090
37,572 33,863
Total assets 92,033 93,150
Current liabilities
Trade and other payables 48,066 43,087
Lease liabilities 843 840
Borrowings 8 2,257 2,400
Total current liabilities 51,166 46,327
Non-current liabilities
Other payables 326 482
Lease liabilities 1,219 1,853
Deferred tax liability 778 1,224
Borrowings 8 21,800 19,887
Total non-current liabilities 24,123 23,449
Total liabilities 75,289 69,773
Total net assets 16,744 23,377
Equity
Issued share capital 144 144
Share premium 24,588 24,588
Other reserves 60 70
Retained earnings (8,048) (1,425)
Total equity 16,744 23,377
Maintel Holdings Plc
Consolidated statement of changes in equity (unaudited)
for the 6 months ended 30 June 2023
Share capital
Other reserves Retained earnings
Share premium
Total
Note £000 £000 £000 £000 £000
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 (loss) for the period - - 9 (252) (243)
Share based payments - - - 71 71
At 30 June 2022 144 24,588 70 (1,425) 23,377
(Loss) for the period - - - (4,109) (4,109)
Other comprehensive income: - - - - -
Foreign currency
Translation differences - - 10 - 10
Total comprehensive loss for the period - - 10 10
Share based payments - - - 110 110
At 31 December 2022 144 24,588 80 (5,424) 19,388
Loss for the period - - - (2,748) (2,748)
Other comprehensive income: - - - - -
Foreign currency
translation differences - - (20) - (20)
Total comprehensive income for the period - - (20) - (2,768)
Share based payments - - - 124 124
At 30 June 2023 144 24,588 60 (8,048) 16,744
Maintel Holdings Plc
Consolidated statement of cash flows (unaudited)
for the 6 months ended 30 June 2023
6 months 6 months
to 30 June 2023 to 30 June 2022
£000 £000
Operating activities
(Loss)before taxation (2,928) (575)
Adjustments for:
Intangibles amortisation 2,842 2,651
Share based payment charge 124 71
Depreciation of plant and equipment 314 330
Depreciation of right of use asset 443 478
Interest expense (net) 974 398
Operating cash flows before changes in working capital 1,769 3,353
Increase in inventories (529) (583)
(Increase) / decrease in trade and other receivables (4,045) 1,410
Increase / (decrease) in trade and other payables 907 (226)
Cash generated from operating activities (1,898) 3,954
Tax paid - (370)
Net cash flows (used in) / generated from operating activities (1,898) 3,584
Investing activities
Purchase of plant and equipment (75) (667)
Purchase of software (1,120) (1,420)
Purchase price in respect of prior period business combinations - (311)
Net cash flows used in investing activities (1,195) (2,398)
Maintel Holdings Plc
Consolidated statement of cash flows (continued) (unaudited)
for the 6 months ended 30 June 2023
6 months 6 months
to 30 June 2023 to 30 June 2022
£000 £000
Financing activities
Proceeds from borrowings 2,500 22,500
Repayment of borrowings (1,200) (15,500)
Lease liability repayments (644) (517)
Interest paid (849) (471)
Issue costs of debt - (234)
Net cash flows generated from financing activities (193) 5,778
Net (decrease) / increase in cash and cash equivalents (3,286) 6,964
Cash and cash equivalents at start of period 6,136 (3,869)
Exchange differences (24) (5)
Cash and cash equivalents at end of period 2,826 3,090
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 2023 and 30 June 2022 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 2022 and those applicable for the year ended 31
December 2023.
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 2023 (unaudited)
Managed service and technology
Network services Total
Mobile
£000 £000 £000 £000
Revenue 24,475 20,892 2,094 47,461
Gross profit 6,525 8,437 1,002 15,964
Other operating income 339
Other administrative expenses (13,345)
Share based payments (124)
Intangibles amortisation (2,842)
Exceptional items (1,946)
Operating (loss) (1,954)
Interest (net) (974)
(Loss) before taxation (2,928)
Income tax credit 180
(Loss) after taxation (2,748)
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 - - - 2,842 2,842
Exceptional items - - - 1,946 1,946
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
3. Other operating income
6 months 6 months
to 30 June 2023 to 30 June 2022
£000 £000
(unaudited) (unaudited)
339 455
Other operating income
Other operating income of £0.3m in the period relates to monies associated
with the recovery of research and development expenditure credits (H1 2022:
£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 2023 to 30 June 2022
£000 £000
(unaudited) (unaudited)
Earnings used in basic and diluted EPS, being (loss) after tax (2,748) (252)
Adjustments: 1,893 2,099
Amortisation of intangibles on business combinations
Exceptional items (note 7) 1,946 261
Tax relating to above adjustments (842) (607)
Share based payments 124 71
Interest charge on deferred consideration - 18
373 1,590
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
2023 to 30 June 2022
Number £000 Number £000
Weighted average number of ordinary shares of 1p each 14,362 14,362
Potentially dilutive shares - 19
14,362 14,362
(Loss) per share
Basic (19.1)p (1.8)p
Diluted (19.1)p (1.8p)
Adjusted - basic after the adjustments in the table above 2.6p 11.1p
Adjusted - diluted after the adjustments in the table above 2.6p 11.1p
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 2023 to 30 June 2022
£000 £000
(unaudited) (unaudited)
(2,928) (575)
(Loss) before tax
Net interest payable 974 398
Depreciation of property, plant and equipment 314 330
Depreciation of right of use asset 443 478
Amortisation of intangibles 2,842 2,651
EBITDA 1,645 3,282
Share based payments 124 71
Exceptional items (note 7) 1,946 261
Adjusted EBITDA 3,715 3,614
6. Dividends
The directors have decided not to declare an interim dividend for 2023 (2022:
nil).
7. Exceptional items
6 months 6 months
to 30 June 2023 to 30 June 2022
£000 £000
(unaudited) (unaudited)
Staff restructuring and other employee related costs 965 153
Costs relating to business transformation 606 -
Fees relating to revised credit facilities agreement 375 154
Gain on disposal of the managed print services business - (16)
(Income) relating to onerous lease provision - (30)
1,946 261
8. Borrowings
30 June 2023 31 December 2022
£000 £000
(unaudited) (audited)
Current bank loan - secured 2,257 5,226
Current RCF - secured 17,500
2,257 22,726
Non- Current bank loan - secured 1,800 -
Non - Current RCF - secured 20,000 -
21,800 -
24,057 22,726
In the previous year, the Company signed a new agreement with HSBC Bank plc
("HSBC") to replace the previous 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 is being repaid in equal monthly instalments,
starting in October 2022. The principal balance of the term loan at 30 June
2023 was £4.2m and of the RCF was £20.0m.
Interest on the borrowings is the aggregate of the applicable margin and SONIA
for Pound Sterling / SOFR for US Dollar / EURIBOR for Euros.
Covenants based on EBITDA to Net Finance Charges and Total Net Debt to EBITDA
are tested on a quarterly basis.
The current bank borrowings above are stated net of unamortised issue costs of
debt of £0.2m (31 December 2022: £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
the 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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