TIDMMAI
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 Increase/
ended 30 June: 2022 2021 (decrease)
Group revenue (GBP'm) 46.7 53.5 (12.7)%
Gross profit (GBP'm) 15.3 14.8 3.4%
Adjusted EBITDA 3.6 4.3 (16.6)%
(Loss)/ profit before tax (GBP'm) (0.5) 3.8 (113.2)%
Adjusted profit before tax ([5])
(GBP'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]) (GBP'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 GBP19.8m, 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: GBP46.7m in H1 2022
behind the comparative period in H1 2021 (-10.6% on a like for like
basis([1]) )
-- Adjusted EBITDA reduces to GBP3.6m (H1 2021: GBP4.3m), reflecting the revenue dynamic
-- Net debt([4]) at 30 June 2022 amounts to GBP19.4m, 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 GBP45m
-- Maintel's successful transition to a cloud and managed
services business continues successfully, as revenues from cloud
and software customers now reach GBP19.8m in H1 2022 up 24.5%
compared to GBP15.9m 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 GBP0.5m savings from the
same period last year, and on a comparable basis([1])
-- Maintel enters a 3-year refinance agreement with HSBC for a
GBP26m 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 GBP6m 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 GBP19.4m 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 GBP0.0m (H1 2021: GBP1.2m) and
GBP0.0m (H1 2020: GBP0.1m) respectively. Comparable analysis also
includes an adjustment in H1 2021 for reclassification of Costs of
Goods Sold to administrative expense for GBP1.8m (this is inline
with the presentation at year ended December 2021) and
capitalisation of software licence costs from Costs of Goods Sold
of GBP0.6m, to match the H1 2022 presentation
[2] Adjusted EBITDA is EBITDA of GBP3.2m (H1 2021: GBP7.9m),
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 GBP2.4m (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
Gab Pirona, Chief Financial Officer
Dan Davies, Chief Technology Officer 0344 871 1122
finnCap, (Nomad and Broker)
Jonny Franklin-Adams / Emily Watts
(Corporate Finance)
Sunila de Silva (Corporate Broking) 020 7220 0500
Oakley Advisory, (Financial Advisors)
Christian Maher 020 7766 6900
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
GBP19.8m, 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 GBP19.4m, 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 GBP6.0m
(H1 2021: GBP4.3m) 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 GBP26m 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 GBP46.7m (H1 2021: GBP53.5m),
and on a comparable basis ([1]) , reduced by 10.6% to GBP52.3m.
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 GBP3.6m (H1 2021: GBP4.3m) .
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 GBP0.6m. Please see note one to the interim financial
statements, on the basis of preparation.
Adjusted profit before tax([5]) was GBP2.4m (H1 2021:
GBP2.9m).
The Group generated a loss before tax of GBP0.5m (H1 2021:
profit of GBP3.8m) and loss per share of 1.8p (H1 2021: earnings
per share of 27.0p). This includes a net exceptional debit of
GBP0.3m (H1 2021: cost of GBP3.6m) (refer note 7) and intangibles
amortisation of GBP2.6m (H1 2021: GBP2.7m).
A djusted earnings per
share (EPS) decreased
by 21.8% to 11.1p (H1
2021: 14.2p) based on
a weighted average number 6 months 6 months
of shares in the period to 30 to 30
of 14.3m (H1 2021: 14.4m). June 2022 June 2021
Increase/
GBP000 GBP000 (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 GBP19.8m (H1 2021: GBP15.9m),
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 6 months
to 30 June to 30
2022 June 2021
(Decrease)
Revenue analysis GBP000 GBP000 / 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)%
Total Group 46,746 53,469 (12.6)%
============================ ============ =========== ============
(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 6 months
to 30 June to 30 June
2022 2021
Increase
GBP000 GBP000 / (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 GBP25.0m, including an adjustment to exclude revenue
contributions from the disposed Managed Print Services division of
GBP0.0m (H1 2021: GBP1.2m) and for reclassification of Costs of
Goods Sold to administrative expense for GBP1.8m 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
to 30 6 months
June to 30
2022 June 2021
Increase
GBP000 GBP000 / (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)%
----------------------------- --------- ----------- --------------
Total division 19,504 18,590 4.9%
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 GBP0.6m. 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 GBP19.8m, 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 to 30
June 2022 June
2021
GBP000 GBP000 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 GBP2.2m (H1 2021: GBP2.4m) with
gross profits at GBP0.8m (H1 2021: GBP1.2m), 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 GBP13.0m for the period,
reduced from GBP13.4m in H1 2021 (up from GBP11.8m 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 GBP1.8m). The net GBP0.4m reduction mainly reflects the
GBP0.5m 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 GBP19.4m at 30 June 2022, compares to GBP19.4m
net debt at 31 December 2021.
6 months 6 months
to 30 June to 30 June
2022 2021
GBP000 GBP000
Cash generated by operating activities before
disposal of managed print services business 3,279 1,345
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 GBP3.3m of cash from operating activities
compared to an underlying H1 2021 comparator of GBP1.3m which
excludes a GBP4.3m 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 GBP1.4m in the period (H1 2022:
GBP1.0m) 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 GBP000 GBP000
(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 GBP000 GBP000
(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 Other Retained
capital Share reserves earnings Total
premium
Note GBP000 GBP000 GBP000 GBP000 GBP000
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 to 30 June
2022 2021
GBP000 GBP000
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 to 30
June 2022 June 2021
GBP000 GBP000
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 GBP0.6m.
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 Network
and technology services Mobile Total
GBP000 GBP000 GBP000 GBP000
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 Central/
service Network inter-
and technology services Mobile company Total
GBP000 GBP000 GBP000 GBP000 GBP000
Intangibles amortisation - - - 2,651 2,651
Exceptional items 107 - - 154 261
================ ========== ========= ========= =======
Six months to 30 June 2021 (unaudited)
Managed
service Network
and technology services Mobile Total
GBP000 GBP000 GBP000 GBP000
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 Central/
service Network inter-
and technology services Mobile company Total
GBP000 GBP000 GBP000 GBP000 GBP000
Intangibles amortisation - - - 2,718 2,718
Exceptional items (3,613) - - - (3,613)
================ ========== ========= ========= ========
3. Other operating income
6 months 6 months
to 30 June to 30 June
2022 2021
GBP000 GBP000
(unaudited) (unaudited)
Other operating income 455 461
============ ============
Other operating income of GBP0.5m in the period relates to
monies associated with the recovery of research and development
expenditure credits (H1 2021: GBP0.5m).
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 to 30 June
2022 2021
GBP000 GBP000
(unaudited) (unaudited)
Earnings used in basic and diluted EPS,
being profit / (loss) after tax (252) 3,878
Adjustments: Amortisation of intangibles
on business combinations 2,099 2,275
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
Adjusted earnings used in adjusted EPS 1,590 2,044
============ ============
The adjustments above have been made to provide a clearer
picture of the trading performance of the Group.
6 months 6 months
to 30 June to 30 June
2022 2021
Number GBP000 Number GBP000
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 to 30 June
2022 2021
GBP000 GBP000
(unaudited) (unaudited)
(Loss) / Profit before tax (575) 3,817
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 to 30 June
2022 2021
GBP000 GBP000
(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 GBP153k
(H1 2021: GBP380k) includes GBP21k relating to untaken employee
annual leave as a result of COVID-19 (H1 2021: GBP158k).
8. Borrowings
30 June 31 December
2022 2021
GBP000 GBP000
(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 GBP20m with a GBP6m 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 GBP0.1m (31 December 2020: GBP0.1m).
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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END
IR KVLFLLKLLBBV
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