TIDMMAI
RNS Number : 8317G
Maintel Holdings PLC
09 March 2015
Maintel Holdings Plc
("Maintel", "the Company" or "the Group")
Preliminary results for the year to 31 December 2014
Maintel Holdings Plc, the telecoms and data services company,
announces preliminary results for the 12 months to 31 December
2014.
Highlights
Strong financial performance with growth in revenues and
profits, with continued investment in both the organic business and
acquisitions to support long term growth.
-- Reported revenues up 35% to GBP41.9m (2013: GBP31.1m)
o Organic revenue([1]) up 1%
-- Adjusted profit before tax([2]) up 16% to GBP6.1m (2013: GBP5.2m)
-- Adjusted earnings per share([3]) up 24% to 46.7p (2013: 37.6p)
-- Proposed final dividend per share increased 29% to 11.6p,
implying total full year dividend of 20.9p
-- Significant improvement in cash generation; net cash flow
from operating activities of GBP6.1m
-- Recurring revenues of GBP30.5m at 73% of total Group revenue
-- Acquisition of Proximity Communications completed in October
for net consideration of GBP8.5m
-- Encouraging performance in the recently acquired businesses;
Datapoint acquired in September 2013 and Proximity in 2014
o The integration of Datapoint is now complete and the
integration of Proximity is progressing well
o Cost synergies coming through as expected from the acquisition
of Proximity
o Cross selling opportunities continue to provide growth
opportunities within the existing customer base
-- Launch of Maintel Cloud, and increased capability in
enterprise unified communications and contact centre
-- Reconfirmed intention to increase the dividend to
approximately 50% of adjusted earnings per share by FY 2015
Key Financial Information
Audited results for year
ended 31 December: 2014 2013 Increase
Group revenue GBP41.9m GBP31.1m 35%
Adjusted profit before tax(2]) GBP6.1m GBP5.2m 16%
Adjusted earnings per share([3]) 46.7p 37.6p 24%
Final dividend per share
proposed 11.6p 9.0p 29%
Commenting on the Group's results, Eddie Buxton, CEO, said:
"This has been another significant year in the development of
Maintel. We have delivered a strong financial performance, with
pleasing organic growth in a challenging market, complemented by
the acquisition of Datapoint in 2013 and Proximity in 2014, which
has brought additional strengths in the areas of unified
communications, contact centres, design authority, data networking,
security and wireless. We remain open to further acquisitions
should they provide clear value to shareholders. Our confidence in
the progression of the business is reflected in the 29% increase in
the final dividend".
Notes
[1] Organic revenue is revenue generated from the historic
Maintel business and excludes any contribution from Datapoint or
Proximity in either 2013 or 2014.
[2] Adjusted profit before tax is basic profit before tax of
GBP3.8m (2013: GBP3.6m), adjusted for intangibles amortisation and
exceptional costs relating to the acquisition of Proximity and
Datapoint (2013: Datapoint).
[3] Adjusted earnings per share is basic earnings per share of
27.6p (2013: 25.0p), adjusted for intangibles amortisation and the
Proximity and Datapoint exceptional costs.
For further information please contact:
Eddie Buxton, Chief Executive 020 7401 4601
Dale Todd, Finance Director 020 7401 0562
FinnCap
Charlotte Stranner (Corporate
Finance) 020 7220 0500
Alexandra Clement (Corporate
Broking) 020 7220 0500
Chairman's statement
I am pleased to report on another transformational year for
Maintel, with our acquisition of Proximity Communications Limited
following on from the Datapoint acquisition in 2013.
Group revenues increased by 35% in the year, to GBP41.9m (2013:
GBP31.1m), with underlying organic growth of 1% being supplemented
by the effects of the acquisitions. Adjusted profit before tax
increased to GBP6.1m (2013: GBP5.2m), a 16% increase year on year,
with adjusted earnings per share of 46.7p, compared with the 37.6p
in 2013, an increase of 24%. Unadjusted profit before tax increased
by 5% to GBP3.8m (2013: GBP3.6m).
The purchase of Proximity in October is the largest acquisition
undertaken by Maintel to date, at a gross cost of GBP12.0m, or
GBP8.5m net of cash acquired. This was funded by an extension of
our existing borrowing facilities to a total term loan of GBP6.0m,
supported by a new revolving credit facility of GBP7.0m, including
a GBP1.0m overdraft facility. Total Proximity revenue for 2014 was
GBP12.3m, and before Maintel management charges, profit before tax
was GBP1.4m. In the period since acquisition Proximity contributed
GBP1.9m revenue and GBP0.3m profit before tax.
We are now moving into the next stage of the Group's development
and growth as we continue to broaden the range of our capabilities
with Proximity bringing further critical mass to the Group's Avaya
expertise and additional strengths in the areas of unified
communications, contact centres, design authority, data networking,
security and wireless.
The Group's managed service and equipment sales division
delivered a 47% increase in reported revenues, driven primarily by
a full 12 months contribution from Datapoint in 2014. On an organic
basis, the underlying business (excluding both Datapoint and
Proximity contributions) showed slight revenue decline of 1%. The
customer contract base in the organic business continued to
decline, but this was almost fully offset by a strong year of
equipment sales as we transition legacy customers to the new
technology characteristic of the Datapoint and Proximity bases. We
were particularly pleased that cost savings at Datapoint resulted
in its gross margins recovering more than anticipated, to above
pre-acquisition levels, so that overall divisional gross margin
excluding Proximity remained at 37%.
The Group's network services division reported a 3% increase in
revenues, 2% of which was organic growth driven primarily by a 29%
increase in data revenues. Although sales of call minutes are still
growing in this division, associated revenue and profit from this
revenue stream continue to diminish with rate erosion. We continue
to counter this rate erosion by converting customers to the more
"future-proof" SIP technology, which also provides a base into
which we are able to sell additional services.
In our mobile division revenues increased by 12% to GBP2.9m
following a disappointing year in 2013, with investment in the
sales force beginning to deliver. The number of connections
increased marginally in the year while customer numbers declined as
we continue to manage the base in favour of larger, more profitable
customers. Gross margin reduced in the year due to a combination of
higher up-front acquisition costs and changes to one of the
networks' commission arrangements as had been expected. The effects
of this have now unwound.
Cash generation from trading improved significantly with net
cash flow from operating activities of GBP6.1m. Net borrowings at
the year end were GBP6.7m following the acquisition of Proximity
for a net GBP8.5m, which was funded by an increase in term loan to
GBP6.0m and a GBP7.0m revolving credit facility, including a
GBP1.0m overdraft facility.
In the 2013 annual report we announced our intention to increase
the dividend to approximately 50% of adjusted earnings per share
over the course of the following two years. This process commenced
with the payment of 43% in respect of the 2013 final dividend which
was paid in April 2014, and 44% in respect of the 2014 interim
dividend paid in October 2014. We propose to pay a final dividend
for 2014 of 11.6p, 45% of adjusted earnings per share, bringing the
total payable for the year to 20.9p (2013: 9.0p and 15.7p), which
will be paid on 1 May to shareholders on the register on 20
March.
Our current priority is to complete the successful integration
of Proximity into the Group, capitalising on the enhanced product
portfolio, skillsets, cross selling and cost saving opportunities
that the acquisition brings. We do, however, remain committed to
considering further acquisition opportunities, both businesses and
customer bases, where these can be seen to add shareholder value.
We continue to grow our expertise in evolving technologies such as
hosted environments, where we have already made some encouraging
organic progress including the recent launch of the Maintel Cloud
unified communications and contact centre proposition.
Finally, I'd like to acknowledge the immense contribution made
by all of our staff to the year's successes and extend a particular
welcome to those who have joined us from Proximity, a business of
outstanding quality. We have experienced a significant year in the
Group's development and we look forward with confidence to building
on that in 2015.
J D S Booth
Chairman
6 March 2015
Strategic report
Results for the year
The results for 2014 show good performance in both the historic
Maintel business, which recorded organic revenue growth of 1% in
the period, and the two recently acquired businesses, Datapoint
acquired in 2013 and Proximity Communications Limited ("Proximity")
in October 2014.
The acquisition of Proximity marked another step change for the
Group and the inclusion of a full year contribution from Datapoint
in 2014, together with 9 weeks of Proximity, has driven a 35%
increase in Group revenue to GBP41.9m (2013: GBP31.1m).
Adjusted profit before tax (as described below) has increased by
16% to GBP6.1m (2013: GBP5.2m), and adjusted EPS increased by 24%
to 46.7p (2013: 37.6p).
On an unadjusted basis, profit before tax of GBP3.8m (2013:
GBP3.6m) and EPS of 27.6p (2013: 25.0p) include the exceptional
costs associated with the acquisitions. The 2014 unadjusted figures
include an increase of GBP0.6m in intangibles amortisation compared
with 2013, with a full year charge for Datapoint and a part-year
charge for Proximity.
2014 2013
GBP000 GBP000 Increase
Revenue 41,890 31,124 35%
-------- -------- ---------
Profit before tax 3,809 3,643 5%
Add back customer relationship
intangibles amortisation 1,472 898
Exceptional items relating
to the acquisition of
Proximity (2013: Datapoint) 809 691
Adjusted profit before
tax 6,090 5,232 16%
-------- -------- ---------
Of which: Maintel^ 5,828 5,232 11%
Proximity^ 262 -
-------- -------- ---------
6,090 5,232 16%
-------- -------- ---------
Adjusted EBITDA 6,407 5,397 19%
Basic earnings per share 27.6p 25.0p 10%
Diluted 27.2p 24.7p 10%
-------- -------- ---------
Adjusted earnings per
share* 46.7p 37.6p 24%
Diluted 46.0p 37.1p 24%
-------- -------- ---------
* Adjusted profit after tax divided by weighted average number
of shares (note 4)
^ Before management charges
Excluding the exceptional costs in the table above (note 7)
Strong cash performance
The Group's operating cash flows improved significantly in the
period, with net cash flows from operating activities of GBP6.1m
(2013: GBP1.0m). The improvement was primarily driven by increased
profits and a significant improvement in working capital inflow.
The Group ended the year with net debt of GBP6.7m (2013: GBP2.2m)
or just under 1.1x net debt to adjusted EBITDA. GBP0.75m of
borrowings were repaid during the year and a further GBP8.0m drawn
to finance the acquisition of Proximity, as described in more
detail later in this report.
Acquisition of Proximity
On 24 October 2014, the Group acquired Proximity for a gross
consideration of GBP12.0m. Proximity is an Avaya Platinum
Enterprise Business Partner and adds a range of capabilities to
Maintel in unified communications, contact centre, design
authority, data networking, security and wireless. It also
significantly enhances the Group's profile with Avaya, with
benefits including improved sales and technical collaboration and
industry leading skills and certification levels.
Proximity provides managed services to approximately 250 UK
customers and has an annualised contract base of GBP6.0m, bringing
the total Group managed service base at the year end to GBP25.0m. A
substantial part of the Proximity revenue stream is recurring (over
50%), with other income including consulting, professional services
and technology sales. It contributed GBP1.9m revenue and GBP0.3m
profit before tax in the period since acquisition, most of this
falling within the managed service and equipment segment, with the
remainder in network services, as described below.
Synergies resulting from the joint servicing of the Proximity
and Maintel bases include bringing currently subcontracted support
contracts in-house as a result of the combined Group's extended
skillsets, and cost savings from joint purchasing. The integration
of Proximity and realisation of these synergies is progressing well
and further cost savings will be achieved over the course of 2015.
The variety of sales skills across the Group is also being
harnessed into a more cohesive structure to capitalise on
opportunities presented by the Group's increasing product
portfolio.
Review of operations
The table below summarises the revenues of the three operational
divisions of Maintel. Proximity revenues are primarily derived from
managed services and equipment sales and most will be reported
within the managed services and equipment division in future
periods, the remainder being reported within the network services
division, however they are stated separately in this report to show
the underlying movements year on year. The 2013 numbers include 15
weeks contribution from Datapoint for the period post acquisition
to the year end. The 2014 numbers include 12 months contribution
from Datapoint and 9 weeks contribution from Proximity.
Revenue analysis
(GBP000) 2014 Increase
2014 2014 Total 2013 excl Proximity
Maintel Proximity reported reported Increase
Managed services
related 19,495 1,109 20,604 14,477 42% 35%
Equipment,
installations
and other 10,710 679 11,389 7,287 56% 47%
________ ________ ________ ________ ________ ________
Total managed
services and
equipment
division 30,205 1,788 31,993 21,764 47% 39%
Network services
division 7,058 98 7,156 6,938 3% 2%
Mobile division 2,907 - 2,907 2,597 12% 12%
Intercompany (166) - (166) (175) 5% 5%
________ ________ ________ ________ ________ ________
Total Maintel
Group 40,004 1,886 41,890 31,124 35% 29%
________ ________ ________ ________ ________ ________
The table below shows the performance of the underlying historic
"Maintel" business, excluding both Datapoint and Proximity from
both years.
Organic revenue performance (GBP000)
2014 2013
Maintel Maintel Increase/
organic organic (decrease)
Managed services related 11,308 11,966 (5)%
Equipment, installations and
other 6,458 5,993 8%
________ ________ ________
Total managed services and equipment
division 17,766 17,959 (1)%
Network services division 7,058 6,938 2%
Mobile division 2,907 2,597 12%
Intercompany (166) (175) 5%
________ ________ ________
Total 27,565 27,319 1%
________ ________ ________
The organic managed service base has declined during the year
but the bulk of this decline has been mitigated by higher equipment
revenues, so that the divisional revenue has fallen only GBP0.2m,
or 1%. Growth in both the network services and mobile divisions of
2% and 12% respectively more than compensates for this, resulting
in 1% organic growth in the period.
Of total Group revenue for 2014, 73% is recurring (2013: 77%),
the reduction in the year largely being a function of a full year
of Datapoint revenue which was 66% recurring, and the drop in the
historical managed service base.
Divisional performance is described further below.
Managed services and equipment division
The managed services and equipment division provides the
management, maintenance, service and support of office-based voice
and data equipment across the UK and Ireland on a contracted basis.
It also supplies and installs voice and data equipment to managed
services customers, both to our direct clients and into our partner
customers.
On a reported basis, revenues in this division increased by 47%
to GBP32.0m, with managed services related revenue up 42% and
equipment sales up 56%.
The growth in revenues reflects a full year's revenue
contribution from Datapoint compared with 15 weeks in 2013, and 9
weeks contribution from Proximity. The historic Maintel business
showed a 1% fall in revenues reflecting a reduction in the legacy
equipment Maintel customer base, offset by improving sales of
equipment, as customers refresh their technology.
The performance in the first half of the year was particularly
strong in this division as two large technology orders placed in
2013 were fulfilled in H1 2014, boosting first half performance in
both sub-divisions of the managed services and equipment division,
as detailed below.
The expected reduction in gross margins resulting from the
impact of the acquisition of Datapoint was mitigated by
improvements in gross margins in the underlying business as the
benefits of the reduced use of sub-contracts and other synergies
started to come through. As a result gross margins were maintained
at 37%. Proximity gross margins were higher than the Group overall,
at 47% in the period since acquisition, due to the focus on higher
specification products and a larger contribution from professional
services.
Managed services
(a) Maintel, excluding Proximity
Revenue including Datapoint increased by 35% year on year, but
in the historic Maintel business (i.e. excluding both Datapoint and
Proximity) revenue decreased by 5%.
It was noted at the half year that the historic customer base
had reduced as customers made the transition to lower revenue IP
technology. This was exacerbated by the loss of three larger
customers in the second half, with new sales not sufficient to
replace those losses. An encouraging increase in the Datapoint base
in the second half partially compensated for the loss, albeit this
was not sufficient to prevent the overall base reducing by 4% to
GBP19.4m (2013: GBP20.1m).
A key focus during 2015 will be to target customers with older
systems with a view to migrating them to a hosted system which
provides them with a flexible opex option of upgrading their
technology and which typically has the advantage of having much
lower levels of churn. This will be facilitated initially by the
launch of a Maintel cloud unified communications and contact centre
hosted platform, based on Avaya technology.
(b) Proximity
The Proximity customer base had an annualised value of GBP6.0m
at the year end, and it contributed GBP1.1m in managed service
revenues in the 9 weeks since its acquisition. The size and nature
of Proximity's typical customer is more akin to the Datapoint base
with its more contemporary technology than to Maintel's historic
base, and it is anticipated moving forward that the growth in the
customer base derived from their newer skillsets will more than
compensate for the loss of older technology customers which make up
a higher proportion of the historic Maintel base. In addition to
the synergies already identified, further savings will be achieved
from eliminating sub-contracted support contracts that can be
brought in-house, cost savings from joint-purchasing and the
sharing of maintenance stock.
Equipment sales
(a) Maintel, excluding Proximity
Revenue including Datapoint increased by 47% year on year, and
in the historic Maintel business (i.e. excluding both Datapoint and
Proximity) revenue grew by 8%.
The first half of 2014 was particularly strong, with equipment
and professional services revenues excluding Datapoint up 12% on
the corresponding period in the previous year, helped by the
delivery of two sizeable projects signed at the end of 2013. A
number of major projects were completed in the second half
including a contact centre installation for an insurance company
and an infrastructure upgrade for a local council; however the H1
deals were larger in scale, so that performance in the second half
was weaker in comparison, with revenues down 15% on the first half.
We had anticipated the start of a major international roll-out for
a pharmaceuticals company during the second half however this only
commenced to any real degree in Q4 and we are expecting to see this
develop in 2015.
(b) Proximity
The Proximity business model is the same as that of Maintel,
with equipment, professional services and other revenues being
derived from Proximity's managed service customers as they grow or
refresh their technology. Proximity contributed GBP0.7m of such
revenue in the period since acquisition.
Division gross profit (GBP000) 2014 2013 Increase
11,311 8,044
Maintel (including Datapoint) (37%) (37%) 41%
Proximity 847 (47%) -
________ ________ ________
12,158 8,044
Total division (38%) (37%) 51%
________ ________ ________
Given the application of common resource across both managed
service and equipment sales, definitive margin data on the separate
business sectors is not provided; however management figures are
used to monitor constituent elements internally.
Network services division
The network services division sells a portfolio of services
which includes telephone line rental, inbound and outbound
telephone calls, data connectivity, internet access and hosted IP
telephony solutions. These services complement those offered by the
managed service and equipment division and the mobile division. The
acquired Datapoint companies make no direct revenue contribution to
this division.
Revenue analysis
(GBP000)
2014 2014 2014 2013 Increase/
Maintel Proximity Reported Reported (decrease)
Call traffic 2,385 62 2,447 2,586 (5)%
Line rental 3,211 36 3,247 3,179 2%
Data services 1,040 - 1,040 809 29%
Other 422 - 422 364 16%
________ ________ ________ ________ ________
Total division 7,058 98 7,156 6,938 3%
________ ________ ________ ________ ________
2014 2013 Increase
2,074
Division gross profit (GBP000) (29%) 2,055 (30%) 1%
________ ________ ________
The network services division continues to show revenue growth
despite overall market contraction, with organic revenue increasing
by 2%. Proximity made a small contribution in the period since
acquisition, resulting in total reported revenue growth of 3%.
Gross profit was flat as margins reduced by 0.6% due to changing
business mix and one specific lower margin data contract.
As expected, call minutes billed continued to increase year on
year as new customers were signed and attrition remained low in
comparison. However continuing price pressure, regulatory changes
and the bundling of minutes in to SIP channel rentals resulted in
call revenues, the highest margin revenue stream of the division,
reducing by 8% excluding Proximity revenues.
Line rental revenues increased by 1% in the year with new sales
being partly offset by clients rationalising large line estates to
reduce costs and also the transitioning of some customers towards
newer SIP technology, which is classified as other services in the
above table. The shift from more commoditised traditional line
rentals to SIP benefits our business through lower attrition levels
associated with SIP and plays to Maintel's professional service,
solution design and engineering strengths. IP-based solutions also
allow Maintel to upsell data connectivity and hosted services more
easily to its customers.
Data connectivity revenues showed particularly impressive growth
in the year, with an increase of 29% including a key new contract
with over 800 connections connecting in the final quarter of 2014.
The lower margin associated with larger contracts reduced overall
divisional margins by 1% year on year.
An additional large MPLS contract was won at the end of 2014 and
will start to benefit the division's data connectivity revenues in
Q2 of 2015.
Mobile division
Maintel Mobile derives its revenues primarily from commissions
received under its dealer agreements with Vodafone and O(2) ,
supplemented by revenue derived from ongoing customer monthly
spend.
Neither the Datapoint nor Proximity acquisitions contribute
directly to this division.
Increase/
GBP000 2014 2013 (decrease)
Revenue 2,907 2,597 12%
1,517 1,640
Gross profit (52%) (63%) (8)%
________ ________ ________
At At
31 December 31 December
2014 2013 Decrease
Number of customers 815 952 (14)%
Number of connections 13,199 13,178 -%
________ ________ ________
Mobile revenue increased by 12% in 2014 to GBP2.9m as the number
of new signings increased significantly year on year, as the
benefits of investment in developing a more experienced sales team
during the year began to come through. Overall, the number of
connections at the end of the year was up slightly on that at the
end of 2013, with the number of customers again down as we focus on
larger, more profitable business, with the average number of
connections per customer increasing by 17%.
Gross profit decreased by 8% to GBP1.5m as margins were impacted
by the higher cost of sale associated with winning new customers
from outside the Group whilst changes to commission arrangements
implemented by one of our network suppliers affected margins on
both new and renewal business. These commission changes were
implemented in August 2013 but had a greater impact in 2014 and
have now fully unwound; as a result the gross margin fell to 52%
(2013: 63%).
Cross selling opportunities continue, with Proximity's customer
base providing additional opportunities and two firm prospects
already engaged. The mobile base also continues to provide
prospects for the other divisions' services including recent
engagement on a large contact centre opportunity and successful
deployments of fixed line, data connectivity and audio conferencing
services.
Administrative expenses, excluding intangibles amortisation and
non-trading adjustments
Administrative expenses (GBP000) 2014 2013 Increase
Maintel sales expenses 2,535 2,408 5%
Maintel other administrative
expenses (excluding intangibles
amortisation and exceptional
expenses) 2,997 2,780 8%
________ ________
Maintel excluding Datapoint
and Proximity 5,532 5,188 7%
Datapoint administrative expenses 3,178 1,148
Proximity administrative expenses 665 -
________ ________
Total administrative expenses
excluding intangibles amortisation
and non-trading adjustments 9,375 6,336 48%
________ ________ ________
Total other administrative expenses excluding Datapoint and
Proximity increased by GBP0.3m (7%) in the year, the main factors
being the expansion of the mobile sales team and increased support
costs reflecting the increased size of the Group. The 2013
Datapoint and 2014 Proximity administrative expenses are shown
above from the date of acquisition.
The exceptional costs of GBP0.8m shown in the income statement
relate to GBP0.5m legal and professional fees incurred in respect
of the acquisition of Proximity and GBP0.3m of redundancy costs
resulting from the combining of certain operations following that
and the Datapoint acquisitions.
The intangibles amortisation charge increased in the year due to
the charge applying to the Proximity intangible acquired during the
year and a full year charge in respect of Datapoint. Impairment and
amortisation charges are discussed further below.
Interest
Interest receivable amounted to GBP2,000 in 2014, the same as
2013, with the Group becoming a net borrower in 2013 following the
acquisition of the Datapoint companies.
The Group recorded a GBP135,000 interest charge in the year
(2013: GBP32,000) on the borrowings secured to acquire Datapoint
and Proximity.
Taxation
The consolidated statement of comprehensive income shows a tax
rate of 22.7% (2013: 26.8%). Each of the Group companies is taxed
at 21.5%, other than Datapoint Communications Limited, which is
taxed at 12.5% (2013: 23.25%; 12.5%). Certain recurring expenses
that are disallowable for tax raise the effective rate above this
and the rate is further inflated in the year by the GBP0.5m costs
of the Proximity acquisition (2013: GBP0.6m in respect of the
Datapoint acquisition) not being an allowable deduction for tax;
excluding these acquisition costs the tax rate would be 20.0% in
2014 and 23.2% in 2013.
The tax charge in the year includes a deferred tax charge
relating to the tax losses of the Datapoint companies, whereby they
do not currently pay corporation tax on their profits, but a tax
asset in respect of the historic losses is charged to the income
statement as the losses are used. The deferred tax charge in the
year was GBP0.2m (2013: GBPNil) in relation to the brought forward
losses.
Dividends
A final dividend for 2013 of 9.0p per share (GBP961,000 in
total) was paid on 24 April 2014, and an interim dividend for 2014
of 9.3p (GBP993,000) was paid on 3 October 2014.
It is proposed to pay a final dividend of 11.6p in respect of
2014 on 1 May to shareholders on the register at the close of
business on 20 March, which is a 29% increase on the 2014 final
dividend taking the Group's payout ratio as a percentage of
adjusted earnings to 45%. The corresponding ex-dividend date will
be 19 March. In accordance with accounting standards, this dividend
is not accounted for in the financial statements for the period
under review as it had not been committed as at 31 December
2014.
The Business model section below describes the board's dividend
policy.
Consolidated statement of financial position
Net assets increased by GBP1.1m in the year to GBP5.0m at 31
December 2014, of which GBP3.3m was cash (2013: GBP0.5m). Cash flow
and borrowings are described further below.
Trade receivables have increased by GBP2.2m in the year, the
main reason being the inclusion of GBP2.6m of Proximity trade
receivables at the year end, net of a reduction in equipment sale
invoicing at 2014 year end and a different phasing of a large
managed service billing.
Prepayments have increased by GBP1.3m, with the Proximity
acquisition accounting for GBP0.9m of this and a further GBP0.3m
arising from an increase in prepaid subcontractor costs at the end
of 2014.
The value of maintenance stock has increased by GBP0.4m in the
year, to GBP1.1m, due to the maintenance stock acquired with
Proximity. The value of stock held for resale has increased from
GBP0.2m to GBP0.4m, the increase down to the timing of project
installations and supplier invoicing.
Trade payables have increased by GBP2.1m since 31 December 2013,
GBP1.9m of this attributable to Proximity's year end balances and
GBP0.2m to late payment of a disputed supplier invoice.
Other tax and social security liability has increased by
GBP0.5m. The Proximity liability amounts to GBP0.8m, partly offset
by a reduced VAT liability on the lower trade receivables noted
above.
Accruals have increased by GBP0.5m year on year, again largely
due to the Proximity liability acquired.
Deferred managed service income has increased by GBP3.8m, with
GBP3.6m attributable to Proximity at year end.
Other deferred revenue has fallen by GBP0.1m due to invoicing
timing differences.
The deferred tax liability has increased by GBP1.1m in the year
as a result of the establishment of a liability on the recognition
of an intangible asset representing Proximity's customer contracts,
net of a GBP0.1m credit to the income statement.
No significant capital expenditure has been required on plant
and equipment during the period, with assets of GBP0.1m being
acquired with Proximity and the depreciation charge including a
GBP0.02m charge in respect of Proximity. The main expenditure was,
as usual, on IT and routine office refurbishment.
Intangible assets
The Group has two intangible asset categories: (i) an intangible
asset represented by customer contracts and relationships acquired
from District Holdings Limited, Callmaster Limited, Redstone,
Maintel Mobile, Datapoint and Proximity, and (ii) goodwill relating
to the Maintel Network Services, District, Redstone, Maintel
Mobile, Datapoint and Proximity acquisitions.
Goodwill of GBP9.9m (2013: GBP4.7m) is carried in the
consolidated statement of financial position, which is subject to
an impairment test at each reporting date. The GBP5.2m increase in
the year relates to the acquisition of Proximity and a small
adjustment to the Datapoint goodwill. No impairment has been
charged to the consolidated statement of comprehensive income in
2014 (2013: GBPNil).
The intangible assets represented by purchased customer
contracts and relationships were carried at GBP10.5m at the period
end (2013: GBP6.3m). GBP5.7m of value was added in the year
relating to the acquisition of Proximity. The intangible assets are
subject to an amortisation charge of 17% of cost per annum in
respect of managed service and maintenance contract relationships,
and 14.2% per annum in respect of network services contracts and
Maintel Mobile customer relationships, with GBP1.5m being amortised
in 2014 (2013: GBP0.9m), the increase attributable to the Proximity
customer relationships acquired and a full year's amortisation of
the Datapoint intangible.
Cash flow
At 31 December 2014 the Group had cash and bank balances of
GBP3.3m (2013: GBP0.5m), all unrestricted save for the floating
charge held by Lloyds Bank.
Borrowings were GBP10.0m at the year end (2013: GBP2.8m). During
the year, GBP0.8m was repaid, and a further GBP4.0m loan and
GBP6.0m revolving credit facility ("RCF") was drawn on 24 October
2014 to finance the acquisition of Proximity for a consideration of
GBP12.0m gross, GBP8.5m net of GBP3.5m cash acquired with the
business. GBP2.0m of the RCF was subsequently repaid so that
borrowings resulted in the GBP10.0m balance at the year end. The
Group retains its overdraft facility of GBP1.0m with Lloyds.
Further details of the loan, RCF and overdraft facility are given
in note 9.
2014 2013
GBP000 GBP000
Cash generated from operating activities 7,103 2,111
Taxation (1,049) (1,148)
Capital expenditure (81) (89)
Finance cost (net) (133) (30)
________ ________
Free cashflow 5,840 844
Dividends (1,954) (1,494)
Acquisitions (net of cash acquired) (8,468) (3,497)
Proceeds from borrowings 10,000 3,000
Repayments of borrowings (2,750) (250)
Issue of new ordinary shares 88 -
________ ________
Increase/(decrease) in cash and cash
equivalents 2,756 (1,397)
Cash and cash equivalents at start
of period 544 1,941
Exchange differences 47 -
________ ________
Cash and cash equivalents at end of
period 3,347 544
Bank borrowings (10,000) (2,750)
________ ________
Net debt (6,653) (2,206)
________ ________
Adjusted EBITDA (note 5) 6,407 5,397
________ ________
Cash generated from operating activities in 2014 at GBP7.1m
(2013: GBP2.1m) was affected by non-recurring transactions, as it
was in the previous year, as follows:
(a) Proximity was acquired with abnormally high receivables due
to the invoicing of some large contracts. The settlement of these
pre-year end has enhanced cash flow.
(b) At 31 December 2012, GBP0.9m was accrued in respect of the
final payment due of the consideration payable for the acquisition
of Maintel Mobile. This was paid in January 2013 and so in the 2013
cash flow statement this is shown as a working capital movement
outflow.
(c) 2013 cash flow was adversely affected by the deferral at
December 2012 of GBP1.2m of supplier payments for operational
reasons, so depressing 2013 cash flows when they were paid.
(d) The Group incurred an exceptional cost of GBP0.8m during
2014, GBP0.5m in respect of legal and professional fees in relation
to the Proximity acquisition and GBP0.3m in respect of redundancy
costs in relation to the Proximity and Datapoint acquisitions
(GBP0.6m and GBP0.1m in 2013 in respect of the Datapoint
acquisition).
Business model and strategy
The Group's objective is to maximise shareholder returns over
the short, medium and long term through the provision of
telecoms-related products and services. Historically these services
were provided predominantly in the UK, however with the acquisition
of the UK and Ireland operations of the Datapoint group in
September 2013, the Group now also services a range of customers
overseas.
The provision of these services is centred around the Group's
managed services and equipment division.
With the acquisition of Proximity, the Group now has a
contracted customer base of GBP25m per annum, and the provision of
managed and break-fix services to this base creates the opportunity
to sell other services into clients, primarily equipment and
professional services, and the Group combines these revenue streams
into a single business unit. The Group operates two other business
units - network services and mobile - whose services are cross-sold
into the managed services base and to external clients, mostly in
the SME sector.
Organic growth in each business unit is targeted in each
financial year, and will be supplemented by the acquisition of
complementary companies or client bases where clear shareholder
value creation can be achieved. Acquisitions may be funded out of
cashflow, borrowings or the issue of shares, dependent on a range
of factors considered at the time. Targeted acquisitions will also
bring extended capabilities, such as overseas customers and
enhanced contact centre expertise with Datapoint and further
security, professional service and higher end Avaya expertise with
Proximity. Organic initiatives are also developed such as the
recent launch of a Maintel cloud unified communications and contact
centre service in conjunction with Avaya.
In the 2013 annual report the board announced that it intended
to increase the dividend to approximately 50% of its adjusted
earnings per share over the course of the following two years. This
process commenced with the payment of 43% in respect of the 2013
final dividend which was paid in April 2014, and 44% in respect of
the 2014 interim dividend paid in October 2014. The directors are
proposing a final dividend of 11.6p for financial year 2014, which
when combined with the interim 2014 dividend of 9.3p per share
gives a full year dividend of 20.9p, equivalent to 45% of adjusted
earnings per share.
Principal risks and uncertainties
The directors consider that the principal risks to the Group
relate to technological advance, marketplace relationships, pricing
strategies and integration risk. Some risks may be unknown to the
Group and others may be more, or less, material than currently
envisaged by the directors, and so the following may not give a
comprehensive view of all the risks and uncertainties affecting the
business.
Telecommunications hardware has historically focused on a PBX
core, which is gradually being replaced by hosted and cloud
capabilities. Customers' acceptance of the new technologies moves
at varying rates, however, so that legacy systems will continue to
be serviced for some time to come. Maintel sells and maintains the
replacement breed of unified communications and contact centre
systems, and has had notable success with the transition to date.
Managed service income from the new technology can be reduced when
compared to traditional telephony although this is mitigated
through reduced service delivery costs and promoting a managed
service concept, retaining where possible the resultant enhanced
calls and lines revenue and up-selling high value new products such
as network monitoring, software assurance and mobile services. The
acquisition of Datapoint and Proximity, with their broader range of
associated business application skills in the unified
communications contact centre high growth space, will accelerate
Maintel's ability to drive new revenue streams.
VoIP technology is a potential threat to the reselling of call
minutes with a particular type of customer. Recognising this
potential risk, the Group has expanded its product portfolio to
include SIP trunking and hosted IP technology, which is gaining
traction, with these and related revenue growing significantly
during 2014. The development of VoIP is constantly monitored so
that the Group may take advantage of profitable business models as
and when they appear.
The Group has a close partner relationship with O(2) /Telefonica
and to a diminishing extent Vodafone (incorporating Cable &
Wireless Worldwide), such that these companies and their clients
constitute a significant share of its managed service base. The
extent of the relationship with O(2) has grown with the acquisition
of the Datapoint companies and the work they carry out for O(2) .
Should the relationships be terminated, the managed service base
would reduce to that extent over time, necessitating a commensurate
reduction in costs. Partnerships with other integrators continue to
be developed to reduce the percentage weighting of business with
these partners.
Maintel Mobile is a dealer for networks, primarily Vodafone and
O(2) , and is reliant on its relationships with those companies.
The Group more generally relies on its contracts with both
suppliers and clients and, beyond contractual status, maintains
strong relationships with them at various levels of the business,
as well as striving to ensure that client expectations are met and,
where possible, exceeded.
The Group's managed service contracts have a natural finite
life, and are subject to competitive attack, so that there is an
inevitable customer churn. The directors monitor the rate and
causes of churn and implement strategies with the objective of
minimising attrition and growing the customer base organically and
by way of acquisition if cost effective.
The pricing of the network services and mobile divisions'
products and services can be affected by regulatory bodies in the
UK and the EU. The Group is also potentially subject to new pricing
strategies by both competitors and suppliers, whether due to their
own internal policies or in response to technological change. The
Group mitigates these risks by assessing anticipated regulations
and pricing strategies and amending its own pricing policies
accordingly.
The Group has stated that it will acquire suitable companies
which fit certain criteria, and recognises that there is a risk of
operational disturbance in the course of integrating acquired
companies into the Group's existing operations. The Group mitigates
this risk by way of due diligence and detailed planning involving
senior management, drawing on the experience of previous
acquisitions.
Employees
Maintel's success is dependent on the knowledge, experience and
motivation of its employees, and so on the attraction and retention
of those staff. The Group offers competitive compensation packages,
including bonus structures where appropriate, to align employee
interest with that of the Group. The Group's management ensures
that there is continual investment in external and internal
training of employees, and monitors the compliance with both
statutory regulation and best practice with regard to gender, race,
age and disability.
Periodic updates are distributed to employees, and a Group
intranet is core to open communication amongst employees; this
continues to be developed.
The Company established a Share Incentive Plan in 2006, allowing
employees and directors to invest tax effectively in its shares,
and so aligning employee interests with those of shareholders.
Under the plan, shares are acquired by employees out of pre-tax
salary, with ownership vesting at that time, and are held by
trustees on behalf of the employees. The plan is therefore separate
from the assets of the Group.
Environment
The Group acknowledges its responsibilities to environmental
matters and where practicable adopts environmentally sound policies
in its working practices, such as recycling paper and packaging
waste and using specialist recyclers of scrap telecommunications
and IT equipment. A major consideration when replacing company cars
is their impact on the environment, a focus on the replacements
during 2014 being on energy saving technologies, with the new
vehicles consequently attracting zero road tax. The Group also
makes use of in-house video-conferencing facilities to reduce the
need for regional meetings. Maintel Europe Limited has
ISO14001:2004 accreditation for its environmental management
systems.
Outlook
Looking across the Group we feel confident in an outlook for
continued organic revenue growth in the coming year. In addition,
we remain committed to considering suitable and complementary
acquisition opportunities, on the basis that they provide clear
value to our shareholders. The Group is well placed to exploit such
opportunities with current gearing levels in the business
comfortably within the range which the Group is able to
support.
In the short term our focus remains on fully integrating the
Proximity business into the Maintel Group. Notwithstanding the
progress made to date, the board sees the opportunity for further
synergies to be realised throughout 2015.
In light of this outlook the board remains committed to its
previously stated intention to increase the dividend payout to
around 50% of adjusted earnings per share by FY 2015.
On behalf of the board
E Buxton
Chief Executive
6 March 2015
Maintel Holdings Plc
Consolidated statement of comprehensive income
for the year ended 31 December 2014
2014 2013
note GBP000 GBP000
Revenue 3 41,890 31,124
Cost of sales 26,292 19,526
------- -------
Gross profit 15,598 11,598
Administrative expenses
-------------------------------- ----- ------- -------
Intangibles amortisation 1,472 898
Exceptional costs 7 809 691
Other administrative
expenses 9,375 6,336
-------------------------------- ----- ------- -------
11,656 7,925
Operating profit 3 3,942 3,673
Financial income 2 2
Financial expense (135) (32)
Profit before taxation 3,809 3,643
Taxation 865 978
------- -------
Profit and total comprehensive
income attributable to
owners of the parent 2,944 2,665
======= =======
Earnings per share
Basic 4 27.6p 25.0p
Diluted 4 27.2p 24.7p
======= =======
Maintel Holdings Plc
Consolidated statement of financial position
at 31 December 2014
2014 2013
GBP000 GBP000
Non current assets
Intangible assets 20,367 10,988
Property, plant and equipment 314 289
20,681 11,277
------- -------
Current assets
Inventories 1,436 845
Trade and other receivables 12,419 8,961
Cash and cash equivalents 3,347 544
------- -------
17,202 10,350
------- -------
Total assets 37,883 21,627
Current liabilities
Trade and other payables 23,309 15,211
Current tax liabilities 828 638
------- -------
Total current liabilities 24,137 15,849
Non current liabilities
Deferred tax liability 1,242 149
Borrowings 7,500 1,750
------- -------
Total net assets 5,004 3,879
======= =======
Equity
Issued share capital 107 107
Share premium 1,116 1,028
Capital redemption reserve 31 31
Translation reserve 47 -
Retained earnings 3,703 2,713
Total equity 5,004 3,879
======= =======
Maintel Holdings Plc
Consolidated statement of changes in equity
for the year ended 31 December 2014
Share Capital Translation Retained
capital Share redemption reserve earnings Total
premium reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January
2013 107 1,028 31 - 1,542 2,708
Profit and
total comprehensive
income for
the year - - - - 2,665 2,665
Dividend - - - - (1,494) (1,494)
At 31 December
2013 107 1,028 31 - 2,713 3,879
Profit and
total comprehensive
income for
the year - - - - 2,944 2,944
Foreign currency
translation
differences - - - 47 - 47
Dividend - - - - (1,954) (1,954)
Issue of new
ordinary shares - 88 - - - 88
At 31 December
2014 107 1,116 31 47 3,703 5,004
========== ========== ============ ============= =========== ========
Maintel Holdings Plc
Consolidated statement of cash flows
for the year ended 31 December 2014
2014 2013
GBP000 GBP000
Operating activities
Profit before taxation 3,809 3,643
Adjustments for:
Intangibles amortisation 1,472 898
Profit on sale of fixed asset (1) -
Depreciation charge 184 135
Interest received (2) (2)
Interest payable 135 32
Operating cash flows before
changes in working capital 5,597 4,706
Increase in inventories (94) (36)
Decrease/(increase) in trade
and other receivables 1,403 (1,253)
Increase/(decrease) in trade
and other payables 197 (1,306)
--------- --------
Cash generated from operating
activities 7,103 2,111
Tax paid (1,049) (1,148)
--------- --------
Net cash flows from operating
activities 6,054 963
--------- --------
Investing activities
Purchase of plant and equipment (87) (89)
Proceeds from disposal of plant 6 -
and equipment
----------------------------------- --------- --------
Purchase price in respect of
business combination (11,994) (3,500)
Net cash acquired with subsidiary
undertaking 3,526 3
----------------------------------- --------- --------
(8,468) (3,497)
Interest received 2 2
Net cash flows from investing
activities (8,547) (3,584)
--------- --------
Financing activities
Proceeds from borrowings 10,000 3,000
Repayment of borrowings (2,750) (250)
Interest payable (135) (32)
Issue of new ordinary shares 88 -
Equity dividends paid (1,954) (1,494)
Net cash flows from financing
activities 5,249 1,224
--------- --------
Net increase/(decrease) in
cash and cash equivalents 2,756 (1,397)
Cash and cash equivalents at
start of period 544 1,941
Exchange differences 47 -
--------- --------
Cash and cash equivalents at
end of period 3,347 544
========= ========
Maintel Holdings Plc
Notes to the preliminary statement
1. Basis of preparation
The financial information set out in these preliminary results
does not constitute the company's statutory accounts for 2013 or
2014.
Statutory accounts for the years ended 31 December 2014 and 31
December 2013 have been reported on by the Independent Auditors.
The Independent Auditors' Report on the Annual Report and Financial
Statements for 2014 was unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2013 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2014 will be delivered to the Registrar
in due course.
2. Accounting policies
The financial information set out in these preliminary results
has been prepared using the recognition and measurement principles
of International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The accounting
policies adopted in this results announcement have been
consistently applied to all the years presented and are consistent
with the policies used in the preparation of the statutory accounts
for the period ended 31 December 2014. The principal accounting
policies adopted are unchanged from those used in the preparation
of the statutory accounts for the period ended 31 December
2013.
3. Segmental information
For management reporting purposes and operationally, the Group
consists of three business segments: (i) telecommunications managed
service and equipment 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 Strategic report.
The Datapoint business is reported under the managed service and
equipment division as it is managed and measured as part of that
division; Proximity is similarly reported apart from GBP98,000 of
revenue and its associated margin which relates to the network
services segment.
Year ended 31 December 2014
Managed Central/ Total
service Network inter-
and equipment services Mobile company
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 31,993 7,156 2,907 (166) 41,890
=============== =========== ========= ========== ==============
Operating profit before
customer relationship
intangibles amortisation
and exceptional costs 4,418 1,027 764 14 6,223
Customer relationship
intangibles amortisation (252) (28) - (1,192) (1,472)
Exceptional costs (312) - - (497) (809)
--------------- ----------- --------- ---------- --------------
Operating profit 3,854 999 764 (1,675) 3,942
--------------- ----------- --------- ----------
Interest (net) (133)
--------------
Profit before taxation 3,809
Taxation (865)
--------------
Profit after taxation 2,944
==============
Revenue is wholly attributable to the principal activities of
the Group and other than sales of GBP3,291,000 to EU countries and
GBP378,000 to the rest of the world (2013: GBP973,000 to EU
countries; GBP151,000 rest of the world), arises within the United
Kingdom.
Intercompany trading consists of telecommunications services,
and recharges of sales, engineering and rent costs, GBP81,000
(2013: GBP90,000) attributable to the managed service and equipment
segment, GBP79,000 (2013: GBP82,000) to the network services
segment and GBP6,000 (2013: GBP3,000) to the mobile segment.
In 2014 the Group had two customers (2013: two) which accounted
for more than 10% of its revenue, one accounting for GBP5.317m and
the other GBP4.311m (2013: GBP5.419m and GBP4.258m).
Managed Mobile Central/ Total
service Network inter-
and equipment services company
GBP000 GBP000 GBP000 GBP000 GBP000
Other
Capital expenditure 87 - - - 87
Depreciation 183 - 1 - 184
Amortisation 252 28 - 1,192 1,472
=============== =========== ======== ========= =======
Year ended 31 December 2013
Managed Central/ Total
service Network inter-
and equipment services Mobile company
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 21,764 6,938 2,597 (175) 31,124
=============== =========== ========= ========= ========
Operating profit before
customer relationship
intangibles amortisation
and exceptional costs 3,246 1,101 931 (16) 5,262
Customer relationship
intangibles amortisation (251) (49) - (598) (898)
Exceptional costs (120) - - (571) (691)
--------------- ----------- --------- --------- --------
Operating profit 2,875 1,052 931 (1,185) 3,673
--------------- ----------- --------- ---------
Interest income (30)
--------
Profit before taxation 3,643
Taxation (978)
--------
Profit after taxation 2,665
========
Managed Mobile Central/ Total
service Network inter-
and equipment services company
GBP000 GBP000 GBP000 GBP000 GBP000
Other
Capital expenditure 89 - - - 89
Depreciation 133 - 2 - 135
Amortisation 251 49 - 598 898
=============== =========== ======== ========= =======
4. Earnings per share
Earnings per share is calculated by dividing the profit after
tax for the period by the weighted average number of shares in
issue for the period, these figures being as follows:
2014 2013
GBP000 GBP000
Earnings used in basic and diluted
EPS, being profit after tax 2,944 2,665
Adjustments: Amortisation of intangibles 1,472 898
Exceptional costs (note 7) 809 691
Tax relating to above adjustments (396) (244)
Deferred tax charge on Datapoint 161 -
profits
Adjusted earnings used in adjusted
EPS 4,990 4,010
-------- --------
Datapoint has brought forward tax losses, so that
it will pay no tax in respect of its 2014 profits.
On acquisition, however, a deferred tax asset
was recognised in respect of its tax losses, and
a deferred tax charge has been recognised in the
income statement in respect of the year's profits.
As this does not reflect the reality and benefit
to the Group of the non-taxable profits, the deferred
tax charge is adjusted above.
2014 2013
Number Number
(000s) (000s)
Weighted average number of ordinary
shares of 1p each 10,676 10,675
Potentially dilutive shares 165 125
-------- --------
10,841 10,800
======== ========
Earnings per share
Basic 27.6p 25.0p
Basic and diluted 27.2p 24.7p
Adjusted - basic but after the adjustments
in the table above 46.7p 37.6p
Adjusted - basic and diluted after
the adjustments in the table above 46.0p 37.1p
====== ======
The adjustments above have been made in order to provide a
clearer picture of the trading performance of the Group.
In calculating diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential ordinary shares. The Group has one
category of potentially dilutive ordinary share, being those share
options granted to employees where the exercise price is less than
the average price of the Company's ordinary shares during the
period.
5. EBITDA
The following table shows the calculation of EBITDA and adjusted
EBITDA:
2014 2013
GBP000 GBP000
Profit before tax 3,809 3,643
Net interest payable 133 30
Depreciation of property, plant
and equipment 184 135
Amortisation of customer relationship
intangibles 1,472 898
------- -------
EBITDA 5,598 4,706
Exceptional Costs 809 691
Adjusted EBITDA 6,407 5,397
======= =======
6. Dividends
2014 2013
GBP000 GBP000
Dividends paid
Final 2012, paid 25 April 2013
- 7.3p per share - 779
Interim 2013, paid 11 October 2013
- 6.7p per share - 715
Final 2013, paid 24 April 2014
- 9.0p per share 961 -
Interim 2014, paid 3 October 2014
- 9.3p per share 993 -
1,954 1,494
================= ======
The directors propose the payment of a final dividend for 2014
of 11.6p (2013: 9.0p) per ordinary share, payable on 1 May 2015 to
shareholders on the register at 20 March 2015. The cost of the
proposed dividend, based on the number of shares in issue as at 6
March 2015, is GBP1.243m (2013: GBP961,000).
7. Exceptional costs
Legal and professional fees of GBP497,000 were incurred in
relation to the acquisition of Proximity Communications Limited in
October 2014 (2013: GBP571,000 incurred in relation to the
acquisition of the Datapoint companies in September 2013).
Redundancy costs of GBP312,000 have been incurred as a result of
synergies achieved following the acquisitions (2013: GBP120,000).
These costs, totalling GBP809,000 (2013: GBP691,000), have been
shown as exceptional costs in the income statement as they are not
normal operating expenses.
8. Business combinations
Proximity
On 24 October 2014 the Company acquired the entire share capital
of Proximity Communications Limited at the following provisional
aggregate valuations:
GBP000
Purchase consideration
Cash 11,994
--------
Assets and liabilities acquired
Tangible fixed assets 127
Inventories 497
Trade and other receivables 4,861
Cash 3,526
Trade and other payables (6,646)
2,365
Customer relationships 5,698
Deferred tax on customer relationships (1,197)
Net assets and liabilities acquired 6,866
--------
Goodwill 5,128
--------
Since its acquisition, Proximity has contributed the following
to the results of the Group before management charges of
GBP60,000:
Revenue 1,886
------
Profit before tax 262
------
Datapoint
On 13 September 2013 the Company acquired the entire share
capital of Datapoint Customer Solutions Limited, Datapoint Global
Services Limited and Datapoint Communications Limited at the
following provisional aggregate valuations:
GBP000
Purchase consideration
Cash 3,500
----------
Assets and liabilities acquired
Tangible fixed assets 119
Trade and other receivables 1,915
Cash 3
Trade and other payables (6,314)
(4,277)
Customer relationships 3,695
Deferred tax on customer relationships (776)
Deferred tax asset relating to historic
tax losses 1,065
----------
Total assets and liabilities acquired (293)
Fair value adjustment (see below) 117
----------
Net assets and liabilities acquired (176)
----------
Goodwill 3,676
----------
The fair value adjustment relates to the inventories held by
Datapoint at the date of acquisition, revalued to their fair market
value.
A further GBP25,000 of goodwill was recognised in 2014 in
respect of a previously unaccrued pre-acquisition liability in
Datapoint, resulting in aggregate goodwill of GBP3.701m.
9. Borrowings
2014 2013
GBP000 GBP000
Non-current bank loan - secured 7,500 1,750
Current bank loan - secured 2,500 1,000
10,000 2,750
On 24 October 2014 the Group entered into a GBP13.0m facility
agreement with Lloyds Bank plc to support the acquisition of
Proximity, replacing its previous facilities with Lloyds. This is
split between a GBP6.0m term loan and a GBP7.0m revolving credit
facility, the latter incorporating a GBP1.0m overdraft
facility.
The term loan is repayable in quarterly instalments over a 3
year period, the first instalment of GBP500,000 having been due in
December 2014 but not taken by the lender until 9 January 2015. The
revolving facility is due for renewal on 24 October 2017 and the
overdraft facility, which was not drawn at 31 December 2014, is due
for renewal on 1 November 2015.
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 term loan and revolving credit facility at
a variable rate of 2.25% per annum over LIBOR, with a reduced rate
payable on undrawn facility. Interest is payable on amounts drawn
under the overdraft facility at a rate of 2.25% over base rate.
10. Annual report
The annual report and accounts will be posted to shareholders in
due course and copies will also be available on the Group's web
site www.maintel.co.uk and on request from the Company's registered
office at 61 Webber Street, London SE1 0RF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXDKEEKSEFF
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